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hi everybody dana sparks broker of maximum one grader atlanta realtors and today's contract tip has to do with how do agents get paid so we're going to talk about where the money comes from and what documents outline and specify all the money regarding uh agent commission broker commission seller paid commission buyer paid commission all of that and where you can find that in those documents so first of all i want you to think where what is the document what is the document that outlines how much you as an agent are going to get paid on any one transaction i'll break it down even further what is the document that describes how much you as an agent if you are a listing agent representing a seller or if you are a selling agent representing a buyer what is the documentation that outlines how much you as an agent are going to get paid think about that for a second now what is the documentation that outlines how much your broker is going to get paid now what is the document that outlines or describes or goes into depth about where's all this money coming from okay that's what we're going to talk about so all the commission in a real estate transaction generally speaking there are always exceptions but generally speaking begins with the seller and on the exclusive and non-exclusive listing agreement the seller negotiates with the broker the listing broker how much total commission the seller is going to pay the listing broker and so all of that is spelled out in the uh exclusive listing agreement which is gar form f 110 and it is the re form re 151 exclusive right to sell agreement now on these forms it does specify let me go back and take a look at the form on the actual listing agreements in both the guard georgia association of realtors contracts and the reforms contracts it does have a place where the seller agrees to pay the listing broker at closing the total amount of commission for that transaction again generally speaking and that's either expressed as a percentage of the sale price or a flat fee then it goes on to state that the broker meaning the listing broker agrees to pay a cooperating broker if any another percentage of the sale price so obviously the percentage that the listing broker is going to pay a cooperating selling broker is going to be a lesser amount than the seller is paying the listing broker if the listing broker pays the selling broker the total amount the seller's paying then the listing broker is working for nothing um so that is uh all described on the uh listing agreements in both contracts and it goes on to state that um hang on i'll tell you what it states specifically that the broker shall share the commission the total commission with the cooperating broker if any who procures the buyer of the property by paying such cooperating broker at closing the percentage of the sale price of the property reference or the flat fee reference above meaning where you fill in the blanks on paragraph a in addition cooperating brokers are expressly intended to be third-party beneficiaries under this agreement so the listing agreement is where all the commission starts with when and you sign a listing agreement when a seller chooses to be a client of the broker now if a seller chooses to be a customer of the broker then the uh seller would sign the authorization to show unlisted property and in guard that form is f107 and in the re forms it is re158 seller authorization to show property without a listing agreement now in that document also it does specifically have a place for the commission and it says in the event that during the term of this agreement the pursuant to the above authorization which is everything that you fill out negotiate with a seller who wants to be your customer um if the broker procures a buyer ready willing and able to purchase the property at the price described above or any other price acceptable to the owner the owner agrees to pay the broker at closing the following commission and then it goes on to state that commission expressed either as a percent of the sale price or a flat fee okay so that's where it all starts seller pays the listing broker listing broker agrees to cooperate with a selling broker if there is one and share the part of the total commission the seller is paying now let's look at the buyer agreements because there is a a mention of commission in the buyer brokerage so in the gar form that is the gar f110 exclusive buyer brokerage agreement and in the re forms that is form f re 150 exclusive buyer a brokerage agreement now it does talk about commission in the buyer brokerage agreement and what it states in there there is a place uh in paragraph a where you fill in the blank and it says commission buyer agrees that the broker shall be entitled to the following commission at the closing of the transaction and again that commission is expressed as either a percentage of the sale price or a flat fee then there's another that's paragraph 5a and then 5b it states in the event the seller does not pay the broker the full amount of commission that was expressed in paragraph a the buyer shall or shall not pay the broker the difference at closing between the brokers commission and the commission actually paid to the broker now that is a little bit further explained in the corresponding paragraph in the bar contract and in the reforms contract it's explained within that paragraph and basically what it says it says that while it is not required the custom in georgia is for the seller to pay the commissions of the real estate brokers this obligation is usually created in a listing agreement between the seller and the listing broker generally these agreements require the listing broker to share the commission it receives with the selling broker working with or representing the buyer in the transaction in the event the seller does not pay the broker the full amount of commission the commission will be paid by the buyer as agreed upon in section a um it goes on to say in the buyer brokerage agreement that if the buyer purchases a property being sold by owner for sale by owner without a broker and the owner is unwilling to pay brokerage commission at or before the closing the buyer agrees to pay the brokerage commission at or before closing so that's expressed in the buyer brokerage agreements in both guar contracts and the reforms contract there is another form that you work with a that you would have a buyer sign to acknowledge if the buyer chooses to be a customer of your brokerage and that is the uh gar form is f 116 and the re form is duh hang on one second i'll tell you what the re form is it is re 159 acknowledgement of customer now in those buyer customer forms there is no mention of commission now license law tells us that if there is not a brokerage agreement signed anywhere or nothing that basically the parties must know who was responsible for compensation to the brokers prior to entering into an offer so if you are working with a buyer customer and a seller customer and the seller has not signed an authorization show property that's not yet listed that would be a situation where you would uh mention the commission in the actual purchase and sale agreement working with both parties your transaction vote for working