As you’ve probably heard, recent industry-wide changes have been implemented affecting how brokers, and consequently their agents, are compensated.
Here, we’ll explain various options for compensating both buyers’ and sellers’ brokers. Broker compensation remains fully negotiable and is not set by law.
Seller’s Broker Compensation
• When sellers list their property for sale, they agree to pay the seller’s broker when escrow closes.
• If the property’s buyer is unrepresented, the seller may agree to additional compensation for the seller’s broker since this circumstance may require additional responsibilities or workload for the seller’s broker.
• In some cases, a broker may represent both the buyer and seller in a transaction, which is called a “dual agency.”
Buyer’s Broker Compensation
• When a buyer enters into a representation agreement with a broker, the buyer authorizes the broker to locate properties for the buyer and agrees to pay the broker if a transaction is completed.
• As required under a settlement reached by the National Association of REALTORS®, brokers participating in Multiple Listing Services (MLSs) are required to have a written agreement with a buyer prior to showing a buyer a residential property or giving a buyer a tour of such a property (this applies to in-person and virtual tours).
• When a buyer enters into a representation agreement with a broker, the buyer agrees to pay the broker when escrow closes.
