Rancho Cucamonga, CA Real Estate Broker: Can a listing agent reduce the cooperating agent's commission to seal a deal? New Update Posted 9/20/11

Can a listing agent reduce the cooperating agent's commission to seal a deal? New Update Posted 9/20/11

How could this happen?  Well I found out that it can and it will.  Our commissions can be unilaterally compromised by any seller, not just a short sale lender when you least expect it.

A new referral client contacted me late January to look at homes with her fiancé.  They are under a tight timeframe to purchase because they need to vacate their rental property no later than the end of March.  Ok!  Let's get started.

We look at several homes and find the one that is ideal for them on our second tour.  I contacted the listing agent to verify that it is available.  She answers the phone and almost acts as if she knew who I was as she was very kind, open and ready for an offer.  Terrific. 

I meet with my clients to write a full price offer with an allowance towards closing costs.  Very clean offer but we need an answer sooner rather than later.   The agent tells me to hold on with sending it over until I have all of the buyer's pre-approved financing information from their lender.  So first thing Monday morning I receive the necessary documentation and confidently forward the offer to the agent who is acting on behalf of herself.  She recently purchased the property in order to flip it. 

Hey, a standard sale will work fine for my buyers as long as we don't have to deal with any chance of a prolonged escrow and for the right price, this will work.  The MLS printout that I have states that the commission offered is 2.5% and there would be a $1,000 bonus if we could close by the end of February.  I don't believe we will make the end of February bonus date, but it sounds as if the seller is willing to compensate fairly (enough) and ready to close quickly too.

The evening after I submitted our offer I get a response from the agent/owner.  I receive a counter offer with an addendum along with a fully signed purchase agreement.  She agrees to all of our terms with the exception of paying for the buyer's home warranty and section 1 termite.  I call her to find out if she has a termite inspection report already since she just purchased the home herself.  She does and immediately sends it over.  There is approximately $800 of work to be performed and a $200 re-inspection fee.

I consult with my clients to determine what they would like to do.  Their cash is very tight and a $1,000 could make the deal a bit uncomfortable for them.  I tell them that the seller/owner recently increased the purchase price by nearly $4,000 right before we came into the picture and since we are giving her full price why not counter back asking her to pay for the section 1 termite.  The worst she could do is say "no" and then the buyer would have to come up with the money themselves.  Ah ha!  Famous last words.

The following day we get a response to our counter offer.  It comes in while I'm in the field on my Blackberry.  I pull up the PDF copy on my tiny Blackberry screen, scroll down and see her signature of acceptance!  Yes!  This is great news.  I wait to get back to my office to phone my clients with the good news.

At the office I pull up the full version of the signed contract and see something that I could not see on my tiny little Blackberry screen.  The box was checked stating subject to attached counter offer.  What?  Oh man.  So much for my eyesight.  I scroll down to view the attachments.  There is counter offer #3.  It states that the buyer's agent agrees to accept 1.5% total commission.  What????  Can this be truly happening?  Can a compensation issue become a part of the negotiation between my clients and the agent/owner?

In order to gain final acceptance, I must have my buyer's signature on this counter offer.  If I were to dispute this with the agent/owner by sending a 4th counter offer back reverting to the terms already agreed to in counter offer #1 it could cost my client's their ability to purchase the home they want.  I have a fiduciary responsibility to my buyers as outlined in the Agency Disclosure to not allow my own personal interests interfere with my client's ability to obtain a home. 

Attached to the counter offer is a CBC form or that I must sign agreeing to the commission reduction.  Oh brother.  If I don't sign then they do not get the house.  How very special is this?  I know that I have no ability to refuse to sign.  My only option is to contact the agent/seller directly to discuss this matter further without jeopardizing my buyers.   I instruct my buyers to sign the counter #3 as their final acceptance of the terms of the contract.  Now it is up to me.

I contact the agent/seller.  I ask her what we can do about this compensation issue.  She answers me with "what compensation issue ?".  I knew right then that I was going to fight an uphill battle.  I suggested that I would pay for the section 1 termite in exchange for the originally offered 2.5% commission.  That is what this is all about anyhow.  She said no.  I suggested that we revert to her original terms outlined in counter offer #1.  She told me that we cannot move backward at this point.  We must move forward.  Ok, how can I earn the compensation offered in the MLS?  She did not give me any answer.  I told her that I it was my fiduciary responsibility to act in favor of my client's desire to purchase her home and the only way for me to do that is to unwillingly sign her CBC form and in doing so I will be pursuing arbitration once escrow closes.  Was she clear about that?  Yes, she was. 

And that is where I'm at.  Trying to behave as if I'm as thrilled with this home for my buyer's sake while feeling utterly disgusted with the whole thing on the inside.  I believe that I will prevail in arbitration pursuant to CAR's Legal network.  It will be a lot of time and effort however that could have been so easily avoided.  What a shame and a shocker!  Agents, please DO NOT do this to your fellow colleagues.  Bilateral negotiations are one thing but a forced compromise is not in the essense of good business practice or fair dealing.

UPDATE from 2/27/2011:

I want to give you an update on my ongoing escrow.  I did contact the CAR attorneys again on Tuesday.  The attorney told me that my signature on the CBC authorization form could constitute my uncontested agreement to the reduction of my commission.  However, I told the attorney that I had written below my signature that my signature was provided only as a means to facilitate the purchase on behalf of my buyer and that I will be seeking arbitration immediately after COE.  He said that was a good thing to do in order to prevail in arbitration.

