Good morning fellow Rainers. This post was inspired by Joslyn Panka's post "Pay up, or you'll be sorry". If you haven't read her post please take a few minutes to do so. It's a well deserved featured post and managed to get my mind working this morning. While I don't agree with Joslyn's take I certainly appreciate her passion towards her work. Passion is always a good thing.
Anyway, this post is to clarify a misconception that some REALTORS® have relating to Buyer's Agent asking for a higher co-broke before they will show your listing.
First, I want to say that everyone is free to choose how they want to handle their business. Some agents choose to work under a BBA (Buyer Broker Agreement) and will only work for a guaranteed fee, some will show their Buyers anything regardless of the co-broke. It's my opinion, that the BBA is best but every one is free to decide for themselves how they want to handle their business.
The key is to disclose to your Buyer, prior to them hiring you, how you work and how you will be paid. You MUST have this conversation with your Buyer whether you are using a BBA or not. (Code Of Ethics, Standard Of Practice 1-13) Did you know that?
OK, back to the point of this post, asking for a higher co-broke before showing a property. According to our COE this is the ONLY time you can ask for an increase in the offered co-broke. PRIOR to showing the property. (COE SOP 3-1). Once you have showed the property you have accepted the offer of compensation in the MLS. Did you know that?
Now, even though you have accepted the offer of compensation (co-broke), you can still increase your compensation. BUT….at this point it is only the Buyer who can ask the Seller for additional compensation via the purchase offer. Of course, this would assume that you have a BBA with your Buyer. If you do, then the compensation owed from the Buyer, above and beyond the co-broke offered, becomes a Buyer closing costs. The Buyer can ask the Seller to contribute to this closing cost. (COE SOP 16-16). The REALTOR® can't….the Buyer can. Did you know that?
One final point. If a BA ask for an increase in the co-broke before they will show your listing, it is NOT your decision to make. It's the Seller's decision. You do not have the authority to say "no". The Seller is your client/customer and it is your duty as their REALTOR® to run this request by them. The increase in co-broke should come from the Seller…not you. In fact, it CAN'T come from you unless your Seller agrees to it. (COE SOP 1-12). Did you know that?
If the request is presented properly the Seller should have no reason at all to deny it. The Seller should agree and the Buyer should look at the property. If the Buyer makes an offer then just negotiate accordingly. Remember the Seller is only interested in selling their property and the NET. Nothing else really matters. If the Seller has to pay a higher commission then the Buyer has to pay a higher price. It's a wash. Did you know that?
My point is, know the Code. If a BA ask for more money and you say "no", you could very well be practicing in an unethical AND illegal manner. Best talk with your Seller.
Sorry about the redundancy. Lenn types a lot faster than me. It is a very important topic though and needs to be expanded upon. The COE is our friend.
OK, one more point, sorry I just had to add this. I am NOT trying to pick on Joslyn. I am expanding upon a very important topic. ActiveRain is a place to share and to learn. I learn stuff on here everyday and I hope that if anyone disagrees with me you will let me know. Did you know that?
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