Tony and Suzanne Marriott's Phoenix Arizona Real Estate Blog

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Is It Really A 50/50 Split? How Can You Possibly Know?

I read a post by Greg Nino this morning that I re-blogged, and the comments on his post sparked this post.

 

First, let me state unequivocally, I have never been a card carrying member of the 50/50 club.

 

There is no "magic percentage" carved in stone that agents (Listing and Selling) should "expect" or feel entitled to.

 

The total commission is negotiable between the Seller and the Listing Broker.

 

The split of the total commission between Listing Broker and Buyer Broker is determined by the Listing Broker, and agreed to in writing by the Seller - at least here in Arizona it is.

 

Nobody other than the Seller and the Listing Broker KNOW what the total commission is until the Settlement Statement appears - and perhaps - since TRID - the Seller's side is not disclosed to the Buyer and vice versa - anyone who knows for sure please feel free to chime in!

 

Back in the early days of Short Sales, the rules of our MLS PROHIBITED a Listing Broker asking the Buyer's Broker to accept a lower commission than the amount offered in the MLS Listing (if the lenders "crammed down" the total commission paid), but put no such restriction on a Listing Broker voluntarily INCREASING the amount of commission paid to a Buyer's Broker once the commission amount approved by the Short Sale Seller's lender(s) was known.

 

This led, in my opinion, to a prudent course of action on the part of some of the Short Sale Listing Brokers, evaluating the amount they "believed" would be approved, and offering 50% of that amount - which - many Buyer Agents were unhappy with.

 

We were one such Short Sale Listing Broker, although I will tell you that we also accepted, without question, the offered co-broke on listings our clients were purchasing, and although we always had them in a Buyer Broker Agreement with us, never charged them "additional commission" to "make up the difference".

 

The above scenario led, in my opinion, to the "lower" co-brokes being offered in the MLS for Traditional Listings.

 

Sellers knew that listings routinely sold, even with the "lower" amount of co-broke, and we all hear from sources in the industry about the continuing downward pressure on total commissions.

 

Let's set all of the above aside for the sake of the 50/50 discussion.

 

It appears that many commenters on Greg's post always "offered" or "expected" 50% of the total commission.  I've seen these comments elsewhere on other posts as well. I'm not saying their opinions are "right" or "wrong" - just making an observation.

 

What nobody addressed is that even if the total commission is split 50/50 between Listing Broker and Buyer's Broker, it's highly unlikely that the Listing Agent and the Buyer Agent each receive the same amount of commission to them!

 

That's because different brokerages have different models, and take varying "slices" of the commission paid to the brokerage before paying the remainder to the agent.

 

It's entirely conceivable that from a $10,000 gross commission to a brokerage, that the agent at that brokerage might receive anywhere from $5,000 up to $10,000 (less a transaction fee), while the agent on the other side of the transaction receives anywhere from $5,000 up to $10,000 (less a transaction fee).

 

The likelihood that those two amounts are an exact match is "slim to none".

 

So, how is that ever a 50/50 split?

 

What say you??

 

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About the Authors - Updated 2018

If you are considering a Traditional or Short Sale of your home in Phoenix, Scottsdale or any location in Maricopa County Arizona, you owe it to yourself to talk with the BVO Luxury Group @ Keller Williams Arizona Realty to determine whether Tony and Suzanne Marriott are the best real estate Brokers in the Phoenix and Scottsdale metropolitan area to help you with the Successful Sale of your home.

Tony and Suzanne have personally Listed, Sold and Closed more than a hundred Short Sales with the highest list to close rate in the Phoenix Metro Area!

Tony Marriott - Chief Operating Officer - BVO Luxury Group @ Keller Williams Arizona Realty

Suzanne Marriott - Chief Learning Officer - BVO Luxury Group @ Keller Williams Arizona Realty

Associate Brokers, REALTORS
BVO Luxury Group
Keller Williams Arizona Realty

Comments

Thart slice of the pie can be different, I am seeing with the market being hot that some agents are changing the way a buyer agent gets paid.

