Realtors Welcome!

REALTORS WELCOME!
Properties For Sale by Owners Cooperating with Brokers

NOT FOR REALTORS ONLY…

In the last few years, many FSBO’s (For Sale by Owner's) have offered to “co-op” with brokers without a listing contract in force. How did this come to be? A little MLS history: co-op is short for cooperation. Typically it applies to real estate brokers, who as members of an MLS agree to cooperate with each other in order to facilitate the sale of their listings.

Before the MLS was “invented,” agents in different real estate firms sold only the listings that belonged to their offices. Buyers had to go from office to office to see all of the listings in a given area that fit their requirements. The MLS solved this problem by aggregating all the listings of all the companies in an area into a single database. Prior to the use of personal computers, the listings were compiled into jealously guarded phone book-sized volumes. Now, not only are all listings available to all agents via computer, most MLS’s offer consumer versions on the Internet.

In the last few years, many FSBO’s have offered to “co-op”
with brokers without
a listing contract in force.

But what really made the MLS work is the agreement to split the listing commission earned upon sale when the agent who found the buyer was not the listing agent (and probably from another firm). This of course is how agent cooperation works to this day.

Although MLS's have been around for decades, the idea of sellers offering a cooperative arrangement to agents without a listing agent and contract is relatively new. In this case, although an owner/seller continues to sell on his or her own, they do promise to pay an agent the equivalent of a commission split if they bring forth a buyer who buys. This is usually from 2.8 to 3%, although it depends on what the seller wants to offer.

While there are some potential negative issues with procuring cause (whose buyer is whose?), certain administrative hassles, and the fact that the buyer’s agent has no listing professional to deal with (the seller is unrepresented), the concept does and can work in many instances.

Buyer's agents will sometimes search for FSBO properties where the seller is willing to “co-op,” just as they search the MLS for properties where the listing agent will co-op. The problem is there is no one place where all the FSBO co-ops in an area are displayed and promoted. Many agents remain unaware of such possibilities for their buyer clients.

Some MLS's have allowed FSBO co-ops to be listed, where for a flat fee, a listing agent will post the property with a 2.8 or 3% co-op to the selling agent, but participate minimally in its marketing and sale, and earn no commission at closing.

The downside to offering a co-op without a full service listing contract in force is that the seller still does not have a broker actively working to find a buyer. The marketing responsibility is left totally to the seller.

Then with no professional assistance, the seller must negotiate with a buyer's broker . It's the seller versus the broker who represents the buyer.

The Colorado Real Estate Commission has now come down on these kind of "discount" listings, insisting that listing brokers not just enter properties in their MLS, but also provide full service as described in the standard listing agreement (see the May 2011 issue of the Commission's newsletter, p. 12.). But it is also true that there is no law or regulation that forces a property to be listed in any MLS.

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