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A commission split describes the sharing arrangement of commissions earned between the listing agent and the selling agent.
The split is often described as a percentage like 50-50, 60-40 or 70-30.
There are typically standard splits and brokers are often left to themselves in negotiating what the commissions split would be.
This is why real estate agents sometimes don’t charge a finder’s fee or a service fee for helping home buyers find their dream homes.
It is because the home seller would inevitably pay the listing agent a commission, and that agent is willing to share commission with another agent who brings along a buyer to close the deal.
While commission splits sounds fair, it must be said that sometimes it can prevent an agent from working in the interest of a buyer.
For example, a home buyer might engage an agent to help him find a suitable home. But upon finding an appropriate one, the agent realizes that the listing is not willing to offer a fair split or any split at all. This can lead the buyer’s agent to not inform the buyer of such a potential house.
Unless the buyer is looking out for properties to buy himself he would never know of the existence of the said listing.
Thus, home buyers might consider these factors before refusing to pay a service fee to an agent to find a suitable home.