The owner/broker did not like it however.  She will not communicate with me now.  After 3 messages to the owner/broker reminding her that I was waiting on the seller’s disclosures for my buyer’s signature I finally received them via email.  With the disclosures she included yet another addendum #2 for my buyer’s signature.  The addendum reiterated that my commission was reduced to 1 ½% evidenced by the signed CBC agreement where I indicated my disapproval of by stating that I would seek arbitration upon close of escrow.  Her verbiage in the addendum read very ambiguously.  She states that the buyer shall take full responsibility for the selling agent’s commission and not seek any legal action against the seller now or after the close of escrow.  She also stated that the buyer has accepted the make, model and installation of the appliances and the central A/C unit installed with no further recourse. 

The owner/broker emailed this addendum to my buyer’s lender and to escrow without mutual signatures.  The lender had a problem with this addendum due to its implication that the buyer could be responsible for my commission therefore throwing off their cash to close.   I told him to disregard the addendum as the buyers are not in agreement with it.  I returned the signed disclosures to the seller only.  The buyers have performed their appraisal, physical inspection and are now ready to close. 

I’m waiting for her next move.  My buyers understand what is at stake and wish to continue with the purchase.  I will keep you posted.

 
UPDATE FROM SEPTEMBER 20, 2011 -

I'm back!  Nearly 6 months later but I wanted to fill you in.  I'm filing my requst for arbitration with my board of Realtors tonight.  I only have 3 days left to file with nearly 180 days passed. 

As you can expect from my intent to arbitrate, we closed escrow on this deal with the reduction in my commission from 2 1/2 % to 1 1/2%.  So even though I must pay $300 to the board for the right to arbitrate this matter I feel it is important.  It is important to fight for what is rightfully ours.  We cannot allow this type of behavior to reign in our industry.  I'm certain that she thought she got away with it since it has been all this time now and with the cost to file vs. the reward she won't think think that I would pursue such a petty matter. 

Well it is not petty to me and it should not be petty to any of you either.  Large or small we must stand up for each other and stop enethical treatment and behaviors met by unscrupulous individuals like the seller/broker in my situation.  I realize that many of us cannot afford the necessary filing fees to get started when they may not be certain that they will prevail in the long run.  Many don't pursue grievances like this one just because they cannot afford to.  But who will if we don't? 

I appreciate your profound support as represented in this post.  It is all of YOU that have convinced me to move forward on this and stop other agents from being bottle necked into something that they are not happy with just because they are feeling bullied or without proper resources to move forward.  I'll take one for the team!  Wish me luck!

 

 

Diane Wheatley, Broker

Real Estate Brokerage, Upland CA

 

(909) 815-4499 Direct Cell

CA DRE Broker Lic #01193694

 

 

Comment balloon 71 commentsDiane Wheatley • February 19 2011 03:46PM

Comments

There are all kinds of this going on in alot of places, it is not right

Posted by Scott Godzyk, One of Manchester NH's Leading Agents (Godzyk Real Estate Services) over 8 years ago

I would talk to her broker because she advertised the property at X amount of selling office commission within your MLS, I assume.  If that does not work then I would file a complaint with the MLS.  If the seller needs the commission cut then the listing agent should be shouldering that burdon, not the buyer's agent - This is another example of buyer's agency agreemtn with set fee being helpful, but really, it seems like the listing agent is falsely advertising the compensation and should have to buck up. just my two cents.

Posted by Courtney Cooper, 206-850-8841 (Ben Kinney Brokerages Leadership at our Keller Williams North Seattle Office) over 8 years ago

So many things wrong here I don't know where to begin.

First, the agent can't change the co-op within the terms of the Contract of Sale.

Second, you do not have a fiduciary duty to give away your commission.  Don't confuse fiduciary with extortion. 

Third.  Where is your broker in all of this, or are you the broker?  Unless you're the broker, you're broker has to agree to a reduction in your commission.

Fourth, There is no guarantee that the buyers would have lost the house if you had not agreed to the extortion.  Agents have been trying to do insane things like this to me forevery and I never submit.   Further, it's never caused a loss of a contract. 

If the buyers did lose the property, they should file a complaint with the CA real estate commission, whatever it is.  I had an agent try to lower the commission in the contract with me and my buyer printed a copy of the COMPLAINT form from the MD Real Estate Commission web site, filed it out and gave it to me.  I wrote SAMPLE across it and faxed it to the listing agent. 

That was a case where the seller was on his way to foreclosures and where the net proceeds were not sufficient to pay the full commission.  The agent wrote in the Contract, Homefinders.com, agrees to a 2% commission, splitting a 4% commission 50/50.  My buyer refused to sign.  I told the agent that if the commission is 4%, I get 3 and her broker gets 1%. 

We settled, my buyers got a great house and I got my commission.

Don't pay extortion. 

 

 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 8 years ago

I'm very surprised that the owner/agent took this course of action -- especially with your client's offer at full-price and so early in the negotiating process.  Sounds like you did the best you could for your client -- I hope it works out in your favor in arbitration!

Posted by Melanie Hedrick, 972-816-7205 (Elite Texas Properties, the best homes from McKinney to Dallas!) over 8 years ago

I couldn't say it better than Lenn Harley did. I am in a current situation with a short sale and I said, absolutely not. I work for my commission that was avertised in MRIS and that is what I expect.

My manager said that I do not have to settle for a lesser commission. In fact, the listing agent is the one that has to take the loss if he/she list the commission higher than the bank offer unless, you sign and mutually agree to reduce your commission.

