How Do Brokerage Fees Work?

I think there is a responsibility incumbent on all real estate agents to educate the public how brokerage fees work.
If you have not heard there are several class action lawsuits by consumers against the Realtor association and some of the largest national brokerages. From my perspective it comes from consumers not understanding how agents are compensated for their services.
The general practice in the United States has been for the fees for the brokers to come from the seller at settlement.
For example, when a seller signs a listing agreement to sell their home with broker A it is agreed that half of that fee will be shared with broker B who will “bring the buyer”.
The seller pays the fees as a cost to them at settlement, but the buyer is paying the sales price and functionally paying for the fees too.
To change the way it is done might require buyers to pay for the buyer agent fee which could hurt many sellers because fewer buyers will be able to participate.
At the end of the day in my opinion it’s all about being up front with consumers as to how the brokerage fees are paid.
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Matt Cheney
Washington Fine Properties
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