Virginia Commissions Offered to Buyer Agents. MRIS RULES

Real Estate Broker/Owner with Northern Virginia Homes - FRANKLY REAL ESTATE Inc

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


p.s. Even Lem talks in terms of Chickens.


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Bob Carney
Taylor-Made Deep Creek Vacations & Sales - Mc Henry, MD
Licensed MD/PA Real Estate Agent

OK I will chime in right from the beginning.  First of all, a good buyers agent will have a signed Buyers agent agreement outlining the compensation for his/her services with his/her buyer.  If for some chance the Seller will not or cannot pay the commission the buyer's agent is rightfully due, the buyer is responsible for the remainder of the expense. 

As for the short is all part of the negotiations.  If the seller's agent cannot negotiate with the bank for his paycheck then it looks like the bank does not get paid at all on this transaction. It is not my fault the bank opted to use poor lending practices to float the loan.

But I do agree with the 50% deal...however 50% of the sales price is not a bad deal.

May 09, 2008 08:02 AM #1
Danilo Bogdanovic
Market Advantage Real Estate - Ashburn, VA
Real Estate Consultant - Loudoun and Fairfax County

I agree with you that the Buyer's Agency Agreement puts the burden on the buyer to pay his/her Buyer's Agent. It's up to the Buyer's Agent to stand up for himself/herself should the co-op fee be less than what is agreed upon in the Buyer's Agency Agreement.

As for Listing Agents being "forced" to cut commissions, that's not true at all. A Listing Agent can say "no". Lem Marshall made a presentation on short-sales the other week and said stated that all of the agents he spoke with that have said "no" to the bank when asked to cut commissions did just fine - the deal closed and everyone was paid what was originally agreed upon in the Listing Agreement.

What's crazy is that many of these agents that are saying "yes" to cutting their commissions are doing so without their broker's approval. Just wait 'till a Listing Broker gets blindsided by a Selling Broker who's coming after tham for the difference in commissions paid out versus what was offered in the MLS.

Great post and thanks for sharing the updated rules with us.

May 09, 2008 08:14 AM #2
Natalie Langford
Realty Negotiations - Winchester, VA
Winchester, VA Real Estate

I love Michelle Yam.  Does she twitter?  She's the sweetest person.  Thanks for the explanation on cooperating commissions.  I watched Lem's webcast on shortsales and learned a lot from what he had to say there. 

For the record, I don't want to be paid in the form of chickens.  I will show those listings, but would much prefer being paid in $'s.   If I must be paid in chickens, then I feel I deserve cage free, vegetarian fed chickens. 


May 09, 2008 08:29 AM #3
FRANK LL0SA Esq.- Northern Virginia Broker .:.
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA


No talking about commissions!

NAR ANTI-TRUST violator you!

May 09, 2008 08:33 AM #4
FRANK LL0SA Esq.- Northern Virginia Broker .:.
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

Natalie, That was a joke.  

May 09, 2008 09:13 AM #5
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Frank, They just made that a rule in our MLS as well. It's about time. My commission is NOT subject to the lenders approval. They are not a part of my commission agreement with my seller or my buyer. In fact if you are a listing broker and the short sale lender wants to wipe out the commission then the seller unfortunately is not able to close that deal unless they agree to pay. Simply inform the lender of this and they will change their mind. They only reduce commissions because listing brokers don't fight it.

Playing with co-brokes is foolish and and a great way to get a bad rep with your peers. I always honor the offered co-broke even if I have to eat the cost.

May 09, 2008 09:51 AM #6
Frances C. Rokicki
Fran Rokicki Realty, LLC - Bolton, CT

Sounds like all good changes.  In Ct, we have had buyer agency, instead of cooperating broker for quite a few years now.  It works well.  The contract is with the buyer, not the listing agent or her seller.

It's a Good Life!


May 09, 2008 11:10 AM #7
Jim Crawford
RE/MAX Paramount Properties - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

Great post.  The verbiage "NO LONGER put Commission Subject to 3rd Party Approval"  violates the CODE OF ETHICS...

NO LONGER put Commission Subject to 3rd Party ApprovalCode of Ethics and Standards of Practice

of the National Association of Realtors®

Effective January 1, 2008

May 09, 2008 11:46 AM #8
FRANK LL0SA Esq.- Northern Virginia Broker .:.
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

Hey Jim,

Can you link to that exact code?

Lem Marshall from VAR legal, had a 28 minute fireside chat about Ethics and commissions on Short Sales.

I believe he stated that the MLS requires that you put a commission that a buyer agent can expect to receive.

Otherwise the contract can be accepted and the bank has the right to give you 0%. Or 1 penny. That model won't work.


May 09, 2008 11:55 AM #9
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

Frank this always brings a healthy discussion. I see this all the time, or something similiar like commission to be paid on the net. That is not right either. A realtor has a right to know what the co-broke fee is and we have seen several violations on it this year. We ( I'm on the board) have told them to STOP,but since we don't have fines, it continues on.

May 09, 2008 04:07 PM #10

I don't see a problem with "Commission paid on Net". If somebody offers $500,000 with $20,000 back, then the commission is on $480k. That sounds ok.

May 09, 2008 05:20 PM #11
Matthew Rathbun

JUST SAY NO!  I have spoken to countless brokers and agents on this topic and never, not once, have a I heard of an agent standing up against the lender and not getting their commission.  When the lenders rep, gives up 33% of his/her salary to help the lender, I'll give up mine!  When the lender goes after both agents, the settlement company, title insurer, home inspector, appraiser, title researcher, home insurance agent, etc...   I still won't just give up the money that feeds my children and puts a roof over their heads.  Lenders attack the commissions because too many agent capitulate and allow them.

Principal Brokers need to have written policy and only permit certain capable and experienced agents to take listings that are short sales. Far too many of the "short sale" listings are not possibly going to sell. Yet, agents are taking them and risking the Broker to pay a buyer agent more than they are getting from the sale, because they've offered the commission in the MLS.  It's a mess, and untrained agents with unreasonable expectations are making liabilities more ubiquitous.


Jun 10, 2008 03:17 PM #12
Terence Michael McCarthy
Terence Michael McCarthy - Washington, DC


Excellent post! It's a shame that I'm the only one who has stumbled upon it in the last three months.  There are too many agents out there, unfortunately, that could really use the education.


Sep 18, 2008 10:28 AM #13
Gene Allen
Fathom Realty - Cary, NC
Realty Consultant for Cary Real Estate

Thanks for the info.  Again it seems banks don't get it and agents need to be more hard edged about commissions.

Dec 15, 2008 04:57 AM #14
Tony and Suzanne Marriott, Associate Brokers
BVO Luxury Group @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ


This is a very tricky area.  No guarantees that the split between Listing and Buyer Broker will be 50/50 of the total commission.


Jul 14, 2010 07:56 AM #15
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