Don't settle for less. As Lenn said, don't pay extorsion.

Posted by Indera Coggins (Re/Max 100) over 8 years ago

Thank you for your comments and suggestions.  Yes, I am the broker in this transaction and so is she!  However, she is acting in the capacity of self-representation. 

Do you think that it would be appropriate for me to tell my clients not to sign the counter offer #3 which is a term that has nothing to do with them?  I could not stand in their way like that.  Buyers do not want to be caught up in any agent to agent or broker to broker agreements that prevent them from purchasing the home they want. 

I did not feel right about doing that.  Am I old school in this harshly competitive market?

Posted by Diane Wheatley, Broker, SoCal Real Estate Expert (909) 815-4499 (Move Up Properties) over 8 years ago

The way other agents (and now brokers?) are treating each other is Brutal. I'm with Lenn 100%. We need our commissions to survive. I understand your thinking, but if this happens now, it'll continue happening.

Posted by Eric Michael, Metro Detroit Real Estate Professional 734.564.1519 (Remerica Integrity, Realtors®, Northville, MI) over 8 years ago

Tell that pimp to kiss your ***! FILE A COMPLAINT! 

Posted by Greg Nino, Houston, Texas (RE/MAX Compass, formerly RE/MAX WHP) over 8 years ago
Always scary when others are reaching into our pockets, what a cam of worms this opens
Posted by Brian Doubleday, Ladera Ranch, Foothill Ranch, Lake Forest, Mission Viejo (Brian Doubleday - IML RealEstate - Orange County, CA Broker) over 8 years ago

The listing agent spelled out how much commission would be paid on the listing agreement.  The commission paid to you cannot be changed, as the agreement is between buyer and seller, and your commission is based on what is offered in on the MLS.
If not, that is what every seller would do, right?  The listing agent needs to be schooled. 

Posted by Gary Frimann, CRS, GRI, REALTOR and Broker (Eagle Ridge Realty / Signature Homes & Estates) over 8 years ago

If it was me, I'd cross out the part of the counter and have the buyer sign it.  

According to CAR, the commission listed in the MLS at the time you submitted the offer stands unless you agree to a change in writing (usually on the CBC).  The offer/counter offer cannot be used to modify the commission as the contract is between the buyer and the seller, not the brokers.  The MLS and/or CBC is the contract between the brokers.

See the CAR Q&A document entitled "Broker Compensation Under C.A.R. form RPA-CA" - specifically items #12 and #15. 

Posted by James Malanowski, REO Broker, Palmdale, Lancaster, Rosamond, CA (theJEMgroup.com (DRE #01373117)) over 8 years ago

That's sleazy and unethical. Fight it. The commission agreement cannot be modified by the contract for sale.

Posted by Tim Bradley, Commercial Real Estate Expert in Jackson Hole, WY (Contour Investment Properties) over 8 years ago

Diane,

Thank You for writing about this.  I believe it's unprofessional and inappropriate for someone to operate like this, especially given that they are in the industry.  It's my opinion, you should not have to pay your commission to help them make-up what they are "losing" on the flip income.  Shame on them! 

Hang tight..when you do right by your clients, you are ALWAYS the Winner!!!!

 

Posted by TODD PICCONI 909.908.7376 GROW WHERE YOU'RE PLANTED, Your #1 Choice for Southern California Real Estate (TODD PICCONI REAL ESTATE) over 8 years ago

I had a similar experience with an agent (not representing himself) in which my clients submitted an offer and part of the counter offer was a reduction in commission.  This has absolutely no place in a counter offer as this is a document for my buyers to think over and decide how to respond.  This puts me in the position of either having to discuss with my seller why we're not lowering my commission (which I certainly shouldn't have to do) or puts the deal in potential jeopardy (and potentially keeps my clients out of a home they like).  I immediately called the listing agent and told him my thoughts and how it needed to be removed from the counter offer.  He was free to try and negotiate with me on commission but it was not going to be decided by his or my clients.  This was basically a bait and switch commission situation as they were offering an above normal commission.  Nowhere in the agent remarks did it state that anything below full price would not receive the full commission.  I did get my broker involved (the other agent was the broker on his end) but eventually my clients lost any and all confidence in both the agent and sellers and backed away prior to any acceptance.

Posted by Keith Kyle, Top Producing Agent (Vista Sotheby's International) over 8 years ago

Beyond sleazy. I'd take her to arbitration if she didn't back down poste haste. What a creepy move. 

Posted by J. Philip Faranda, Broker-Owner (J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY) over 8 years ago
I am nearly speechless. This must be someone who is only licensed for the purpose of acquiring and selling their own property. This person cares about nothing or no one but self.
Posted by Charita Cadenhead, Serving Jefferson and Shelby Counties (Alabama) (Keller Williams Realty) over 8 years ago

Never I would rather walk away than pay extortion as Lenn rightly calls this. I have the luxury ( although an expensive luxury) of having a corporate attorney we can consult with about this stuff and I would have been on the phone with him so fast.....

I work hard for my clients and they expect me to get paid

Posted by David O'Doherty, Clayton NC Homes, Raleigh, NC (Raleigh Realty Inc) over 8 years ago

I have not now or ever let my commission become part of the negotiations. I know it goes on and it has been suggested to give up some to make the deal work and I will not do it. Shame on those who attempt extortion on their fellow brokers.

