Uneven Commission Splits
Looking for some input as to what other agents feelings are regarding uneven commission splits. I recently had a listing agreement with a 6% commission and advertised at 2.5% split on MLS. It is approved at 6% and sent HUD over to buyer and agent is making a fuss because he feels this is unfair. Mind you its only a 25k property but just curious as what other agents opinions are as he is claiming that I am being unethical.
Replies to This Discussion
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Permalink Reply by Eric Mieles on
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The answer is yes. I would accept it because I understand in a short sale the lender may reduce commissions.
In regards to value to the client I only stated it to show some of the ways a great buyer’s agent brings value to the deal and HELPS get it to closing.
Also I’m not sure if everyone really read all the posts but I have stated over and over I had no recourse nor did I "Grouse" about it here on this board. I'm not "Bitchin, moaning" or any of the other things others seem to believe I’m doing. I simple used what recently happened to me this week as an example and felt it was relevant to the topic.
It's amazing that some of you have such a Me vs. You mentality. I have maintained a good standing on this board and recently have really looked at what we do from the outside in and to tell you the truth......A lot of it bothers me. So I simply choose to not follow the status quo, middle of the road, herd mentality and speak about issues that I feel need to be addressed.
I know when going against what the "Norm" is I will get some slack or strong opinions but what I can't understand is why some automatically get so nasty, mad, and quite frankly ugly in their responses.
I have been on the site for a while now. I read more than I post and when I do it's because I feel I may have some value to add. I listen more than I speak and sometimes even ask myself if this is a battle I want to choose. It's funny because I'm really not even a buyer’s agent and have stated over and over I'm one of you guys but after this week’s closing I noticed something and felt a different way. That's all!!
And for Ms. Sheyenne, SHAME on you young lady for even writing this but I will gladly reprint it so that everyone can see the problem sometime in our industry. "The LISTING belongs to the LISTING agent, NOT buyer agent. If it was listed that way in the MLS, you had a choice at THAT time to either make an offer or PASS it up"
Really Shyenne???
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Permalink Reply by Sheyenne Schultz on
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Eric I don't know you and I've never met you. Feel free to reprint my ENTIRE POST if you want to. If I didn't want people to read it, I wouldn't POST IT. And frankly...I've read thru everyone's posts on here and there's about 10 other agents on here stating the same thing that I did...and that is that we ALL are forced to ABIDE by what is posted on the MLS. This is what the MLS is for... to publicly STATE the commission to the OTHER SIDE. So why do YOU feel that later on when the approval letter comes in ...just.because YOU don't like it...that the other agent should GIVE u more or CHANGE it. ????Heck..I DO agree with you. I would LUV IT if ALL agents on listing side would give me EXACTLY what they are making..short sale listing or not, but guess what? It ISN'T always that way..and yes it sucks..but if it CLEARLY said on MLS what MY SIDE OF THE COMMISSION would be, then I need to remember I am working for my client in order to get a house...it's not about ME. You are right in that EVERYONE here is entitled to their opinion...YOU, ME...and everyone else. Frankly, what the heck are you picking on ME for? My comments on my post were NOT directed at you, but were solely on the basis of giving my opinion to ALL OF US AGENTS reading our posts on here..and in giving my opinion to the person who posted this discussion in the first case. If you RE READ his post...he is ASKING for everyone's opinion? Why on god's earth...would u EVER think I'm talking about YOU??? It's just a post..nothing more, nothing less...stating that any agent who reads it should remember that if a commission was posted on the mls...then why do we feel we have the right to as you say" bitch and moan" about it when we find out the other agent is getting more commission than we AGREED to in the beginning? Why does ANYONE on the buying side FEEL this way? I deal with tons of BUYERS too and YES, I'm on the buying side many times also, and YES, I see approval letters where the listing agent is NOT giving me ANY MORE than they agreed to in the beginning on the mls..and you know what? Big Deal? I agreed to it..in the beginning and it IS his/her decision on whether to GIVE me any more money. Oh..and one more thing... let me reprint this again: "The LISTING belongs to the LISTING agent, NOT buyer agent. If it was listed that way in the MLS, you had a choice at THAT time to either make an offer or PASS it up" And NO ERIC...this isn't directed at YOU!
