Real estate listing agreements seem a bit complicated. You will pay a listing agreement a total commission (usually 6%) to market your home & the listing agent then offers a “co-broke” to any buyer’s agent who brings a buyer for the home. This is usually split 3% to the listing agent & 3% to the buyer’s agent.
If there’s no buyer’s agent on a transaction, then the listing broker acts as an intermediary. This means that either the listing agent represents both parties, each party is assigned to their own agent, or one party chooses to self represent.
In most listing agreements, the broker still earns the full commission. This means that the listing agent can earn the full 6%, the commission can be split between the two agents, or one party to the transaction can get a discount.
“Double Dipping” is when a listing agent earns the full 6% commission because no other agent was involved in the sale. Great for the listing agent, right?
If a listing agent has the potential to earn twice as much money, it’s a massive conflict of interest. No matter how honest someone is, it’s human nature to want to earn more money. It’s now in the listing agent’s best interest to encourage you to take one specific offer (the contract where they earn double) over any other offer. So, if another offer comes in with a buyer’s agent attached, the listing agent is biased against it.
Make sure to include a provision in your listing agreement that addresses this issue ahead of time. Find out how each situation will be addressed - if the buyer doesn’t have an agent, if they want an agent, or if they don’t want an agent. We think it’s fair for the listing agent to earn 3% in any of these scenarios, so that they don’t have a conflict of interest.
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