Legal Blog - Compensation and Commission


MLS properties for sale vs. for rent

Sep 27, 2016


Question: I represent a tenant. I showed him properties listed in the MLS and one day I showed him, at his request, a property he found on another site which was not listed for rent in the MLS but was listed for sale in the MLS. He was interested in the property as a rental, so we completed an application. I collected the checks and forwarded the package to the listing agent. The listing agent called me back to inform me that the owner was not willing to pay commission on a rental. What are my remedies?

Answer: The MLS is a forum that not only allows listing brokers to advertise their properties for sale or for rent but also provides them with a means to make offers of cooperative compensation that can be reviewed and accepted by other members of the MLS. In order for a broker to accept an offer of compensation, he or she must be able to access the listing. If a property is not listed in the MLS, then the cooperating broker has nothing to accept since no offer of compensation was made.

Therefore, you should always have a conversation with a buyer or a tenant about showing houses that are not listed in the MLS. Since you are not accepting an offer of compensation from the listing agent through the MLS, your brokerage agreement stipulates that the client will be responsible for paying your commission.

Educate your clients about that portion of the brokerage agreement and manage their expectations. If your client elects to rent or purchase an unlisted property and then refuses to pay a commission, then the only remedy is to enforce the brokerage agreement in court.

Please note in my example, that even though the house was listed for sale in the MLS and thus compensation would be owed to a cooperating broker in a sale transaction, no such offer was made for the rental of the property. Therefore, the landlord/owner/listing agent is not obligated to compensate an agent for finding a tenant.
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