First let us begin by learning what a variable rate commission is. Yes, I know you have been wondering what that little box is all about that you are asked to check Y or N on every listing that you enter into the MLS (That’s if you’re a member of Southeast Florida Regional MLS). What is a variable rate? Variable rate refers to when the listing agent makes an agreement to accept lower commission, should he have both ends of the deal. The problems (notice it is plural) begin by placing the co-op agents and their buyers at a disadvantage, for example they both make a full price offers at 300K but the listing agent has agreed to 2 points less in brokerage if he has the buyer, that’s the variable, the seller nets an additional 6K by taking the listing agents offer. That is why disclosure of the variable rate is required.
The first problem encountered here is that many sellers ask the listing agents to discount, but they neglect to put it in the MLS as a variable rate listing, opening them, and their brokers up for a lawsuit, by the injured parties should there be a competing offer. I find that many agents, in fact, most agents; don’t even know what it is; much less disclose it in the MLS.
The other problem many agents run into is the “ethics problem”. Let’s agree that you want a fee of 6%, when a co-op agent sells you split the 6% between you. When you have both ends you now get 4%, earning 1 more point than you would by co-operating with another broker, you’re only earning 1% for that customer when the standard rate of compensation is much higher.
The problem is, if you took this very buyer to another property and sold that one you would get 3% of that fee instead of 1% for selling your own listing. Agents’ figure this out and are tempted not to, and often don’t show their listings when they have made this bad business arrangement with the sellers. You should be rewarded when bringing in a buyer not penalized, that’s why you are hired to find the buyer.
My advice stay ethical, don’t get sued, make your hard earned commission, by avoiding variable rate listings. If the seller asks, be honest; tell them it puts you in a compromising situation with the rest of your team.
The first problem encountered here is that many sellers ask the listing agents to discount, but they neglect to put it in the MLS as a variable rate listing, opening them, and their brokers up for a lawsuit, by the injured parties should there be a competing offer. I find that many agents, in fact, most agents; don’t even know what it is; much less disclose it in the MLS.
The other problem many agents run into is the “ethics problem”. Let’s agree that you want a fee of 6%, when a co-op agent sells you split the 6% between you. When you have both ends you now get 4%, earning 1 more point than you would by co-operating with another broker, you’re only earning 1% for that customer when the standard rate of compensation is much higher.
The problem is, if you took this very buyer to another property and sold that one you would get 3% of that fee instead of 1% for selling your own listing. Agents’ figure this out and are tempted not to, and often don’t show their listings when they have made this bad business arrangement with the sellers. You should be rewarded when bringing in a buyer not penalized, that’s why you are hired to find the buyer.
My advice stay ethical, don’t get sued, make your hard earned commission, by avoiding variable rate listings. If the seller asks, be honest; tell them it puts you in a compromising situation with the rest of your team.
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