I'm obligated to present an offer on a home - it's outside my MLS and listed on another MLS in a nearby county.

The agent said he'd take the offer and give me a whole 1.75% commission for my side.

I spent most of yesterday upset and in tears over this - I've worked so long and so hard with these buyers and feel like I got kicked in the teeth.

Any advice you have would be appreciated.

I think I would check to see if your MLS and the other MLS practice reciprocity. If so, it seems as though you would deserve the same fee as someone in their native MLS. Not certain about this, however. Alternatively, can you get your buyers do use you as a buyer's agent, and kick in the balance of the fee you would otherwise receive? There's probably more than one way to work this out.

Prior to even showing a property that is not in your MLS you should have a co-broke agreement with the listing broker (whether that broker is in another MLS or totally independent). There is no sense in spending your time and resources promoting a property to a buyer without knowing, in advance, what your share of the commission will be.

· Standard of Practice 16-15
In cooperative transactions REALTORS® shall compensate cooperating REALTORS® (principal brokers) and shall not compensate nor offer to compensate, directly or indirectly, any of the sales licensees employed by or affiliated with other REALTORS® without the prior express knowledge and consent of the cooperating broker.
· 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)

Explanatory Notes
The reader should be aware of the following policies which have been approved by the Board of Directors of the National Association:

In filing a charge of an alleged violation of the Code of Ethics by a REALTOR®, the charge must read as an alleged violation of one or more Articles of the Code. Standards of Practice may be cited in support of the charge.

The Standards of Practice serve to clarify the ethical obligations imposed by the various Articles and supplement, and do not substitute for, the Case Interpretations in Interpretations of the Code of Ethics.

Modifications to existing Standards of Practice and additional new Standards of Practice are approved from time to time. Readers are cautioned to ensure that the most recent publications are utilized.

It's a non-cooperating MLS w/mine so reciprocity isn't gonna happen by law -- I'm wondering if I can add an agent from their MLS to my offer and give her half the commission just to keep it out of Mr. Greedy's pockets and teach him a lesson that's not how you treat people.

Take what you can get and move on. No need to further muddy the water at this point.

I've cursed every dollar he's taken and it will only bring him misery -- you can't build happiness by causing the suffering of others, it's the law.

I hope you have it in writing because nothing in life is guaranteed to be fair. Next time get it writing before you show it while you still have some leverage.

Artiste - take this as a lesson and learn from it. It's not the listing agents fault that you didn't specify the terms of your procurement before presenting them with a buyer. From what you're saying, they don't have to pay you anything at all...they're being nice by offering the 1.75% co-broke to you.

The MLS serves not only as a database of properties but also as an offer of compensation. If you are not a member of that MLS and if your MLS is not reciprocating.....then nobody ever offered to pay you a dime for procuring a buyer for that property.

Next time I would recommend having your buyers sign a buyer-broker agreement and/or getting cooperative commission in writing from the listing agent PRIOR to showing the property.

I'm sure you've already thought of these things...but the only thing you can do is learn and move on...or stay bitter and slash the other agents tires (not that I'm advocating that course of action...)

so, tell me why you cannot join the other MLS before submitting the offer? would you realize a higher net profit if you do?

He's trying to grab over $2600.

Never in a million years did I think I'd meet a greedy Realtor who'd gladly burn me -- I thought our motto was "Fair and Ethical" and it's unfair to grab commission even if you can, imo. Just like it's unfair to make an employee work 10 days in a row before you pay him overtime, it's legal but it's still not the right thing to do.

I included a Commission Agreement and sent that to the Seller for their signature.

I could join the MLS but couldn't in time to present the offer -- I'll get agreements in writing for commission from now on.

Never in my life have a wanted an offer to be rejected more than this one. He's not acting in the Seller's best interests.

The agreement you need signed is with this agents broker not the seller. The seller has already agreed to pay the listing broker and now you need to get the listing broker to share it with you. A signed commission agreement with the seller probably won't do you much good.

how long have you been in this business?? LOL

I'd just categorize this as an expensive lesson that won't have to be learned a second time. Most of my Competitors are very generous with their earnings AFTER a Closing; but toe the line when it comes to their Contracts, and Offers of Cooperation. They don't give anything away unnecessarily.

