Talk to Your Sellers About Your Compensation
Legal News from the WRA
In the current climate, it is important for licensees to be prepared to have conversations with clients and customers about the antitrust lawsuits, and perhaps more importantly, about how commissions are established and how they are paid.
Listing agents should discuss the amount of compensation the seller will pay to the listing firm. It should be clear that the amount of compensation is negotiable. A firm may require that its agents request a minimum amount of commission for providing services to the seller. If the seller will not pay the minimum amount, the seller may need to work with a different firm.
Listing agents should also talk about the various options for paying the buyer’s firm. It should be clear that the amount of compensation offered to buyers’ firms also is negotiable. The seller should understand there are options to pay $0 to the buyer’s firm, offer a dollar amount or percentage, or, if the buyer’s firm has buyer agency with the buyer, allow requests from the buyer for the seller to pay the buyer’s firm as part of the buyer’s offer.
Buyers’ agents should discuss the amount of compensation to be paid by the buyer to the buyer’s firm. The buyer should be aware that the amount of compensation is negotiable. It should be clear that the buyer is responsible for paying the buyer agency commission but what the buyer owes may be reduced or eliminated by what the listing firm is offering to pay the buyer’s firm and by any amount the seller agrees to pay.
It should always be emphasized that there is no standard commission rate, and that sellers and buyers have choices when it comes to paying commissions.
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