Wow, so many misconceptions...and so many good points as well! A little clarification from a NY point of view (I am a licensed realtor and have been for 6 years).
When you list your house with a realtor, you have to specify what percentage you are willing to share with an agent who brings you a buyer. This can be a sub-agent of your listing agent (another agent who works for you, as the seller). I have only participated in this scenario in one transaction. It is in the buyer's WORST interest and I have no idea why someone would agree to it, unless they have not been properly educated as to the alternatives (and the alternatives may be different in other states - I can only speak for NY). Basically, a buyer has a agent working with them to show houses and make the offer, but the agent is not working FOR them. Although it technically is another agent working on the seller's behalf, it also carries the most liability for the seller as they can be liable for statements made by the sub-agent, even though they are not the listing agent for the house. For this reason, it is not uncommon for sellers to refuse to offer compensation to sub-agents.
A seller can also offer compensation to a buyer's agent, a agent working SOLELY on behalf of the buyer and looking out for the buyer's best interests, with fiduciary duties to the buyer alone (NOT the seller). This is extremely common in our market. Almost all of my transaction have taken place with both a seller's and buyer's agent involved.
If a buyer is interested in a property listed by a seller's agent, they can choose to call the agent directly to view the place, make an offer, etc. That agent SHOULD, by LAW, be disclosing that he is a seller's agent at first substantial contact with the buyer, or explaining "dual agency" and proceeding only if both the buyer and seller consent. I do not practice dual agency, in which an agent has fiduciary duties to both parties. This is an inherent conflict of interest, one that I cannot resolve personally for either party, although I know there are many agent who do practice it. If I were buying, I would not consent to using a dual agent, but rather find my own buyer's agent. Howevr, I have been in this situation several times and have explained to the buyer that I am representing the seller and working for their best interests, and if they want to proceed with me, I will treat them as a "customer" rather than a "client" (in other words, with no fiduciary duties attached). If they want to proceed, effectively without an agent representing them, I will take their offer to my seller. I have closed three deals this way with full disclosure and consent. This has been in cases where the buyer already knows what they want and how to get it, and can proceed without an agent's guidance.
Just to reiterate brokemofo's point, which seems to keep getting lost
, an agent is never paid directly. I can never accept money from a client. My broker is paid from the seller, who them passes down my split (which is less than 25%, after the 9% fees are paid to our parent company as well). And remember, out of my broker's 25%, she has to pay for advertising, which for a house that has been on the market 4-6 months, with multiple open houses, etc., she may be taking a loss on.
As a seller, you are only obligated to pay whatever is in your contract. If you specify, say 1%, for a discount broker, you are not obligated to pay for a buyer's agent. However, when you are contacted by that buyer's agent to show your house, they should be asking you if you are willing to work with a buyer's agent and if you are offering a commission. If your answer is no, then they need to try to get their commission from their buyer. However, if you refuse to pay a buyer's agent, then you will lose potential buyers, who can look at any other number of houses who are offering to pay their agent for them. Whether you think it's right or wrong, that is the system we are operating in and you probably will be at a disadvantage among other houses who are offering compensation. A few years back, I worked with a young couple who wanted representation from a buyer's agent. After looking at several houses on the market without finding one, they found a FSBO they liked. Before even speaking to the owners, they asked for my help. I approached the owners, who were willing to work with me, but not pay my commission. I went back to my buyers to explain the situation and told them that I would need them to pay my commission if they wanted to continue with me. They did, and agreed to pay my commission.