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5 Key Points on Staying Compliant with the New MLS Rules.
Don’t get slapped with a violation and a fee! Words matter.
You’re operating in a heightened regulatory environment where MLS’s are watching for violations and agents to make an example of.
Note: We are not attorneys or your broker! Check with your broker and state associations and MLSs for specific, attorney-vetted compliance issues.
Our podcast is designed to educate you, motivate you and get you into action!
1. Use the Term “Fee” Instead of “Compensation” or “Commission”:
- Agents should shift their language to use the word “fee” rather than “commission” or “compensation” when discussing payments. This change helps avoid the negative connotations associated with these terms due to recent litigation. Referring to it as a “fee” opens up various possibilities for sellers to assist buyers, such as offering credit for repairs or helping with interest-rate buy-downs. Stop saying compensation and commission.
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2. Promote Transparent Buyer Representation Agreements:
- Agents should clearly communicate the importance of signing a buyer representation agreement before showing properties. Use your Ethical Real Estate Professional Buyer Presentation plus, for example, The new eXp Buyer-Broker Representation Agreement form, which offers a model for this. It uses the term “broker fee” throughout the document and specifying how the fee will be “paid” rather than “compensated.” This agreement also allows for the broker fee to be negotiated with the seller, either through a credit to the buyer at closing or through a direct payment to the broker. This approach will keep you compliant!
3. Discuss Broker Fees, Not Commission Sharing, in Conversations:
- While commission sharing cannot be advertised in the MLS, agents can discuss broker fees with their clients outside the MLS platform. The eXp agreement, for example, includes language that allows the broker to negotiate with the seller for the broker fee, either directly or through a credit to the buyer. This ensures all parties know how fees will be handled, promoting transparency, and by doing so, you’ll be compliant.
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4. Use ‘Terms and Conditions,’ Not ‘Concessions’:
- Agents should use the wording “terms and conditions” when drafting purchase contracts instead of “concessions.” If your state or brokerage purchase contract has a field for “concessions,” it’s advisable to leave this field blank. Instead, agents should place any additional terms the seller wants in the “other terms and conditions” field or an addendum.
5. Handle Seller Objections with a Focus on Net Price:
- When a seller objects to paying the buyer’s broker’s fee, agents can overcome this objection by emphasizing the goal of achieving the highest possible net price for the property. Start by asking the seller if their primary objective is to get the highest net price. Then, explain that the ultimate decision on how fees are handled can be made after reviewing offers. For example, if an offer that asks the seller to pay the buyer’s broker fee nets a higher amount than another offer, the seller is likely to choose the one that results in a better net outcome. This approach focuses the conversation on the seller’s financial goals and ensures they remain open to all possibilities.
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Most importantly, when a buyer’s agent asks a listing agent if there is a commission and / or what is it, the answer should be to write your request in the offer along with all of the other desired terms and conditions.
Ethical Real Estate Professional, EREP Buyer Presentation will help you with everything we discussed!
