You Should read this – even though you don’t want to.

Up until August 2024, in the vast majority of locations around the United States, the Seller of a property would agree to pay a commission to a real estate broker to list their property for sale. When the transaction closed, that listing broker would split the total commission earned with the broker who brought the buyer. As a Note, even though sales associates typically take listings and work with buyers, all commissions must be paid to the broker, who then compensates their agents according to their split arrangements.

That total commission, often 5 or 6%, usually got split at least 4 ways.

It can be a little confusing so let’s add in a few more
facts and break down how it used to work a little more.

• Brokers (or Brokerage Companies), not their agents, own the Listings and are the only ones that can be paid a commission by the seller or buyer.
• Sellers typically paid a commission to the listing broker and the listing broker would then split that commission with the buyer’s broker. The amount of the split was up to the seller to decide, though often aspect would not even be discussed with the seller and the listing broker would split the commission however they wanted – which more often than not, was 50/50 between the seller’s broker and the buyer’s broker.
• 93% of listings in active markets (primarily urban and suburban areas) are sold by a buyer’s agent. That is, they are not sold by the listing agent, they are sold by another agent, usually with another broker, that is working with the buyer. This can change in small and niche markets, but in average to large size markets it is usually around 93%.
• A “Listing Agent” is the Seller’s Agent and a “Selling Agent” is the Buyer’s Agent. The same designation goes for the respective brokers in a transaction (Listing Broker and Selling Broker).
• Sellers Typically paid a commission to the Listing Broker (Seller’s Broker), who would then split the commission with the Selling Broker (Buyer’s Broker) – Unless the Listing Broker found the buyer themselves (about 7% of the time in large markets).
• If one agent from a Brokerage listed the property and another agent from the same Brokerage found the buyer, that is an In-House Sale and the total commission would be paid to the Listing Broker, who would then split it with those agents.
• If the agent who took the listing also found the buyer, that would commonly be called a Double-Dip and the entire commission would be paid to the Listing Broker who would then split it with that one Agent based on their agreement with the Broker.

Because the majority of residential real estate state sales
involve different agents (and brokers) for the Seller and the Buyer, real
estate commissions are commonly referred to as having two “sides” – a Seller
Side and a Buyer Side – even though prior to August 2024, the Seller paid all of the commission to
their Broker (the Listing Broker) at closing. That is also why when a Listing
Agent also happened to find the buyer, they were often said to have “Double
Dipped” the Sale – they were getting paid on both “sides” of the commission.

By the way, the reason 93% of listings in active markets are
sold by another agent than the listing agent, is because of the multiplying
effect and power of the MLS (Multiple Listing Service). When you list your
property with a Broker who is a REALTOR® and member of the MLS, you are
effectively not only hiring them, but every other broker and agent in that MLS
and in any adjacent or overlapping MLS’s. That can easily be tens of thousands
of agents – all of whom would love to find a buyer for your home. That is the way it worked prior to August 2024, and it is still functionally how it works now, except that there are a few new rules.

The first change is that sellers are no longer required by MLS rules to offer some amount of commission to a Buyer’s Broker. Prior to the rules change, in Florida at least, a Seller could not list their property for sale in the MLS without offering at least $1 to a Buyer’s Broker, and now they can offer $0. So that rule changed the minimum requirement by one dollar.

The 2nd change is that the amount of compensation offered to the Buyer’s Broker can no longer be shown in the MLS. It can be shown anywhere else, just not in the MLS.

The 3rd change is that now Buyer’s Brokers must have an agreement with a buyer before they show a property that they intend to be compensated on if the buyer purchases it. It can be exclusive or non-exclusive, can cover only specific properties or any properties they show. An entire article could be written on this one topic so we won’t dwell on that here.

When many sellers list their home with an agent, they are often only concerned with what that single, solitary agent is going to do to “market” their home. They don’t even think about the real question they
should be asking that agent: What are they going to do to make those thousands of other agents, and their buyers, aware of your property and want to show and sell it.

Statistically, in a normal to active market, the agent you select will only have a 7% chance of selling your home themselves. You don’t want to put all your eggs in that little basket. Some agents actually brag
about how they sell a large percentage of their own listings, as if that were a good thing, and sellers usually think it is. To their own detriment.

The truth is, if an agent actually does sell a high percentage of their own listings (like 25% for example), they are usually doing it at the seller’s expense. They will probably tell you that they are able to accomplish this because of their amazing marketing program and all the buyers they have ‘lined up’ just waiting to buy the seller’s home.

What they are really doing, in most cases, is making the listing hard to find and difficult or impossible to show; so they can sand bag it until they manage to scrounge up a buyer themselves somewhere. This simply results in longer times on market and lower sales prices for the seller. These agents are capitalizing on a common seller misconception and turning it into more money for themselves, at the seller’s expense – all while bragging about doing it and leaving the sellers thinking they must be really special.

There are a variety of ways to market properties these days; almost all of which are completely different than from a couple of decades ago, and also different from what many sellers think is important. However, in this room full of marketing programs and advertising techniques is one gigantic,
50,000lb Gorilla. The King Kong of Real Estate Marketing, and one you can still only get by listing your property with a Realtor. That is the MLS.

The MLS is the Multiple Listing Service.

All Realtors put their listings in the MLS (unless it’s a pocket listing, and any other Realtor can show, sell and rent those listings. Realtors can set up searches for their buyers who will then receive automatic updates on new listings and price
changes, etc. for properties that meet their requirements.

