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Have you ever seen a situation where a listing broker unilaterally agrees with the seller before closing to reduce the total commission, well after the deal went into contract?
Unfortunately, in this situation the listing broker is not a member of any MLS or REBNY, so all we have to go off of was the commission circulated in the deal sheet. However, even if there isn't a MLS co-brokerage agreement in place, wouldn't the seller's agent need to clear any changes in total commission with the buyer's agent first?
Here's what the guy told us after we proposed a new split that saw us still take a haircut, but less of a haircut then he had unilaterally decided right before closing:
Normally we only do a 2% of the total brokerage with preferred agents feeding off our listings. We get our listing from years of goodwill and we spend a lot of money in advertising. We get calls from all sorts of preferred agents to show our property expecting what ever percentage that we are willing to give away. I negotiate my commission with the seller, it is my listing and sometimes I need to do things to make the deal go though. I have my expenses and you have your expenses. I am willing to give you a 50% split on the total commission. That is the brokerage commission that I instructed the seller's lawyer to to cut checks for. We have always treated everyone fairly.
Here's what our side responded with. Not sure if our side was harsh enough.
My firm has submitted its invoice for the above referenced transaction based on the terms provided in the deal sheet. Your firm's intention that a lower commission be paid to us, as Co-Broker, violates both REBNY and Bronx Manhattan National Association of Realtors rules ( see below) which provide that any commission reduction negotiated by an Exclusive Broker requires the written approval of the Co-Broker.
Regarding the above referenced transaction, no written approval was obtained and, in fact, the Co-Broker was never informed, even verbally, of an intent to reduce the commission until May 24, 2018, seven days before the closing.
As Co-Broker, we are entitled to the original commission (3% of the original selling price) but in an attempt to resolve the situation amicably, we have volunteered a solution that in which it would receive a lower commission than it is entitled to. So far, the Exclusive Broker has refused to consider our solution and, instead, wants us to accept a commission based on an agreement made between the Exclusive Broker and the Seller of which it was not made aware and which, as indicated, contravenes both REBNY and Bronx Manhattan NAR rules requiring written approvals for commission reductions.
1. REBNY UNIVERSAL CO-BROKERAGE AGREEMENT RULES AND REGULATIONS, Article IV, Section 2:
Changes in Commissions After Dissemination Over the RLS.
A. Negotiations Involving Reductions in Commissions.
Any negotiation of the reduction of a brokerage commission must be done with both the Exclusive Broker
and the Co-Broker’s written approval of the commission reduction. If the Exclusive Broker negotiates a reduced commission with the Owner without the written approval of the Co-Broker, the Exclusive Broker must absorb the full amount of the commission
2. BY LAWS OF THE BRONX-MANHATTAN NORTH ASSOCIATION OF REALTORS, INCORPORATED
DIVISION OF COMMISSIONS
Section 5: COMPENSATION SPECIFIED ON EACH LISTING:
NOTE 1: In filing a property with the Multiple Listing Service of a Board of Realtors, the participant of the
service is making blanket unilateral offers of cooperation to the other MLS participants, and shall therefore
specify on each listing filed with the service, the compensation being offered to the other MLS participants.
Specifying the compensation on each listing is necessary because the cooperating broker has the right to know what his compensation shall be prior to his endeavor to sell. (Amended 4/92) The listing broker retains the right to determine the amount of compensation offered to subagents and to buyer agents, which may be the same or different. (Adopted 4/92) This shall not preclude the listing broker from offering any MLS participant compensation other than the compensation indicated on any listing published by the MLS provided the listing broker informs the other broker in writing in advance of their producing an offer to purchase and provide that the modification in the specified compensation is not the result of any agreement among all or any other participants in the service. Any superseding offer of compensation must be expressed as either a percentage of the gross sales price or as a flat dollar amount. (Amended 11/95)
We submitted our invoice to which we are entitled. We would agree in writing to a commission of $X which will result in a commission to us of 2 1/4% and a commission of 2 5/8% to you taking into consideration our rebate to our Buyer and Exclusive Broker's decision with the Seller to absorb a 20% coop flip tax.
Please see attached as well as the email thread. As the closing is tomorrow, we will be glad to send a check to you for $X as soon as we receive funds from our commission check. Please advise.
