The Most Misunderstood Concept in REALTOR® world –
Cooperation and Compensation outside the MLS.
Disclosure: For this article, it is assumed that all brokers and agents mentioned are REALTORS® who have an obligation to follow the Code of Ethics.
The Code of Ethics requires all REALTORS® to cooperate, but there is no obligation under the Code to compensate.
Cooperate DOES NOT mean compensate.
Cooperation means the obligation to share information on listed property and to make it available to other brokers for showing when it is in the seller’s best interest.
Compensation is a totally different matter and is by written agreement only.
When BOTH Brokers in the transaction are Participants of the same MLS, the MLS is the agreement to compensate.
When a buyer’s agent wants show property in the area of another MLS in which their broker is NOT a member, there is no automatic agreement to compensate in place.
- The listing agent/broker is obligated to cooperate (make the property available to show)
- The listing agent/broker is not obligated to compensate.
Cooperating brokers may not assume that the offer of cooperation includes the offer of compensation. Terms of compensation, if any, shall be ascertained by the cooperating broker before accepting the offer of cooperation. (Article 3, Standard of Practice 3-1).
How to communicate with the listing agent in another MLS:
Buyer’s Agent to Listing Agent: Hello, my name is Tom Hanks with Castaway Real Estate and I have a client interested in seeing your property at 123 Wilson Way. I’m not a member of your MLS and we have no agreement in place for compensation. I have two questions: Will you arrange for me to show your listing to my client, AND is your broker willing to pay me a commission if I bring an offer acceptable to your seller?
The Listing agent must answer Yes to the first part of the question if cooperation is in the SELLER’S best interest; however, the answer to the second question about compensation is totally up to the two BROKERS and whether or not they reach an agreement.
Moral to the story: REALTORS® must cooperate with other brokers whether those brokers are part of the same MLS or not if the seller might benefit. However, REALTORS® are not required to compensate unless an agreement for compensation is in place, in writing, up front. The MLS is an agreement to compensate Brokers who are authorized participants in it. There are 18 separate MLSs in Mississippi. Compensation is only guaranteed in the MLSs in which a Broker belongs.