Posted by Will Hamm, "Where There's a Will, There's a Way!" (Hamm Homes) about 3 years ago

When I see 50/50 split listed I feel leary because I wonder what is actually being split. Great point with TRID, I hope someone replies about it. This is a a thought provoking post...

Posted by Erica Love (Brokers Guild Cherry Creek) about 3 years ago

Commissions... it's complicated.  

Posted by Carol Williams, Retired Agent / Broker / Property Manager (Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals.) about 3 years ago

The split is between brokerages. What happens in the separate offices May in fact be less. 

Posted by Gary L. Waters Broker Associate, Bucci Realty, Fifteen Years Experience in Brevard County (Bucci Realty, Inc.) about 3 years ago

I agree that what an agent gets from the co-broke will vary depending upon the split with the broker/age. I do not feel that was the point of Greg Nino post or that of Karen Fiddler, Broker/Owner post I just read on this subject. 

Are we splitting hairs on the topic now?  Pardon my pun, I could not help myself. The point (not AR points ... the point to the post) is about what is "split" offered in the co-broke to the cooperating agent via the listing agreement. 

Posted by Kathleen Daniels, San Jose Homes for Sale-Probate & Trust Specialist (KD Realty - 408.972.1822) about 3 years ago

First, I always offer 50/50. I enjoy the listing side the best and I have contemplated experimenting with giving the buyer side +.5% more as an incentive for buyer's agents to see if a home would sell quicker with that offer. I have not tried it yet.

Second, it's a free market. Just as each agent on both sides, even with a 50/50 split, may net a different amounts because they voluntarily agreed to work for different percentages with their respective brokers. When a buyer's agent sees the commission offered on the MLS for a particular home, agrees to show it, and sells it, they knew what they would receive from the outset. It is actually irreleveant if it is a 50/50 split. It could be they are receiving less than the listing agent, or possibly even more. The point is they knew in advance and could elect not to show the home for that offered commission (although ethically if their client wants to see that home, the agent is obligated to show it to them and keep their client's best interest in mind). 

Posted by Scott Pope, You Can't Live Without Water™ (Nautical Properties) about 3 years ago

Will Hamm We're seeing it too...

Posted by Tony and Suzanne Marriott, Associate Brokers, Serving Scottsdale, Phoenix and Maricopa County AZ (BVO Luxury Group @ Keller Williams Arizona Realty) about 3 years ago

Erica Love Indeed - 50/50 of what?

Posted by Tony and Suzanne Marriott, Associate Brokers, Serving Scottsdale, Phoenix and Maricopa County AZ (BVO Luxury Group @ Keller Williams Arizona Realty) about 3 years ago

It is Carol Williams !

Posted by Tony and Suzanne Marriott, Associate Brokers, Serving Scottsdale, Phoenix and Maricopa County AZ (BVO Luxury Group @ Keller Williams Arizona Realty) about 3 years ago

Agreed Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC 

Posted by Tony and Suzanne Marriott, Associate Brokers, Serving Scottsdale, Phoenix and Maricopa County AZ (BVO Luxury Group @ Keller Williams Arizona Realty) about 3 years ago

Kathleen Daniels - Not splitting hairs on the topic (what would be the point ?) - but I find it "interesting" that so many focus on 50/50 when in reality it rarely, if ever, is for the agents involved...

Posted by Tony and Suzanne Marriott, Associate Brokers, Serving Scottsdale, Phoenix and Maricopa County AZ (BVO Luxury Group @ Keller Williams Arizona Realty) about 3 years ago

Scott Pope " It is actually irreleveant if it is a 50/50 split. It could be they are receiving less than the listing agent, or possibly even more. " Absolutely agree!

Posted by Tony and Suzanne Marriott, Associate Brokers, Serving Scottsdale, Phoenix and Maricopa County AZ (BVO Luxury Group @ Keller Williams Arizona Realty) about 3 years ago

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