with both parties as customers so everybody's on the same page adds to acknowledgement of who is paying the brokerage's uh conference who's compensating the brokers now another thing i know you guys thought about are the instructions to the closing attorney and in gar that is for f 255 and in the re forms that is form re one one five commission acknowledgement now that form when you look at that closely that is exactly what the title is in car instructions to the closing attorney and on that form it states the total real estate commission to be paid by the seller is again whatever percent of the sale price or a flat fee then the next sub paragraph says the listing broker agrees to share this commission with the selling broker by paying the selling broker the following amount and again it's a percentage of the purchase price or flat fee so the listing broker the the first amount is the total amount the seller's paying and the second amount is what portion of that the listing broker is sharing with the selling broker if any again that second amount is going to be smaller than the first amount now there are other places on there where it talks about buyer paid commission per the buyer brokerage agreement that we just went over and the parties that sign that you guys as agents are signing but you are signing as affiliated licensees whom are you affiliated with yes the broker so again that is all broker commission so we've talked about what form it is where all the commission starts that's the listing agreement and potentially the buyer brokerage agreement how much so and then the commission uh commission instructions so guess what guys all of that is how your brokers get paid so all of that is public money public commission to the brokers so once again how do you guys as agents get paid i haven't brought it up yet yes you are correct it is through your independent contractor agreement that is the document that is the contract that you signed with your broker that outlines how much you as an agent get paid by your broker all of the contracts you guys are all affiliated licensees you are all affiliated with your broker all contracts are written in the name of your broker your listing agreements your buyer brokerage agreements those are all contracts in the name of your broker so the only documentation regarding where you as an agent get paid for all of this hard work amazing work that you guys do for the public is outlined in your independent contractor agreement or in a policy manual that is referenced in your independent contractor agreement that's one of the many variables that you look at when choosing a broker with whom to to hang your license so i just wanted to bring that to your attention because a lot of agents mistakenly think that the instructions closing attorney outline how much say as an agent get paid and no that's how much your broker gets paid which is important because your broker can't pay you if the broker doesn't get paid now one more issue that comes up is what about the co-op fee that is mentioned in an mls service well there is an article by seth weissman and it is back from 2001 at the advent of buyer brokerage and basically it states that um listing a property in an mls service does constitute a contractual offer to cooperate with all members of that mls and to pay them a specified commission if they are the procuring cause of sale for that commission however if the property is not listed in an mls the financial basis upon which the selling broker the broker and agent working with the buyer will be compensated it needs to be worked out in advance so that is something key to keep in mind with uh with as an example for sale by owner with a property that is quote-unquote coming soon and not necessarily listed in an mls service with new construction that's not yet listed in an mls service so you you agents working with buyers one of the things that you need to take a look at and i suggest as a piece of paperwork is before you write an offer on behalf of a buyer you definitely need to make sure that the listing broker is going to share the commission with your broker the selling broker so that you can get paid again if it is an mls service that does constitute a contractual agreement nevertheless you want to get that in writing uh the mls services are advertising and there are typographical errors and mistakes it depends on what who who within a brokerage is entering that information into the mls service is it the agent themselves is it a uh listing uh admin person is it a listing secretary is it a virtual assistant you don't know so first of all listing agents once your property goes in an mls service double check it verify it also make sure to share a copy of that mls printout with your sellers and get them to check off on it that everything is correct um you buyers agents when you are showing a property and there is a property your buyer is going to make an offer on print out the mls printouts from that property on that day you are making an offer but better yet use the instructions to closing attorney if uh it is in mls if it's not or if you are unsure or if there is verbage about a variable rate commission gar has another form that you should all you agents working with buyers your selling agents definitely want to take a look at it is called the co-op commission agreement to be used prior to showing that is gar form f 258 there's not a similar form in the re forms as of this point and it is very similar to the instructions to closing attorney but it is a form to use to avoid any misunderstanding about commission before you show a property or write an offer especially if that property is not yet listed in an mls service and it's very similar you identify the property and it has a place that the commission being paid by the seller we don't know what the total commission is all it has on this form is the listing broker agrees to share the commission paid by the seller with the selling broker by paying the selling broker and again x percentage of the purchase price or a flat fee so that way a listing broker if you are showing a property or writing an offer you don't necessarily know what how much the seller has agreed to pay the listing broker this is just a confirmation signed by listing agent slash broker and selling agent slash broker how much the listing broker is going to pay the selling broker again once you go under contract you definitely want those instructions closing attorney so the closing attorney can put both sides of the commission on the closing statement so i hope this video helped you out and explained a few things and as we know the commission the gross commission that gets paid from a seller or from a buyer that goes to a broker um and even from a broker to you as the agent gets divvied up a variety of ways the mls services get some the um there's taxes that are paid on that uh there are operating expenses and there are a lot of fees that come out of that so the gross commission that gets paid does get divvied up by brokers as well as agents um for expenses to go about helping the public with their buying and selling needs so thank you guys so much for watching dana sparks broker of maximum one greater atlanta realtors satisfying your needs of service innovation and education you