It’s one of the dark corners of American real estate that doesn’t get much attention from consumers: When realty agents representing potential buyers don’t like the commission split offered on a particular listing, they might boycott it — simply not show the house to clients.
The net result: Houses get less exposure. They sit on the market longer than they would otherwise and the seller may end up with a lower price. The practice — known as “sell-to-the-commission” — has surfaced recently as discount brokers in major markets advertise low fees on both sides of the transaction, and home sellers increasingly ask: Why am I paying 6 percent to agents when I know my well-priced, well-maintained house will sell quickly?
The issue bubbled up earlier this month during a frank discussion among agents across the country on the industry website ActiveRain.com. Some agents described the practice as commonplace or even “rampant” in their areas. One, Eve Alexander of Buyers Broker of Florida, in Orlando, said “It is a fact that when the co-op fee is peanuts, less agents will show it and it will more than likely take longer to sell.” In a subsequent interview with me, Alexander deplored the practice, saying “sellers usually don’t know” that their property is getting fewer showings because of the low fee-split to the buyer-side agent. And buyers don’t know what they’re not being shown.
Real estate commissions are all about splits. If you agree to list your home for a 6 percent total commission, frequently that means the listing agent and brokerage will take half at closing — 3 percent — and the buyer’s agent and brokerage will get the other half. Both brokerages split their fee with the individual agents involved, who may get half or more. If the listing agent offers the buyer-side agent what is seen as an inadequate split — or especially if there is a discounted fee involved — agents representing buyers may be much less interested in showing the property.
