What is meant by commission splitting?
Commission splitting or sharing is a concept of cooperation which facilitates maximum efficiency in the real estate market. When a Broker lists a property and enters it into the Multiple Listing System the property becomes available for any other MLS Broker or Agent (“Selling Agent”) to show and sell. The MLS agreement is such that when the property is sold by any “Selling Agent” the listing Broker compensates that “Selling Agent” ** for their participation in the sale by paying them a stated “Co-op Fee” . Obviously, if the Selling Agents didn’t get paid they would have no incentive to show and sell listed properties. The listing Broker pays this “Co-op Fee” out of the fee he collects from the Seller for listing the property. The Seller only pays one party, the listing Broker. ** Actually, the payment is made to the Broker of the “Selling Agent”.
