Sorry But The Co-Broke Commission Is Too Low For Me.

By
Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690
https://activerain.com/droplet/4w5V

tutas towne realty

Hi folks. I read a blog post from Tricia Hoffman titled "Risking Your Client's Happiness Over $200."

Basically it's about an agent contacting the listing agent to ask for a higher co-broke. One of the commenters, Joetta #44 wrote:

  • "I wonder how all these listing agents who said the agent had a perfect right to ask for a better split would feel if they got an email from a buyers' agent asking for a higher commission than what is shown in the MLS."

Ok. I'll bite :) I've been primarily a listing agent for 18 years. I do not split commissions 50/50. I take a larger chunk on the listing side and always have. Over the years I have had many agents request the co-broke be changed. It doesn't bother me in the least that they ask. As long as they are asking PRIOR to accepting the co-broke being offered. This is as per our CoE.

 

  • Standard of Practice 3-1 REALTORS®, acting as exclusive agents or brokers of sellers/ landlords, establish the terms and conditions of offers to cooperate. Unless expressly indicated in offers to cooperate, cooperating brokers may not assume that the offer of cooperation includes an offer of compensation. Terms of compensation, if any, shall be ascertained by cooperating brokers before beginning efforts to accept the offer of cooperation. (Amended 1/99)
  • Standard of Practice 3-2
    REALTORS® shall, with respect to offers of compensation to another REALTOR®, timely communicate any change of compensation for cooperative services to the other REALTOR® prior to the time such REALTOR® produces an offer to purchase/lease the property. (Amended 1/94)
  • Standard of Practice 3-3
    Standard of Practice 3-2 does not preclude the listing broker and cooperating broker from entering into an agreement to change cooperative compensation. (Adopted 1/94)

Sometimes I agree to an increase and sometimes I don't. But what I always do is help the agent understand how to get paid when working as a buyer's agent. It's simple. Have a written agreement with your buyer/tenant outlining how you work and how you expect to be paid. That way the buyer can pay you extra commission if you feel you need it.

My guess is that as we move forward towards lenders and 3rd party vendors stepping between agents and their clients it will be even more important to know how to get paid for buyer agents.

Buyer agents should NEVER have to rely on the listing agent to get them paid. The co-broke being offered should be a supplement to your "already negotiated compensation" with your buyer.

If all agents knew how to get paid these types of discussions would become obsolete.

Maybe some of these articles about working with real estate buyers will help.

****Edited on 1-24-2013 to add Standard pf Practice 3-1

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Keith Ritter 01/24/2013 06:53 AM
Topic:
ActiveRain Community
Location:
Florida Orange County Orlando
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Rainer
145,948
Theresa Akin
CORPUS CHRISTI REALTY GROUP - Corpus Christi, TX

I had a listing one time that was very old home that was listed at $35,000.00 with 6% commission split 50-50 but if an accepted offer came in below that amount such as 30000 the minimum would be $1000.00 to both sides. we got and offer much less than that price. The other agent for the buyer was surprise when I called him to ask if he looked at the listing agent remarks. He couldn't believe I would let him know about the minimum. I believe in fairness to all agents no matter whether or not they have been with me. But $1,000.00 is my minimum and my buyers and sellers know this.

Jan 25, 2013 01:52 AM #67
Rainmaker
1,542,806
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Isn't discussing actual percentages and dollar amounts here a bit dangerous?

Jan 25, 2013 02:10 AM #68
Rainmaker
656,967
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

Thanks, Bryant.  I was a little frightened when I saw my name in print, but it wasn't painful at all!  

Jan 25, 2013 03:01 AM #69
Rainmaker
974,759
Beth and Richard Witt
Long Island Cash Home Buyer - Huntington, NY
Long Island Cash Home Buyer 516-330-6940

Very interesting...  I'm thinking that before long the listing agents fee will be eliminated by the flat fee brokers... Time will tell...

Jan 25, 2013 03:21 AM #70
Rainer
479,189
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

I agree with your post. Simply disclose your terms and conditions, services and fee structure prior to accepting any client. Any professional relationship must be suitable and mutually beneficial to all parties. 

Jan 25, 2013 04:10 AM #71
Rainmaker
1,025,371
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

The challenge I seem to have is when listing a short sale.  Most of the lenders will max out the commission amount at 6% on an approved short sale.  That is great except for when it is a cheap deal.  A friend of mine is trying to short sale a low end junker condo and the sales price will end up being $20,000 or less.  3% per side is $600 each - not much motivation for a buyer agent.  How can you offer a buyer agent more on deals like this? 

Jan 25, 2013 04:29 AM #72
Rainer
61,819
Sharon Sanchez
Ace Home Realty - Carson, CA
Your Number "1" Source For Real Estate.

Hi Bryant.  I agree with your post.  I offer a lower commission on short sales all the time and a 50/50 split on standard sales.  However I may adopt your concept and off a lower commission on each listing.

Thanks.

Jan 25, 2013 07:30 AM #73
Rainer
443,730
John Dotson
Preferred Properties of Highlands, Inc. - Highlands, NC - Highlands, NC
The experience to get you to the other side!
In North Carolina the new listing agreement (BOR) lists the commission split so the sellers knows up front what it will be. I had not thought much about it until now, but I wonder if that is illegal, since I might want to change my mind about how much I pay an " out of the area" agent who knows nothing about real estate in our area. After all, what we do with the commission should be our decision. Hmmm.
Jan 25, 2013 08:24 AM #74
Rainer
20,216
Kelly Fischer
Treasure Coast | Sotheby's International Realty - Vero Beach, FL
Kelly Fischer, P.A.
Richard and Jean, maybe nobody has noticed, but if you are asking for .05% of the selling price you aren't going to get paid very much. I know this was an old thread, but it just jumped out at me. Better fix that!!
Jan 25, 2013 09:49 AM #75
Rainmaker
843,257
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Bryant, we don't do a 50/50 either because we feel we end up doing more that 50% of the work.