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Permalink Reply by Mary Ellen Galaris on
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It's interesting to me that even within our industry there are so many 'experts'. My opinion, Sheyenne, your spot on target with both of your posts. Buyer Agency has been in place now for many years and yet many agents still think the listing agency is responsible for generating the buying agency's commission. Perhaps a refresher course in Buyer Agency is needed? [Just as I have a conference with a seller and discuss the listing contract---including the marketing fee (and how I earn it), I also have a conference with a buyer to discuss the buyer contract---including what they will be responsible to pay me for my expertise as they seek, investigate, negotiate and purchase a property.]
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If the MLS states 2.5% then buyer agent needs to abide by this...NOTHING MORE< NOTHING LESS. I don't see where the argument is..... Frankly, when we peruse the MLS for properties for our buyers....we look at what the compensation is..right? And it is usually 2.5%, sometimes 3%, or more.... We ABIDE by that when ALL these other listings say what compensation is...so why is it that in a short sale situation...once buyer side finds out compensation was 6% and 2.5% was given to buyer agent...they complain? The LISTING belongs to the LISTING agent, NOT buyer agent. If it was listed that way in the MLS, you had a choice at THAT time to either make an offer or PASS it up. Why do you consider it UNFAIR once you find out, listing agent is getting 3.5% and you're getting 2.5%, once you find out bank gave 6%. This is done ALL the time in REO listings. I've seen REO listing agent take 3.5% and give ON THE MLS...2.5%. Once commish instructions were given by escrow to sign, I see what listing side is getting....and you know what? Sometimes, it is 50/50 and sometimes listing side is giving buying side 3.5% and THEY are taking 2.5%...do you think I feel bad and give the listing side MORE of my commission? NO! Or if they gave me 2.5% and I see they are getting 3.5%...do I complain? NO!
So WHY do buyer agents in a short sale COMPLAIN if they see MORE commission given by the lender, if they ALREADY AGREED to the 2.5% in the mls? Frankly, the buyer agent is NOT doing ANY of the work...aside from buyer agent duties. If commish was published on MLS a certain way and buyer agent KNEW this going in, then they shouldn't give a rat's a__ on what the listing agent is making. PERIOD! I'm sick of buyer agents being "BUTT -IN-SKIS" on short sale listings that require the work of the listing agent. If it weren't for the person NEGOTIATING it...NO ONE would get paid. If , however, it was published a certain way on mls and THEN the listing agent CHANGED it once approval letter came in...then THIS IS NOT FAIR! I've seen agents do this and it is greedy and unethical. If they published 50/50 equal to both sides...then they should stay that way. Changing something in the middle of a transaction is unethical and will come back to bite you later.
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Permalink Reply by Thom Colby CA Brkr 888-391-5245 on
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It is always interesting to me that questions pertaining to commission get the most responses. Also, the answers are the most passionate which just shows how passionate we are about our profession.
Our MLS Rules with regard to commisisons, subject to short sale approval, are as follows and I suspect they are the same across the country;
Lender Approval Listings. Compensation offered through the MLS to cooperating brokers on listings which require lender approval (commonly referred to as “short sale” listings) is for the amount published therein unless the listing broker indicates on the MLS the following: (a) the fact that the sale and gross commission are subject to lender approval; and (b) the amount or method by which the compensation offered through the MLS will be reduced if the lender reduces the gross commission. This section does not allow an additional reduction from the commission offered for items such as a short sale negotiator fee or other administrative costs of the transaction. Any reductions from the commission offered for such items should be factored in as a reduced amount the listing broker initially offers to a cooperating broker and may not be made a condition of the offer.
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Permalink Reply by Bryant Tutas on
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OK guys back off on the passion. Keep the conversation civil or.......
......anyway, opinions aside. Commissions are 100% negotiable between the listing broker and the seller. Once they have agreed to total amount that the selling is paying their broker they then decide how much to offer selling brokers as the co-broke. this can be ANY amount that they agree on over $1.
