Real Estate Commissions 101

[Bryant Tutas]

Hi folks. I read a recent featured post that was about a buyer’s agent asking the listing agent to increase the co-broke prior to showing the property to the buyer. There were over 200 comments and with the exception of a very small handful the comments ranged from being appalled, to calling the buyer’s agent names, to how unethical it was, to even being illegal!

It saddens me to see so many agents that have no clue how commissions work and what is and is not an ethics violation. I blame their Brokers for not educating their agents.

So.....in order to do my small part to help educate agents here are some commission facts.

By the way, if you disagree with any of these facts please post the state law or ethic that supports your position. I fully understand that State laws vary. However the REALTOR(R) Code of Ethics applies to all REALTORS(R). Remember, not all licensees are bound by our CoE.

Real Estate Commissions 101

1. ALL Commissions are negotiable.

2. All Commission agreements are between the Broker and the customer/ client.

   1. If you are signing listing agreements and/or Buyer Broker Agreement without the authority to do so, the agreement may very well be unenforceable.

3. There is no 50/50 split rule.

4. The co-broke offered in the MLS is an incentive for Buyer agents to show and sell the property.

   1. You are free to charge your buyer whatever you want. You do not have to be at the mercy of listing brokers. But if you don’t know how to get paid then quit whining about how low the co-broke is. It was YOUR decision to accept it as your full compensation.

5. As a listing broker your commission can be paid as a percentage, as a set fee or both.

   1. Commission can be paid before listing, at time of listing, during the listing, before closing, at closing, after closing or any combination thereof.

6. You can charge your customer/client as much as you want as long as they are agreeable. There are no limits.

7. If you collect commission from more than one party it must be disclosed.

8. A real estate transaction does not have to be completed to receive a commission.

9. In most cases you cannot sue the seller for your co-broke commission.

10. There is no part of the CoE or law that requires us to show property offering a co-broke we are not willing to accept. That is a myth.

    1. What the CoE does require us to do is to discuss commission and what we expect to be paid with our Buyers PRIOR to going to work. If you don’t then yes you need to go show that property offering you a $1 co-broke.

11. If you say commission doesn’t matter then you are delusional and technically unemployed.

I hope this helps to get you really thinking about your business and how YOU are in charge on your own compensation. Quit relying on others to get you paid. What say you?