Posted by Laura J. Lycans, Your Dream + My Passion = Success!! (Sandhills Choice Realty, LLC) over 8 years ago

Agents like these should be forced out of the market immediately.  I had this happen to me and we went to the Real Estate Commission and the agent had to make it right.  It took two years and guess what that agent is still in business. Some people have no conscience.

Posted by Anonymous over 8 years ago

This makes me sick.  Some people lack ethics, morals and honesty.  I am constantly shocked that they remain in the market to do this to others.

Posted by Sarah Moore, We Open More Doors! (Southern Homes of the Carolinas) over 8 years ago

Time for the brokers to hash this out....not acceptable...bad business and creates a bad rep.

Posted by Cory Barbee, Broker (760) 563-4022 over 8 years ago

I've always included the MLS sheet in the offer so we are clear on everything, including compensation. Might need to check with your MLS rules. Unless it's noted that the commission could be reduced, I think this is a slam dunk for you. Let us know.

Posted by Loreena and Michael Yeo, Real Estate Agents (3:16 team REALTY ~ Locally-owned Prosper TX Real Estate Co.) over 8 years ago

First of all. . 

Commission amount  should not be part of a contract. .

At this point, if I was your broker and you were in Maryland. .I will tell you to go ahead (under duress)and allow the sale to happen even if they reduce your commission to $1.00 

As soon as the transaction is over. .sue their brokerage for COMMISSION OFFERED originally IN THE MLS LISTING .. PLUS ATTORNEY FEES!

 

 

Posted by Fernando Herboso - Broker for Maxus Realty Group, 301-246-0001 Serving Maryland, DC and Northern VA (Maxus Realty Group - Broker 301-246-0001) over 8 years ago

OK so I'm with Lenn. Where is your broker? You have many things wrong in this article. Lenn already mentionedhat the purchase contract can't be used to change the terms of the offered Co-broke. The commission paid by the seller is between the seller and their broker. The co-broke is between the 2 brokers.

You are under ZERO fiduciary obligation to just accept a lower co-broke. You are however under a fiduciary obligation to bring this entire situation up to your buyers. Your buyer may be more than happy to pay you the additional 1% to save their deal.

By the way of you sign the "counter" agreeing to the reduced commission you can't then go back and file a grievance. your signing is an acceptance. Of ocurse the acceptance has to come from your broker.

If it were me I would just point blank tell the other agent/seller that commission is not a part of these negotiations. They can either accept, reject or counter the buyers offer.

And the lesson for you is to always reasd the complete offer/contrcat before calling yor customer/client with any news.

Please come back and let us know how it all plays out.

 

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) over 8 years ago

Oops!! OK I see you are the broker. If your decision is to just accept the reduced co-broke and let your buyer move forward with the purchase then so be it. That is certainly your choice to make and may very well be a good business decision. But if this is the decision you made then you really should have no complaint against the agent/seller. They negotiated and they got what they wanted. And you agreed. Done deal. Be happy for the buyer and forget about it.

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) over 8 years ago

This actually happened to me in a multiple offer situation.  The listing agent called me and told me that she would only go forward with my offer if I agreed to reduce my commission.  Fortunately, I had a buyer's agency agreement and explained the situation to my buyer.  He agreed to compensate me for the difference if in fact we got an accepted offer.  Ultimately, the offer never got accepted and we found another house where I was fully compensated.

I was as shocked as you were and the buyer's agency agreement made the conversation much easier with my buyer, but I realize now, after talking with my broker owner, that I should have persued arbitration after the fact and not allow another office to bully me.  What a coincidence when the deal closed, and I noticed the succesful offer that was accepted came out of the same office.

Unbelievable but true.

Laurie

Posted by Laurie C. Bailey-Gates, ABR, SFR (Robert Paul Properties) over 8 years ago

I had someone do this to me a few years ago when a rather arrogant seasoned agent came back with a counter offer and told me that the commission would now be lower because my offer was so low. We never got the deal to work, but I looked into the situation as it just did not seem fair.  I found out they can't lower your commission unless it is done before you bring an offer.  

I would give it right back to the other agent . . . send him an email telling him you plan on taking this to the board for arbitration after the deal has closed.  Let him know he will most likely have to pay all his commission to you.  Put it in writing, tell him ethically you can't hold up the transaction for your buyer to argue over you commission, so you will present the offer under duress. 

He put you in a bad position with your buyers, so give it right back to him!  Let him take that signed offer back to his sellers knowing that there is a good chance he is going to loose his side of the commission. 

Posted by Karen Mathers - REALTOR®, When it Matters, Choose Mathers! 772-532-3221 (Keller Williams Vero Beach) over 8 years ago

Karma !  Hopefully this works out for you.  Work the deal.  I would have your buyers sign the contract and move forward with that and leave the commission open and not sign the CBC.  The purchase contract is between buyer and seller.  The commission is between brokers.   You can get paid what they offer you at settlement and sue them for the rest.  Or perhaps the agent caves and pays the whole amount at settlement.

That happened with us on a recent deal.  We had an agent who did not want to pay us at all or a discounted commission since the buyers saw the property at an open house but they wanted to be represented by us via buyer agency.  It was an extremely hard deal so we worked the deal to settlement without a CBC and got compensated the full amount at closing.   Good luck and keep all of us posted !

Posted by The Somers Team, Real People. Real Dreams. Real Estate. (The Somers Team at RE/MAX Access) over 8 years ago

Sorry to hear about this Diane. I'm guessing your more disappointed about the conduct of the agent as you are the loss of paycheck. There are always going to be agents like that and unfortunately it takes well written posts and comments like the ones above to learn a lesson. I sure have learned something.

