Legal FAQs for REALTORS® — Professional Standards
Variable Rate Commission

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Legal disclaimer

What is a variable-rate commission? (Updated Sept. 17, 2014)

The REALTOR® Code of Ethics defines a variable-rate commission arrangement as a listing in which one amount of commission is payable if the listing broker’s firm is the procuring cause of sale and a different amount of commission is payable if the sale results from the efforts of the seller or a cooperating broker.

The Code of Ethics and NAR’s Handbook on Multiple Listing Policy require listing brokers to disclose a variable-rate commission to potential cooperating brokers as soon as is practical. In response to inquiries from potential cooperating brokers, REALTORS® are also required to disclose the difference between the two rates.

In addition, once a cooperating broker knows that a variable-rate commission has been offered, the cooperating broker must disclose this information to his or her client before the client makes an offer to purchase. In this situation, a buyer who makes an offer that’s identical to an offer from a buyer who’s represented by the listing broker’s firm is at a disadvantage, since the commission on the other offer will be lower.


Legal Disclaimer: The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on TexasRealEstate.com. Any legal or other information found here, on TexasRealEstate.com, or at other sites to which we link, should be verified before it is relied upon.

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