Battle Over Commission Pt. 2

I believe in charity and giving back to the community, however real estate is my business.  That being said when in business you have to set a price for your product.  I know many realtors that will not show properties to their clients unless it offers 3%.  I do not feel that is representing my client to the fullest, and at the same time, I don’t work for less than 3% (normally).  When I first meet with my clients, before I start showing them any properties I explain this to them in detail and give them the option to work with me through my buyers contract which states that the seller will pay no less than 3% even if it means that the buyer adds it to the accepted sales price.

Now this 2.5% listing seems like I may be overdoing it, but I pose this question to you, if the compensation offered was .5% would you still feel the same way?

This excerpt was taken from Realty Times:

"Obviously no business should be required to represent clients at a loss, and having brokerages continue to work for ever-decreasing commission schedules will cause, at some point, a loss to be sustained by the brokerage and/or agent because of the reduced commission schedule.  Therefore, it is up to the individual brokerage or agent to determine when they are potentially going to cross this line, which will result in the agent not showing a specific property solely due to the cooperating compensation offered in the MLS."

-- Quote from Hank Sorenson, FL real estate attorney

Now for the case analysis

Taken from our Standards of Practice

Article 3
REALTORS^® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker. (Amended 1/95)

-  Standard of Practice 3-1

REALTORS^®, acting as exclusive agents or brokers of sellers/ landlords, establish the terms and conditions of offers to cooperate. Unless expressly indicated in offers to cooperate, cooperating brokers may not assume that the offer of cooperation includes an offer of compensation. Terms of compensation, if any, shall be ascertained by cooperating brokers before beginning efforts to accept the offer of cooperation. (Amended 1/99)

-  Standard of Practice 3-2

REALTORS^® shall, with respect to offers of compensation to another REALTOR^®, timely communicate any change of compensation for cooperative services to the other REALTOR^® prior to the time such REALTOR^® produces an offer to purchase/lease the property. (Amended 1/94)

-  Standard of Practice 3-3

Standard of Practice 3-2 does not preclude the listing broker and cooperating broker from entering into an agreement to change cooperative compensation. (Adopted 1/94)

The following  would support the  listing  agents  argument, however  this was not my contingency, it was my buyers because they  did not want to  put it on  top, especially after they were already told offer accepted.

- Standard of Practice 16-16

REALTORS®, acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an offer to purchase/lease to attempt to modify the listing broker’s offer of compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing broker’s agreement to modify the offer of compensation. (Amended 1/04)

So ladies and gentlemen in the State of NJ, everything was done by the book.  Morally it may seem like I was in err, but legally (according to my attorney and standards of practice) everything was done by the book.  It was the listing agent in fact that violated the law when she did not present the entire offer to her seller including the 3%, which is why the commission came off their side.

There are certain circumstances where I would accept the lower commission; however the agent’s broker insulted my integrity and integrity by making false accusations and wanting to challenge me as far as threatening legal action.  I feel like that their having to pay my commission is a fair compensation for the free real estate lesson.  Had they presented the offer in full and left it to their seller to say no, it would be different.  Instead they chose to blow me off until they thought they had me in the corner.

However I do have a heart and I aim to always be fair, so here are my questions:

1. Would you sell a listing with less than 1% co-op?
2. To the previous comments, do you still feel the same?
3. Would you let the agent keep their entore commission?