KEEP YOUR COMMISSION OUT OF THE PURCHASE CONTRACT

May 24th, 2013 at 7:50 pm

As you know, in almost any MLS transaction, your commission is set by the offer of cooperation made by the listing agent. Pursuant to the rules of the MLS, by presenting an offer, you are accepting that compensation and a binding contract is created. Unfortunately, despite that fact, and the fact that discussing our commission in the client’s contract documents violates our duties, we often see listing agents try to get a discount as part of a counter offer. When faced with this issue, the obvious question is what to do. Can I refuse to discount? What if doing so negatively affects my client? These, and many other questions, illustrate how difficult this issue can be.

So, when faced with a request for a discount in your client’s contract, your response may take numerous steps. The first thing you need to decide is whether you are willing to discount. Remember, if your client has already written an offer for the property, you do not have to. You have an enforceable contract. But, if you agree to the discount, you should simply memorialize the new arrangement in a Cooperating Broker Compensation Agreement (CAR Form CBC). That takes the issue outside the clients’ contract and solves your problem.

On the other hand, if you do not want to discount, you should address the counter as follows: (1) First, tell the agent you already have a binding MLS contract and that including commission in the RPA is against the rules. If that works, great. If it doesn’t then (2) contact your manager, who should call the listing broker. Hopefully, by going up the chain, you will have better luck. If they still insist then (3) let it go and we will make a board claim after the fact. Remember, you do not want to cost your client the property by refusing to cooperate. So, after making the above attempts to have the listing agent do the right thing, let the deal close. You are serving your client and will not be waiving any rights. I have seen many board claims where an agent was awarded his full MLS commission after closing to save the client’s deal. I can’t promise it will happen in every case, but it will in most. Most boards, who are realtors just like you, do not like agents violating the rules in this way.

So, try to keep your commission out of the RPA if possible. You have an MLS contract and need nothing else. But, if the listing agent insists, and you can’t get them to do the right thing, then close the deal and we will go after your commission later.

As always, contact your manager with any questions you may have and they will contact the Legal Department if necessary

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