On June 1st, MRED updated its Rules and Regulations to allow offers of compensation to be as low as $0 or 0%, but this rule applies only to listings in a Private Status. Prior to this rule change, any listing within MRED, whether in a Standard Active Status or Private Status required a minimum commission of $1.
MRED sat down with some of our Managing Brokers last month to explain the change to Private Listings and ease some concerns. In an FAQ provided by MRED, it reads in part “Given the legal environment in the industry, MRED’s Board of Managers determined that MRED will test allowing users to start entering $0 or 0% in the compensation field in Private-Status listings. Of course, a seller’s agent will maintain the option to enter the compensation amount they choose and continue to negotiate compensation with their clients and buyer’s brokers”.
MRED added that other markets across the U.S. have tested and implemented similar rules without any significant disruption. Further, they clarified that there are no current plans to make any changes to compensation for Standard Active Listings and that MRED has always allowed, and will continue to allow, brokerages to negotiate compensation. We offer a Brokerage to Brokerage Cooperating Compensation Agreement in our Forms and Contracts library to assist brokerages when there is a change to cooperating compensation.
When representing a buyer or tenant and prior to beginning a property search, REALTORS® should consider utilizing an Exclusive Buyer-Broker Agreement to establish the terms of the relationship with their client and the terms of compensation for services. Based on the terms of compensation in the buyer-broker agreement and any potential offer of compensation from a listing broker in the MLS, a buyer may choose to ask a seller to compensate you as a term of their offer. REALTORS® should be mindful of their ethical obligations within the Code of Ethics under Article 16, which states that REALTORS® shall not make the submission of an executed offer to purchase/lease contingent on the listing broker’s agreement to modify the offer of compensation and that REALTORS® shall not use the terms of an offer to attempt to modify the listing broker’s offer of compensation. Any request for buyer-broker compensation in an offer to a seller must come at the direction of the buyer and not the REALTOR®. REALTORS® must always act in the best interests of their client and have transparent conversations with their clients around agency and compensation either upfront during an initial consultation or ongoing throughout their relationship.
MRED is always looking for member feedback and input into the connectMLS system. If you have feedback on this new rule or have a rule change request, system enhancement, etc. consider submitting a formal request to MRED using their Rule Change Request Form.