Good factual post!   Most agents would not be aware of this.  This was covered in the ABR training course I took.  Even after all of that I still find it difficult to get a buyer to sign a buyers broker agreement.

We, in Connecticut, no longer offer co-op compensation.  We have Buyer Broker compensation posted in the mls listing.  Our contract for compensation is with the Buyer, not the Seller.  It works out very well.  I sell fsbo's, having the buyer (who pays my compensation).

It's a Good Life!

Fran

This is good advice. I have received many offers with a Change of Compensation form attached.

My office has a written agreement with several dozen other local companies that we will each split commissions evenly.  A die hard few old local companies are missing out.  At one time the old timers had the market share, now they don't. When writing an offer, I simply refer to my list and know when to utilize the Buyer Agent Fee or not.  No agreement is discussed on a contract.

Jesse & Kathy- The MLS is an agreement between brokers in Florida. That's where commissions are posted. Offers, are between buyer and seller and compensation has no place on an offer. A separate contract between broker to broker can be drawn.

We cannot address commissions in our California purchase contracts because agents are not a party to the contract. When I sign a buyer to a buyer broker and specify a commission, I also note in THAT agreement that if the cooperating compensation is less than the percentage in the buyer's broker agreement, I will waive the difference for the buyer.

Looks like I am much closer to the hot waters than I thought. Guess, i need to sit and read the COE. Good thing I learn so many things on AR, that can help me keep out of trouble.

Now I get confused by Teresa's comment, The agreement, isn't it an antitrust issue?

I am curious about how they are doing this in Connecticut. I am a bit confused if it is a matter of semantics, or an actual change.

James Lockard - Realtor, Allendale, NJ: Hi, James, It's unfortunately an issue many agents locally still struggle with.  Many can't wrap their minds around the concept.  I used to struggle with getting buyers to sign a BBA, but a friend and trainer in Anchorage told me once that the problem was with me.  I approached it from a perspective of negativity; a BBA is in a buyers best interest.  It shows them that we are committed to them.  We don't get paid until they close, so we will work diligently to find the best home and help them purchase it on the best terms for them, all while guaranteeing that we'll be available when they need us.  It's a win/win situation.  I've had a few balk since then and I generally cut them loose, but the majority are happy to sign it, if not on the initial visit, they take it and the info we provide home and think about it.  I would say that close to 95% that take the info home bring it back to us signed and are ready to hit the ground running. 

Frances C. Rokicki, Broker~Mentor: Hi, Fran, I'm using buyer broker compensation and co-op as interchangeable terms... here they are the same thing.  Working as a buyers rep, we have a contract that stipulates our compensation comes from the buyer, unless paid by the seller.  Is CT different or is it just late and my brain is fuzzy?

Graham Holmes - Yucaipa Hemet REO Homes: Hi, Graham, We don't have a CoC form... agents include the amended compensation language directly into the "additional terms" section of our purchase agreement or as an associated addendum. 

Teresa King, e-PRO, Daphne & Fairhope, AL: Hi, Teresa, Interesting angle.  At first glance it makes me a little uncomfortable, but I suppose as long as your agreement with the other firms isn't exclusionary and you're not agreeing, as a group, to establish a common fee schedule, then you're probably ok. 

Mark Horan PA Keller Williams Kissimmee, Florida: Hi, Mark, It's a broker to broker agreement here as well.  Our inclusion of a co-op fee in the MLS is our contract with the selling brokerage per MLS rules/regs.  I have occasionally drafted a separate agreement, but not all that often.

Elizabeth Weintraub, Sacramento Real Estate Broker: Hi, Elizabeth, It's the same here.  We're not parties to the contract but that doesn't stop agents who haven't figured that out from inserting language into the contract to increase their commission.  As for the BBA, I will sometimes waive the difference, but most of the time I do charge them.  I suppose like anything it all depends on the buyer and the circumstances.

