RE: Commission based AFTER seller concessions

Yes there are rules in this regard.  In my local MLS (Southland Regional AOR) specifically states that the brokers remarks cannot reference a commission based on the sellers net.  This usually occurs on REO listings when seller concessions are given to the buyer.  The wording we use is commission will be subject to lender's approval.  I will include with those remarks the property is not a short sale but an REO call listing agent for details at which time I explain the details to the buyers agent.

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Mary wants to know:

"We are seeing a practice of commissions being based on Sales Price LESS concessions being paid by the Seller (net sales price). Do any MLSs have rules pertaining to this practice that they would be willing to share? It is becoming so prevalent that we need to give some guidance in noting this in a listing and giving co-broke agents notice that their commission will be based differently in such a case.

Thanks for any help that you can give us,"

Heavens yes Mary.  Just make sure the selling agent understands what you and the seller have cooked up first.  Generally you pay commission on Gross just like you pay taxes on Gross.  As long as the buyer's agent is aware of the rules prior to showing. That is all MLS requires. There really is no reason to be concerned.  Remember the seller is paying for the commission out of the equity, but not until the buyer offers enough to satisfy what the equity is.  You see it's all a numbers game.  Seller sets a price, buyer makes an offer.  All the MLS does is make sure compensation is being offered.  How you calculate the commission is between the listing agent and the owner of the property and whats in the MLS info sheet.  This business is not rocket science.  Just remember, you must offer compensation of at least a dollar for a listing to qualify for the entry into the MLS.  That's all that's required.  Oh I almost forgot the lenders are not obligated to play by these rules if the offer is less than the mortgage balance.  Wouldn't be prudent to allow a lender to take in the ***. especially if they determine the commission is TO MUCH.   Lenders don't have to pay the stated commission amount in short sales, foreclosures or pre-foreclosures.  I'm so glad NAR was able to negotiate this small detail through their compromise with the DOJ and Sherman Anti-trust Laws.  I guess lenders are exceptions to the rules of law.  right? 

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At the 2008 NAR mid year, NAR approved an optional rule to allow comission based on net sales. You can review that rule on NAR's website.   My MLS did not adopt this rule, nor the optional conditional commission rule.  All commissions in our MLS must be unconditional and based on gross sales price.  In lieu of a percentage of gross sales price the agent may of course use a flat dollar amount.  That all being said, if brokers agree to a different commission than what is stated in the MLS listing, that is what will be paid.

Paul Kriewall

Compliance Officer

Arizona Regional Multiple Listing Service, Inc.

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We are seeing a practice of commissions being based on
Sales Price LESS concessions being paid by the Seller
(net sales price). Do any MLSs have rules pertaining
to this practice

So far we are not seeing this in our market in El Paso
and I sure hope we don't. I guess I can understand why
seller's are wanting to do that but sellers helping
the buyers is pretty standard in our market.

Patti Olivas

Broker/Owners
RE/MAX Elite
240 Thunderbird Ste D
El Paso, TX 79912
915-584-5430
Patti's cell 915-241-0087
mailto:dpolivas@swbell.net
web site: http://www.teamolivas.com

Oh by the way, if you know of someone who would appreciate the level of service that I provide
please call me with their name and number and I will be happy to follow-up and take great
care of them.

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