If memory serves me correctly

This falls within Basic Education 101

Who are you working FOR,

When and how you will be COMPENSATED; and

That you have it all IN WRITING

Now, in the event you had a Buyer's Agreement in place with the buyer being responsible for your compendation and any short-fall in the compensation as may be received from a Listing Broker, then the Buyer has a definite interest and nothing prevents the buyer (definitely not you as that would be unethical) from personally contacting the seller and informing the seller that their agent refuses to adequately share their commission in relations to a possible sale and certainly not in the best interest of either the sellers or the buyers, who would like to purchase the seller's property.

In most instances, a Listing Broker is deemed to have a fiduciary obligation to their seller and are required to act in the best interest of their seller.

Further, in the event the Listing Broker fails to fulfill or breaches their fiduciary obligations to their seller, the seller may be justified in denying compensation to the Listing Broker on the grounds that they "Breached their Fiduciary Duty" due the seller.

Listing Brokers, once made aware of the all the facts have been known to become more co-operative.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .

In my MLS, offers to brokers from other MLS areas are clearly stated in the listing information (of course, if you aren't in the MLS, you probably wouldn't be able to access that information). In any event, I think I would be sure to clarify that issue in my first conversation with the listing agency.

"Hi, I'm Suzy Q from the neighboring MLS and I'm calling to see if your listing on 123 Main Street is still available? It is? Can I show it? Do you participate with non MLS brokers? What are your terms?"

There is one independent broker near me who shares nothing with anybody. If you call and ask about a property, he makes that clear.

I am sorry to sound negative here. But what no one has stated is what the listing broker has advertised in the first place. You may be angry for only getting 1.75% but what was originally offered. If that is what is posted then so be it. Commission is totally negotiable and what the listing office chooses to offer is totally negotiable.

Also note that the co-broke fee may have already been negotiated out via the listing agreement. If that is the case your “included a Commission Agreement and sent that to the Seller for their signature” is actually illegal and also un-ethical for you are using a third party contract (for witch both your buyer and you are not a party to) to change the terms of. Especially if the listing agreement is an exclusive right. You cannot do that. Plus the listing broker not the seller is who offered the co-broke to the selling office. So be careful with that one.

It is not illegal for a buyer to ask their agent to add any additional commission verbiage into an offer contract. (remember, what our duties are under agency to the buyer)
If the co-op in the MLS is 2% and the buyer had agreed that their agent will get paid 3%, but does not want to pay out of pocket, the buyer can ask in the offer to have the seller/listing broker, make up the difference.

They can ask but also remember the selling broker is not a party the purchase and sale contract nor to the listing contract between the seller and the listing broker. Without being a party to the contract you have very little leverage to negotiate.

That's correct, because the purchase contract is between the buyer and the seller, the buyer can ask the seller for anything, the antique furniture, the old car in the garage or an increase of commission for his agent.
Depending on the offer, the seller can accept, counter or reject the offer.
The offer itself has nothing to do with the listing agreement or the buyer agency agreement, they are between their agents and clients and stand on their own.
p.s. I'm not saying it's the best way to negotiate, just that it's legal to do so, at least in my state.

Well sort of. Sorry been through this before.
You have to be very careful how you word it.
If the co-broke fee is say 2.5% and the buyer wants the selling broker to get say 3% then the buyer can ask that the seller compensate the selling broker an additional .5%. However what they cannot do is if the co-broke fee is 2.5% and they say that the co-broke fee is 3%. That become interfering with the listing agreement. And when you do that the listing broker then has a right to object to the contract. Without the verbiage “additional compensation” then the you are trying to renegotiate a contract of witch you are not a party to. And then the listing broker can object to the offer and contract period.
Been there before on a very same issue when I a young realtor. I had an offer on one of my listings where we offered 3% and the selling broker put it right in the contract to receive3.5%. I missed it the title company missed, the selling agent missed, it everyone missed it except the selling broker who came after us for the additional .5%. The judge ruled that part of the contract is illegal and voided as buyer and selling broker are not a party to the listing agreement.

Excellent input, Alan - I was hoping someone would have personal experience and could clarify regarding that situation.

