How do traditional real estate agents make money?

Traditionally, the commission structure used to compensate buyer and seller agents has traditionally been hidden from buyers. Here's what really goes on: when a buyer purchases a property, the seller pays a commission fee, traditionally around 5-6% of the sale price, split between the seller's and buyer's agents.

What is the commission and how is it set?

Traditionally (pre-NAR settlement), the commission was communicated between seller and buyer agents via listings on the MLS--i.e. there was a data field on each listing saying the % of the purchase price that the buyer's agent would collect as a commission.

Why does this produce problems (e.g. what is steering)?

Different listings will have different associated buyers agent fees. Thus, buyer's agents have had a financial incentive to steer their clients to listings with higher commission rates for the buyer agent. For example, 123 Main Street could have a 2% commission and 456 Main Street could have a 3% commission--an unscrupulous buyer's agent, seeing that a transaction on 456 Main Street results in them making thousands more than on 123 Main Street, may not ever show 123 Main Street as an option to their buyer--or may point out all the flaws of one property while highlighting the strengths of the other.

Why was this confusing?

Here's where all that opacity comes into play. You may often hear a variant of "my services are free; the seller pays for me!" from unscrupulous buyer's agents. This is misleading, the seller is paying that commission fee out of the proceeds of the transaction--mean that the buyer, ultimately, is paying for their own agent. In and of itself, that isn't necessarily bad--buyers often want to know what their "all-in" price is, including the purchase price, closing costs, agent fees, etc.

However, critically, not only is the buyer paying for their own agent, the buyer is paying for their own agent without knowing in advance what the commission rate is going to be.

The lack of transparency in commission structures can create confusion and mistrust among buyers, who may not fully understand how their agent is compensated or how it might impact the agent's recommendations. This opacity undermines the trust that should be foundational in the buyer-agent relationship.

How is Bluesidy different? How does Bluesidy make money?

Bluesidy collects a set commission rate (1% of the total purchase price). If the buyer's agent fee is any higher than that, we rebate the difference to you, tax free, at closing. Since we collect the same rate no matter where you buy, you can be confident that you're getting impartial service, no matter what you'd like to buy.

For instance, if you are buying a $1,6M house (median June 2024 Manhattan listing price), we'd collect the same commission regardless of what the seller offers as a buyer's agent commission. If the seller offers a 2.5% commission, we'd keep 1% and give you 1.5% back (~$24,000). If the seller offers a 3% commission, we'd keep 1% and give you 2% back (~$32,000).

Bluesidy was built with transparency and the buying experience in mind, and we're committed to always putting the customer first. Our pricing structure is just one way we're accomplishing that goal.