Take the co-op & buyer offering commssion away!

Real Estate Agent with Associate Broker

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!

Adam Rich

Associate Broker

Licensed since 1989 

email: adamrich@mris.com





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David Spencer
Keller Williams Northland - Kansas City, MO
Show Me real estate in Kansas City

NAR states that all commissions are negotiable and is not a violation of ethics standards to negotiate your commission with 'your client'. You may contract for your services for what ever you are willing to go to work for. If you have ever tried the commercial side, you would know that most often the listing broker does not pay a co-op fee.

A buyer agency contract enables you to notify the listing agent that the negotiated price reflects no co-op commission. 

Sep 29, 2007 12:40 PM #1

I know commissions are negotiable by law. In my original Post I was referring to the "contract" for the sale of the real property, not the contract between your client and yourself.

Right now Buyer's agents are "negotiating" compensation with their client however in reality they are "accepting" whatever is in the MLS!

and, yes, I have done some commercial work and that is exactly what I am advocating for the residential side!




Sep 30, 2007 04:13 AM #2
William Johnson
Retired - La Jolla, CA
Retired Real Estate Professional

Ultimately when the law suit with NAR is completed by the DOJ, it may come to something like this. The basis for the MLS was to guarantee that there was compensation where there is no Buyer's Brokerage agreement and uniformity . If Buyer Brokerage were to be mandated and not a random option, the question would be answered.

On the other hand, if Buyer Brokerage were mainline and not so random, the standards for negotiating on behalf of the Buyer would be greatly improved.

If Single agency were also imposed by states law, it would also end dual agency. Listing offices would be more specialized and so would the Buyer Brokerages. This may be the future and our industry would look very different from today. This may be the path of evolution of the industry takes.

Apr 19, 2008 06:32 AM #3
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