The co-broke can be negotiated prior to acceptance. Acceptance is prior to submitting an offer. The buyers agent cannot use the purchase offer as a way to negotiate the co-broke. The reason we can ask for this change is that it may affect the buyer based on their buyers broker agreement. For example: the buyer may have agreed in the BBA to a certain percentage of compensation to be offset by the co-broke. It is to the buyer's advantage to have the seller pay this amount.
So first off, if you are working as buyer's rep then why not just sort out your own compensation? Why are you relying on listing brokers to get you paid?
Now you can't use the purchase contract to get paid but the buyer can. The buyer can simply ask the seller to contribute to their closing costs. Part of their closings costs can be you compensation. So if you were a smart buyers agent you could easily make an extra 1-3% on EVERY transaction. Not to mention the buyer could also pay you a fee in advance. Buyers agent have the ability to earn unlimited commission on each transaction.
Listing brokers could to until short sale came about. Now we are limited in some respects. Of course there are still many ways to get paid more than 6%. But that's fodder for another article.
I've been a broker for 15 years and i have rarely split commissions 50/50. But that doesn't mane my co-broke are necessarily a lessor amount. Before short sales I charged an 8% commission and the co-broke was 3 and sometimes 3.5%. I made 5-4.5%. And still agents complained that I didn't split 50/50!!!
Now that most of my business is short sales i offer 2.75-2.5% But it's guaranteed. No matter how much I receive the co-broker stays the same. It's fair. But I still get agents that complain. Funny how they don;t complain when I make less. Not once have I had a buyers agent offer to split their commission 50/50 with me. They don't split their transaction fee with me either. They also don't offer to pay 505 of the referral fee I have to pay.
50/50 is a myth. Commission are paid out solely based on the co-broker offered in the MLS. Sadly our MLSs have given us the ability to reduce the co-broke based on what the lender will pay. The 50/50 share on the reduction of commission did our industry a major disservice. It enables listing brokers to get lazy when it comes to negotiating with lenders. It foolishly makes the lender a part of our listing agreements and offers of compensation. It has effectively destroyed the integrity of our MLS.
My suggestion is for agents to learn how to get paid. Quit relying on other agents and lenders for you compensation. Until you learn how to get paid you will continue to bicker about compensation.
Get educated.
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This could go on forever . . . It does not matter whether we're in the short-sale business (which is probably the lion share of the business anyway!) or traditional real estate. Our fiduciary responsibility is to our client, and our client is the person that we represent and (hopefully) have a written contract spelling out the mutual obligations of the parties in the contract. Bottom line? Earn your commission from your client and stop expecting the other side to take care of you! Again, perhaps it's time to go back to the classroom and really learn the basics of Buyer Agency.
I've been a full-time realtor for 25 years and this is such a waste of effort. Use your efforts and energy to hone your skills and never stop getting educated. No bad feelings here, let's just work at the career we've chosen and prepare for more changes to come.
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Bryant - all good stuf except: "Not to mention the buyer could also pay you a fee in advance" - that's not legal in the State of California - Broker's and Agents cannot collect a fee in advance.
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Hi Thom. Are you saying you don't have flat fee listing companies in your area? Is it really illegal for a buyer to or seller to pay their agent for services rendered i.e. marketing, providing property searches etc...
I only ask because many in my state also believe it to be illegal to collect advanced fees. Especially with short sales when the reality is it's not. It's mostly related to how you collect, what it's for, how you disclose it and whether or not it's a regular part of your business.
Maybe advance fee is the wrong terminology. But how about payment at time of listing (seller or BBA) for services rendered?
So what does the CA law state?
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Hi Byant -
Out of pocket expenses such as advertising etc. are not an issue.
Limited Service Brokerages are not an issue when the fees are collected as each task is completed.
To clarify this is the clarificatio of CA law and became effective January 2011. It was initially written to target Loan Mods, but expanded to include all activities that require a DRE license.
http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_1751-1800/ab_1762_b...
