New forms confuse home sellers

Starting in January of 2017 REALTORS® across the state began using updated real estate forms provided by the Maine association of REALTORS®, MAR. One of the most significant changes includes a change to the listing contract that will now include information on company policy regarding the amount of commission that a listing agent will be sharing with any other agent that brings a buyer.

In a statement to REALTORS® Linda Gifford, MAR legal counsel explains that listing agents have always been required to disclose the amount of the commission that they are charging home sellers that they are sharing with other agents that assist buyers with purchasing a property. The forms have been revised to assist agents with complying with our ethical obligation to share crucial information with our clients. It is imperative that sellers know what portion of the commission being charged to the seller will be shared with the buyer's agent as it will likely have a significant impact on the selling process.

The confusion comes from the way that the association chose to word the new provision of the contract. Instead of simply stating a dollar amount or percentage of the commission being charged to the seller that will be shared, the association chose to allow listing agents to use a range. The form does not specify what dollar amount or percentage within that range will be advertised or offered.

When discussing commission with a listing agent there are some facts that a home seller should be aware of to facilitate an intelligent and informed conversation. 

1- In most cases a listing agent will charge a seller a fixed price or a percentage of the selling price of a property as a sales commission. This may be all or only part of the total commission that a seller will pay.  

2- Most listing agents are members of the Multiple Listing Service (MLS). Unless they inform sellers in writing to the contrary, they will advertise all property to other agents and syndicate the listing to other websites within 5 days. They are required to advertise the amount of the buyer agent's compensation in the MLS in the form of an absolute dollar amount or as a percentage of the sale price. This compensation may not be advertised as a range between 2 numbers. 

Sellers don't really care about the range of compensation that company policy allows a listing agent to offer a buyer's agent. The care about the actual amount being offered. The new form is a step in the right direction towards ensuring that sellers are informed. Unfortunately, the wording is unnecessarily vague and fraught with the danger of creating situations where the seller believes they are informed but are not. MAR should revise this form to simply state the amount of the compensation that will be offered to buyer's agents. 

Brian Walker holds an Associate Broker’s license in the State of Maine and practices real estate brokerage as a member of Berkshire Hathaway HomeServices Northeast Real Estate. While he is a licensed agent; he is not your agent. The information in this article dos not constitute customer or client advice and does not create any type of relationship. The opinions expressed are solely those of Brian Walker and are not necessarily shared by any other affiliation.