It's never fun to be thrown a slimy knuckle ball when your just trying to play a clean game. 

Thanks for such a well articulated lesson. 

Posted by Charlie Dresen, Steamboat Springs, CO e-Pro (Steamboat Sotheby's International Realty) over 8 years ago

This is when it's difficult to be your own broker. I know agents have tried to do this in our office and our broker stepped in and kept their commission in tact. Lenn and BB have given you excellent advice here. Use it.

Posted by Tammie White, Broker, Franklin TN Homes for Sale (Franklin Homes Realty LLC) over 8 years ago

I agree with Lynn Harley completely!  Dont confuse commission with extortion and the contract between the buyer and seller has nothing to do with the agent's commission.  I do not believe she can agree to change the commission (as long as you are a member of her mls) without your permission.  The answer is no, you do not agree. 

As a buyer, I wouldnt want my agent to allow the sellers agent to bully me or my my agent.  Period!!  You can rest assured I would not sign that agreement.  I would have them sign the offer and strike through the portion about the compensation.  Then its back in her corner to accept the offer as it is or walk away.  You cant control the seller, and its not up to you to allow something wrong to happen under the smokescreen of fiduciary duty.............her ego needs a cold shower.

Posted by Teresa Tedder (Carolina Realty of Wilkes Inc) over 8 years ago

Diane, as already stated the commission has nothing to do with the offer to purchase. If you sign it, you are agreeing to the reduction.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA over 8 years ago

I would have your broker on this case right away. It is part of his split. That is why you have a broker.

Posted by Harry F. D'Elia, Investor , Mentor, GRI, Radio, CIPS, REOs, ABR (RentVest) over 8 years ago

Well said Lenn!! 

And James (#11).  Your buyer cannot sign an agreement giving away your commission.  So the commission has no place on the contract.

Extortion is exactly what it is. 

Posted by Barbara Calwhite, 417-438-7387 Specializing in Relocation (Keller Williams Realty of Southwest Missouri) over 8 years ago

I strongly disagree that you should just let it go.  This person is getting over by pure hot air.  I would definitely take them to task over it.  Let us know how it goes.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) over 8 years ago

I would definitely get your and her broker involved. I do not even want to begin to speculate on what the law is where you live, but something seems fishy over there and I would not lie down and take it. Hope all works out well :-)!!!

Posted by Kaera Mims, Associate Broker, e-PRO, REALTOR; Hampton, Newport News, York Co. (Liz Moore & Associates) over 8 years ago

This is highly unethical on the listing broker's side. I agree with those who said that the contract is between the buyer and seller and isn't the place to discuss broker commission. I would have contacted a real estate attorney for advice before proceeding - a good reason to develop a relationship with a title company run by attorneys.

Posted by Retired Notworking over 8 years ago

Using an Offer to Purchase to alter the terms of a Listing Contract is a chapter and verse violation of the NAR Code of Ethics.  It is also tortuous interference in an existing contract by an unrelated third party (fraud in most states).  Having provided written evidence of the sin makes your grievance procedure and civil action much easier. Perhaps the other side does not realize what they have invited into their tent!

And, yes, as always, Lenn got it right!

Posted by Jim Gilbert, The Gold Homes Team (Keller Williams Fairfax Gateway) over 8 years ago

Diane, 

Extortion is a fabulous word for this.  I am a bit concerned that signing the reduced commission you may have agreed and given away your rights. 

I would guess this person is desperate or greedy, either of which will come back to haunt them. 

All the best, Michelle

Posted by Michelle Francis, Realtor, Buckhead Atlanta Homes for Sale & Lease (Tim Francis Realty LLC) over 8 years ago

We are  not paid by the seller, but by the listing brokerage. Here in central Florida our MLS agreement states that what is offered to cooperating brokers in the MLS MUST be paid or the listing agent and broker will be called out on it. There is no allowance for playing with that number, except in the case of a short sale where it has to be clearly stated that the commission may be lowered contingent on what the bank accepts. Other than that, the listing agent has NO ability to somehow pull the rug out from under a cooperating agent who performed his/her job relying on the proffered compensation. Shame on the unethical and sleazy listing agent who tried to pull this one. I say, let her lose her entire commission if that is what it takes to make her follow the rules.

Posted by John Elwell, You Deserve a Full-Time Agent, Not Reduced Results (CENTURY 21 Bill Nye Realty, Inc.) over 8 years ago

As stated by others here, you are not part of the contract to purchase so there is no place in that contract for this kind of stipulation. Contract to purchase is between buyer & seller, Co-op is between listing broker & selling broker.  The buyer simply does not have legal standing to change the commission agreement.

For this reason even if you leave that stipulation in the counter offer, you will still be owed the commission as stated in the MLS. At least in Colorado, there is no place within the contract or counter offer for the realtor to sign. It is clearly stated after buyer & seller signature boxes that it is the end of the contract. Then there is an area on the form for the realtors to sign - meaning they are NOT part of the contract.

So it doesn't matter if your buyer accepts the counter. You are still entitled to your full commission.

These kinds of issues are one of the main reasons I would not act as my own broker. In my Keller Williams office I have the full support of a team of experts. I once went against their advice and gave in to a similar situation but never again. Stand your ground on this. You are in the right!

