Broker Conversations: Altering Offers of Cooperative Compensation
Question: A buyer agent prepares and submits a Purchase Agreement for a client and enters under additional terms that the buyer agent firm will be compensated 2%. The compensation offered by the listing firm in MLS is 3%. Can they do that?
Answer: No According to MLS rules, listing Brokers must specify the compensation being offered to cooperating MLS participants. These offers are unconditional, unilateral offers. The unilateral offer becomes an enforceable agreement between the brokers when a seller and a buyer execute a purchase contract, and the cooperating broker is the procuring cause of that sale. While brokers can mutually agree to modify the cooperating compensation firm to firm, outside of a Purchase Agreement, Realtors acting as buyer representatives do not have the ability to change the compensation stated in the MLS unilaterally.
It is important to understand that the compensation offered in the MLS is coming from the listing firm, not the seller. Disclaiming all or part of the compensation offered in the MLS does not change a seller’s obligation to pay the compensation stated in the Listing Agreement.
In addition, Standard of Practice 16-16 under Article 16 of the REALTOR® Code of Ethics states that a Realtor acting as a buyer’s representative may not use the terms of an offer to attempt to modify the listing broker’s offer of compensation or make the submission of an offer contingent on the listing broker agreeing to modify the compensation.
For questions concerning cooperative compensation, ask your Broker or contact Peggy Lynch at plynch@RARealtors.com.