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Uncategorized | 141 Posts
June
21

In my little real estate world, a certain question, or request, from buyers' agents has been popping up lately that was not typical in years past. I have seen it in several different forms, but it is all the same: Buyer agents asking, requesting, or demanding a commission rate higher than what is being offered in MLS.  
 

Three times in the last month, I've experienced the following:

  1. An offer written on a listing where other provisions state, "Commission to selling agent to be X"  (the request was higher than the MLS offering).
  2. Prior to an offer being written, the buyer agent requested a higher commission. I said no, and the offer came without the request.
  3. After countering an offer and prior to the receiving the buyer acceptance, the agent called and said that we have an agreement, and then the agent requested a higher sale-side commission. In so many words, I said no, and then the agent sent the accepted contract.

In the deal regarding point "a" above, I did not counter and just reduced my listing side commission to compensate in order to make the deal work. I was not going to request that the seller take the hit as requested by the buyer within the offer.
 

In a NAR® policy statement, NAR® states:
 

"In filing property with the multiple listing service, participants make blanket unilateral offers of compensation to the other MLS participants and shall therefore specify on each listing filed with the service the compensation being offered by the listing broker to the other MLS participants. This is necessary because cooperating participants have the right to know what their compensation will be prior to commencing their efforts to sell.

The listing broker retains the right to determine the amount of compensation offered to subagents, buyer agents, or to brokers acting in other agency or non-agency capacities, which may be the same or different. (Revised 11/96)

This shall not preclude the listing broker from offering any MLS participant compensation other than the compensation indicated on his listings as published by the MLS, provided the listing broker informs the other broker in writing in advance of their submitting an offer to purchase and provided that the modification in the specified compensation is not the result of any agreement among all or any other participants in the service…."
 

I don't know if negotiating commissions other than what is offered in the MLS is a new trend, or if these are isolated incidents. The fact is, however, buyers' agents are allowed to request a different compensation than what is offered, and listing agents are allowed to offer a different compensation. This is a negotiation between the agents, but must not compromise our fiduciary duty to our clients.   For example, in Article 16 of the Code of Ethics, it is emphasized that Commissions Are Negotiable. Here is a quote from a NAR FAQ about compensation (Code Comprehension: Article 16 - Commissions are Negotiable)
 

"REALTORS®, acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an offer to purchase/lease to attempt to modify the listing broker's offer of compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing broker's agreement to modify the offer of compensation."


And:
 

"This Standard of Practice never prohibits negotiations between the listing broker and a cooperating broker at any time during the transaction. In fact, Standard of Practice 3-3 expressly authorizes the listing broker and cooperating broker to come to an agreement to change cooperative compensation, and that can happen before a property is shown, after showing, or even after an offer is accepted."
 

The bottom line is that you cannot make an offer contingent upon a certain compensation amount being paid to the selling agent (see my example "a" above;  this was a "no no" by the buyer agent). This can jeopardize the fiduciary duty to the client. However, you may request a change during the sales process and even after an offer is accepted. If the listing agent agrees to the change, it should be in writing.
 

Keep front and center your fiduciary duty to your client, and the rest will work itself out. After that, be respectful of your Realtor peers. We are all in the trenches together, and just remember that one day the roles may be reversed with the agents you are working with today.

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