 

 

Posted by Bob Krus, What About Bob? For All Your Real Estate Needs! (Keller Williams Foothills Realty) over 8 years ago

If this were my deal, I'd have the buyer sign the counter offer but I would not sign the CBC. Brokers aren't a party to the contract. I would leave my buyer out of the fight. But I would file a complaint at the Board. She can't change the commission based on your buyer's offer. You can offer to change your compensation but she can't force you to change it. Of course, if you tell her you're filing a complaint, she might not accept your buyer's offer. I'd document the file if I were you.

Posted by Elizabeth Weintraub Sacramento Realtor Top 1%, Put 40 years of experience to work for you (RE/MAX Gold) over 8 years ago

Bummer. I hate it when greed, stupidity and no-ethics get in the way of viable transactions. Best wishes.

Posted by Dave Rosenmarkle, 32 years of providing fully satisfying service! (Highland Realty) over 8 years ago

Had this attempted on one of my files but I printed out the full mls sheet.  Cost the listing office on their end not my end. Stood my ground fast and brought in our Managing Broker immediatley.  Sent it to the listing agent as well as the managing broker of the Listing Office.

The listing agent/owner probably saw a window of opportunity and went for it.  Wrong.

Posted by Barb Van Stensel over 8 years ago

Our business is hard enough without having to deal with agents like that! Extortion is a great word for it and agents that practice this type of behavior should be removed from our business.

Posted by Bill Byrd, Virginia Beach Real Estate (Byrd Realty Group) over 8 years ago

Thank you again!  Everyone has been so insightful.  I read through the CAR Q&A document regarding the Broker Compensation under CAR for RPA-CA.  That spells it out very clearly as follows:

A The cooperating broker will need to get the listing broker to agree to a different amount of compensation prior to presenting any offer. (The cooperating broker should not use the terms of the offer to conduct these negotiations. Standard of Practice 16-16 of the Code of Ethics of the National Association of REALTORS®, and Rule 9.5 of the California Model MLS Rules, generally state that a cooperating broker shall not use the terms of an offer to purchase to attempt to modify the listing broker's offer of compensation nor make the submission of an executed offer to purchase contingent on the listing broker's agreement to modify the offer of compensation.)

What I'm a bit confused about is why the attorneys at CAR would advise me to proceed as I did knowing that the terms offered through the MLS shall not make the offer to purchase contingent on a modification of compensation. 

The CAR attorney advised me to proceed with the execution of all counter offers and subsequent CBC form because I cannot allow a compensation issue interfere with my buyer's ability to purchase the home.  He went on to say that although I may feel uncomfortable signing an agreement that I do not agree with I have an obligation to do so if I am to act in the best interests of my clients.  "You can seek arbitration when escrow is closed to recover the difference between the commission offered in the MLS and what was actually paid at COE". 

I want to call CAR in the morning and speak with another attorney to find out if I was provided with poor information.  Also, the broker/seller (same person) instructed escrow to not proceed with the preparation of escrow documents for my buyer until the signed CBC was delivered to escrow.  Escrow already had the fully executed purchase agreement with counter and buyer's deposit.  As much as I did not want to sign the darn CBC agreement, the broker/seller again made it a part of this transaction by her instruction to escrow.

I allowed the broker/seller to strong arm me because of the advice provided to me by the attorney when I'm left scratching my head regarding the merit of the advice to begin with.

Posted by Diane Wheatley, Broker, SoCal Real Estate Expert (909) 815-4499 (Move Up Properties) over 8 years ago

I had a commission problem this week also...and also believe I'm in the right. I have a blog about it...would love opinions from the powers-that-be, my deal died.

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) over 8 years ago

I've dealt with this only a couple of times. I start by sending a written contact to the Seller through the Agent/Broker stating clearly that my commission is not a part of the sale negotiations and how silly it is to make the Brokers a part of that process. I suggest that if I'm to be a part of it, there are many changes that would need to be made to the contract because there are many other terms of the contract I am not happy with. The first being a cash credit to the buyer for every penny renged on from my commission. The second, an extension of all time frames wi/in the contract since there's now an additional principal involved in the negotiations. Third, we'll need to verify every disclosure due to the Seller making it clear they have no problem going back on their word... etc etc etc.

As you can tell, by the time that letter goes out I'm already bringing up other homes to show my buyer because I'm done with them. I've never actually had a seller follow through on the threat to whack my pay but even once it's worked out, I try very hard to walk my buyer away from that seller.

In writing I flatly state to my buyer that the credibility of the Seller is in question, I do not trust them, I have no idea what's true or not true in terms of disclosures, that they need to verify any and all info from the Seller since I believe none of it.....

Next!

Posted by Pete Buckley (Independent Broker/Realtor, North San Diego County CA.) over 8 years ago

Lenn and Bryant are absolutely right, the commission cannot be part of a counter to the buyer.  It doesn't belong in the contract.

Sometimes there is an adjustment that is dealt with in a separate letter between brokers.  Not buyer to broker. 

The agent/owner is representing herself and has increased liability.  Obviously, the termite issue was NOT DISCLOSED prior to the warranty issue coming up.  She failed in her duty to disclose material facts.

Last fall I had a client on a contract for deed who came up short on downpayment funds. The seller accepted, but wanted to deduct half of my commission to compensate himself.  The buyer, who was a loan officer, wailed and moaned about how he wouldn't get his house if I didn't agree.  He promised he would make it up to me afterwards.  I negotiated a lesser reduction, never got another dime from the buyer, and he went out of business.  What a shock.

Posted by Mary Jo Quay, I Move You Home (Remax Results) over 8 years ago

I would have done as James #11 suggested....   Cross out the reference to the commission (it does not belong in the purchase price negotiation, as per CAR rules), and have your buyer sign the balance.

