A buyer broker is allowed to negotiate for a larger fee than offered through the multiple listing service
By Jeff Sorg, OnlineEd Blog
(December 7, 2016) – In Oregon, the source of the commission is not determinative of the agency relationship and a principal broker representing a buyer is free to receive compensation from the buyer or seller, the seller’s principal broker, or any combination thereof.
In the normal residential transaction, the listing principal broker contracts with the seller for a percentage of the sales price as compensation for the seller and buyer brokers. The seller pays this fee to the listing principal broker through escrow, usually from the proceeds of the sale. The listing principal broker then gives escrow instructions to pay the selling principal broker the fee the listing principal broker offered through their Multiple Listing Service (MLS), or as otherwise may be agreed to between the two principal brokers.
The buyer broker is allowed to negotiate for a larger fee from the listing principal broker than may be offered through the multiple listing service.
The amount the listing principal broker pays the buyer’s principal broker is usually offered through the MLS when the listing broker inserts the listing into its database, but the buyer broker is free to negotiate with the listing broker for a higher fee. Regardless of the fee offered, a buyer broker is required to show all properties meeting their buyer’s parameters. Because the listing principal broker might not offer any fee to the buyer’s broker, it’s good practice for buyer brokers to enter into buyer broker agreements with each buyer and to specify the minimum fee the broker will accept for their work. With a properly drafted buyer broker agreement, if the minimum fee is not covered by the fee offered by the listing principal broker, the buyer will owe the balance to their broker. When a buyer agrees to pay a fee and part or all of the fee is paid from another source, the amount paid from that source must be disclosed to the buyer and used to reduce the amount of the fee the buyer agreed to pay.
In Oregon, a real estate sale agreement written by a real estate broker should not be conditioned upon payment of a real estate commission or a certain amount to be paid to the buyer’s principal broker. Real estate sale agreements are between the buyer and seller and commission agreements or co-broker fee agreements are to be independent of contracts between the broker’s principals.
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Jeff Sorg is a co-founder of OnlineEd®, a Web-based vocational school founded in 1997 where he also serves as Corporate Secretary, Chief Operating Officer, and School Director. Sorg holds vocational instructor licenses in Oregon, Washington, California, and Nevada and has authored numerous pre-licensing and continuing education courses. Sorg was awarded the International Distance Education Certification Center’s CDEi Designation for distance education in 2008-2018.
OnlineEd® provides real estate, mortgage broker, insurance, and contractor pre-license, post-license, continuing education, career enhancement, and professional development and designation courses over the Internet.