Never in my wildest imagination did I dream that I would be writing a post in 2013 about Agency Relationships and how a Broker’s Agency Policy affects their MLS offer of “Co-operation and Compensation”. But since there seems to be SO much misunderstanding still about this issue here we go!!
I was teaching a class the other day when a Broker/Owner asked me if it was true that if she didn’t have a buyer representation agreement with the buyer (BTW in a state that does not require written buyer rep agreements in order to represent the buyer) and she was showing another Broker’s listing that she was an AUTOMATIC SUBAGENT of the seller. I about fell to the ground screaming! The answer of course is NO! And that’s where it started….and then another Broker/Manager friend asked me about it the next day…and then another instructor texted me looking for clarification…and then I said “Gotta write a post on this, really?” So, here are the things you MUST know:
1) the MLS is a co-operative offering a blanket unilateral offer of co-operation and compensation to each other for the showing and selling of each others listings. Each Broker through policy gets to determine if they want to offer co-operation (the ability to show their listing) and compensation (the opportunity to get paid for selling the listing) to a) Brokerages acting as Buyers Agents b) Brokerages to whom they have offered Subagency (which is basically unheard of any more) c) Brokerages acting as Transaction Brokerages or whatever you call it in your state or in some cases d) to co-operating brokers from outside the MLS. The listing Broker makes that determination to whom THEY individually are going to offer co-operation and compensation.
2) The Brokerage showing the co-operating Broker’s listing must determine individually their company policy on agency. Do they always represent the buyer when showing a co-brokers listing? Do they ever accept subagency if it is offered or do they have a policy to always reject subagency and only ever represent the buyer in cases where it is offered. YOU HAVE TO KNOW THIS!
3) If your state requires a Buyer Brokerage Agreement in writing…get it in writing! It can be for an hour, a day, whatever the buyer wants. Of course I know you don’t do that but it makes me feel good thinking you might. Regardless if you are doing it in writing or not, if the company whose listing you are going to show only offers co-operation and compensation to Buyer’s Agent (which is the norm) there is no way in the world (didn’t I say that nicely?) that you can be an automatic subagent of the seller! And in the states where written agreements aren’t required you are always then assumed to be the Buyer’s Agent since there are no other options, of course unless you are one of those states that does have that transaction broker option that is your default position. Someone said “Well…you could show the listing as a subagent you just wouldn’t get paid if there was a zero there. NO YOU CAN’T. In the MLS the “0” means we don’t like or co-operate (allow to show) with subagents. We don’t care how you are paid…you cannot be an agent of our seller. We don’t want the liability of what you may say or do, and neither does our seller.
4)there are instances where the Listing Brokerage has decided in their infinite wisdom that co-operating AND compensating a particular co-broker would not be in their seller’s or their best interest and so have sent by separate correspondence a letter to that Broker outlining that the Brokerage may SHOW (co-operate) their listing but they would not be compensated for selling it if they did. Hence the recent situation in Des Moines,Iowa between Iowa Realty and Keller Williams. But that’s the point! It’s Up to the Listing Broker to discuss with the Seller their policy on co-operation and compensation and then to-through the MLS-disclose to fellow MLS participants their position by posting in the MLS a similar post such as this: Commission Buyer Agency x%.
If there is a “0” in the MLS under a SUBagency Compensation tab, however that is structured SAC, etc, then that means there is NO offer of co-opeartion or compensation offered to the Co-operating Brokers in the MLS PERIOD!
You can’t BE what is NOT offered…..Got it!?
Then the Broker says to me – well if I don’t have the written agreement with the buyer and our state requires it, then I was told that I could just be a ‘non-agent’ or ‘secret-agent’. She happens to live in a state where NON-agency is non-existent. SO NO!! You can’t be a Non-Agent. You are a presumed buyer’s agent if you are showing the listing of a co-broker who only offers co-operation and compensation to Buyer’s Agents. You don’t need to show a copy of your buyer rep agreement to the listing broker-they have already assumed you are one.
Which brings up the second topic: The question was “If subagency IS offered and the buyer agent has no rep agreement are they then a subagent?” NO…NO…NO. The buyer’s agent has to know their company’s policy. Even if Subagency for some reason IS offered…if your company doesn’t allow you to be an agent of another company’s seller you cannot do that. At the time you make that initial agency disclosure (Please tell me you ARE doing that!) you disclose to the Buyer your company’s policy on agency and that you ‘represent buyers in the transaction’. If you live in a state where appointed agency is not at the unset of the transaction (like TX) and the buyer says “But I don’t want you to represent me I just want to look at houses….” then you are not going to like this answer: You can show your company’s listings to that buyer who is a customer because your company represent the sellers. If your company doesn’t allow you to accept subgency or if subagency is NOT offered by the other brokerage, you CANNOT show other company’s listings if they only co-operate and compensate buyer’s agents because you ARE NOT ONE! If the buyer agrees to representation, and who wouldn’t, then you can show all co-op broker’s listings showing co-operation with buyer’s agents.
When Georgia, Illinois and Iowa passed their agency laws all those years ago we called it “Love the one you are with”. In other words the presumed agency was a miracle! No worries! You represented the party that was by your side. Other states-take note! It’s a fabulous law!!!
Cheers…until another ‘morning after’ an exciting question in class!