It is not renegotiation, nor a fresh counter, as the commission offered in the MLS is the offer, unless she gets you to accept a different compensation SEPARATE from the negotiation of the purchase price.

And you are not breaking your fiduciary duty to your buyer, by not allowing the seller/broker to hold you hostage.  There's nowhere in being a fiduciary that says you have to "take it in the shorts" in order to properly represent your client.

Yes, you can fight this after the fact in arbitration, but it's much harder that way.

Good luck.

Posted by Alan May, Helping you find your way home. (Coldwell Banker Residential) over 8 years ago

Integrity, integrity last time I looked it still had a definition in the dictionary. Unfortunately there are some agents who disregard or are to hungry to have this word, or it's meaning, play a part in how they do business. Sounds like you have it and truly put your clients interest before your own. If I ever moved to Calif. and didn't have a license I would certainly use you as my agent and hopefully your buyers will tell all their friends how good an agent you are.

Posted by Mark Wienshienk (MarkW Realty/ Agent for Keller Williams) over 8 years ago

Hi Diane~  I can't understand why an agent thinks it is ok to do that!  Wrong!  Your pay is not up for grabs so she can sell her house and make commission at your expense!

Posted by Vickie McCartney, Broker, Real Estate Agent Owensboro KY (Maverick Realty) over 8 years ago

Never compromose on commission!  Its a slippery slope.  those that do make it harder for the rest of us.  I'm worth my fee!

Posted by Linda Lohman, Former Teacher/Broker (Fonville Morisey Realty) over 8 years ago

Commission is a contractual agreement between the listing agent and the , not the buyers and the seller, that is why I do not like to see commission in a sales contract, it has nothing to do with the agreement between buyer and seller. Buyer agent compensation is advertised in MLS and is binding on the listing agency. I would call the Broker for the unethical actions of the agent, and file for arbitration.

Posted by Jeanne Kozak, REALTOR and Broker/Owner in WV and VA (RE/MAX In Action) over 8 years ago

It sounds like the CAR attorneys recommended signing it and then mediating afterwards?  It's my understanding we can't do something like that in the offer, so I don't you can in the counter.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 8 years ago

I'm not sure if any of the last few comments were made by people who read your post about the legal advice that you received from your own CAR attorney; however, I'd be interested what happened (or happens as the case may be) when you called for further legal clarification. Junk like this is going on wayy to often because some sleazy agents and brokers think they can get away with it.

Posted by Norm Werner, Helping the first time and every time (Real Estate One) over 8 years ago

The MLS rules in my area prohibit renegotiating the compensation that is offered in the MLS as part of contract negotiations.  I am not so sure that the C.A.R. attorney was technically right, but they always take the safe route.  I think the contract negotiations are between the buyer and the seller and the buyer cannot agree to reduce your commission.  You are not a party to the transaction.  You are the buyer's agent.  There is a reason why the MLS rules prohibit this kind of conduct and there is also a reason why the commission amount is not part of the CA RPA (the compensation portion is below the parties' signature lines.  Did the broker sign the Real Estate Brokers section?  Although I personally don't agree that you would be breaching your fiduciary duty to your client by not agreeing to reduce your commission, I would proceed as suggested by the C.A.R. attorney because my relationship to my client is more important than the money, especially since you mentioned that time is very much of the essence for your buyers. 

Posted by Ute Ferdig, Because Getting It Right Matters! (Ferdig Real Estate Solutions) over 8 years ago

You might want to remind the other broker how utterly painful additional required ethics training can be.

Posted by Robert Slick, NRBA, RDCPro, Trident/CCAR MLS (Beach and River Homes) over 8 years ago

Unbelievable! Don't you just love it when owner/agent won't pay the going rate on commission. It's like they are backstabbing their own profession. Disgusting! I hope you win with the committee and get paid your full commission. In Missouri, the seller agrees to pay for termite treatment when they sign the listing agreement. The bank owned homes are the only listings that somehow try to negotiate their way out of termite and wood destroying insect treatment. This is a bad agent all the way around.

Posted by Kalene Bagwell, Realtor - Selling Blue Springs - Kansas City Metro (Realty Executives Of Kansas City) over 8 years ago

Diane:  IMHO, I think Lynn Harley said it all.  (Also, I hope you won't mind me asking, do you think this should be a members only post)?  I'm not sure this is something we want the public reading but then I realize when I say that, it sounds like I'm tyring to hide something, which I'm not but may be interpreted that way.  Just asking.  

Posted by Donna Yates, Blue Ridge Mountains (BHGRE - Metro Brokers) over 8 years ago

Very unethical on that agents part.  I hope you will take her to arbitration.

Posted by Richard Weeks, REALTOR®, Broker over 8 years ago

This actually can't be done - it is against the Code of Ethics. Commission cannot be negotiated as part of a transaction. I know some agents and even brokers try to, but you simply can't. To present an offer with a different compensation than what is offered in the MLS is a direct ethics violation. Contact your local board.

Posted by Christianne O'Malley, Exceptional Service - Delivering Results in Reno! (RE/MAX Realty Affiliates) over 8 years ago

It's illegal in CA to mention commissions in the purchase contract, addendum or counter offer.  I'd be on the CAR legal hotline in a second.

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) over 8 years ago

Updates?

