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MARIS

August 28, 2020

Q&A: What is “Variable Rate” Commission?

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Author: Jeff Bosch

Q: What is a “Variable Rate” commission and why should it be disclosed in the MLS? 

A:  Variable Rate commissions are addressed in both the MARIS Rules & Regulations and the REALTOR® Code of Ethics. In short, a Variable Rate Commission is when the listing broker agrees to a reduced total commission should they (or one of their agents) also procure the buyer without the assistance of a cooperating broker. This is important to disclose in the MLS because a cooperating broker’s offer would be at a financial disadvantage, all other terms being equal, in a multiple offers situation when an offer also comes from a client of the listing broker. Please review the passages below and consult with your managing broker should you need more guidance.

Where to Find Variable Rate

Variable Rate can be found under the "Financial Information" subsection of a listing in Matrix. 


 
From the MARIS Rules & Regulations:

Dual or Variable Rate Commission Arrangements: 
The existence of dual or variable rate commission arrangement (i.e., one in which the seller/landlord agrees to pay a specified commission if the property is sold/leased by the listing Broker without assistance, and a different commission if the sale/lease results through the efforts of a cooperating Broker; or one in which the seller/landlord agrees to pay a specified commission if the property is sold/leased by the listing Broker either with or without the assistance of a cooperating Broker and a different commission if the sale/lease results through the efforts of a seller/landlord) shall be disclosed by the listing Broker by a key, code or symbol as required by the MLS. The listing Broker shall, in response to inquiries from potential cooperating Brokers, disclose the differential that would result in either a cooperative transaction or, alternatively, 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.


REALTOR® 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. (Amended 1/02)