A Guide to Topping Up Commissions

With mandatory Buyer Brokerage Agreements and sellers working with alternative brokerage models or on their own, it’s important to know how to draft clauses that ensure you are paid for your services when representing buyers.

Using the Exclusive Buyer Representation Agreement is the easiest way to guarantee you will be paid. Clause 8 of the Exclusive Buyer Representation Agreement is very clear on the amount of your fee and how it will be collected. It authorizes you to ask the seller’s brokerage or the seller to pay the fee, and addresses that the buyer is responsible for topping up the difference in the case of a shortfall.

The non-exclusive agreement clearly states that the buyer is not responsible for paying a fee and that you will ask the seller or the seller’s brokerage to pay your fee. However you do not know what the seller or cooperating brokerage is offering or willing to pay.

Asking the Seller or Seller’s Brokerage to Pay the Fee

If the remuneration offered by the seller or the seller’s brokerage is not enough to cover your fee, this can be addressed in two ways:

1. Add as a term in Clause 7.6 of the Purchase Contract

Additional terms of sale (if any): Seller paying Buyer’s commission.

Buyer and Seller agree that XXXX plus GST will be paid from the proceeds of the sale to CIR REALTY on behalf of (your name) for services rendered to the Buyer. This amount is separate and in addition to any other amount payable and advertised through the MLS Listing #XXXX.

The brokerage is not a party to the Purchase Contract, so the terms must be agreed to in writing by both the buyer and the seller. Note that the amount to be paid from the proceeds of the sale is in addition to the amount offered through the MLS® listing (topping up the advertised remuneration, if any).

2. Seller Customer Acknowledgement and Fee Agreement

If you are in a Customer Status relationship with the seller (e.g., you found their property listed on Kijiji, etc.), your fee is addressed in Clause 5 of the Seller Customer Acknowledgement and Fee Agreement and is pretty straight forward:

Our fee is XXXX plus (GST).

However, if you are using this form as a fee agreement for a seller that is represented by another brokerage, some modifications to the form are necessary:

Cross out the content in Clause 2.1 as shown below, as the seller does have an agent representing them and the advantages of agency:

You agree that we will not act as your agent.

You have read and understood this agreement and the Real Estate Council of Alberta’s Consumer Relationships Guide (Guide). You have decided not to have an agent represent you. This means you will not have the advantages protection, and services that go with agency. You understand that…

Insert your fee in Clause 5.1.

Our fee is XXXX (plus GST). This amount is separate and in addition to any other amount payable and advertised through the MLS Listing #XXXX.

Note that your fee is in addition to the amount offered through the MLS® listing (topping up the advertised remuneration, if any).

These examples apply to situations when the remuneration offered by the cooperating brokerage is not enough to cover your fee, when dealing with unrepresented sellers, or when the property is not listed on the MLS system.

-Written by Chris Mortensen, CIR REALTY – Listings and Conveyance Manager

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