This Blog is about a real situation that I am aware is ongoing at this time.
Two agents working at the same Brokerage are scheduled to be at the front office of the Brokerage to be available to answer phones and help anyone who walks in the office. This is a typical situation that has occurred in the past. It is verbally agreed that any sales or listings that come out of it, the commission would be split 50/50. This is common and has been done repeatedly over the years. The two agents are at different stages in their work experience. One agent has twice as many years of experience as the other. They are also friends.
A customer walks into the office and wants his property listed for sale. The listing is taken. A listing agreement is signed and put on the MLS. This is also very common. The less experienced agent, we will call LEA, takes the advice of the more experienced agent, MEA, that the listing agreement does not need to be signed by both agents.
Months go by and the agents work together to post signage and advertise the listing. They even make long trips to the property together to make sure they understand the environment that the property is in.
LEA decides to leave the Brokerage and join a new firm. At the exit interview, the Broker notifies LEA that the listing can be kept but it will be under the original Brokerage. There were other listings that were in the same situation. LEA has no problems with this because him/her just wants the listings sold. It will happen that the other listings go into escrow and the commission is paid as expected.
When LEA leaves he realizes that MEA has not shown him as the co-listing agent on the MLS. He notifies MEA that he needs to correct the situation and MEA agrees in writing via email that it will happen right away. The property gets close to expiring on the original listing and the two agents have discussions that they should get the listing extended.
LEA, not hearing from MEA for some time communicates to him/her “if they still have a listing”. MEA replies that “yes we still have a listing” and that it is now in Escrow. Along with hearing that, LEA also was notified by MEA that the Brokerage has dropped him as the co-listing agent and his 50% commission split was changed to a referral commission of 15%. The differences in commission for LEA is several thousand dollars. The original Brokerage cites a policy document that they believe allow them to change the commission. A legal opinion from the Brokerage where LEA now works say that there is a contract between two different brokerages and the policy document does not apply. Therefore, the commission should be split 50/50.
Further discovery reveals that MEA never put LEA on the listing agreement as they agreed and also never added LEA to the MLS listing as him/her agreed.
What does everyone say about this situation? Is LEA entitled to the original 50/50 commission split? Is there a contract, albeit verbal between the agents and/or the Brokerages?
What do you think?
seems to be a touchy situation and the little i know about agreements between partners or so be it freinds can be touchy also. I guess the general rule of thumb is that a “freind” in this situation would honor his agreement with the mutual party. If the freind decided to not honoe his agreemnt then it should be taken directley to the broker in person with validating documents. If the agreement really has valid foundation it seems that the broker would pay or force payment from freind or brokerage to avoid legal ramification that could exceed the few thousands of dolars that was taken. hope this helps good luck..
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Thank you. I believe the same. Not the belief of the Broker and the friend who is stuck in the Brokerage policies.
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As a Broker (with over 25 years of Real Estate experience), I believe it is the responsibility of the original broker to maintain the original agreement between both parties, after all the listing belongs to the broker, not to the two individual agents. The original listing was taken while both agents were currently employed and working under the broker, therefore the “contract” “agreement” or “understanding” between the two agents should remain and be enforced. As a Broker, the last thing I want is a lawsuit over the commission. The fact that Lea has written correspondence just further strengthen his case that there was an existing agreement between both agents. The Broker should do the right thing and enforce the agreement and keep all parties out of court.
As far as giving Lea a 15% referral, this is just ridiculous. While I don’t believe a referral is in order (unless there was a gap of time from the original listing and the renewal) it should be at least the average referral of 20% to 25%.
Just my 2 cents!
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Thank you for commenting. The original listing was expiring after 1 year. Agent MEA got an extension and an offer during the extension. The Brokerage is citing their policy thinking it allows them to cut the commission however acted differently on LEA’s other listing. Thank you for your commentary.
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Reblogged this on babastinoblogs's Blog.
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I have various thoughts on this touchy situation. Here’s the brief version. First off, LEA, even with minimal experience, should have insisted that his/her signature be on the contract. IMO that is common sense. That being said, in this situation, if the work was truly equally split throughout the length of the contract(s), MEA should honor his/her word and give LEA his/her agreed upon share. I think the brokerage rules (in my experience) have to stand, but morally speaking MEA should step up to the plate.
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Totally agree. The blind trust of LEA is not good business practice.
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However, the verbal agreement by the two agents and the written correspondence all point to a contractually binding agreement albeit a verbal contract. Agent MEA may have a individual liability.
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If there were notes, witnesses and other convincing evidence to believe they both were working it, then 50/50. But sometimes if days have passed as since leaving the brokerage, that alone is reason enough to renage on paying the 50/split, absent both names on the listing agreement or in the MLS.
Truly if it was colisting, they both should have had their names on the original agreement because no one is going to pay you what they agreed in this industry unless it is in writing.
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Sorry for spell check errors, my phone is changing my posts at will. I TRIED to say after 30 days and 50/50 split
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