Potential Pitfalls of Realtor Purchase Contracts Reflecting Commission Paid Solely by the Seller
In the realm of real estate transactions, the structure of purchase contracts plays a pivotal role in ensuring transparency and fairness. However, a concerning trend has emerged where boards of realtors create purchase contracts that reflect the commission as being paid solely by the seller. This practice, while seemingly straightforward, may have significant implications, especially in light of recent multi-million dollar settlements involving the National Association of Realtors (NAR).

The Issue at Hand
Traditionally, purchase contracts drafted by numerous boards of realtors have stipulated that the seller is responsible for paying the buyer broker’s commission. This approach simplifies the transaction process but fails to disclose alternative options, such as the commission being paid by the buyer or split between both parties. The lack of disclosure regarding these options can lead to a lack of transparency and potential conflicts of interest.

Negotiation Flexibility Across Ohio
Notably, various boards across Ohio, including those in Northwest Ohio, Cincinnati, Dayton, and Northeast Ohio, have incorporated language into their contracts, or in their addendums, that permits the negotiation of commission payments. These contracts allow for the buyer, seller, or the respective brokerages to negotiate how the commission is paid—whether in full, in part, or split between the parties as agreed upon. The Ohio Association of Realtors purchase contract and the Ohio Broker Direct Purchase contract also include provisions for such negotiations. This flexibility is essential to ensuring that all parties are aware of their options and can negotiate terms that are mutually beneficial.

The Columbus Board or Realtors Central Ohio MLS Example
Late February 2025, the Central Ohio MLS released a new board purchase agreement that explicitly states in Section 1.2 Buyer Broker Compensation:
“The parties acknowledge that the following broker was involved in the transaction on behalf of the Buyer and that no other broker(s) were involved on behalf of the Buyer: _________________________ (“Buyer Broker”). The Seller agrees to pay Buyer Broker compensation in the amount of ____________________________ to be paid or credited by Seller at closing, to cover, in full or in part, the costs of Buyer’s obligation to compensate Buyer Broker. Each party acknowledges and agrees that Buyer Broker is an express third party beneficiary of this Agreement, entitled to enforce the terms of this Section as if it were an original party to the Agreement. This section not applicable if left blank.”
While this clause aims to clarify the compensation structure, it reinforces the notion that the seller is solely responsible for the buyer broker’s commission, without presenting alternative payment options.

Importance of Disclosure
It is crucial for agents to disclose to their sellers that they are not required to pay a buyer brokerage commission. This transparency ensures that sellers are fully informed about their options and can make decisions that best suit their interests. Additionally, buyers working with agents are required by Ohio law to sign a buyer representation agreement, stating what they will pay their agent’s brokerage directly. This requirement is outlined in the Ohio Revised Code Section 4735.51, which mandates that all buyers working with an agent must sign a written agency agreement prior to making an offer on any residential property.

Potential Backfire and Legal Implications
The failure to disclose alternative commission payment options can backfire in several ways:
1. Lack of Transparency : Buyers may be unaware that they have the option to negotiate the commission payment structure. This lack of transparency can lead to mistrust and dissatisfaction among buyers.
2. Conflict of Interest: When the seller is solely responsible for the buyer broker’s commission, there is a potential conflict of interest. The buyer broker may prioritize the seller’s interests over the buyer’s to ensure their commission is secured.
3. Legal Repercussions: In light of recent multi-million dollar settlements with the NAR, the failure to disclose commission payment options could lead to legal challenges. Plaintiffs may argue that the lack of disclosure constitutes a breach of fiduciary duty and a violation of consumer protection laws.
4. Recourse for Sellers: If agents fail to disclose that sellers are not required to pay a buyer brokerage commission, sellers have several options for recourse:

• File a Complaint: Sellers can file a complaint with the Ohio Division of Real Estate and Professional Licensing.

• Seek Legal Action: Sellers may pursue legal action against the agent or brokerage for failing to disclose important information. This could include claims of breach of fiduciary duty, misrepresentation, or fraud.

Conclusion
Potential Pitfalls of Realtor Purchase Contracts Reflecting Commission Paid Solely by the Seller To ensure transparency and fairness in real estate transactions, boards of realtors need to reconsider the structure of their purchase contracts. By providing alternative commission payment options and clearly disclosing them to all parties involved, realtors can build trust and avoid potential legal issues. The recent amendments to the Central Ohio MLS purchase agreement underscore the necessity for a more comprehensive approach to commission disclosure—one that equally prioritizes the interests of both buyers and sellers.