March 4th, 2019 at 12:52 pm

We continue to have new issues with the newly formatted Agency Confirmation (see last week’s legal tip). At least you are amongst the first agents in California to be “in the know.” Because of the new Agency Confirmation wording, listing agents who offer their sellers a lower commission rate when the listing agent represents both the seller and buyer, should be careful setting forth that arrangement in the listing agreement.

What We Used to Do: As an example, Amy Agento would negotiate a 6% commission and then insert in the listing agreement something to the effect of: “Total commission to be only 5% if Amy represents the buyer.” That language may be problematic when another agent from our company submits an offer using the newly revised C.A.R. Residential Purchase Agreement (RPA). Under “Agency Confirmation” in paragraph 2 of the RPA, Amy Agento will be identified as the “Seller’s Agent” followed by a marked checkbox stating that she is “both the Buyer’s and Seller’s Agent (dual agent).” The seller could try to use that language to get the 5% discounted rate, even though someone else is the “Buyer’s Agent.”

What We Should Do: To avoid the above confusion, naturally the best thing to do is try talking sellers out of the discounted commission altogether! If that doesn’t work, here’s some suggested language to use in your listing agreement (or in an amendment to an existing listing agreement):

In the event that Amy Agento is personally the Buyer’s Agent, the total compensation to Broker shall be 5% instead of 6%. Seller understands and agrees that this discounted commission rate shall NOT apply if another Berkshire Hathaway agent represents a buyer, and that other agent is identified as the “Buyer’s Agent” in the Agency Confirmation paragraph of that buyer’s offer.

Copyright© 2019 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of March 4, 2019. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.

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