This code comprehension resource, distributed during the November 2019 REALTORS® Conference & Expo, sets forth two FAQs that clarify the right of cooperating brokers to negotiate commissions with listing brokers. The scenarios covered by the FAQs reference Standards of Practice 3-3 and 16-16. Download as a PDF (204.41 KB) Q: There is a home in the MLS that I think my buyer client would love, but the commission being offered by the listing broker is lower than I want to be paid. It’s so low that it won’t cover the time or effort I put in to representing the buyer throughout the transaction. I want to do the right thing. What can I
do? A: Since you believe that your buyer client would love the house, you have an ethical duty to show the listing to your client. But you have a few options to address the fact that the compensation being offered is inadequate. First of all, buyers and sellers can negotiate the commission paid to their brokers and agents at any time. When representing a buyer, you should consider using a buyer agency agreement that sets forth the services you will provide and
establishes what compensation your client will be responsible for paying. Often, the buyer agency agreement explains that you will first seek to be compensated in the amount set forth in the listing, but that if that amount is inadequate, you will expect the client to make up the difference between _____ and the compensation provided by the listing broker. It is entirely up to you how you will fill in the blank. The buyer agency agreement is between you and your client, so you and your buyer can
negotiate the terms of that agreement at any time. Additionally, with one exception, you could ask the listing broker to negotiate the offer of commission. The one exception is that you may not submit an offer to purchase that is contingent upon an increase in the commission paid to you by the listing broker. An offer of that nature is thought to be inconsistent with your fiduciary duty to the client. This request can be made at any time during the transaction, even after showing the
property or submitting an offer to purchase on behalf of the client. You could also have a conversation with your buyer client about the commission being too low to cover your time and costs incurred in connection with representing that client. If your client so wishes, he or she could make the decision to condition the offer to purchase the property on an agreement by the seller to pay an additional specified amount. The buyer and the seller are the parties to any contract to purchase the
listed property. They can negotiate the terms of that contract as they see fit. Just make sure that your client completely understands the pros and cons of submitting an offer with that type of contingency, and make sure not to pressure your client in any manner that is inconsistent with your fiduciary duty to that client. Q: Wait, doesn’t Standard of Practice 16-16 prohibit me from negotiating my commission after showing, during the purchase offer phase, or after we have an
accepted offer? A: Absolutely not! Except for the fact that you cannot make an offer to purchase contingent upon an increase in compensation paid to you by the listing broker, you can negotiate your commission with the listing broker at any time during the transaction. Standard of Practice 16-16 is designed to protect sellers and listing brokers from having purchase offers “held hostage” by cooperating brokers demanding a higher commission to be paid by the listing broker.
Standard of Practice 16-16 provides as follows: REALTORS®, acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an offer to purchase/lease to attempt to modify the listing broker’s offer of compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing broker’s agreement to modify the offer of compensation. This Standard of Practice never prohibits negotiations between the listing broker and a cooperating broker at any time during the transaction. In fact, Standard of Practice 3-3 expressly authorizes the listing broker and cooperating broker to come to an agreement to change cooperative compensation, and that can happen before a property is shown, after showing, or even after an offer is accepted. Indiana Broker Exam Prep Edge Free Assessment for IN Real Estate Exam PrepBelow are eight free Indiana real estate practice exam questions that will closely resemble your licensing exam. Review these questions and see what you know! The answers are provided beneath the question set. 2. Indiana listing agent Simone gave her client a closing statement. How long does the law require Simone to retain a copy of this statement for her records?
3. Sheperton Realty, an Indiana brokerage company, receives notice that the Indiana Real Estate Commission wants to inspect the brokerage records. Which of these is a true statement?
4. Regal Realty has two branch offices along with its main office. Managing broker Trish may manage ______.
5. When advertising real estate, which of these actions is required of an Indiana licensee?
6. What is true about an Indiana licensee’s affiliation with a broker company?
7. Which one of these individuals needs an Indiana real estate license?
8. In Indiana, which one of these scenarios would require a real estate license?
Answers: 1. D, 2. A, 3. A, 4. C, 5. A, 6. D, 7. D, 8. B For a more comprehensive view into the types of questions you can expect on the exam, sign up for our free assessment. You’ll have the chance to review a 99-question real estate practice exam at no cost to you. Note that answers are only provided upon purchasing Exam Prep. If you’re ready to feel confident about your upcoming licensing exam, you can purchase our Indiana real estate Exam Prep package. By purchasing one of our packages, you not only get to see the results from your free assessment, but you’ll also have access to an innovative Exam Prep Edge program that will put you in the best position to pass your test the first time around. Here's What You Need to Know About Your Free AssessmentWhat is it?Your free assessment consists of access to the Exam Prep Edge initial assessment exam that will give you immediate feedback on the topics you’ve mastered and the ones you still need to work on. Note that you’re required to purchase the program before you’re able to access the study materials or unlimited practice exams. What do I need to do?It's simple. Choose the program you want to try, sign up, and you're ready to get started. We won't even ask for credit card information until you're ready to buy. Will my progress be saved?Yes! The score from your free assessment will be saved. When you purchase the program, your progress will seamlessly transfer and you can pick up right where you left off. What will it cost me?Nothing at all! When we say free, we really mean it. Getting your real estate license is an investment and we want to show you how committed we are to helping you pass your exam. Take it for a test drive - you won’t be disappointed. Ready to buy? Am I obligated to purchase by signing up?Nope! We want you to be completely satisfied with Exam Prep Edge. You're not obligated to anything if you don't want to buy. What happens when my free trial ends?When you complete your free assessment, your program will be locked until you decide to purchase. If you like the program, you can purchase at any time. Get started! Questions?Live ChatClick here to chat now. Phone888.827.0777 Which of the following would be true regarding Indiana limited agency and psychologically affected properties?Which of the following would be true regarding Indiana limited agents and psychologically affected properties? Limited agents must disclose their knowledge of psychological affectations to all parties. Due to their limited agency position, limited agents cannot discuss psychological affectations.
Which of the following individuals is exempt from needing an Indiana real estate license?In Indiana, which of the following acts is exempt from needing a real estate broker license? Renting apartments as an employee of a licensed broker.
What is true about an Indiana licensee's affiliation with a broker company?What is true about an Indiana licensee's affiliation with a broker company? "A licensee can transfer companies as often as desired without approval from anyone. A licensee may affiliate with more than one broker company as long as the licensee has a managing broker designation.
What is the maximum penalty if you're convicted of committing a serious violation and your broker is found to have knowledge of it?What is the maximum outcome if you're convicted of having committed a serious violation and your broker is found to have knowledge of it? You are fined and could have your license suspended or revoked.
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