Thanks
Also of note if the wording of additional compensation is not in the offer then here is what is actually happing. Say you have a 5% listing and agreed to co-broke at say 50-50 or 2.5% each. If the selling broker comes is and asks for say 3.5% then the listing broker only gets 1.5%. See this is how you are trying to renegotiate a listing contract of witch you or the buyer is not a party to. You got to realize that without the wording additional compensation the seller still pays only the 5% of the original listing agreement.
Without the wording of additional compensation the listing agent/broker can say no to that without the seller. Not to mention without the proper wording you are also flat out rude to the listing broker. For if you do not use the term addition compensation then you should be trying to renegotiate with the listing broker not seller. You are actually trying to do an end arround so to speak

"If the selling broker comes is and asks for say 3.5% then the listing broker only gets 1.5%. See this is how you are trying to renegotiate a listing contract of witch you or the buyer is not a party to."

We are talking about 2 different scenarios here. I think the above statement is very misleading because, since the buyer and the buyers agent have no idea what compensation is offered to the listing broker, they just know the co-op, I don't see how that can be implied as interfering in a listing contract.
Also, it's not the broker asking for an increase in commission, it's the buyer, because the buyer would have to pay the additional commission to their agent and is asking the seller to pay that. If the offer is such where the seller will gladly pay the additional amount, why should the listing broker object since he is not even part of the offer contract and none of his commission will be reduced?
It's just like asking the seller to pay for the buyers closing cost, it has nothing to do with the listing agents agreed to commission.

p.s. it's the same as asking a FSBO to pay the buyers agent, no difference.

No Pikes what you are saying is misleading.

The buyer cannot just say the selling broker is to receive 3% when 2.5% is offered without asking for there to be an additional compensation offered by the seller. If they do not ask for additional compensation above and beyond the listing agreement then they are interfering with the listing agreement of which they are not a party to.

[quote]No Pikes what you are saying is misleading. /quote]

Sorry, but my attorneys disagree. I suggest to let them fight it out.

Pikes,
You are right on the money!

My attorneys have expressed the same opinions in similiar situations and have had my clients include in the offer that the seller agrees to pay x% amount to make up for the shortage between my fee and the amount offered the listing broker as a co-op fee. The listing broker gets nothing extra so it has nothing to do with his listing contract so there is no interference.

Thank you, Pikes Peak & Paul, for the information -- I appreciate you both and I'm grateful that you took the time to research the issue

The rest of the story is that I took the clients to a new development and they're buying a brand new home. 3% for me and they're doing all the work and I'm just waiting for my check to arrive soon.

and I keep forgetting to tell Mr. GreedyAgent that we're not going forward with him...

Cool! Congrats!

I must say this really bugs me.
1. You are upset that you made a mistake and didn't find out what compensation if any you would receive from another agent, why does that make him greedy? He had no obligation to pay you anything. Take responsibility for your mistake and make it a learning experience.
2. You are willing to let your client "do all the work" and you just wait for your 3%, are you their agent and looking out for their best interest or looking out for yours? Wow, guess who sounds greedy to me.

^^ Then you tell me why is it NOT greedy to split commission 75/25 and "cuz it's legal" ain't the right answer -- explain how 75/25 is FAIR.

And, tell me what specifically I should do to move along the sale between the builder and the buyers.

Life is not fair. I've left money on the table a few times when I've allowed myself to get deeply involved in presenting property that Buyers wanted to see; but which wasn't in MLS where the compensation is clearly outlined. I call it allowing myself to be stampeded into masochistic behavior.

I have several pockets of activity around me where some Brokers can survive without being in the MLS and if you don't clarify the compensation on one of their Listings in a contractual Offer of Cooperation in advance, one may often find themselves (including myself) working for free. (Or, going hat in hand, begging for a piece of the Commission.) Actually, now that I think about it, not being a Member of that other MLS and showing a Property without such a Contractual Agreement or a signed "Offer of Cooperation", would be illegal in Vermont.

Similarly, they must approach us regarding how we "might" split a Commission if they are the ones to procure a Buyer for one of our Listings (which is in the MLSs). Prior to an Appointment, they have the power of not showing our stuff. Afterwards, their position is much weakened; because the Buyer has already seen it, and may abandon that Broker.

Being in MLS solves many thorny issues.

This is exactly why agents are perceived the way that they are (greedy, entitled, not deserving of the commission they earn).

"Greed" and "Fair" has nothing to do with the 75/25 commission split. What you agree to is what you agree to...regardless of how entitled you might feel.

If you didn't negotiate a better compensation for yourself, then you earn what you get. Now you know better (I hope) and you won't make the same mistake next time.

Not for nothing...you should have known better.

