Reviewing a New Trend in Commissions offered to Buyers’ Agents

Recently, Aires has seen an increase in creative home listing arrangements in some parts of the U.S. in which the listing agent offers a very small commission (such as $100 or even $1) to the buyer’s agent. Most commonly the listing agent accept a negotiated commission from the seller on the sale of a home, and that commission is typically split equally with the buyer’s agent. Now, in certain locations, this “even split” is not so even. Listing agents in some markets are negotiating less than the standard split to buyer agencies. Their rationale is that the market is so “hot” that buyers will be willing to make up the difference by paying an additional commission to their agents and the home will sell without shared compensation.

Aires’ view is that commissions should remain at a 50/50 split and listing agents in our network are required to submit any deviations from this requirement (other than what would be usual and customary in an area) for approval prior to listing.

Regarding transferees purchasing a home, Aires has the following guidelines for buyer’s agents:

• Any buyer agency contract must be approved by Aires prior to signature by the transferee. Minimum commissions are not allowed because they are not reimbursable expenses in relocation.
• Buyer agency contracts should expire in 60 days or at closing, whichever comes first. These are of course renewable.
• We ask our partners to remember that transaction/administration fees are not allowed in relocation because they are not reimbursable expenses.
• The transferee should sign an Agency Disclosure as soon as possible, and the buyer agency contract only after they have met and feel comfortable with the assigned agent.
• Transferees should be shown all homes that fit their criteria (regardless of compensation offered) per the agents’ fiduciary duty to the buyers.

If in an area where buyer agency commission may be minimal or lower than standard, Aires should be notified as soon as the service authorization is received. The situation will be reviewed with the client to determine if an exception to policy is necessary, and if so, determine if the client will choose to cover a portion of the buyer agent’s reduced commission.