Industry NewsOpinion

Secret rebates point to larger commission structure problems

Perspective: Why the split compensation system should be scrapped
Published on Mar 21, 2006

A secretive and controversial new real estate business model has cost one real estate agent his job and muddied the already blackened waters that swirl around how real estate commissions are split between the sell side and buy side of most transactions. The business model and the debate and angst over it point to a serious structural problem in the industry and support the argument that the split compensation system should be scrapped altogether. The agent, Ron Patterson, was terminated from his affiliation with Long & Foster Realtors after he set up Realty Legacy, a network of real estate agents who agree to offer commission rebates to buyers -- and, interestingly, sellers -- secretly and separately from the settlement process. Long & Foster rightly declined to discuss why it cut Patterson loose from the company, yet the timing of events suggests the severance wasn't mere coincidence. Patterson's business model appears dicey since monies paid through settlement must be disclo...

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