I hope you did a better job representing your customers with the builder than you did representing yourself with the other agent...but wait...you said you just turned them over to the sharks and are waiting to get your commission check in the mail, right...? Way to earn it... (psst, your job isn't to "move along the sale"...it's to "protect your buyer and work in their best interests")

I know my post is a bit harsh...the quote from you above necessitates and begs for it...

I hardly think the builder is a shark - I think you need to expand on that and tell me specifically what I need to do to save them from the sharks, as you like to call new home sale agents.

And in you own words 3% for me and they're doing all the work and I'm just waiting for my check to arrive soon. Is that fair as well. Like we asked from the get go tell us the whole story and it seems we are just now starting to see the whole story. You wanted someone else to do all the work and you just sit back and wait for the check to arrive.

not even -- what, other than touring them since Oct, should I do with regards to the sale of the home btw the builder and my clients?

it's getting very trolly in here

ManFromTheBand, I couldn't have said it better myself.

Artiste, I'm surprised that you have to ask what is expected of you when you are representing clients. As for "touring them" since Oct. isn't showing them properties and providing them with ALL the information you can to help them make the decision that is best for THEM and THEIR needs part of YOUR job?

In my part of the country, we generally offer agents who are not part of our mls 1.5% commission when they bring an offer. Before I tour homes in an area not in our mls, I phone the broker and get a signed commission agreement. A few years ago a California client of mine I had worked with for a year, walked into an open house without me and stopped by my office afterward to write up an offer. It was accepted and the listing agent offered me 25% because I could not prove I was procurring cause. I called him and bluffed my way to a 75% commission. It helped that my buyer was irate and on my side when I told him. Maybe you could try the same, Artiste.

yes...the folks who have been here for years and post their contact information in their signatures are trolling to create issues...

Let me clarify the term...I think anyone on the opposite side of the negotiation table from me is a shark and my job is to protect my client who (to continue the analogy) usually doesn't know how to swim nearly as well as I do (given that I do this every day and they do it once every 5-10 years).

With regards to what you could do to represent your clients beyond being a chauffeur...that'd be a great question for you to ask your broker.

Couldn't have said it better.

I would love to set the delusional trolls straight but it's obvious their reading comprehension skills are severely lacking and they wouldn't understand it anyways. They're just jealous.

ouch!

Hmm. Interesting discussion!

I totally understand where Artiste is coming from.

In our MLS, we are able to pull up and view the private listing info from neighboring MLS systems without joining them. We do have some reciprocity going as I can pay a small fee and enable my lock box key to open their lock boxes. We frequently overlap listings from one another - someone from a neighboring MLS may list a property in our area and vice versa.

It never once occurred to me that if I sell one of those listings from another MLS that I'd be entitled to less of a commission than if I belonged to the MLS in question. In fact, I had a house under contract from another MLS and was going to get the full 3% co -broke (unfortunately, the deal fell through over something else.)

It also would not occur to me to not pay another agent the same commission that we'd pay someone from our own MLS...an agent from Philadelphia who sold one of my listings got the full co-broke...

Sure life is not "fair" but wow - I would never take advantage of someone like that "just because it was legal." It's not ethical to me.

What difference does it make if I belong to the same MLS or not?

I've seen some listings in NY or NJ in our MLS, stating that unless you have a NY or NJ license, all sales must be by referral fee from the other agent; that I can understand as it involves licensing in another state...some of those agents will only pay a 25% referral fee, but some will pay a good hefty referral fee that's pretty darn close to the 3% co-broke - why?

Because it just seems like the RIGHT thing to do.

I know I'm naive - but I don't want anyone to ever call me greedy or a shark because I was legally able to do something that seems to me to be ethically wrong.

Maybe if it ended up causing a lot more work on behalf of the listing agent, I could see that - but really...

I work for a broker who believes in "nice begets nice." It's much better to play fair and be nice with others, than it is to play hardball and be out only for Number 1.

Perky, I agree with you 100%. But what you or I would do is not what is in question.

CYA - for yourself just like you should for your customer. Whether fair or not, there are rules to this game and they are the rules that we all work within.

MLS is an offer of compensation to other members 'of that MLS'. If you are not a member (or reciprocal member) of that MLS, then nobody has offered to compensate you. Like it or not, fair or not, whether you would do it that way or not if you were the listing agent, etc etc... that's the rule that you have to work with.

