I would like to clarify a statement in my last post. I stated "the seller and the seller’s agent control both (the buyer’s agent’s and seller’s agent’s) commissions in the listing contract." But typically, the seller does not set the buyer’s agent commission. This is because the listing agreement does not break out the seller’s agent commission from the buyer’s agent commission. It is simply shown as one amount, usually a percentage of the sales price.
In effect, both the seller and the buyer have no idea what is being offered to the buyer’s agent. The seller’s agent sets the buyer’s agent commission in the MLS listing which is not available to the public. In addition, the seller’s agent can change the buyer’s agent commission at any time without the seller’s knowledge.
Without requiring agents to document every house they show, there is no way to prove how much buyer’s agents are influenced by the commission. But it is not hard to imagine a property offering a 2% commission will get fewer buyers than a similar property offering 4%.
Separating the commissions resolves these issues. It is time for regulations requiring the seller to pay the seller’s agent and the buyer to pay the buyer’s agent. Buyers and sellers should know up front what their agents are being paid.