Posted by Teresa Tedder (Carolina Realty of Wilkes Inc) over 8 years ago

Late to the party here, but the advice you received from the attorney doesn't seem right. The brokers are not a party to the RPA so how can you ask your buyer to sign a counter with that term included?

And once we allow this to happen, where does it stop? Fiduciary duty, yes, of course. But if today we're being coerced into forfeiting 1%, soon we'll be donating the whole commission. And then, before you know it, buyer's agents will be kicking in $10K for the priviledge of bringing the buyer. I don't believe your duty to your client includes being ripped off. We're agents, not slaves.

Love to see that woman's head roll over this one.

Posted by Diane Mora (Keller Williams Chino Hills) over 8 years ago

 

I want to give you an update on my ongoing escrow.  I did contact the CAR attorneys again on Tuesday.  The attorney told me that my signature on the CBC authorization form could constitute my uncontested agreement to the reduction of my commission.  However, I told the attorney that I had written below my signature that my signature was provided only as a means to facilitate the purchase on behalf of my buyer and that I will be seeking arbitration immediately after COE.  He said that was a good thing to do in order to prevail in arbitration.

The owner/broker did not like it however.  She will not communicate with me now.  After 3 messages to the owner/broker reminding her that I was waiting on the seller’s disclosures for my buyer’s signature I finally received them via email.  With the disclosures she included yet another addendum #2 for my buyer’s signature.  The addendum reiterated that my commission was reduced to 1 ½% evidenced by the signed CBC agreement where I indicated my disapproval of by stating that I would seek arbitration upon close of escrow.  Her verbiage in the addendum read very ambiguously.  She states that the buyer shall take full responsibility for the selling agent’s commission and not seek any legal action against the seller now or after the close of escrow.  She also stated that the buyer has accepted the make, model and installation of the appliances and the central A/C unit installed with no further recourse. 

The owner/broker emailed this addendum to my buyer’s lender and to escrow without mutual signatures.  The lender had a problem with this addendum due to its implication that the buyer could be responsible for my commission therefore throwing off their cash to close.   I told him to disregard the addendum as the buyers are not in agreement with it.  I returned the signed disclosures to the seller only.  The buyers have performed their appraisal, physical inspection and are now ready to close. 

I’m waiting for her next move.  My buyers understand what is at stake and wish to continue with the purchase.  I will keep you posted.

Posted by Diane Wheatley, Broker, SoCal Real Estate Expert (909) 815-4499 (Move Up Properties) over 8 years ago

I'm back!  Nearly 6 months later but I wanted to fill you in.  I'm filing my requst for arbitration with my board of Realtors tonight.  I only have 3 days left to file with nearly 180 days passed. 

As you can expect from my intent to arbitrate, we closed escrow on this deal with the reduction in my commission from 2 1/2 % to 1 1/2%.  So even though I must pay $300 to the board for the right to arbitrate this matter I feel it is important.  It is important to fight for what is rightfully ours.  We cannot allow this type of behavior to reign in our industry.  I'm certain that she thought she got away with it since it has been all this time now and with the cost to file vs. the reward she won't think think that I would pursue such a petty matter. 

Well it is not petty to me and it should not be petty to any of you either.  Large or small we must stand up for each other and stop enethical treatment and behaviors met by unscrupulous individuals like the seller/broker in my situation.  I realize that many of us cannot afford the necessary filing fees to get started when they may not be certain that they will prevail in the long run.  Many don't pursue grievances like this one just because they cannot afford to.  But who will if we don't? 

I appreciate your profound support as represented in this post.  It is all of YOU that have convinced me to move forward on this and stop other agents from being bottle necked into something that they are not happy with just because they are feeling bullied or without proper resources to move forward.  I'll take one for the team!  Wish me luck!

 

Posted by Diane Wheatley, Broker, SoCal Real Estate Expert (909) 815-4499 (Move Up Properties) over 7 years ago

 

I have an update!  Thanks to all of you on ActiveRain.com, I pursued an arbitration action and prevailed.  I was granted the full award plus filing fees and received the payment on Friday. 

We cannot allow other agents in our profession take advantage of us.  When you know that something is wrong or unscrupulous, do something about it!  Don’t roll over and pretend it didn’t happen or believe that it isn’t worth it to stand up.  You are not only standing up for yourself, you are standing up for all of us working so hard to make a living in these less than savory times. 

Don’t allow a fellow agent to take something away from you just because they “can”.  Whenever we turn our backs on what’s right or wrong, we allow other individuals to continue with bad behavior because they believe they “can”.   Well, I feel very proud to have stood up to say “no you can’t!”. 

Sites like this one prove that we’re not alone in our day to day experiences.  There is a lot of bad behavior going on that should be stopped.  I know that I will support any fellow agent who believes that they were “wronged” and provide them with the support I was given here to do the “right” thing.  Thank you all !

Posted by Diane Wheatley, Broker, SoCal Real Estate Expert (909) 815-4499 (Move Up Properties) over 7 years ago

Diane,

Thanks for posting this and glad to hear you had prevailed.

A good warning for us to guard what is rightfully ours.

Posted by Pete Xavier, Outstanding Agent Referrals-Nationwide (Investments to Luxury) over 6 years ago
This is my first time reading this blog. I have to say that thus far I'm extremely impressed. Keep on writing such wonderful pieces like this one. Until next time, take care of yourself. regzooka
Posted by regzooka about 6 years ago

Diane Wheatley congratulations on winning the arbitration! I know I'm a little late to the party... I'm glad you took the time and thanks for sharing your experience.

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) almost 4 years ago

Participate