Jan 25, 2013 09:55 PM #76
Rainer
301,054
Lehel Szucs
All Seasons Real Estate, Inc. - Covina, CA
REALTOR of choice

I split my commission depending on each deal .... I also work with what is typically offered in the mls ... when it is low I explain to my clients what is going on and if they want a particular property that is too low than I have them sign a buyer agreement where they pay me .... 

 

when an agent offers 1% OR $ 500 than it is obvious that they want to double end and will most likely not accept your clients offer anyway .... 

 

the greed in our business :(

Jan 28, 2013 02:55 AM #77
Rainer
102,220
Tom Esposito
Alpharetta Home Solutions - Alpharetta, GA

Good post.  As usual, you cut through everything and get to the point.  I agree, if the buyer's agent wants to get paid then they need to prepare an employment contract and get the buyer to sign it before they start taking them out. 

Jan 28, 2013 04:38 AM #78
Rainmaker
1,431,210
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I think we can get into trouble when we start discussing specific numbers.  However, we must always act in our clients best interest.  That means showing them the homes that best meet the needs they say they have.  If we are worried about getting paid we better get a BBA.

Jan 30, 2013 12:59 AM #79
Rainer
19,976
Chris Marquez
Charleston HOME Properties ~ www.BuySellCHS.com - Sullivans Island, SC

It makes me crazy when I see agents put on their web sites that there is no charge to the buyer..."doesn't cost you anything".  I wonder what these agents would do if client showed up ready to make an offer on a For Sale By Owner property...work for free!?

Bryant,
A few questions if you will indulge me.
(I will assume that in your market a 50/50 split of the list agent commission is normal and customary.
Also, I will assume for the discussion we are talking only about available commission paid by the seller.)

1.) DISCLOSURE:
How do you explain to your sellers your fee structure and your un-equal fee split?
How does that conversation go, or is it just ink in the listing agreement?

2.) OBJECTIONS:
How do you handle objections from your sellers when they know (find out) that a 50/50 split is normal and customary, but you “always have" taken a "larger chunk"?

3.) WHY NOT MORE:
Why not take the entire listing commission and not split at all?  What will the (your) market  bare?

4.) "sellers best interest"
"(circumstances would compel you to change your mind? ) If it's in my sellers best interest to do so."
When would it not be in the "sellers best interest" to offer the buyer’s agent more commission/incentive?
Only when they cannot afford to, correct?

Thanks...this has been thought provoking and given me things to consider and remember for the future.

Jan 31, 2013 02:41 AM #80
Rainer
99,578
Jim Basquette
Basquette Group of Huff Realty - Cincinnati, OH
CRS, CNE, GRI, e-Pro, CLHMS, PSA

Rob #72, I pay co-op agents 3% or $1,000 whichever is higher.  If the seller does not agree to a minimum comission on low priced properties, I don't take the listing.  If it's a short sale or any 3rd party decision maker affecting the commission , I don't take the listing on low priced properties.

Feb 08, 2013 09:48 AM #81
Rainer
374,821
Edward Gilmartin
CRE - Boston, MA

I suppose if some agents rufuse to show homes with low commission splits it may do  a disservice to that home owner esp in a slow market where cooperation is necessary and where homes do not vary much if listing agent insists on giving himself most of the commission. This should be explained to seller too.

Feb 08, 2013 10:29 PM #82
Rainer
46,127
Nancy Middleton
Counselor Realty, Inc. - Excelsior, MN
Nancy Middleton, Counselor Realty, Minnetonka, MN

Bryant: This discussion about commissions and fees makes me uncomfortable, as it's on the edge of RESPA problems. In our MLS it is clearly stated what the % split is or whether it is variable. Then it's up to the Buyer's agent to have it clarified on what percentage they will be paid and get it in writing, but not on the purchase agreement, as it's between the two Brokers.

Feb 09, 2013 01:28 AM #83
Rainmaker
94,433
Roger Stensland
Keller Williams Realty Puget Sound - Maple Valley, WA
Let's Move!

There is no problem with the discussions as long as be are not involved in anti-trust violations.  I have not seen anyone seeking agreement on setting commissions. 

 

Back to the original discussion, always, always, always get a BBA before showing properties to your buyers - even if you will most likely, at least in the Seattle area, have a 50-50 split.  If my buyers insist on looking at houses that offer a lower buyer-side commission, they know by the BBA how much they will end up spending. 

Feb 12, 2013 06:28 AM #84
Rainer
374,821
Edward Gilmartin
CRE - Boston, MA

When I go on a listing appointment one of the selling points is I have a good relationship with all the agents that show units and have access to lots for customers due to their marketing and refrerrals...If I gave those key people less of a split they would not be my friends and I could not say this.

Feb 12, 2013 09:07 PM #85
Rainmaker
3,053,541
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

The reality is that Buyers search for properies on the Internet, and instruct their agent what to show them.  If the agent refuses - they simply go on to another agent.  Co-Brokes are specifically NOT included in the Zillow type internet searches, so the Buyer has no idea of the co-broke.

Jul 13, 2015 04:01 AM #86
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