I just attended the NVAR (Northern Virginia Association of Realtors) Hispanic Forum event, which included Michelle Yam from MRIS's Compliance department.
It was a great way to clarify the rules on how to advertise cooperating commissions on our local MLS.
Here are the rules for MRIS as I understand it (as of today, it might change at NAR's mide year event).
1) "You can NOT put "50/50%" as the commission amount."
It isn't the buyer's fault or the buyer's agent's fault if the listing agent makes a mistake and accidentally wipes out everyone's commissions. Also as Michelle put it "If you were to offer 50%, what is that 50% of, 100 chickens?" (or something like that)
2) You can not put TBD (To be determined, which is the same as putting 50%)
3) You can NO LONGER put Commission Subject to 3rd Party Approval. (either in the remarks or scroll down option)
4) You CAN put X% of Net (sales price minus seller subsidy)
5) You CAN put $1
6) You can NOT put $0 (some offer has to be made)
I am strongly in agreement with the decision to take this route.
Why? Well if I have a buyer agency agreement that states I will be paid "100 Chickens" or X percent, that means that the buyer is obligated to make sure that I get paid that at closing. If the commission changes mid stream (or 3 days before closing) the BUYER is the one that effectively has to come up with the $ difference.
If $1 is offered up front on the MLS, that is fine, then my buyer can decide if they want to proceed with this listing (you really SHOULD since it won't be seen by anybody and we will get a great price on it).
Listing agents that say "but what if the bank cuts the commission, it isn't fair." Well you need to know what you are doing, to make sure that doesn't happen. And it isn't the buyer agent's fault (nor the buyer) if you don't know what the hell you are doing. Also with the lack of certainty, you will get LESS agents to look at your property (because the buyer tells them, they don't want to fill the gap).
And Brokers beware. If your agents are putting in a percentage on the MLS as the "offered" commission, if the total commission gets cut by the bank, the BROKER is still responsible for the entire amount. Even if it gets cut to "1 chicken" on the HUD1, the broker will get sued and LOSE for offering X% or $X and not paying it at closing.
Consumers beware. You need to have this discussion with your buyer agent. You want your agent on your side. You don't want them NOT showing you listings because they fear that they won't get paid. Read my blog on Short Sales, while they currently suck. Don't worry, we are working on a new process where hopefully 90% of them will close.
Just wait, somebody who hasn't read the post, is bound to comment "You can't talk about commissions."
- Written by Frank Borges LL0SA Broker FranklyRealty.com
p.s. Even Lem talks in terms of Chickens.
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