Two topics some home buyers and sellers may have questions about are 1) what is a multiple listing service (MLS) and 2) who pays the real estate sales commission?

  A multiple listing service, or MLS, is an association of real estate brokers and their agents in which they cooperate to show and sell each other's properties. Let's say, you list your home with ABC Realty, and an agent from XYZ Realty shows it and gets an offer from the buyer.

  You and the buyer enter into a contract or a Purchase and Sale Agreement as we call it in Georgia. When the sale is closed, the commission is split between the two companies. By cooperating, both companies were able to earn part of the commission at no additional cost to you or to the buyer.

  If you were the seller, the MLS helped you find a buyer for your property by making it easy for all members of the MLS to show and sell it. If you were the buyer, the MLS helped you find the property of your choice using only one Realtor.

  What about commissions? How are they set, and who pays them? The commission is a fee charged by the broker for services that result in the sale of real estate. The property owner and the broker agree on a fee, or commission, at the time the property is listed with the broker.

  The closing attorney deducts the commission from the seller's proceeds and pays it to the broker. In many cases, it is paid to two brokers who cooperated through their MLS. 

  There is no "standard" real estate commission, and the amount is negotiable between the seller and broker. A typical commission in the Americus area is 6 percent of the selling price. When two companies are involved in a sale, the commission is split, usually 50-50, between them. 

  In the case of a split, or shared, commission of 6 percent, each company will receive 3 percent of the selling price. Within each company, if the property was listed by an agent or sold by an agent, that 3 percent commission is again split between the agent and the broker. 

  But ... first the broker will deduct a percentage of the commission for operating expenses, so the net commission will be less than 3 percent. Therefore, the broker and agent will share a very small percent of the selling price.

  Does the buyer ever pay the commission? Yes, in cases where the seller is not obligated under a listing agreement to pay it. For example, if a buyer is working with a Realtor and finds a For-Sale-by-Owner house, the seller may refuse to pay a commission. For the Realtor to be compensated, the buyer will have to pay a commission on top of the purchase price. 

  In FSBO cases, the Realtor will attempt to get the seller to pay the commission. But if the seller refuses, the Realtor must get the commission from the buyer. Usually they will be in an Exclusive Buyer Brokerage Agreement in which the buyer is committed to pay a commission if the seller will not pay it.  

  In the majority of cases, the seller pays the commission according to the listing agreement, but now and then the buyer must pay it. 

  Next time you leave a tip of 15 or 20 percent on the table for your waiter, please remember your Realtor who performs a valuable service for a much smaller "tip."    

  Your Realtor will be glad to answer your questions and help you understand the buying and selling process. Just ask. Believe me, we Realtors want to work with informed buyers and sellers.  

  In closing, let me remind buyers of a very important point: Your first contact, before you look at properties, should be your mortgage lender. Get pre-approved for a mortgage loan amount, and then get with your Realtor to find a property in your price range. 

  As a real estate buyer, you will have the confidence of knowing you will be able to obtain financing when you find the property of your choice and sign a purchase contract.  

  AND ... please work with a local mortgage lender whenever possible. Your lender, like your Realtor, should be a member of your community who knows you by name, and wants to be your friend in the buying process.