This has the potential to be a very large post, I am going to give a condensed version and hope that if one has more questions that they will contact us.
In a nutshell, the commission structure is generally set by the listing agent and the seller, prior to the property being marketed. It is clearly spelled out in their contract who gets what and at what time. Usually, the commission is paid to the agents that procure a ready and willing buyer. It used to be that these agents both worked for the seller as an agent and sub-agent. Due to recent changes in the industry and consumers' demands, in Greater Boston, the commission is paid to the listing agent and a buyer's agent. MLS allows the listing agent to advertise to the buyer's agent how much commission has been allocated to their compensation.
A buyer agent working out of contract with a buyer is entitled to only the amount stated in MLS, and usually this works out OK.
A buyer's agent with the exclusive right to represent will have a commission structure spelled out in their respective contract between the agent and buyer. This is where I get the most questions; what happens if the amount offered in MLS is less than my contract amount? Well the answer can be simple or complicated depending on how savvy your buyer's agent is. Typically, we set our minimum commission below the average MLS compensation. In the case that a property is not offering the full contracted commission, we will negotiate it into the offer. This goes for off-market sales and for-sale-by-owners (FSBO's)too. Now, in certain seller's markets, this can be more difficult and the buyer may have to pay cash at closing. But in today's buyer's market this is a very rare occurrence.
By the way the average commission being offered to buyer's agents in Dorchester is 2.5%.
Please, please, please do not take this post as gospel, but as a tidbit of information that gives the buyer and seller some more insight to how it all works. And email or call us for more info!!!!