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Ethics Q&A
Variable rate commissions; statute of limitations on ethics violations; and reporting the status of MLS listings.
Read the full Code of Ethics updated for 2003.
Q What is a variable rate commission? I’ve seen this in our MLS and have no idea what it means.
A This term is defined in the Code of Ethics, Standard of Practice 3-4: "REALTORS®, acting as listing brokers, have an affirmative obligation to disclose the existence of dual or variable rate commission arrangements (i.e., listings where one amount of commission is payable if the listing broker’s firm is the procuring cause of sale/lease and a different amount of commission is payable if the sale/lease results through the efforts of the seller/landlord or a cooperating broker). The listing broker shall, as soon as practical, disclose the existence of such arrangements to potential cooperating brokers and shall, in response to inquiries from cooperating brokers, disclose the differential that would result in a cooperative transaction or in a sale/lease that results through the efforts of the seller/landlord. If the cooperating broker is a buyer/tenant representative, the buyer/tenant representative must disclose such information to their client before the client makes an offer to purchase or lease."
Similar language is found in NAR’s suggested rules and regulations for an MLS.
In a typical situation involving a dual or variable rate commission, the listing broker has an agreement with the seller to charge a lower commission if the listing agent or another agent from the listing agent’s firm is the procuring cause of sale, because that firm is responsible for both sides of the transaction.
This type of arrangement must be disclosed so that other agents and buyers have the necessary information to make an informed decision regarding offers. In such a case, a buyer making an offer identical to another offer from a buyer represented by the listing agent is at a disadvantage, since the commission on the other offer will be lower.
Q Is there a statute of limitations on ethics complaints?
A Yes. An ethics complaint must be filed within 180 days from the time a complainant knew (or reasonably should have known) that potentially unethical conduct took place.
Q There is a contract pending on one of our firm’s listings. The listing agent wants to leave the property as an active listing in the MLS, because he believes other agents will not be likely to show the listing if its status is changed to pending. Isn’t this a violation of MLS rules?
A Most MLS rules require that participants accurately report the status of listings and promptly report changes in that status. It is likely the listing agent would violate the MLS rules by not reporting the pending status in a timely manner. Though some buyers might want to consider properties with pending contracts, others might not. It would be unfair to those buyers to mislead them about the true status of the properties advertised in the MLS.
Send questions about ethics to texasrealtor@texasrealtors.com. Not all questions received can be answered.
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