Frequently Asked Questions

Legal Hotline FAQ

a blog of the most frequently asked questions to the MAR legal hotline.


Cindy Sellers
Cindy Sellers
Cindy Sellers's Blog

The buyer submitted an offer to purchase a property.

First, the offer of compensation made by a listing broker through the MLS constitutes a contract by and between the listing broker and the cooperating broker with respect to payment of compensation by the listing broker to the cooperating broker who procures a buyer in connection with the property listed. The terms of compensation as communicated through the MLS constitutes a unilateral offer which any other authorized participant may accept by performing in accordance with the offer. The terms of such offer may not be changed without the consent of the cooperating broker.  If the cooperating agent faithfully performs and is the procuring cause of the buyer, the listing broker remains obligated to pay the compensation in accordance with the contract formed through the MLS.

 

Additionally, Article 3, Standard of Practice 3-2 of the NAR Code of Ethics states that any change in compensation offered for cooperative services must be communicated to the other REALTOR® prior to the time that REALTOR® submits an offer to purchase/lease the property. It also says that after a REALTOR® has submitted an offer to purchase/lease property, the listing broker may not attempt to unilaterally modify the offered compensation with respect to that cooperative transaction.

 

We believe that it is improper to include provisions detailing the compensation arrangement between the listing broker and the cooperating broker in the contract of sale between buyer and seller.  Any changes in the compensation arrangement as posted in the multiple listing service should be set forth in a separate agreement between the listing broker and the cooperating broker.

 

Finally, negotiations regarding compensation should be handled by the listing broker and the cooperating broker separately and outside of the negotiations being conducted between the buyer and seller.  Our guidance under these circumstances is always for the brokers to attempt to negotiate a mutually acceptable arrangement. Absent that, we remind the REALTORS® involved that in order to act in the best interest of their clients, REALTORS® should not allow a dispute over compensation to interfere with the settlement of the property. REALTORS® should allow settlement to proceed and then arbitrate any commission disputes at a later time.

As we discussed, the offer of compensation as advertised in the MLS is unconditional.  Of course, the cooperating broker may agree if he or she chooses to accept a lesser amount.



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