As you probably know, the buyer’s agent is usually compensated by the listing agent. It’s called a “co-op” commission paid to the “cooperating agent.”
Regardless of the commission which the listing agent charges the seller, he or she typically offers 2.8% from that commission to the agent who produces the buyer. Back before the Justice Department said it constituted price fixing, there was a “standard” commission of 7%, and the “standard” co-op was 40% of that, which came to 2.8%. Although listing commissions are now competitive and therefore completely negotiable, the 2.8% co-op remained because brokers found that if they reduced that incentive, other agents wouldn’t show their listigns. I experimented one year with offering 2.5% and learned that very lesson myself. Now I offer 2.8% again — or more.
Sometimes under “broker remarks” (not visible to the general public), I’ll see that a “bonus” of, say, $2,000 is being offered “for a full-price offer” or for a contract by a specified date, but that practice has always made me uneasy for ethical reasons. Agents are required to act in their clients’ best interest, and offering a bonus for producing a full-price offer constitutes an incentive to the buyer’s agent for him or her to do the opposite — to act in his or her own best interest. And since the incentive is hidden from the buyer, there’s the possibility that the agent won’t disclose the incentive to the buyer.
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