This post originally appeared on Burt M. Polson's Real Estate Journal and is republished with permission. Find out how to syndicate your content with theBrokerList.
In no other industry I am aware are two competing professionals representing two competing parties brought together for several weeks under a contract working together in the ultimate exchange of a product.
In a real estate transaction, all parties must go into the transaction with a team mentality, a win-win spirit and a sharing of the work.
Will you split your commission with me?
Transactions involving selling real estate are not always clear when it comes to commissions. Participants in the same multiple-listing service (MLS) are bound by rules regarding the aspect of commission. However, without the MLS, brokers need a written commitment up front between each other.
I leased a restaurant where I represented both the landlord and the tenant. This is called a dual-agency and is allowed provided it is disclosed to both parties. The tenant had an agent friend, who I never met, review the lease before signing. The agent called me, asked a couple of questions and then requested half of the commission.
I am excited to share my commission when another broker brings a ready, willing and able prospect to the table, shares in the negotiations and the work. But, in this case all the work was completed.
I am working on your behalf.
A seller and buyer can each have their own broker. Each broker has a fiduciary duty in representing their clients’ best interest. A level of trust is created–the highest level of all types of these relationships.
A prospective buyer asked how do they get their own broker? I told him to interview two or three who focuses on the type and price of property he is considering or ask an acquaintance who they used and if they liked him.
A broker representing a buyer does not cost anything to the buyer because this broker receives their commission from the broker who listed the property. A listing broker will share or split their commission from the seller with the broker who brings a ready willing and able buyer. It is important for the buyer’s broker to be the first point of contact not the buyer.
Broker vs. agent
An agent is someone who has completed the basic education requirements and passed the salesperson exam. A licensed salesperson can represent buyers and sellers or landlords and tenants in real estate transactions provided he is working under a broker.
A broker is someone who has completed additional advanced education requirements, passed the broker exam and has had experience in the field. A broker can handle transactions on their own and collect a commission.
An agent is a representative of the broker and performs all duties on behalf of their broker. The commission is paid to the broker who then gives the agent her share called a split usually between 50 to 90 percent of the total commission.
Which should you use? Either an agent or a broker, just find one who is knowledgeable, experienced and a good negotiator you feel comfortable with.
SWAT team photo--Attribution 2.0 Generic (CC BY 2.0) by Oregon Department of Transportation