Straight
talk on real estate commission splits
Did you know
that how your agent divides the commission that you pay to sell your home can
hurt you and you might never know it?
Let’s face it a 6% commission is a lot of money. It is customary in the Raleigh/Durham greater
Triangle real estate market that the commission you pay as a seller to sell
your home is divided between listing agents and buyer’s agents. Many times the split is a simple 50/50 split,
3% to the buyer side and 3% to the listing side. After all without a buyer
there would be no sale and certainly no commission. Other times it isn't a
simple split; and that’s where you a seller can be hurt.
Agents are
required to disclose to sellers how the seller paid commission will be split,
but disclosure as we all know doesn't always mean explanation with respect to
consequences. For example let’s say the
a couple lists their home for sale; and let’s suppose that the sale of their home
is going to be a short sale, the seller owes more on their mortgage than is
supported by current market conditions. Their agent takes the listing, knowing
and disclosing the short sale and he markets the property in multiple listing
with a 2.5% commission payout. He is
retaining 3.5% because he’s going to have to work hard. His listing agreement notes the commissions
split but the agent doesn't explain the consequences of the split to the seller.
The listing
agent doesn't explain to his clients that although they aren't “supposed to consider” commission payouts when searching multiple listing, buyer agents are
only human and to expect them not to consider payment for work is naïve. So many times when competing with a 3% paid
commission against 2.5% or 2.4% commission paid, a buyer agent might be
overlook the properties paying less. In the case of the sellers mentioned above
with their short sale perhaps this was the case. The property was aggressively priced but only
after a series of price drops but still it languished on market. So long that the
bank began foreclosure proceedings because the owners had stopped paying their
mortgage.
Ultimately
the home did sell and close but it did so after about six months. Perhaps the listing agent could have
expedited the sale of the home; which he is required to do, had he explained
the consequences of his actions with respect to commissions paid. Did he?
I doubt it because why would any seller risk foreclosure when they could
avoid such drastic measures.
My advice to
sellers and buyers alike, ask questions.
Ask your agent if how they divide YOUR money is going to hurt you or
benefit you. You have a right to know.
