Your Questions Answered
At Ashlar, I firmly b that an educated home buyer or seller is best equipped to make their own decisions. That’s why I take time out of my day each and every day to answer someone’s real estate question. And, when I think the answer can be useful to you as well, I share it here. So without further ado:
Free isn’t quite the right way to describe it.
Basically, on the listing agreement between the Home Owner and the Listing Brokerage, there are two parts concerning compensation to the broker:
Compensation to Listing Broker
Cooperation and Compensation to Other Brokers
Basically, let’s say Sally is selling a $400,000 Home. The agreement is 5.75% total compensation with 2.5% offered to cooperating brokerages (aka Buyers Brokerage / Agent).
So with this arrangement, whoever brings the buyer gets 2.5% of $10,000 and the listing brokerage gets 3.25% (13,000). If the listing brokerage also represents the buyer then they get both sides.
There’s a lot of additional details and finetuning you can do in there with specific types of representation, but that’s the gist of it.
It’s also while many “Go It Aloners” absolutely misunderstand commission’s structure in a transaction. They think they are saving the seller money and thus can negotiate lower because the “Buyers Agent” commission would go back to the seller, but that is not how it works.
The Listing Agent would quite likely keep both unless there are some extremely specific circumstances met. And buyer “not having an agent” is not one of those criteria.
Here’s the mantra: A Buyer Has No Control Over Commission In A Listing Agreement.