That's right, for the next few weeks we are going to be counting down the top ten myths about Realtors. It seems like every day that a comment made by a client, prospect, or friend reminds us how misunderstood our profession is as a whole. Some of these misperceptions are innocent and just make us smile. However, there are other misperceptions that can result in frustration and feelings of ill-will for both the Realtor and the client. It is our sincere hope that this blog series will both educate and prevent future misunderstandings. With that said, let's get to Realtor Myth #10.
Myth: In Florida, the buyer pays a commission.
Fact: Only in extremely rare circumstances does the buyer owe his Realtor a commission.
The commission system in Florida is truly buyer friendly. Here's how it works.
First, the listing agent negotiates the total commission amount with the seller of the property. That amount typically ranges between 4% and 7% of the purchase price, depending on the listing agent and/or listing company. The full commission is due the listing agent if he represents the buyer in the transaction.
However, it is rare for a listing agent to represent both the seller and the buyer of a particular property. For that reason, the listing agent almost always agrees to split his commission with any agent who can bring a buyer ready, willing, and able to purchase the home. This agreement is made when the listing agent places the property in the Multiple Listing Service (MLS).
Per MLS rules, the listing agent must include his offer of compensation to the buyer's agent in the MLS listing. This offer is usually a percentage of the purchase price. Currently, three percent is considered a full offer of compensation.
Once an agent has brought a buyer to the home, a contract is executed, and the sale is closed, the listing agent pays the buyer's agent the agreed upon amount and keeps whatever is left for himself. For example, if the listing agent negotiates a six percent total commission and offers the buyer's agent three percent, he will receive the remaining three percent as his compensation.
To boil this down to its simplest level, the seller pays the listing agent and the listing agent pays the buyer's agent. The buyer does not pay anything for his Realtor's representation (with the possible exception of a small transaction fee, depending on the Realtor's company). It's a great system because it allows the buyer use all of his resources to actually purchase the home.
We hope you've enjoyed this first installment of our series on the Top Ten Realtor Myths. Check back on Friday for Myth #9. As always, we welcome any feedback!
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