Good question, the only problem with not disclosing is that the unethical agents will pay less commission to the buyers agent.  Disclosing the commission is simply so we know how much it is and so that it can not be changed

Nelva,

I am for disclosing the selling agents commission as we do for the buyer (Co-broke). In my area some selling agents are doing this. It really pisses me off when we don't split 50/50. They don't realize that a lot of time the seller leaves the listing agreement out in the open for others to look at. I guess that the selling agent figures that they are deserving of the other 1% or 2% because of their advertising. But carting around a buyer looking at homes isn't cheap either! Good Post!

Regards,

Tony DeLuke, ABR, GRI in Ohio

The higher commission gives more agents an incentive to include that home in what is shown to the buyer. I feel this is totally appropriate to give an added incentive to agents. I don't see the harm in it. Builders will often offer a 5% or 6% or sometimes even 7% commission to a Buyers Agent that closes a deal. I have seen several that will even throw  in a week long paradise vacation to motivate sales in a community.  In my opinion a good practice is to split the bonus with the buyer, or simply give it all to them. You can bet he/she will be telling ALL their friends what a great agent you are. Good luck!

Betina

Hi Nelya,

I have only sold one of those homes.  The buyer chose the home on their own and I was fortunate to receive a higher commission.

Our NC offer to purchase/contracts are being have been revised.  All additional compensation (gifts, incentives, bonus, rebate) are required by law to be disclosed in a timely manner.

Raleigh Realtor – Pamela St. Peter

Originally, we used a contract that disclosed the commission for the selling agent and for the listing agent on the sales contract.  The purpose was twofold - it provided the title company with commission information and it clearly disclosed the commission paid to the brokerage thereby providing some protection against commission disputes.  However, it was widely criticized and we ultimately revised the sales contract to change this provision to reflect the source of the commission as opposed to actual amount.  The criticism stemmed from the fact that the disclosure of the commission structure resulted in purchasers seeking price reductions tied to the reduction in either the listing broker's commission or the selling broker's commission.

As to the purchaser, it is our policy to include in the buyer's agency agreement the source of the commission and a general range for the commission.  It is our policy to disclose the commission on any transaction where we are paid a commission outside the normal commission range, which to me is anything above 3.25%.  It is also our policy to disclose any progressive commission program, agent bonus or gift supplied in connection with the sale.  In addition to our disclosure, the commission paid to us is included on the settlement statement.

The disclosure requirement presents a dilemma.  If you disclose your commission, it encourages negotiation of price to include a reduction in the selling agent's commission.  Some purchasers don't understand the time and other costs associated with showing homes.  Just because their search was easy doesn't mean that all transactions are that way.  On the other hand, where the commission is excessive (or at least outside the normal commission range), it creates the inference that you are "pushing" the property based solely on commission and are not providing objective advice.  I think our disclosure policy adequately addresses both concerns.

The compensation agreement is between the parties listed on the contract.  If it is the Seller, then the Seller and his broker.  If it is the buyer, then the buyer and his broker.  Your brokerage is entiltled to the broker compensation listed in the mls or whatever your contract with your client states it is.  It's really very simple. Ethically, this should be discussed as apples and/or oranges, not real monies.

It's a Good Life!

Fran