2024 Legal Review

October 2024 Industry Update

Instructor:

  • Brian Westrin, Esq., General Counsel at Michigan Realtors®
1. The buyer negotiates the broker’s commission, either paying it directly or asking the seller to cover it.
2. Buyers can ask the seller to pay buyers agent fees in the purchase agreement OR they can request the Buyer Broker to ask the Listing Broker to share part of their compensation in the broker-to-broker compensation form.
3. When Listing Broker IS Offering Compensation…
If the seller has authorized the listing broker to compensate the buyer’s broker…this payment arrangement would be accomplished through an agreement between the two brokerage firms using a broker-to-broker compensation agreement.

4. The agreement between the two firms to share compensation should NOT be included in the purchase agreement because neither broker is a party to the purchase agreement.

 

5. When Listing Broker Is NOT Offering Compensation…
If the listing broker is not offering compensation to the buyer’s broker (or not offering enough to cover the buyer’s entire obligation to their buyer’s broker), the buyer can include a provision in the purchase agreement whereby the seller agrees to pay this obligation.

 

6. If a listing broker has agreed to pay the buyer’s broker commission amount, the listing broker should NOT have their seller-client agree to pay this same amount.

 

 

7. Under the settlement agreement, if a buyer will not sign a contract with a broker—either an agency agreement or a touring agreement – the broker cannot “work for” that buyer. A buyer who chooses not to sign a contract with a broker is unrepresented.

8. If an unrepresented buyer wants to make an offer on a home, they can:

 

  1.  Work directly with the listing agent (as a customer); or
  2.  If, and only if, the listing broker agrees, the buyer can work with a subagent of the listing broker.

 

9. If a subagent prepares an offer for an unrepresented buyer, the role of the subagent is the same as it would be if the listing agent was preparing the offer. The subagent’s loyalty is to the seller. An agent cannot work as a subagent of the seller without permission of the listing broker.

 

 

10. Independent Contractor Agreement and Copyright: Photos and creative listing content produced by agents are usually owned by the broker as “work for hire.” This arrangement means agents cannot reuse images with a new broker if the property is relisted nor can they allow another agent to use the photos​.