Real Estate Insights on Commission Splits and EBAs

Real estate insights on commission splits and exclusive buyer agents. Real estate market insiders give their take on trending topics.

Over the past few weeks, we’ve had several responses to columns that have run, especially the one that explained in greater detail how real estate agent and broker commissions work.

Real Estate Insights on Residential Commissions, Commission Splits and Negotiating Commissions

Steve Murray, president of Real Trends, a Castle Rock, Colorado-based company, which has provided news, analysis and information on the residential brokerage industry since 1987, notes that a “Big glaring problem is that the Consumer Federation is not only wrong on total residential commission amounts but wildly wrong. The actual number is around $72 billion and that number has been static for several years now as the average commission rate has been trending down for the last 5 years.”

He added that the “big round number of $100 billion” is often used to assert “how bad consumers have it but … people need to realize that in America there is no requirement that people even use an agent, much less pay them what they ask for. And, increasingly, they are getting agents to negotiate their commissions.”

And, a couple of other comments on that column:

Comment: Thanks for the explanation on commissions. I’m a real estate agent and not only do I discuss commission splits, but I also provide a net sheet so sellers know the true costs of their home sale. The buyer agent’s commission is advertised on the multiple listing service (MLS), yet the listing agent’s commission is not.

Comment: I find it funny that [the] agent that tried to defend her high fees then proceed to throw in the usual “discount brokerage” crap would not actual say what all her “fees” were to justify gouging the consumer. Talk about continued lack of transparency. You should [have] asked her to clarify all her enormous fees. No wonder [there’s] another class action suit. Oh, and yes. I’m an agent with one of those horrible “discount brokerages.” I also like reading your articles.

Real Estate Insights on Exclusive Buyer Agents, Real Estate Inventory and Buyer Representation

Tom Coler, Broker/Owner, Buyer’s Broker of Southwest Florida, took exception to the column on how to compare an exclusive buyer agent (EBAs) with traditional agents:

Comment: Thank you for this article. But I’m concerned about your comment that the exclusive buyer agent you work with “typically has to work a rather large metropolitan area rather than concentrating on a few small neighborhoods or towns. There is less chance the agent will know the ins and outs of a particular type of housing stock.”

I have [spent] 31 years as an exclusive buyer broker and exclusive buyer agent in Sarasota and Naples and have never had an issue with knowing the “ins and outs” any of our current inventory. Perhaps in LA, NYC, [or a larger metro area] this might occur.

A 1983 study by the Federal Trade Commission found that 82 percent of buyers surveyed believed their conversation with an agent was confidential. That same survey found that 57 percent of buyers responding thought the agent represented them. The FTC found that misleading. Yet, here we are in 2019 with the same problems nationally.

The fact is, buyers are never represented in typical transactions

Further Insights into EBAs

Simply, I believe the problem is that in 2019, national consumer priorities have changed dramatically since the 80’s. Buyer’s Brokers and their EBA’s were pushed away from real estate buyers by new confusing National Association of Realtor (NAR) and state agency policies. All those who had advocated using EBA’s and exclusive buyers brokers went onto other topics for their readers, viewers or listeners.

As a member of the National Association of Exclusive Buyer Agents, many thanks for shining a light on the right path for real estate buyers. By law, in Florida, EBA’s are required to help the buyer receive the lowest price and best terms. What traditional listing broker can say that?

We welcome all comments, diatribes and other great thoughts from our readers, though if selected for publication, we may edit these for content and clarity.