10.25 Disclosure of Company Policies Relating to Commissions

Company policy is to always disclose the terms of how a commission will be offered to other agents and the possibility of dual agency (if dual agency is allowed in your State). Under State real estate law the listing broker has an affirmative obligation to disclose the existence of dual or variable rate commission arrangements to cooperating brokers. These dual or variable rate commission arrangements typically provide that one amount of commission is payable if the listing agent is the procuring cause of the sale and a different amount of commission is payable if the sale results through the efforts of the seller or a cooperating agent. Once this information is disclosed to the cooperating agent, that agent has an obligation to disclose this information to their buyer before making an offer to purchase.

For example, the listing agent takes the listing at 6% and offers 3% to the selling agent but has agreed to reduce the total commission to 4% if they represent both parties. This would be considered a “dual variable rate” and must be disclosed.