Please see my August 2007 post on ‘short sale’ reduced commissions in connection with this blog. 

 

 QUESTION:  I have a client that is interested in a certain area and I found a location that might match their needs but the co-op is less than I would like to earn. Can I raise the co-op in my offer?  Absolutely not! It is a violation to negotiate commission within a purchase agreement [i], but in a perfect world you can request a greater co-op.

 

 

Commission offerings are just that, offerings [ii].  They can be negotiated [iii], but it must not be at your client’s expense.  Co-ops are the base of the real estate industry and are protected, once offered.  Commissions are not set in value in the industry, as that would be a violation of Anti-Trust, and they are negotiable.

 

 

 

Let us first be clear, you must not place your client between you and your commission.  So, if the co-op is not what you desire and you ask for a greater commission in an offer, you are placing your client at risk of not gaining their purchase due to your desire to be paid more.  (But of course you would never do that due to it being both a violation of the REALTORS® Code of Ethics [iv] and NRS 645 [v].) That is a conflict of your client’s interest over your interests.  However, prior to your client instructing you to place a bid on a property you are likely to view numerous properties.  You might view hundreds of properties in your research for current and future clients.  Your clients are your asset in the bargain an exchange of the real estate industry.  You are a within a brokerage and by definition that means you are a middle person.  Listings are the assets of the listing agent, but buyers are the asset of the buyer broker.  The buyer agent has the asset of the many buyers you are educating and cultivating and learning about.  You hold an asset that is ready to buy a certain product.  You control an asset that fits the missing piece of the real estate jig saw puzzle.

 

So . . . you see a co-op that is lower than you would like to earn, but keep in mind this would have to be in advance of your client’s interest.  You would contact the listing agent and discuss with them the possibility that you earn a certain commission in the event you have client at a later date that is procured as a purchaser.  If you are granted the ability to gain a greater commission, you would place in writing the irrevocable commission agreement “In the event [you] of Prudential®, Americana Group, REALTORS®, procures a buyer for the purchase of the above stated [or list real property here] the [listing broker] agrees to pay the following commission ____________________,” and you get it signed by the broker of the listing agent. 


[i] Standard of Practice 16-16 Realtors®, acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an offer to purchase/lease to attempt to modify the listing broker’s offer to compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing broker’s agreement to modify the offer of compensation.  (Amended 1/04)

[ii] Standard of Practice 3-1 Realtors®, acting as exclusive agents or brokers of sellers/landlords, establish the terms and conditions of offers to cooperate. Unless expressly indicated in offers to cooperate, cooperating brokers may not assume that the offer of cooperation includes an offer of compensation. Terms of compensation, if any, shall be ascertained by cooperating brokers before beginning efforts to accept the offer of cooperation. (Amended 1/99) 

[iii] Standard of Practice 3-3 Standard of Practice 3-2 does not preclude the listing broker and cooperating broker from entering into an agreement to change cooperative compensation. (Adopted 1/94) 

[iv]  http://www.realtor.org/mempolweb.nsf/214c1520b27c9ee286256b2600557d81/3232c1847235fbe2862572340079aaec/$FILE/EnglishCode2007.pdf

 

[v] http://www.leg.state.nv.us/NRs/NRS-645.html

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