Howdy, Acadiana!
Staying abreast of the latest developments in the real estate realm is vital, especially when it comes to the nitty-gritty of commissions and agreements. At Keaty Real Estate, we’re committed to ensuring that every aspect of your real estate journey is as clear as the bayou waters.
Earlier this year, the Realtor Association ushered in a refined version of our listing agreement. This update, though designed to sharpen the focus on commission details, might present some nuances, even for seasoned professionals like us. That’s why I’m here to break it down for you.
Previously, our listing agreement primarily centered around the listing commission fee charged to sellers. We didn’t delve into discussions about compensating other realtors or the cooperative aspect. However, this aspect is now distinct from the listing agreement itself.
This change stems from a national discussion the National Association of Realtors (NAR) is having with the Department of Justice. They’re recommending some modifications to clearly define who bears what costs in a real estate transaction.
So, what does this mean for our valued sellers?
Our listing agreement now explicitly outlines how much of the commission will be allocated to the buyer’s broker or the selling agent. This goes beyond just disclosing the total commission for sellers, as we did before. Lines 48 and 49 of the agreement now spell out the specifics.
In these lines, we explicitly state how much of the gross commission will be extended to cooperating brokers. Now, while this may seem straightforward, the wording can be a bit tricky. Even experienced agents have occasionally filled this out incorrectly. It states that the broker agrees to offer a cooperating brokerage fee, a blank amount, to be paid from the gross commission, as listed in line 40, due and payable at act to sale.
Let’s put this into context:
If you’re charging your sellers a 6% commission and you intend to offer a 3% co-op to the selling agent or the buyer’s broker, this new section in the listing agreement should not say 3%. Instead, it should read 50%, indicating 50% of the total commission, not 3% of the sales price. Remember, in this example in the MLS, we’re going to be offering 3% of the total sales price.
Of course, please note that these figures are for illustrative purposes only. In reality, commissions, both for sellers and co-op, are entirely negotiable and dependent on your office policy. As always, consult with your broker to understand their policies and their interpretation of this listing agreement.
I’m eager to hear your thoughts on these changes. What’s your take on the wording? Share your insights below. By pooling our industry knowledge, we can all grow stronger together, and that’s a powerful thing. So, let’s dive into this discussion, and I’m hopeful this sheds some light on the matter.