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Legal Blog

The Legal Blog, brought to you by NVAR's Professional Standards department, helps you stay on top of the latest rules and regulations in the industry.

REO Commison regarding a licensee

Sep 20, 2016

Compensation-Commission

Question: I am an investor and a licensee in the Commonwealth of Virginia. In reviewing properties for sale, I located one that fit all my criteria. The property is an REO and the listing says that no commission will be paid to the cooperating broker if the party to the transaction is a licensee. Can they do that?


Answer: As it turns out, NAR recently addressed the issue. The MLS Cooperative Compensation Work Group of the Multiple Listing Issues and Policies Committee of NAR (the Work Group) acknowledged that in a number of instances financial institution and government agency asset managers, when entering into listing agreements with MLS participants, have asked to include terms in those listing contracts prohibiting listing brokers from offering or paying cooperative compensation to cooperating brokers if the successful purchaser holds a real estate license. In some instances, institutional sellers have insisted that cooperative compensation not be offered by listing brokers through MLS or paid to cooperating brokers in cases where the purchaser is related to a real estate licensee.

It was the consensus of the Work Group that any listing agreement between a seller and a listing broker that provides that cooperative compensation cannot be offered or paid to a cooperating broker if the purchaser holds a particular license or credential, engages in a particular trade or profession, or if the range of potential purchasers is otherwise arbitrarily restricted, is not and should not be eligible for inclusion in MLS.
Visit www.realtor.org for more details on the Work Group Report.
Group(s):
  • Compensation and Commission