Virginia Commissions Offered to Buyer Agents. MRIS RULES

By
Real Estate Broker Owner with Northern Virginia Homes - FRANKLY REAL ESTATE Inc

I just attended the NVAR (Northern Virginia Association of Realtors) Hispanic Forum event, which included Michelle Yam from MRIS's Compliance department.

It was a great way to clarify the rules on how to advertise cooperating commissions on our local MLS.

Here are the rules for MRIS as I understand it (as of today, it might change at NAR's mide year event).

1) "You can NOT put "50/50%" as the commission amount."

It isn't the buyer's fault or the buyer's agent's fault if the listing agent makes a mistake and accidentally wipes out everyone's commissions. Also as Michelle put it "If you were to offer 50%, what is that 50% of, 100 chickens?" (or something like that)

2) You can not put TBD (To be determined, which is the same as putting 50%)

3) You can NO LONGER put Commission Subject to 3rd Party Approval. (either in the remarks or scroll down option)

4) You CAN put X% of Net (sales price minus seller subsidy)

5) You CAN put $1

6) You can NOT put $0 (some offer has to be made)

I am strongly in agreement with the decision to take this route.

Why? Well if I have a buyer agency agreement that states I will be paid "100 Chickens" or X percent, that means that the buyer is obligated to make sure that I get paid that at closing. If the commission changes mid stream (or 3 days before closing) the BUYER is the one that effectively has to come up with the $ difference.

If $1 is offered up front on the MLS, that is fine, then my buyer can decide if they want to proceed with this listing (you really SHOULD since it won't be seen by anybody and we will get a great price on it).

Listing agents that say "but what if the bank cuts the commission, it isn't fair." Well you need to know what you are doing, to make sure that doesn't happen. And it isn't the buyer agent's fault (nor the buyer) if you don't know what the hell you are doing. Also with the lack of certainty, you will get LESS agents to look at your property (because the buyer tells them, they don't want to fill the gap).

And Brokers beware. If your agents are putting in a percentage on the MLS as the "offered" commission, if the total commission gets cut by the bank, the BROKER is still responsible for the entire amount. Even if it gets cut to "1 chicken" on the HUD1, the broker will get sued and LOSE for offering X% or $X and not paying it at closing.

Consumers beware. You need to have this discussion with your buyer agent. You want your agent on your side. You don't want them NOT showing you listings because they fear that they won't get paid. Read my blog on Short Sales, while they currently suck. Don't worry, we are working on a new process where hopefully 90% of them will close.

Just wait, somebody who hasn't read the post, is bound to comment "You can't talk about commissions."

 

- Written by Frank Borges LL0SA Broker FranklyRealty.com

 

p.s. Even Lem talks in terms of Chickens.

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Location:
Virginia
Groups:
Realtors®
Running a Brokerage
Northern Virginia Agents
Virginia Foreclosures Short Sales and REO (and Pre-Foreclosures)
Tags:
short sales

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Anonymous #11
Anonymous
Frank

I don't see a problem with "Commission paid on Net". If somebody offers $500,000 with $20,000 back, then the commission is on $480k. That sounds ok.

May 10, 2008 12:20 AM
Anonymous #12
Anonymous
Matthew Rathbun

JUST SAY NO!  I have spoken to countless brokers and agents on this topic and never, not once, have a I heard of an agent standing up against the lender and not getting their commission.  When the lenders rep, gives up 33% of his/her salary to help the lender, I'll give up mine!  When the lender goes after both agents, the settlement company, title insurer, home inspector, appraiser, title researcher, home insurance agent, etc...   I still won't just give up the money that feeds my children and puts a roof over their heads.  Lenders attack the commissions because too many agent capitulate and allow them.

Principal Brokers need to have written policy and only permit certain capable and experienced agents to take listings that are short sales. Far too many of the "short sale" listings are not possibly going to sell. Yet, agents are taking them and risking the Broker to pay a buyer agent more than they are getting from the sale, because they've offered the commission in the MLS.  It's a mess, and untrained agents with unreasonable expectations are making liabilities more ubiquitous.

 

June 10, 2008 10:17 PM
Rainer
3,130
Terence Michael McCarthy
Terence Michael McCarthy

Frank,

Excellent post! It's a shame that I'm the only one who has stumbled upon it in the last three months.  There are too many agents out there, unfortunately, that could really use the education.

Terry

September 18, 2008 10:41 PM
Rainmaker
238,291
Gene Allen
Realtor Hampton Roads Real Estate
Resh Realty Group

Thanks for the info.  Again it seems banks don't get it and agents need to be more hard edged about commissions.

December 15, 2008 12:57 PM
Rainmaker
895,187
Tony Marriott
Associate Broker, REALTOR
Haven Express @ Keller Williams Arizona Realty

 

This is a very tricky area.  No guarantees that the split between Listing and Buyer Broker will be 50/50 of the total commission.

 

July 14, 2010 02:56 PM
Anonymous
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Rainmaker
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FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com

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