If we want to truly move our industry ahead we need to address the commission structure and "sharing" thereof.
Presently we use the MLS and, even though the Buyer is "technically" paying us, (read your Buyer Broker agreement - that is what it says! - however, as a courtesy, and due to tradition, we "take it out of the proceeds from the seller's side on the HUD sheet)
Note: I know "he who pays has nothing to do with who you represent" - it is much a matter of semantics. One could just as easily argue the Buyer is actually paying the Listing commission, because it is all the buyer's money coming to the table to fund the transaction.
....anyway, Redfin, and a number of other companies, some discount, some not, now offer "rebates" to the buyers and or seller in the form of "commission rebates". Perfectly legal but totally misleading!
When we take a listing we decide what we are worth and we "advise" the seller they ALSO need to "offer" at least 2% or 3% or X% in the MLS to pay the "buyer's agent" - (forget about co-op and sub-agent that is all but gone - rightly so) then along comes Mr.Buyer Agent and, what?, just accepts whatever is in the MLS? What happened to their deal with their buyer?!
If the MLS was used for what is SUPPOSED to be - a shared database of information of houses for sale, the house's asking price, access, who is representing the seller, etc. and there was NOTHING about commission or sharing in the MLS then the Buyer and Buyer's agent could come along and offer what they want along with a clause that said "this offer includes X% to cover my agent's commission.
I KNOW this is currently against the Code of Ethics - I am NOT advocating "negotiating" our commission in the contract - even though that is what we are doing every day - I AM saying take it out of the seller's and listing agent's hands!
Then the discount companies will have NOTHING to REBATE! They will have to contract with their Buyer's for whatever they want and we will have TRUE competition! Some will charge 2% to represent the buyer, some 3, some flat fees, some may even charge an HOURLY RATE! etc!
The Seller's will also be able to truly compare their choices - some will find 1.5%, some 3% some flat fees, hourly plus advertising, etc - and it will have NOTHING to do with "offering" half of it, or some of it to the "buying side"!
Representation was the greatest move our industry has made in the last 100 years - let's take the next step and separate the compensation as well!
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