Question: I recently represented a buyer who negotiated her buyer brokerage compensation with the seller in the purchase contract. The seller agreed, via the purchase contract, to pay my brokerage X%. (This amount did not exceed the amount I had agreed to with my buyer client in our buyer brokerage agreement.) We are now getting ready to schedule the closing, and the listing broker is requesting that my brokerage pay a fee in the amount of $Y (X% – $Y) to the listing brokerage. We have not signed anything agreeing to pay this fee and it is not mentioned anywhere within the purchase contract. Does my brokerage have to pay this fee?

Answer: The starting point for these scenarios is keeping the parties to each contract/agreement in place. The listing agreement is between the seller and listing broker where those two parties agree to the compensation due to listing brokerage and, if applicable, an amount of compensation offered (off-MLS) to a cooperating buyer brokerage. The buyer brokerage agreement is between the buyer and the buyer’s brokerage, whereby the buyer agrees on an amount of compensation due to the buyer’s brokerage.

If there is an offer of compensation to be provided from the listing broker to the buyer broker, that information should be memorialized in writing between the listing brokerage and buyer brokerage (i.e. brokerage to brokerage agreement).

The parties to the purchase contract (buyer and seller) may agree via that purchase contract, for example, that the seller pays the buyer brokerage X. It sounds like in your scenario, the seller has agreed via the purchase contract to pay buyer’s brokerage X% and there is no existing (listing) brokerage to (buyer’s) brokerage agreement.

Based on these facts alone, I do not see where the buyer or the buyer’s brokerage has agreed to pay the fee of $Y to the listing brokerage company.

It is not appropriate or legal for any trade association to suggest or dictate what fees may or may not be charged or paid by or to anyone in or related to a real estate transaction. If this is a fee that the listing company is attempting to charge a consumer or another brokerage, there should be a valid reason for the fee, a rationale for seeking reimbursement or payment of this fee, and direct agreements with whoever is ultimately being asked to pay it. Is the seller aware and approves of this fee being charged by their own brokerage? Why must the buyer or the buyer brokerage incur this cost? Each company should be making their own independent business decisions as to fees and compensation upon consultation with their own advisors.