AN ARBITRATION SCENARIO (based on the Code of Ethics)
Listing Broker, I.M. Abigshot listed his new short sale in the local MLS offering 3% co-op commission. The MLS does not mandate disclosure of short sales. In the MLS, however, there is a check-box that says "short-sale... yes or no" which the listing agent did not check either yes or no. Buyer's agent Alan May brought a contract that was successfully negotiated with the seller, and I.M. forwarded the contract to the bank for approval.
During the approval process, the bank informed I.M. that the compensation was going to be reduced from 6% down to 4%.
At the closing, Alan was paid 2%, and has now filed for arbitration seeking the additional 1% compensation.
In your opinion, should Alan prevail and be awarded the additional 1%, or is I.M. correct in reducing the co-op commission equally based on the bank-imposed reduction of commission?
(As a second scenario... does your opinion change if I.M. clicked "short-sale-YES" on the MLS input sheet?)
Note: compensation mentioned in this example is for educational purposes only. I am not recommending nor suggesting how much you should charge your sellers nor how much you should offer a co-operating broker. The numbers are place in the scenario merely for learning purposes. Answers can be found by turning your computer up-side down, and reading the text in the red box. Alan accepts no responsibility for any damage caused by turning your computer up-side down, or dropping your computer on your desk, your pets or any body parts.