Unfortunately, in this situation the listing broker is not a member of any MLS or REBNY, so all we have to go off of was the commission circulated in the deal sheet. However, even if there isn't a MLS co-brokerage agreement in place, wouldn't the seller's agent need to clear any changes in total commission with the buyer's agent first?
Here's what the guy told us after we proposed a new split that saw us still take a haircut, but less of a haircut then he had unilaterally decided right before closing:
Normally we only do a 2% of the total brokerage with preferred agents feeding off our listings. We get our listing from years of goodwill and we spend a lot of money in advertising. We get calls from all sorts of preferred agents to show our property expecting what ever percentage that we are willing to give away. I negotiate my commission with the seller, it is my listing and sometimes I need to do things to make the deal go though. I have my expenses and you have your expenses. I am willing to give you a 50% split on the total commission. That is the brokerage commission that I instructed the seller's lawyer to to cut checks for. We have always treated everyone fairly.
Here's what our side responded with. Not sure if our side was harsh enough.
My firm has submitted its invoice for the above referenced transaction based on the terms provided in the deal sheet. Your firm's intention that a lower commission be paid to us, as Co-Broker, violates both REBNY and Bronx Manhattan National Association of Realtors rules ( see below) which provide that any commission reduction negotiated by an Exclusive Broker requires the written approval of the Co-Broker.
Regarding the above referenced transaction, no written approval was obtained and, in fact, the Co-Broker was never informed, even verbally, of an intent to reduce the commission until May 24, 2018, seven days before the closing.
As Co-Broker, we are entitled to the original commission (3% of the original selling price) but in an attempt to resolve the situation amicably, we have volunteered a solution that in which it would receive a lower commission than it is entitled to. So far, the Exclusive Broker has refused to consider our solution and, instead, wants us to accept a commission based on an agreement made between the Exclusive Broker and the Seller of which it was not made aware and which, as indicated, contravenes both REBNY and Bronx Manhattan NAR rules requiring written approvals for commission reductions.
1. REBNY UNIVERSAL CO-BROKERAGE AGREEMENT RULES AND REGULATIONS, Article IV, Section 2:
Changes in Commissions After Dissemination Over the RLS.
A. Negotiations Involving Reductions in Commissions.
Any negotiation of the reduction of a brokerage commission must be done with both the Exclusive Broker
and the Co-Broker’s written approval of the commission reduction. If the Exclusive Broker negotiates a reduced commission with the Owner without the written approval of the Co-Broker, the Exclusive Broker must absorb the full amount of the commission
2. BY LAWS OF THE BRONX-MANHATTAN NORTH ASSOCIATION OF REALTORS, INCORPORATED
DIVISION OF COMMISSIONS
Section 5: COMPENSATION SPECIFIED ON EACH LISTING:
NOTE 1: In filing a property with the Multiple Listing Service of a Board of Realtors, the participant of the
service is making blanket unilateral offers of cooperation to the other MLS participants, and shall therefore
specify on each listing filed with the service, the compensation being offered to the other MLS participants.
Specifying the compensation on each listing is necessary because the cooperating broker has the right to know what his compensation shall be prior to his endeavor to sell. (Amended 4/92) The listing broker retains the right to determine the amount of compensation offered to subagents and to buyer agents, which may be the same or different. (Adopted 4/92) This shall not preclude the listing broker from offering any MLS participant compensation other than the compensation indicated on any listing published by the MLS provided the listing broker informs the other broker in writing in advance of their producing an offer to purchase and provide that the modification in the specified compensation is not the result of any agreement among all or any other participants in the service. Any superseding offer of compensation must be expressed as either a percentage of the gross sales price or as a flat dollar amount. (Amended 11/95)
We submitted our invoice to which we are entitled. We would agree in writing to a commission of $X which will result in a commission to us of 2 1/4% and a commission of 2 5/8% to you taking into consideration our rebate to our Buyer and Exclusive Broker's decision with the Seller to absorb a 20% coop flip tax.
Please see attached as well as the email thread. As the closing is tomorrow, we will be glad to send a check to you for $X as soon as we receive funds from our commission check. Please advise.