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Weekly Membership Newsletter
July 3, 2018 • Stay Connected!
         

QUESTION:  More and more often, we are receiving offers from buyers where the buyer broker is demanding more compensation than is offered through the MLS. Is this allowed? It appears that most of these buyer brokers are under an erroneous impression that we (the listing office) are receiving a greater share of the compensation paid by the seller. Is that even relevant?



ANSWER:  No. What seller is paying the listing broker is wholly irrelevant to the buyer's broker. The buyer's broker's firm is entitled to the compensation offered through the MLS to the cooperating firm. That compensation amount has nothing, whatsoever, to do with the compensation paid by seller to listing firm.
 
The statewide form listing agreement requires listing broker to identify the total amount of compensation paid by seller and the amount of that compensation that listing firm will pay to a cooperating firm. Most sellers recognize that a buyer's broker should be incentivized and fairly compensated to bring a buyer to seller's home. Thus, if listing broker established an unfair rate of compensation between the cooperating brokerages, listing broker would have to account for that disparity to seller.
 
This question illustrates one aspect of the wisdom of buyer brokers using an Agency Agreement with buyer. Using a Buyer Agency Agreement, buyer broker can establish a rate of compensation that buyer and buyer's broker agree is fair for broker to receive. If the seller of the house buyer purchases pays less compensation than what buyer and buyer's broker agreed, then buyer will be required, by the Buyer Agency Agreement, to make up the difference. Some MLS's have a rule allowing buyers to request seller to pay any additional compensation owing from buyer, to buyer's broker, based on a written buyer agency agreement, as that additional compensation would take the form of buyer closing costs. Effectively, buyer would be asking seller to pay a portion of buyer's closing costs and those closing costs would be payment to buyer's broker in fulfillment of the buyer agency agreement obligation that buyer owes to buyer broker.
 
In any other circumstance, it would be improper for buyer's broker to make any request for increased compensation to buyer's broker's firm as part of buyer's offer to purchase seller's home. Buyer's offer to purchase seller's home should set forth buyer's offer terms related only to the purchase of seller's real property. Buyer broker's compensation, on the other hand, is controlled by the listing agreement between seller and listing firm and the MLS agreement that binds the two cooperating firms.

 

The Legal Hotline Lawyer does not represent Washington REALTORS or its members. To browse through our database of past Q & A's, visit www.warealtor.org. Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to legalhotline@warealtor.org . Please tell us your NRDS number when you e-mail the Hotline with your question.


 

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(updated every Thursday)  Source:  Freddie Mac
 
 June 28, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.55%  4.04%  3.87%
 Fees & Points  0.5
 0.5
 0.3
 Margin  N/A  N/A  2.77



 June 21, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.57%  4.04%  3.83%
 Fees & Points  0.5
 0.4
 0.3
 Margin  N/A  N/A  2.77



 June 14, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.62%  4.07%  3.83%
 Fees & Points  0.4
 0.4
 0.3
 Margin  N/A  N/A  2.77



 June 7, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.54%  4.01%  3.74%
 Fees & Points  0.5
 0.4
 0.4
 Margin  N/A  N/A  2.77



 May 31, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.56%  4.06%  3.80%
 Fees & Points  0.4
 0.4
 0.3
 Margin  N/A  N/A  2.77



 May 24, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.66%  4.15%  3.87%
 Fees & Points  0.4
 0.4
 0.3
 Margin  N/A  N/A  2.77



 
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