A House Divided: what are Transaction Sides and how do they work?

Speed read …

• All real estate transactions are split into two “sides”: a listing side and a selling side,
• Each agent earns the commission generated by the “side” they are on,
• Each “side” typically earns 50% of the total commission,
• Over 80 percent of all transactions are cooperative transactions (co-ops) involving two agents,
• Because every transaction involves two “sides”, co-ops take place within a single brokerage agency and between two different brokerage agencies,
• For you as the seller it makes no difference if one agent works for Company A and one agent works for Company B or if both agents work for Company A.

All transactions are split into two “sides”: there’s a “listing side” and there’s a “selling side”. Each “side” is allocated a portion of the total commission or fee which typically, but not always, is equal to one-half of the total fee: 50% goes to the listing side and 50% goes to the selling side. Think of it as a coin. A coin has two sides: a heads and a tails but it’s still one coin. Which side of the coin you “see” depends upon which side of the coin you’re “on”. The same concept applies to real estate transactions: the “side” of the commission the agent “sees” (or earns) depends upon which side of the transaction they’re on.

Summarizing:

• When a property is listed for sale or lease the “listing side” is created,
• When a property sells or leases the “selling side” is created,
• The agent you hire to sell or lease your property is designated as the “Listing Agent”,
• The agent who brings the buyer or tenant into the transaction is designated as the “Selling Agent”,
• Whenever a single agent lists AND sells the property a “double-sided” transaction is created. In these rare instances the agent is said to have earned “both sides” of the commission or fee, i.e. the “listing side” AND the “selling side”commission. This is referred to as a two-sided or double-sided transaction.

Florida Statutes prohibit real estate AGENTS from owning and operating a real estate brokerage company and must work for an employing BROKER therefore technically every property listing belongs to the BROKER and not to the AGENT. When you hire a real estate AGENT you’re actually hiring that agent’s employing BROKER OR AGENCY. The relevance of this is that if your AGENT leaves their employing BROKER/AGENCY your property listing remains with the BROKER/AGENCY unless you as seller and the LISTING BROKER agree otherwise in writing. (Termination of your listing agreement is not automatic and the relationship between your Agent and his or her employing BROKER has no effect on the listing agreement. There are three events that terminate a listing agreement: 1). fulfillment of the terms of the contract by the parties, 2). expiration of time*, 3). mutual consent of the contracting parties. *The term of a listing agreement is negotiable between you as owner and the Broker, however Florida law prohibits listing agreements from running into perpetuity and therefore they must have an expiration date.)

It’s important to note that even though “sides” are agent specific the segregation of every property listing into two “sides” takes place within the LISTING BROKERAGE. To clarify, if your listing agent works with Company A and the selling agent also works with Company A, the listing agent will be paid the “listing side” commission and the selling agent will be paid the “selling side” commission. In this instance, even though Company A earns the full commission each agent has earned only one “side” of the commission. If your listing agent also introduces the buyer (or tenant) to the property then your AGENT now has earned both “sides” of the commission. This is referred to as a “double-sided” transaction for obvious reasons. If on the other hand the selling agent works for another Company, that Company is paid the “selling side” commission and the listing Broker retains the “listing side” commission. (The amount of  commission paid to the individual agent(s) is governed by separate commission agreements with their Broker and has nothing to do with your listing agreement.)

Since 80 percent or more of all transactions are co-ops, what matters most when you’re ready to sell is the Experience, Performance, and Trust you have in your listing agent.

ALL transactions are co-op transactions involving two agents with Agent 1 earning the “listing side” and Agent 2 earning the “selling side”. This holds true regardless of whether Agent 1 and Agent 2 work for the same Brokerage Company or if Agent 2 works for a different Brokerage Company.

In summary, since every transaction is split into two “sides” internally at the listing BROKER’s office, as a seller it doesn’t matter if there’s one or two agents involved in your transaction. It also doesn’t matter if your listing agent AND the selling agent both work for Company A or if the selling agent works for Company B. The agents involved in the transaction will earn the commission depending upon what “side” they are on.