In September there was a change made to the MLS Rules & Regulation, Section 5 – Division of Commission, which coincided with the release of our revised Exclusive Right to Sell and Purchase and Sale Agreements. This change made the division of commission predicated upon the net sale price of property and further goes on to clarify how the net sale price is to be determined. An excerpt of this section is shown below:
The compensation on said listings filed with the Multiple Listing Service shall appear in one of two forms. The essential and appropriate requirement by a Board Multiple Listing Service is that the information to be published shall clearly inform the Participants as to the compensation they will receive in cooperative transactions unless advised otherwise by the listing broker, in writing, in advance of submitting an offer to purchase. The compensation on said listings published by the MLS shall be shown in one of the following forms:
(a) By showing a percentage of the net selling price, defined as the purchase and sale price less any mortgage loan closing cost credits paid by the seller to the buyer, if any, as defined in section ‘7. Settlement Charges’ on the (HUD-1). The HUD-1 Settlement statement ‘Section 7 Settlement Charges’ outlines bank credits if allowed by the lender, including items payable in connection with loan, items required by lender to be paid in advance, reserves deposited with lender, title charges, government recording and transfer charges
(b) By showing a definite dollar amount.
When making an offer of compensation through the MLS it is based on either of the two forms. But, further the Rules state:
This shall not preclude the listing broker from offering any MLS Participant compensation other than the compensation indicated on any listing published by the MLS provided the listing broker informs the other broker in writing in advance of submitting an offer to purchase and provided that the modification in the said compensation is not the result of any agreement among all or any other Participants in the Service. Any superseding offer of compensation must be expressed as either a percentage of the net sales price or as a flat dollar amount.
In addition to other situations, this means that the listing broker can notify the cooperating broker, in advance of submitting an offer to purchase, that additional credits, such as inspection costs, will further reduce the net selling price.
Please note, the Rules & Regulations for the form of compensation offered unilaterally in the MLS does not assume that closing costs will be factored into the net selling price of a piece of property. The MLS developed a flyer explaining closing cost credits, which can be found in the FORMS menu on MLS, or can be read here.