Listings in the MLS also provide the data and photos for all
of the major real estate portals like Zillow, Realtor.com, Homes.com, etc., as well as for all of the tens of thousands of Broker and Agent Sites on the Web. This includes everybody from the big National companies like Redfin, along with national
franchises like RE/MAX, Coldwell Banker, Century 21, Keller Williams, Berkshire Hathaway, EXP, Compass and so on. Although Compass is arguably the king of the sandbaggers, lol. The MLS also provides all of the data to International real estate Sites around the World.

It all starts with the MLS, and what goes into the MLS is what goes out for the world to find and see. Obviously, if an agent takes bad photos, puts incorrect information into the MLS, or leaves it out entirely, it can have a hugely negative impact on the sales performance for that property.

There is another item impacting which properties Buyer’s want to see, out of the many choices they usually have, and that is the amount of commission is being offered to the buyer’s broker.

When a listing is taken by a Broker, part of their agreement with the property owner is not only how much of the commission they are paying to the listing agent, but how much they are willing to offer a buyer’s broker. While NAR’s Rules (National Association of Realtors) have changed, now allowing sellers to list their property in the MLS offering $0 compensation to a Buyer’s Broker, when previously in Florida that minimum was typically $1, that is not the law and it does not change the market. Seller’s can offer whatever they want for commissions to the listing agent and the buyer’s agent and they can ask whatever they want for their property. But regardless of what a seller wants, the market determines what they will get. The same goes for buyer and brokers. Everything is negotiable and market driven.

Real Estate Agents work on commission

How much of a commission they earn on each property greatly affects their total income. It is simply human nature for people who are working hard for a living to want to earn more, rather than less, for the same amount of work. That is why the often overlooked fact of how much, if any, commission is offered to a buyer’s agent is an important factor that should not be overlooked.

In fact, how much of the commission is being offered to the
buyer’s agent is actually more important than how much is offered to the
listing agent. In practice, however, an equal amount is commonly offered to both, though many agents in their sale pitches, trying to get the listing, will tell the seller they only have to pay them, and it’s the buyer’s agents problem how they will get paid.

Sellers that like that pitch and sign that binding listing agreement that locks them in with that broker for many months, quickly discover that if they don’t offer any compensation to the Buyer’s Agent, most buyers won’t want to see their property and even if they do see it and decide to make an offer on it, the offer will usually include either a reimbursement for the commission they’re paying their agent, and/or a reduction in the offer price. Plus, less offers and less buyer interest, means less competition, which means lower selling prices.

Of couse, if you have a hot property in a hot market and everybody wants it and there’s nothing else available, a seller can get away without paying a buyer broker any compensation. But in a normal market, and especially a slow or buyer’s market, not offering compensation to a buyer’s broker will have a similar effect as overpricing your home.

As mentioned earlier, since the 1950’s, up until August of 2024, a common real estate
commission has been 6% of the selling price. On a 50/50 commission split, that
means 3% to the listing agent and 3% to the selling agent (buyer’s agent). While
there are no official standard amounts (even discussing standard commission
amounts between brokers is illegal), the market has generally supported a 5 to 6%
commission as a fair amount on a residential real estate sale, all things
considered. Because of that, any commission amount less than 5 or 6% was usually
considered to be a “Discounted” commission.

So now the rules have changed, but the market mechanics have not.

Brokers Offer A Variety of Commission Structures.

There are many different types of commission arrangements out there, though the percentage based model is by far the most common. While there are many specific commission arrangements available (depending on location), they generally fall into the following categories:

1. Full Service, providing a complete range of services from start to finish, usually for a commission based on a percentage of the sales price.
2. Full Service, Flat Fee on the listing side, the same as number 1, but a flat amount regardless of the sales price.
3. Limited Service, Flat Fee paid up front just to put the listing in the MLS. The seller is on their own for the rest of the work.
4. A-La-Carte Service for Fees based on the services selected by the seller.

In all cases, there is usually also an amount offered to a buyer’s broker – most often a percent of the selling price, but can also be a flat amount. Or, if it’s a super deal, or the seller’s really not motivated to sell, zero to the buyer’s broker.

Also, what you get for “Full Service” can vary greatly from
broker to broker and even agent to agent within the same brokerage. At a
minimum however, it means that the broker will do a market evaluation and recommend a asking price,  list it in the MLS, enable other agents to show it and receive and negotiate offers and serve as the intermediary between the buyer and their agent (if any) and the seller. Many brokers will offer more than the minimum requirements on their full service listings.

The Listing Program from HomeMint Realty is in the first category above – it is a Full Service, percentage based commission to the listing broker with a buyer broker compensation set at whatever the seller wants, including zero. The big difference with the HomeMint Listing Program is that the percentage on the listing side is only 1%. The Percentage on the Selling Side is up to the Seller, but we recommend a competitive offer on the buyer broker commission as well as the price for maximum market effectiveness. 

This means that on any properties, regardless of the selling price, this Full Service listing program would provide a greatly discounted listing cost compared to a traditional listing, while enabling the seller to offer a competitive compensation to a Buyer’s Broker and still end up with a total commission less than most full service listings that skimp on the Buyer’s Broker commission.

All things considered, the HomeMint program offers a superior combination of services, costs and results and an excellent overall value in selling a residential property in today’s real estate market.