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Phoenix Real Estate and Homes for Sale | Jonathan Dalton, Realty ONE Group – (602) 502-9693

Jonathan Dalton
REALTOR
ePro, SFR
602-502-9693

What’s In a Co-Broke? Nothing and Everything

What’s In a Co-Broke? Nothing and Everything

Here’s one of the more peculiar aspects of the real estate transaction: when we represent buyers, we are compensated by the seller through the listing agent 99 percent of the time.

There are exceptions to this rule; some agents negotiate their own compensation directly with the buyer and anything above or below the co-broke listed in the MLS goes to or comes out of the buyers’ pocket.

But, since most buyers have yet to see the value of an independent buyers’ agent – at least an agent they are responsible for compensating themselves (I mean, what really could go wrong with a purchase) – we receive whatever is offered as a co-broke and go on our way.

Yet this isn’t always the case. Running a business takes a certain amount of money and the expectation is the co-broke will be within a set range (which I won’t specify as I don’t want to make the Department of Justice mad at me.) Outside that set range, it’s necessary as a professional to decide whether it makes sense to take on the liability that goes with writing a real estate contract.

Yesterday, I ran across a property where the co-broke offered was somewhere in the range of one half of one percent of the purchase price, give or take a little. It was the equivalent of walking into a store, seeing a $50, dropping a crisp $10 on the counter and walking out with your new clothes.

Business doesn’t work that way …

We as agents don’t search for properties based on the highest commission we can find. At least, I know that I don’t. I’ve worked for a rather wide range of percentages in my seven years in the business. One half of one percent, though, is beyond the pale and makes me wonder if either seller or listing agent is serious about selling.

Some of you may be asking what the big deal is … essentially, every single transaction opens the door for a possible lawsuit in case something goes severely sideways. There also are incidentals that come up along the way that often are solved out of the real estate agent’s commission check. It’s the cost of doing business.

Such a small, small commission offer simply doesn’t cover the cost. And with that being the case, barring the rare buyer willing to make up the rest of the commission not being paid by the seller, it makes no sense to write the offer.

Footnote … when asked if the seller might consider a more reasonable co-broke, the listing agent asked what the details of the offer might be, implying that one is connected to the other. Need I explain what a wiggly can of worms that would open?

Comments

  • HowardArnoff says:

    Jonathan, does your listing form indicate to the seller how much commission percentage will be paid to both the listing agent and the buyer agent. The reason that I ask is that our forms changed several years ago so that the listing agent couldn’t hide a low offer of compensation from their seller in order to try to get both sides of the transaction.

    L’shana Tova.

  • It’s on the marketing sheet, not the listing agreement itself. It’s possible that the commission is cut in general and the agent is passing along his deep discount to the buyers’ agent as well.

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