What that tells you is "ask before you show it if you want to guarantee your payment, cuz you aint got nothin in writing".

One of the first rules I learned in real estate - "If it's not in writing, it doesn't exist."

This applies both to myself and to my clients.

Broker said he'd give me a 90% split? Great - let's write it down. Other agent said "Sure, I'll kick you a referral fee" - fantastic, let's put it to paper.

Again - it's not about what YOU would do if you were the listing agent (you and I would both do the same thing, pay the other agent and ask them to bring more buyers for your other listings!)...it's about how you would protect yourself if you were on the other side from a listing agent you didn't know who hadn't offered to make sure you get paid for your procurement of a buyer.

The question though was "is it fair." That was the original post, and it seems like everyone just wanted to pounce on Artiste and point out how ignorant you all think she was.

That's the jist I got, anyway.

Perky
I agree with you. However we are not talking about a broker paying less then what they offered. That was not mentioned. so we can only assume that what was stated was also offered.

I didn't say we were talking about a broker paying less than what they offered - I was talking about Artiste's question of was it fair that the broker offered less because she was not a member of the MLS in question.

I did say that my broker - and most of the brokers I am familiar with - will pay the same commission to others regardless of whether they belong to the same MLS or not...and I do believe that it is the ethical thing to do.

This thread seemed to turn into a "Let's Beat Up Artiste for Not Knowing Better" thread...

When I look at the situation that Artiste went through, I see an education being paid for (Lord knows we've all earned our "educations" in this business) as well as a possible learning opportunity for other agents reading the thread.

It's akin to me bringing a buyer to see a FSBO without working out compensation in advance, and then being upset that they didn't want to pay me.

You are responsible for your own situation. Does it suck? absolutely - can you learn from it and do things differently next time to protect your livelihood? Hopefully.

But accept the fact that you made a mistake and own it...because until you do, you can't learn from it.

I make mistakes too, and it sucks when it happens. I was working out a deal about a year ago between an unlisted seller (who had expired several months prior) and one of my buyers. In going back and forth I revised my Seller's Net Sheet several times in the span of 10 minutes...

Because I was rushing, I screwed up my numbers and gave the seller the wrong info (and they agreed to the deal based on my incorrect numbers). I realized my mistake 2 minutes after I got off the phone with the seller.

Could I have called them back up and said "I'm sorry, you're actually going to net THIS much, not that much" and let them decide what to do from there after a deal had already been struck? yes, I could have...but instead I owned up to it, took responsibility for my mistake and made 1.5% instead of 5% on the deal. Did it suck? Absolutely. Was it fair? That's debatable...but it was my mistake, I owned up to it, learned from it, and kept the deal together in the best interests of my customers and gained some referral business out of it.

The worst thing an agent can do is make a mistake and then convince themselves that it wasn't their fault (i.e. there's nothing for you to learn because the other agent was just being unfair) - if you learn from it, at least you'll have gained something.

The reality of the situation is that Artiste was never offered ANY compensation because she's not a member of that MLS. With no buyer-broker agreement in place with compensation from the buyer, and no MLS agreement in place with compensation from the seller....it is what it is, no?

Perky Here is what Artiste said

"I'm obligated to present an offer on a home - it's outside my MLS and listed on another MLS in a nearby county.

The agent said he'd take the offer and give me a whole 1.75% commission for my side.

I spent most of yesterday upset and in tears over this - I've worked so long and so hard with these buyers and feel like I got kicked in the teeth.

Any advice you have would be appreciated."

No where in there does it say that the offer of compensation was less becuase Artiste was not a member of that board. All it says is the offer of compensation offered was 1.75%. And all it says is Artiste was upset with the amount offered. Where in there does it say that the compensation offered in that MLS was more then 1.75%. No where thats where. You all are making implications about information that is not given. The simple fact is the offer of compensation that was offered was 1.75% and Artiste was not happy with that. Well compensation is just like the purchase price, there is nothing that says Artiste has to accept that. Let me ask another question rather then get upset why did not Artiste even try to negotiate his/her compensation.

Sorry but I go by what information is given. I dont assume anything. And the simple fact is rather then get upset Artiste should have tried to negotiate her compensation just like she tryied to negotiate the sales price for her client.

Perky gets it completely - smart gal!

The trolls should be ashamed of themselves for being unhelpful and mean.