A California seller signs an exclusive right-to-sell listing with a 5% commission. The listing broker enters the property into the MLS with a 2.5% offer of cooperating compensation. Before any showings occur, the seller instructs the broker to reduce the cooperating compensation to 1.5%, and the broker updates the MLS accordingly. A cooperating broker who had not yet shown the property shows it after the reduction and submits an offer that is accepted. What cooperating compensation is owed?
Correct Answer
C) 1.5%, because the cooperating broker commenced performance after the compensation offer was lawfully reduced in the MLS
An MLS offer of cooperating compensation is a unilateral contract offer that a cooperating broker accepts by commencing performance. The critical timing question is what rate was published when the cooperating broker first performed — here, by showing the property. Because the MLS was updated to 1.5% before any showing occurred, the cooperating broker commenced performance under the reduced offer. No prior performance had vested rights at the 2.5% rate, so the 1.5% rate controls.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
An agency relationship created when a principal approves or accepts an agent's previously unauthorized actions, effectively granting authority after the fact.
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
More Laws Of Agency Fiduciary Duties Questions
A property sold for $450,000. The commission rate was 6%. If the listing broker received 60% of the total commission, how much did the listing broker receive?
An individual who is not employed by the client, but has been delegated agency duties by an agent of the client, is referred to as a(n):
What are the three steps of the agency disclosure in proper chronological order?
An agent needs to disclose a conflict of interest to the affected parties when a principal or service provider in the transaction is the agent’s:
A broker who simultaneously represents the best interests of both opposing parties in a transaction is known as a(n):
- → When showing a listed residential property of one to four dwelling units to potential buyers, the listing broker is required to disclose:
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- → A real estate broker is subject to disciplinary action from the Department of Real Estate (DRE) if they:
- → The seller states they will accept the buyer’s offer if the broker lowers their 6% commission by 25%. If the broker accepts, they will receive:
- → When a broker wants to store documents electronically, the storage method may not allow the final documents to be altered. What method of electronic document storage is required by the Department of Real Estate (DRE)?
- → A broker receives a full price offer on a house they are listing. Before they present the offer to the seller, another broker brings in an all cash offer for $5,000 less. The listing broker is to:
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- → Broker Chuck listed a duplex for sale from a corporate owner. After entering into the listing, the officers of the corporation die in a plane crash. What happens to the listing?
- → If a 16-year-old emancipated minor wishes to sell real property, their broker may:
- → A broker who fails to promptly disclose their dual agency status is subject to:
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