Dear Anne: Too Many Rules Now for an Offer of Compensation
ORLANDO, Fla. – Dear Anne: I have been in real estate for a long time and it used to be a lot less complicated than it is now. All you had to do is belong to the MLS – that was it. Now it’s different story, and, quite frankly, there is confusion among the rank-and-file on how compensation works and we need answers.
Here is my laundry list of concerns I need you to address. What if…
- They’re a member of your MLS but not your association
- They’re a member of your MLS but no association
- They’re a member of your MLS but an association that isn’t part of MLS Advantage
- They’re not a member of your MLS but are a member of an association that’s part of MLS Advantage
- They’re a Thompson broker
- The broker is a member of the MLS but, due to MLS of Choice, the agent is not
I hope you can clear this up for all our sakes. – We Need Answers
Dear We Need Answers: Well, it looks like I have my work cut out for me. I am the first to admit times have changed and NAR’s MLS policy can be challenging. The best way to tackle this is to address each of your bullet points individually.
Warning: There is a lot of information to cover, so brace yourself for MLS policy overload.
They’re a member of your MLS but not your association
Under NAR’s Board of Choice policy, MLS participatory rights shall be available to any Realtor® (principal) or any firm comprised of Realtors irrespective of where they hold primary (or for that matter secondary) membership, subject only to their agreement to abide by any MLS rules and regulations, arbitrate disputes and pay MLS fees.
For example: If Participant Patti is a member of the Sunset Board, by virtue of being a Realtor member in another board, Patti can join the Sunset Board’s MLS. She does not have to join the board to access the MLS. If Patti is a participant in your MLS, she can offer and accept offers of compensation just like any other user. The fact that she does not hold board membership has no bearing on the unconditional offer of compensation afforded to all participants in the MLS.
They’re a member of your MLS but no association/Thompson Broker
These two subjects are one in the same, so I’m combining them. In Florida, Georgia and Alabama, local Realtor-operated MLSs must allow non-members (affectionately nicknamed Thompson Brokers) access to core MLS services: active listing information and offers of compensation.
For example, Broker Bob is not a member of a local board anywhere, and if he wants to join the MLS, he can. He can offer and accept offers of compensation. He must follow the MLS rules, pay fees, adhere to a standard of conduct, be willing to accept discipline and must submit to arbitration involving commission disputes. It is mandatory for Realtors to arbitrate with non-members who participate in the MLS.
They’re a member of your MLS but an association that isn’t part of MLS Advantage/They’re not a member of your MLS but are a member of an MLS Advantage association
Since these two focus on MLS Advantage, I believe one explanation will suffice. If your association participates in Florida Realtors MLS Advantage Service, the offer of compensation extends to you if you are the procuring cause.
If your association does not a participate in this program, the offer of compensation through MLS Advantage does not extend to you.
Take a look at Article 3 and its sidekick, Standard of Practice 3-1, because it could play a part in whether you get paid or not.
REALTORS® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker.
Standard of Practice 3-1
REALTORS®, acting as exclusive agents or brokers of sellers/ landlords, establish the terms and conditions of offers to cooperate. Unless expressly indicated in offers to cooperate, cooperating brokers may not assume that the offer of cooperation includes an offer of compensation. Terms of compensation, if any, shall be ascertained by cooperating brokers before beginning efforts to accept the offer of cooperation.
In a nutshell, if your association does not participate in MLS Advantage or you do not participate in the listing broker’s MLS, it’s important to understand that under Article 3, the listing broker must cooperate with other brokers (member or non-member alike as long as it is in their seller’s best interest). The obligation to cooperate does not include the obligation to pay a commission.
It is the cooperating broker’s R-E-S-P-O-N-S-I-B-I-L-I-T-Y to find out if he or she is going to be compensated by the listing broker, especially if the offer of compensation is not extended through participation in the MLS or MLS Advantage.
If you’re coming into the transaction as a “lone wolf” with no ties to the listing broker through the MLS or MLS Advantage, the offer of compensation, if any, may not be the same as the offer stated in the MLS – it may be different or it may be nothing. If you do reach a compensation agreement, it’s a good idea to get it in writing.
A broker is a member of the MLS but, due to MLS of Choice, the agent is not
Finally, the last one. In 2017, NAR changed Policy Statements 7.42 and 7.43. “MLS of Choice” went into effect July 1, 2018, to give agents a choice in subscribing to any MLS in which their broker participates – but they must choose one or one will be chosen for them.
The question is: Can the broker participant be denied compensation if his agent is a subscriber in another MLS?
I believe the best response to this issue comes directly from NAR’s FAQ on MLS of Choice:
26. Do the offers of compensation expressed in the MLS apply to licensees who receive a waiver of MLS subscription fees?
The offers of compensation in the MLS are between the principal brokers of the firm, and not the licensees affiliated with the MLS Participant. The principal broker can rely on the actions of his or her affiliated licensees to claim entitlement to compensation through procuring cause. That remains unchanged for licensees who receive a waiver of subscription fees. Waived licensees are precluded from using the MLS as the source of any property information, and licensees who violate the terms of the waiver can be subject to sanctions in accordance with the waiver agreement and/or MLS rules.
Unfortunately, some folks are under the impression they’re automatically entitled to compensation because they are a licensee or hold Realtor membership. Most of us know this is not how it works. A good rule of thumb is to always ask yourself: Is there a verbal offer? An offer in writing? Does the listing appear in the MLS or MLS Advantage? If there isn’t, you may end up working for free.
Anne Cockayne is Director of Local Association Services for Florida Realtors
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