At the April MLS Board of Directors meeting, the directors took under advisement the practice of modifying the commission paid to cooperating brokers through language entered in REALTOR-to-REALTOR remarks.  There was a consensus of the directors that placing net proceeds language in the remarks on a listing creates confusion for the cooperating brokers because there is no way to determine prior to submitting an offer what the actual compensation will be and that such practice is in direct violation of the spirit of the MLS.

A motion was made and an unanimous vote taken that placing net proceeds comments in the REALTOR-to-REALTOR remarks is prohibited.  The motion reads as follows:  Motion to change Rules & Regulations to reflect the following: … 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. Seconded and approved unanimously.

For context, the full section of the rules and regulations are as follows:

Section 5.0 – Cooperative Compensation Specified On Each Listing:

The listing broker shall specify, on each listing filed with the Multiple Listing Service, the compensation offered to other Multiple Listing Service Participants for their services in the sale of such listing.  Such offers are unconditional except that entitlement to compensation is determined by the cooperating broker’s performance as the procuring cause of sale (or lease).  The listing broker’s obligation to compensate any cooperating broker as the procuring cause of sale (or lease) may be excused if it is determined through arbitration that through no fault of the listing broker and in the exercise of good faith and reasonable care, it was impossible or financially unfeasible for the listing broker to collect a commission pursuant to the listing agreement.  In such instances, entitlement to cooperative compensation offered through MLS would be a question to be determined by an arbitration hearing panel based on all relevant facts and circumstances including, but not limited to, why it was impossible or financially unfeasible for the listing broker to collect some or all of the commission established in the listing agreement; at what point in the transaction did the listing broker know (or should have known) that some or all of the commission established in the listing agreement might not be paid; and how promptly had the listing broker communicated to cooperating brokers that the commission established in the listing agreement might not be paid.

In filing a property with the Multiple Listing Service of a Board of REALTORS® the Participant of the Service is making blanket unilateral offers of cooperation and compensation to the other MLS Participants, and shall therefore specify on each listing filed with the Service, the compensation being offered to the other MLS Participants.  Specifying the compensation on each listing is necessary because the cooperating broker has the right to know what his compensation shall be prior to his endeavor to sell*.

The listing broker retains the right to determine the amount of compensation offered to other Participants (acting as subagents, buyer agents, or in any other agency or non-agency capacity as defined by law) which may be the same or different.

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.

(b)    By showing a definite dollar amount.

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.

It is to be noted that this does not preclude the listing and cooperating brokers from making commission adjustments as part of their conversations, but that blanket changes to the commission offered in the MLS cannot be made through the remarks section.

Staff will remove any such remarks from the MLS when they are discovered or when they are reported to the office.

Thank you!