Request for Change in Cooperating Compensation

Q: Is it a violation of the REALTOR® Code of Ethics for a cooperating agent to ask for a change in the offered compensation before showing a property? If the listing broker  agrees to the change, may the agreement be a verbal one? Is there a form a cooperating agent can use to confirm the changed agreement? If the listing broker refuses to  agree to the change, may a buyer agent decline to show the property based on the amount of the commission offered in the MLS?

A: No, yes, yes, and maybe. It is not a violation of the REALTOR® Code of Ethics for a cooperating agent to seek a change in compensation before showing a property. In  fact, Article 3 of the Code requires cooperating brokers to ascertain terms of compensation before beginning efforts to accept the offer of compensation (note well that where  the listing broker is initiating the change, Article 3 of the Code and MLS rules require that the change in compensation for cooperative services, the listing broker must timely  communicate that change to the other REALTOR® prior to the time such REALTOR® produces an offer to purchase/lease the property, either by notice published to all MLS  Participants or in a writing to a specific cooperating broker, and the change cannot be the result of any agreement between or among all or any other MLS Participants).  Although the change requested by the cooperating agent and agreed to by the listing broker can be accomplished orally, if there is a dispute later, it is difficult for the  cooperating agent to establish the oral modification; thus, it is preferable to have it in writing. Use of Standard Form 220 would be appropriate. Whether a buyer agent may  decline to show the property based on the commission offered in the MLS may turn on the structure of the agreement between the buyer agent and the principal. For  example, if the agreement provides that the buyer agent’s fee will be a certain percentage of the purchase price and the commission offered by the listing broker is less, the  buyer agent probably has no obligation to show the property to the client if, after having discussed the matter with the client, the client is not willing to make up the difference  between what is being offered by the listing broker and what is owed the buyer agent per the agreement. On the other hand, if the buyer agency agreement simply says that  the buyer agent will accept whatever is being offered through MLS or otherwise, then I think the buyer might claim that the buyer agent is in breach of the buyer agency  agreement if the buyer agent refuses to show the property just because the offer of compensation from the listing broker is less than what the buyer agent thinks he or she  should be paid. This is one reason why it is unwise for agents to simply insert “per MLS” in the compensation blank of their buyer agency agreements. As is stated in the Guidelines for Completing the Exclusive Buyer Agency Agreement (standard form 201G): “Do NOT insert “per MLS,” “N/A” or a zero in the blank. An agent is not relieved from assisting a buyer client in acquiring property merely because there is no offer of compensation made to the agent by the listing agent or seller; consequently, if an agent does  not insert specific compensation in the blank, he or she may become obligated to assist their buyer client in acquiring property without the benefit of being compensated for  their work.”