AB 1762 (Hayashi) Advance Fee Clarification
In 2009, SB 94 (Calderon) was signed into law to prohibit "cash up front" loan modification contracts. In 2009 C.A.R. negotiated amendments with the author and DRE to clarify the definition of an advance fee in other sorts of transactions and to ensure licensees’ ability to engage in a fee for service contract. Even with those amendments, the current statute is confusing. C.A.R.-sponsored AB 1762 clarifies the "advance fee" statute in order to make very clear that “unbundled” fees or “fee for service” contracts do not trigger the advance fee requirements. This new law goes into effect Jan. 1, 2011.
This new law:
. Defines an "advance fee" as a fee, regardless of its form, which is claimed, demanded, charged, received, or collected by a licensee for services requiring a license, or for a listing, as defined, before fully completing the service the licensee contracted to perform or represented would be performed, with certain exceptions.
. States that neither an advance fee nor the services to be performed may be separated or divided into components for the purpose of avoiding the application of the Real Estate Law.
. Adds the following exclusions from being defined as an advance fee:A) A fee claimed, demanded, charged, received, or collected for the purpose of advertising the sale, lease, or exchange of real estate, or of a business opportunity, in a newspaper of general circulation, any other written publication, or through electronic media comparable to any type of written publication, provided that the electronic media or the publication is not under the control or ownership of the broker.
B) A fee earned for a specific service under a "limited service" contract. A “limited services contract” is a written agreement for real estate services, which are promoted, advertised, or presented as stand-alone services, to be performed on a task-by-task basis, and for which compensation is received as each separate, contracted-for task is completed. All services performed must be stated in B & P Section 10131 subdivisions (a), (b), or (c).. States that a contract between a real estate broker and a principal that requires payment of a commission to the broker after the contract is fully performed does not represent an agreement for an advance fee;
. States that the changes made by the bill are intended to supersede the changes made to B &P Section 10026 by SB 94 (Calderon), Chapter 630, Statutes of 2009, but are not otherwise intended to alter the obligations or liability of any person pursuant to SB 94.Background
Business and Professions Code Section 10026 was enacted in 1955 and the last change to this section was requested by CAR in 2009.
SB 94 (Calderon) in 2009 added language stating that neither an advance fee, nor the services to be performed pursuant to an advance fee contract may be separated or divided into components for purposes of avoiding B & P Section 10026 and prohibited advance fee for loan modifications and forbearances.
The changes proposed by CAR were intended to ensure that two types of fee arrangements, where DRE licensees may currently enter without an advance fee agreement, are not interpreted as requiring advance fee agreements by DRE in the future. These two fee arrangements include: 1) entering into a limited services contract and 2) entering into a contract in which a commission would be earned by the licensee, after completion of the contract.
The limited services contracts covered by this bill are “a la carte arrangements” and are entered into when an individual might want some help from a DRE licensee in purchasing or selling a home or performing another real estate-related service, but does not wish to enter into a full-service contract with the licensee. A limited services contract allows the licensee to price the desired services on a piece-by-piece or task-by-task basis and to receive payment as each piece or task is completed.
AB 1762, effective 1/1/2011. Repealed and added B & P Section 10026.
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Interesting Thom. Thanks for providing the law. I will read this more thoroughly later and come back with any questions.
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Permalink Reply by Mike Rosania on
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I am glad see so many passionate and informative opinions on this and glad that is an open forum to address these types of concerns. Obviously there are different point of views especially in regards to compensation. It really just got under my skin as the agent used words like unfair, unethical, greedy etc and I take a lot of pride in what I do. Many of the times I am controling the whole transaction as most buyers agents dont know or even care how the deal gets done, just that it does and all of my co-ops are very happy with what I do and how I conduct my business. The way this other agent came at me actually had me second guessing how I was doing things and I knew I was only obligated to pay what is advertised but also want to be fair. Needless to say I refuse to give him another penny and here is the kicker. He added a conveyancing fee and is not even showing up to closing. Whos greedy now?...
Thank you everyone for all the responses!!
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