Introduction

The typical parties to a residential real estate transaction are the following.

1. Seller
2. Listing Agent
3. Listing Broker
4. Multiple Listing Service
5. Selling Broker
6. Selling Agent
7. Buyer

The seller typically gets referred to a real estate agent.  The agent has the seller sign a Listing Agreement.  The Listing Agreement is a contract but it is not not between the listing agent and the seller.  Rather it is between the seller and the listing broker.  

Under Georgia law real estate agents are not permitted to earn commissions on the sale of real estate only real estate brokers may earn commissions on real estate transactions.  Therefore agents work for brokers.  Real estate agents typically work as independent contractors of real estate brokers.  The Listing Agreement will be between the broker and the seller.  

The listing agent will have an agent's contract with the agent's broker.  That contract will provide that on sales generated by that agent the agent gets a specified percentage of the commission from the transaction.  Agent's agreements with their brokers are many and varied but typically the agent keeps between 50% and 100% of the commissions and pay their broker between nothing and $2,000.00 per month for services provided by the real estate broker.  

Almost all brokers enter into contracts with listing services.  In metro Atlanta the two listing services are First Multiple Listing Service ("FMLS"), and Multiple Listing Service ("MLS").  The rules and regulations of these listing services require brokers to advertise or post each of their listings on the computer systems maintained by these services.  The rules further require the listing broker to specify a percentage of the commission that will be earned pursuant to the Listing Agreement which that broker is willing to share with an agent that brings a buyer to a transaction.  Frequently the commission specified in the Listing Agreement will be between 6% and 7% and the commission will be split evenly with a broker that brings a buyer to the table.  

A broker that brings a buyer into a transaction is called the "selling broker".  From a layman's perspective this is somewhat confusing as the "selling" broker is the "buyer's" broker.  The selling broker will be required to abide by the same rules and regulations as provided by the listing service as the listing broker.  Also, selling brokers work through selling agents on an independent contractor basis just as listing brokers work through agents.  

Interestingly buyers many times do not have a written agreement with the agent they are working with.  Sometimes a buyer will sign a buyer's brokerage agreement with a broker but more often prospective buyers are shown houses by agents with whom they have no contractual relationship.  Ultimately the buyer enters into a contract with the Seller and that Purchase and Sale Agreement many times provides the brokers involved with certain rights but frequently the only contract the buyer signs is a contract with the Seller.  

Diagram

A diagram of the relationships between the respective parties appears below.

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Last modified: December 05, 2006