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"Joint fund" between real estate agents - is it good for a realtor? - Post 2 out of 2

Posted by Yair Sharon on 07/06/2021
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In the first post, I explained what cooperation between brokers is, Why it is good for customers (seller and buyer), And what does "common fund" mean between brokers.

In this post I will explain why the requirement for a "joint fund" is harmful to real estate agents.

Usually, The requirement to balance the commissions between the selling broker and the buying broker through the mechanism of "joint fund", Comes from the direction of the selling broker who is having a hard time getting a full market commission of 2% In the negotiations he is conducting with the seller.

The starting point of the selling broker is that the buying broker is easier to agree on 2% With the buyer, Therefore if the buyer wants to cooperate with him, The buyer's broker will transfer part of the buyer's commission to him.

First say, Even if it is true that it is "easier" to receive a full commission from a buyer (factually this is not always the case, Because the buyers also learned to negotiate hard on the brokerage fee), Yet this does not justify the balance between the intermediaries, Because it encourages the seller broker to give up the struggle over the amount of commission.

Indeed, We have recently found quite a few cases, In them a broker is willing to receive exclusivity from a seller at zero commission (!) Or is satisfied with half a percent, Because he relies on the buyer's broker to fill in the missing part.

The result is a market situation in which sellers are unwilling to pay proper brokerage fees to the brokers who represent them., And buyers over time will realize that they are financing the bulk of the commission of the brokerage deal and will revolt over it, So it came out we paid in our loss.