One important question any seller should ask their listing agent is, “Will you reduce your commission if you don’t have to split it with a buyer’s agent?”
This is known as a “variable commission.” My listing agreements usually include a one percent reduction of my commission when I do not have to compensate a buyer’s agent — in other words, when I produce the buyer.
When a listing agent doesn’t have to split his commission with a buyer’s agent, he earns about twice the commission. I think that windfall should be shared with the seller. That’s why I don’t wait for a seller to ask me to reduce my commission if I sell their home myself.
The existence of a variable commission must be disclosed in MLS listings so buyer agents know whether a contract they submit is at a competitive disadvantage to a contract from an unrepresented buyer.
In the event of multiple offers, a listing agent who has disclosed a variable commission must also disclose, when asked by another agent, whether any offers are from the listing agent’s own buyer and the percentage differential. That helps the other agent craft a competitive offer.
Since variable commission is a searchable field on the MLS, I ran a search and found that fewer than 25% of agents are reducing their commissions when they “double-end” their listings. Make sure a variable commission is part of your listing agreement.
Published April 21, 2016, in the YourHub section of the Denver Post and in four Jefferson County weekly newspapers.