Compensation

Compensation

All Canopy MLS listings must offer cooperation and compensation to other MLS participants for their services in the listing’s sale. Such compensation offers are blanket, unilateral and unconditional. The compensation specified on listings submitted to the MLS by the Member Participants must appear in one of two forms: (1) by showing a percentage of the gross-selling price, or (2) by showing a definite dollar amount. The rules regarding compensation are found in Section 6 of the Canopy MLS Rules and Regulations. Below are selected interpretations of the rules.

Compensation offered in CMLS is only for CMLS Subscribers. Offers of compensation advertised through the MLS are only for other participants of the MLS. Possession of a real estate license does not entitle the buyer agent to compensation. Article 3 of the “Realtor® Code of Ethics” says, "Realtors® shall cooperate with other brokers except when cooperation is not in the client's best interest. The obligation to cooperate does not include the obligation to share commissions, fees or otherwise to compensate another broker."

Bank sellers must pay. Sometimes sellers (usually banks) refuse to pay a commission to buyer agents if the buyer agent is the buyer. NAR says it is not OK for these bank sellers to refuse to pay a commission to agent-buyers. To submit a listing to the MLS, the seller must agree to give listing brokers the authority to offer cooperation and compensation to other MLS participants. When the listing is entered into the MLS, a contract is created between the listing brokerage and cooperating brokerages, and one element of that contract is consideration. In the case of MLS, compensation is offered by listing brokerages to cooperating brokerages that procure a ready, willing and able buyer. Such compensation offers are blanket, unilateral and unconditional. Sellers and listing brokerages are free to include whatever terms and conditions they choose in listing agreements – as long as those terms and conditions are permissible under the law and the “Realtor® Code of Ethics.” Inclusion of a term requiring a listing broker to make his or her offer to cooperating brokers conditional would make that listing ineligible for the MLS. Click here for more information from NAR.

Negotiating compensation. The rules and regulations say the cooperative compensation is "unconditionally" offered. However, if the buyer’s offer is less than full price, the seller can either accept, or counter; and the counter offer could include anything, including a lesser commission amount or a different split. The parties can agree upon a commission amount or split other than the amount
originally proposed in the MLS. Of course, the listing agent and buyer agent have the right to refuse to negotiate the compensation, but such refusal would result in a rejection of the counter offer (see also “Realtor® Code of Ethics,” Article 16, Standard of Practice 16).

‘Sliding Scale’ Compensation Offers OK’d. Statements such as, “commission to buyer agent 3 percent up to $300,000, any amount over $300k commission to be 2.5 percent,” have been OK’d by NAR.

Submitting offers online OK’d. The listing brokerage, with the seller’s concurrence, might require cooperating brokerages to submit offers online, even if the online service requires a registration fee. The registration fee is not considered a condition on the offer of compensation. Rather, any cooperating broker who accepts the compensation offer by his or her performance as the procuring cause of the resulting successful transaction (defined as a sale that closes or a lease that is executed), can expect to receive the compensation offered through the MLS. The costs related to submitting an offer is one of the factors to be considered by potential cooperating brokers in determining whether to work on a particular listing.

Be careful when offering bonuses in Canopy MLS. We have had numerous complaints and requests for mediation and arbitration about bonuses. Be extremely careful when making an offer of a bonus. Indicate whether the bonus is negotiable, who is offering the bonus and whether the bonus is contingent upon a full-price offer. Hopefully this will cut down on the confusion and disputes about this issue.

Gross-sales price determined by contract. The Canopy MLS Rules and Regulations state that the compensation specified on listings published by MLS must be shown in one of the following forms.

  • By showing a percentage of the gross-selling price, or
  • By showing a definite dollar amount

The gross-sales price is established in the purchase contract by an agreement between the buyer and seller. The purchase price established in the purchase contract is the sales price that should be reported to the MLS.

Potential short sales must be disclosed in Canopy MLS listings. “Short Sale” is defined as a transaction where title transfers; where the sales price is insufficient to pay the total of all liens and costs of sale; and where the seller does not bring sufficient liquid assets to the closing to cure all deficiencies.

Potential short sales must be disclosed when reasonably known to the Listing Brokerage. Such disclosures must occur at the time of MLS input, if known, or within one (1) business day upon receipt of such knowledge.

To avoid disputes with a cooperating broker, it’s also a good idea to include a disclosure in the MLS listing regarding whether and how any reduction in the gross commission established in the listing contract, required by the lender as a condition of approving the sale, will be apportioned between listing and cooperating brokerages. This will alleviate any problems with commission disputes and allegations of a violation of the “Realtor® Code of Ethics,” Article 3, Standard of Practice 2 which states that Realtors® must timely communicate a change in commission to the buyer agent prior to an offer being made.

All confidential disclosures and confidential information related to short sales must be communicated through dedicated fields or confidential “remarks” available only to Member Participants and Subscribers, i.e., the “Agent Remarks” field.

The following disclosure or any similar language must be entered at the time of input if known, or within one (1) business day upon receipt of knowledge: “List price may not be sufficient to cover all encumbrances, closing costs, or other seller charges, and sale of property may be conditioned upon approval of third parties.” (See Section 6.2.1 Canopy MLS Rules and Regulations.)

For information, tips and resources on short sale listings, visit Realtor.org.

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  • 21-Aug-2019
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