Explanation of MLS Offers of Compensation
EXPLANATION OF MLS OFFERS OF COMPENSATION
Offers of compensation through the MLS are blanket and unilateral and must be designated as a percentage of the sales price or a fixed dollar amount.
By definition, MLS constitutes a blanket offer of compensation from one Participant to another. While this concept is often called a “commission split,” it is more-accurately defined as an “offer of compensation.” All participating brokers have the right to know how much they will be paid for cooperating in the sale of another Participant’s listing. Listings submitted to the MLS must state a definite amount offered to the cooperating Participant for the services.
Listings CANNOT be submitted to the MLS if they do not designate a fixed dollar amount or a fixed percentage of the gross sales price.
Ranges of compensation and compensation with conditions CANNOT be submitted to MLS.
Listings CANNOT be submitted to the MLS with unacceptable terms regarding the offer of compensation to cooperating broker.
Listings with statements such as the following, with a fixed offer of compensation and additional terms or conditions about compensation, are violations of the MLS Rules:
•”This is written notice that if the listing agent shows the property to your customer and you write the offer, the cooperating compensation will only be half of the stated amount.”
•”Notice, if the listing office shows this property to a buyer and another agents brings a written offer for that buyer, the full cooperating compensation will not be paid.”
•”Attn. agents: You must personally show this property to receive buyer agent compensation.”
•”Buyers agent must be present at all showings to receive full commission.”
•”Buyers who are licensed real estate agents will not be paid a commission.”
These listings cannot be submitted to the MLS because they contain conditions on the payment of compensation to a cooperating broker.
THE MLS RULE SECTION 5.3 – DUAL OR VARIABLE RATE COMMISSION ARRANGEMENTS does not mean that the “offer of compensation” to other Participants in MLS can be Variable. This Rule deals only with the gross commission agreement between the seller and listing broker.
“The existence of a dual or variable rate commission arrangement (i.e., one in which the seller/landlord agrees to pay a specified commission if the property is sold/leased by the listing broker without assistance and a different commission if the sale/lease results through the efforts of a cooperating broker; or one in which the seller/landlord agrees to pay a specified commission if the property is sold/leased by the listing broker either with or without the assistance of a cooperating broker and a different commission if the sale/lease results through the efforts of the seller/landlord) shall be disclosed by the listing broker by the appropriate code as required by the Multiple Listing Service.
The listing broker shall, in response to inquiries from potential cooperating brokers, disclose the differential that would result in either a cooperative transaction or, alternatively, in a sale/lease that results through the efforts of the seller/landlord. If the cooperating broker is a buyer/tenant representative, the buyer/tenant representative must disclose such information to their client before the client makes an offer to purchase or lease.”