I’ve had a Realtor tell me how their commission works. For a 6% total sales commission on the sale of a home, 3% goes to the listing agent, and 3% goes to the buyer’s agent. Each of them split they with the broker. So the Realtor gets 1.5% of the 6%.
If you are marketing your home yourself, doing the listing agent’s job like paying to get it listed in the MLS listings so it appears in places like realtor.com, flyers, professional photography, instead of paying the full 6%, can I simply pay the 1.5% directly to the agent who sells the house? Are they excluded from doing this? Is there a way to specify this in the MLS listing or in it’s description?
Can I approach an agent and offer the 1.5% to them directly if they sell the home? My thinking is that, they would end up with the same gross commission for themselves anyway.
Plan A is to do For Sale By Owner and not involve a Realtor at all in the transaction, but Plan B would be to offer 1.5% directly to the agent who sells the home if we aren’t able to sell it with Plan A.
You can offer anything you want; the question is whether it’s worth it for the agent to accept. Presumably no agent is going to cut her broker out of the deal, so factor that in. There are discount brokerages that will do less work for less money, on the seller side. Small independent brokers are more likely to do non-standard deals than the large national companies.
Bear in mind that even if you sell as a FSBO, most buyers are going to be working with an agent. If you don’t make it clear in your marketing that you will pay a commission to the buyer’s agent, you will miss out on a lot of business.
In California only a real estate broker can earn a commission. A sales agent must work for a broker. Thus, no you cannot pay a sales agent who is not a broker a commission directly (in CA).
The same goes in New Jersey. Furthermore, a HUD-1 form has to be filled out and filed with the IRS. It basically lists where the money is coming from and going to. And the commission check is made out directly to the real estate office, and it has to go into the real estate office’s commercial account with all monies paid out of that account.