How to Nail Commission Details in Your Texas Listing Agreements
Set yourself up for success by properly completing the commission section of your listing agreements! One of the most common questions Texas real estate agents ask is:
👉 “How do I complete the listing agreement commission section to ensure what the seller and I agreed to actually happens?”
Understanding how to structure commissions correctly will help you avoid disputes and ensure smooth transactions. Let’s break it down!
Table of Contents
▼Understanding Commission Terms in the Listing Agreement
The commission section of the listing agreement begins with an important reminder:
âś… Compensation between brokers is not set by law
âś… It is not controlled, fixed, recommended, or suggested by any association, MLS, or listing service
✅ Brokers independently determine their fees—they are fully negotiable
After this disclaimer, the form instructs you to complete either Section 5A or Section 5B, depending on how the commission will be structured.
Scenario 1: The Seller Pays the Listing Brokerage and Buyer’s Brokerage
If the seller agrees to pay the listing brokerage commission, which will then be split with the buyer’s brokerage, you will use Section 5A.
- 5A(1)(A): Enter the total commission (either a percentage or flat fee) paid to the listing brokerage.
- 5A(1)(B): Enter any additional agreed-upon fees.
- 5A(2)(A): Specify the portion of the total commission that will be paid to the buyer’s brokerage (as a percentage or flat fee).
- 5A(2)(B): If sub-agency compensation is involved, this section is for that allocation.
If the seller agrees to pay 6% total commission, and the listing brokerage will keep 3% while giving the buyer’s brokerage 3%, then:
- 6% goes in 5A(1)(A)
- 3% (buyer’s brokerage commission) goes in 5A(2)(A)
đź’ˇ Easy, right?
Scenario 2: The Seller Only Pays the Listing Brokerage
In some cases, the seller might only agree to pay the listing brokerage and not the buyer’s agent commission. Instead, the buyer’s agent commission would be paid by the buyer or negotiated separately during the sale.
For this situation, do not complete Section 5A. Instead, fill out Section 5B.
- 5B(1)(A): Enter the amount the seller agrees to pay the listing brokerage—and that’s it!
📌 Key takeaway: The word “ONLY” in Section 5B is crucial. If the seller is only agreeing to pay the listing brokerage, this section must be used instead of Section 5A.
Final Thoughts: Avoid Commission Disputes & Ensure a Smooth Transaction
Properly completing the listing agreement commission section ensures clarity between you and your seller.
âś… Always double-check whether to use 5A or 5B
âś… Clearly outline commission splits to avoid confusion
âś… Educate your sellers on their options
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