Whether it is a “sin,” a “right,” or something in between, the practice of uneven commissions between listing brokers and buyer-side brokers appears to be on the rise, according to an informal Inman News survey. The latest tally of survey results found 83 percent of respondents saw “a growing practice of uneven commission splits between listing agents and buyer’s agents.”
But survey participants expressed wildly different views on whether this practice is fair and ethical, and whether uneven splits should favor the listing side or the buyer side.
“I believe (the practice of uneven commission splits) is a sin and that we are heading down a very scary road,” stated Robert Levering, a Realtor for Coldwell Banker Bellbrook Realty in Long Island, N.Y. “Why can’t we work together as professionals and learn to validate our profession and the services we provide? Through weak skills and lack of proper training this industry continues to self-destruct.”
Michael McGee of Coldwell Banker Burnet Realty in Minneapolis, Minn., wrote, “Uneven splits are an unfair and borderline unethical practice, the cause of which can only be attributed to greed on the part of the listing agent. In a business that relies on cooperation an uneven split is counter-productive.”
Other respondents said the practice could lead buyer-side agents to steer their clients clear of properties that lack adequate commissions and could cause resentment and even lead to retaliation in future transactions. Some survey participants also called upon listing agents to be up-front in disclosing offerings of uneven commissions.
Elaine Wagner of RE/MAX Preferred Partners in Edwardsville, Ill., suggested a possible motive for uneven commission splits with scant buyer-side commissions: “Most selling agents advertise the lower buyer’s agent side so that they can double-dip the property because they know it won’t be shown at such a low rate,” she said.
But Jim Lee, a Realtor for Realty Executives Associates in Knoxville, Tenn., wrote, “Listing companies have the right to pay buyer’s agents whatever they choose. Buyer’s agents have the right to charge their buyer clients whatever they choose.”
And Charles Frank of Prudential Fox & Roach Realtors in Hamilton Square, N.J., wrote, “It’s OK, so long as it’s disclosed in writing on a form signed by the seller and listed in (the MLS) as an uneven split.”
When the commission is unevenly divided between the listing side and the buyer side, which side deserves more? That’s another matter for debate.
Anne Alsup of Coldwell Banker Residential Real Estate in Longwood, Fla., typically charges a 6.5 percent brokerage fee to sellers. She keeps 3.5 percent for her services and passes along 3 percent to the buy-side broker.
“Many customers are still willing to pay for exceptional service,” she said.
Steve Yingling of Keller Williams Realty Greater Cleveland in Cleveland, Ohio, believes listing agents “deserve a larger share of the total commission” because “without listings there is no market. If you do your job in marketing the listing you will traditionally have more money out of pocket than simply driving around a buyer.”
Randy Selby of Selby Team Realty in Wildcandle Spring, Texas, likewise said listing agents “should receive a larger share.”
Not so for Jay Goscinski of GMAC Real Estate The Kee Group in Warren, Mich.
“I often offer an uneven split. More often than not I offer 4 percent to the buyer’s agent,” he wrote.
Other respondents believed uneven splits should be in favor of the buyer’s agents.
Theodore Theologis of RE/MAX Allegiance in Alexandria, Va., wrote: “If the listing agent is willing to cut their commission, they should also eat the loss. The buyer agent’s job is not an easy one. Especially in this market the buyer’s agent works much more than the listing agent. If a listing agent is not offering full commission to the buyer agents, they are doing a disservice to their client.”
Catherine McKendry of Weichert Realtor in Turnersville, N.J., also believes the buyer-side should not play second fiddle.
“It should be the listing agent who takes the hit on reduced commissions. As the buyer’s agent I had no say in the commission and I feel I am due my full 3 percent based on a 6 percent commission rate,” she wrote.
Mike Wertz also agreed that buyer-side agents shouldn’t be handed a lower commission because the listing agent was willing to take a lower amount.
“If a listing agent is going to discount their commission, they should do so only to their side. It is not the buyer’s agent’s fault that the listing agent was not strong enough to charge a full commission,” he wrote.
Opinions may vary on the use of uneven commissions, but the practice is not going to go away, said Matthew McKee of Realty Executives in Orlando, Fla.
“It is the nature of the current state of our business. We must adapt and be flexible and make adjustments to areas such as commission on an as-needed basis,” he said.