All commission reduction agreements negotiated by brokers and sellers are mandatory for brokers. When commission reduction agreements are proposed, the details must be recorded in writing and forwarded by the broker or seller to their brokerage firm. All commission reductions should be in accordance with the broker`s guidelines. In any event, the brokerage is bound by commission reduction agreements concluded by its employees on its behalf. In a commission reduction agreement, the listing broker has agreed with the seller to reduce the previously agreed commission. Here are the two most common ways to do this. Commission reduction agreements can be a way to facilitate a transaction. However, registrants are required to ensure that the promotion, documentation and provision of a fee reduction are in line with the REBBA 2002. Otherwise, disciplinary or other actions could be initiated. Most often, a commission is paid to the broker who represents the seller under a written agreement to represent the sellers, which may contain an agreement for the payment of part of the total commission to a cooperating broker representing the buyer.
However, it is important to note that some commission models are not mandatory under REBBA 2002. Different models of commissions are acceptable as long as they comply with the law. “detailed disclosure” means, in accordance with Section 25, the disclosure of the terms of the agreement with respect to commissions that may affect whether or not an offer to purchase is accepted. The complexity of disclosure depends on the conditions. For example, if the commission reduction agreement is a simple percentage reduction, with no restrictions or conditions, this must be disclosed. More complex reductions would require more detail. The best method is to ensure written disclosure to ensure clarity and record of disclosure. Article 25 of the Code of Ethics contains provisions applicable to commission contracts between a broker and a seller, as well as offers or proposals to amend them. . . .