Jon Zolsky, your Daytona Beach connection: Hi, Jon, That's definitely one of the great benefits of AR; there is no shortage of great information from very talented agents.  This comment section is full of them; talented agents, that is.  As for Teresa's comment, I would say, taking the comment at face value, that as long as the agreement wasn't designed to exclude other 'non-member' firms and there isn't an agreement between members to charge X to consumers, then it's probably ok. 

I have a similar agreement with a few agents I work closely with. One or the other usually initiates a call about the total commission to see if there's a need to address a buyer broker fee in the offer before writing it.  If the total commission offered covers my or their total fee, we don't bother inserting the BBA language into the offer... if not, we do.

Sarah Nopp, REALTOR(R), CRS. RE/MAX Four Seasons, Olympia WA: Hi, Sarah, Unless I'm reading it wrong, and it is late, it sounds like they are just using a different term for the buyer broker fee.  Hopefully Fran will clarify if we're off base.

 Thanks everyone for reading and commenting.  I appreciate your comments!

No anti-trust issues.  The agreement is NOT about what the client is charged.  It is all about how the companies agree to split ANY commission that is paid.  No company is excluded, and all are free to participate.  Strictly voluntary on the part of the broker of each company. 

Jesse and Kathy, I think the rules differ by state. The MLS in our state specifies the offered Buyer Agent Commission while the listing agreement specifies the Seller commission. And of course everything is negotiable.

Teresa King, e-PRO, Daphne & Fairhope, AL: Thanks for the clarification, Teresa.  When you say "..When writing an offer, I simply refer to my list and know when to utilize the Buyer Agent Fee or not..." what exactly do you mean?  How do you know when or whether to ask the seller to pay a percentage of your fee?  Here, even with the few agents we work closely with, there are many times we still ask the seller to pay a portion of our fee.  Sometimes the total commission, regardless of how it's split, just doesn't cover our fee.  Do your buyer clients ever pay a part of your fee or do you just work for/from the split, period? 

Gary Woltal - REALTOR® Dallas Ft. Worth : Hi, Gary, When we enter a listing into the MLS, we specify the selling brokers compensation (whether as a percentage or a dollar value).  This is actually our contract with the selling brokerage.  While selling agents are free to call us on an individual basis and try to negotiate more, it's a violation of the CoE to attempt to leverage a higher selling agent commission through an offer.  Sounds like we're doing the same thing or am I reading your post incorrectly?

Our Buyer Agency form has a fill in the blank to state the compensation we work for as a BA.  I write in mine as a percentage of the sales price.

You asked, " How do you know when or whether to ask the seller to pay a percentage of your fee?" 

I don't ever ask the seller to pay anything.  My BUYER requests in the purchase agreement for the seller to cover some of the buyer closing costs. My buyer is told that there is a commission discrepancy and the dollar amount of the shortage is calculated. We then discuss his options of paying for it himself, or the preferred method of asking the seller to make up the difference as a buyer closing cost.

For instance, let's say in the MLS the listing agent is offering the buyer agent "2 Apples" and I normally work for "3 Apples" as a buyer's agent, and this company is not on our reciprocal list.  I have a form to invoice the buyer (explained before writing the offer) for the difference.  I write in the purchase agreement, Seller agrees to pay X number of dollars toward the buyer's closing costs.

Usually, the listing agent will state the lower compensation in the MLS, due to not all companies participating.  If the company is on our list, I call the listing agent and ask the # of "Apples" that the agent took the listing for, so I am aware of the higher compensation, if any.   If it is not the 3 Apples I work for, I will still invoice the buyer and they will ask the seller in the offer to pay the difference.

Teresa King, e-PRO, Daphne & Fairhope, AL: The "..how do you..." question was meant as though the request was originating from the buyer... sorry I wasn't clear.  It sounds like you operate pretty much as we do. I misread your original comment.  Thanks!

Great post and a much needed topic.  I have used a BBA a few times, but fees have been covered by the co-op agreement so far.  I recently wrote a contract for a purchase for a client that had signed a BBA with me, on a FSBO.  This will be the first time to actually have the buyer pay the fees out of their pocket.