By Brett M. Woodburn, Esquire

(Brett M. Woodburn, Esquire, is the founding member of Woodburn Law. He has represented REALTORS® since he started practicing law in
1999. He currently represents several local Associations of REALTORS® and MLSs across Pennsylvania. This article is his work, with all rights
reserved, and may not be reprinted without his permission. Copyright August 2025.)

 

If you are a REALTOR®, and if you understand what it truly means to be a REALTOR®, then you should understand how important it is to stay relevant with the goings on in the real estate space. The demand for professionalism has never been louder among REALTORS®, and the expectations that consumers have for REALTORS® to be professional and knowledgeable are growing.

There are endless streams of information, changes in corporate structures, changes in practices and presentations… it can be so overwhelming to even the most experienced REALTOR®. Understanding the Standard Agreement for the Sale of Real Estate (“ASR”) that is provided by the Pennsylvania Association of REALTORS® (“PAR”) should be a basic expectation of yourself, as well as of your colleagues. And yet... While there is much to discuss about the ASR, I want to focus on compensation and how paragraph 3(A) is written. Despite being in its present form for approximately a year, paragraph 3(A) is still misunderstood, and this confusion almost resulted in at least one lawsuit.

Listing Agent for ABC Realty used the PAR Exclusive Right To Sell listing agreement. Listing Agent negotiated a fee of three cigars to be his fee upon the successful sale of the property. Seller did not authorize or instruct Listing Agent to share any of the cigars, so Listing Agent was comfortable knowing that when the property sold, he would be able to enjoy three pleasurable cigars.

Selling Agent submits an offer on the property and does not fill in any of the blanks in paragraph 3. In other words, Buyer was not asking for Seller to pay any of the Buyer’s broker’s fee on behalf of Buyer, nor was Buyer asking Seller to pay any concessions. Paragraph 3(A) was blank, and paragraph 3(B) was blank. At some point during the transaction, Listing Agent and Selling Agent spoke, and they signed a Cooperating Broker Compensation Agreement (“CBC”) through which Listing Agent offered to give Selling Agent three cigars upon completion of the transaction. The transaction proceeded relatively smoothly until the title agent prepared the closing statement for review.

Imagine Listing Agent’s utter surprise when he saw that the Selling Agent was getting three cigars, but he was getting zero cigars! Listing Agent contacted the title agent and got the explanation that yes, title received the Listing Agent’s confirmation that his fee was three cigars. The title agent also confirmed that title received the CBC, which very clearly articulated that the listing broker was giving the buyer’s broker those same three cigars. How very kind of you, Listing Agent, to work for free!

This was exactly the correct outcome. Listing Agent was paid three cigars by Seller pursuant to the listing agreement. Selling Agent was paid three cigars by the Listing Agent pursuant to the CBC. While this could have been a valuable, though painful lesson, had the Listing Agent taken a moment to understand what he did wrong, the Listing Agent instead chose to attack the Seller.

Attorneys got involved. Threats were made to the Sellers that a lis pendens would be filed so that the transaction could not close. Litigation was threatened if the Seller did not agree to pay Listing Agent the three cigars that was in the listing contract. There was much gnashing of teeth and thumping of chests as the battle cry of SUE THEM; SUE THEM; SUE THEM were sent through emails in all caps, clearly conveying the outrage and indignation felt by Listing Agent.

Ultimately, Seller agreed to part with a cigarillo and the transaction closed. But is the tale done? Time will tell.

Since its release in 2024, paragraph 3(A) has been a constant source of confusion for agents and brokers, and the confusion seems to be compounding, not lessening. Referencing the CBC seems to be one of the key factors resulting in that confusion. Here are some key points for you to learn:

• Paragraph 3(A) determines how much money the SELLER will pay the buyer’s broker on behalf of the BUYER. Ignore how the paragraph is titled. Paragraph 3(A) is a term in the ASR that is negotiated between the buyer and the seller. Paragraph 3(A) sets forth how much money the Seller is paying the Buyer’s broker. Period. End of Sentence. There is nothing more to understand.
• Ignore the reference to the CBC (if any), because this only confuses the issue. The CBC is a contractual agreement between the BROKERS. The CBC establishes how much money the LISTING BROKER is paying the BUYER’S BROKER. The CBC is NOT a term of the ASR, even though it is referenced in paragraph 3(A).
• Paragraph 3(A) and the CBC are independent obligations. If you use both, the Buyer’s Broker gets paid on both. Paragraph 3(A) determines what the Seller pays the Buyer’s Broker, and the CBC determines what the Listing Broker pays the Buyer’s Broker. If paragraph 3(A) says two cigars, and a CBC says two cigars, the Buyer’s Broker gets FOUR cigars. (Whether the Buyer’s Broker can actually receive the four cigars depends on what the buyer agency contract says.)

Why are REALTORS® struggling so much with this language and these two forms? Are they being taught poorly? Are they refusing to listen to what they are being taught? Are they using both paragraph 3(A) and the CBC because the CBC is referenced in paragraph 3(A)? Is it bad teaching, bad learning, or just bad practice habits? I will let you draw your own conclusions.

Oh, what potential consequences does our hapless Listing Agent potentially face? There are potential breaches of the listing contract, potential violations of the Pennsylvania Real Estate Licensing and Registration Act, potential violations of the Code of Ethics, and potential violations of the NAR Settlement Agreement.

Perhaps this will encourage, motivate, and/or inspire you to spend a little more time learning about the forms, and understanding how they do or do not work together, so you can be sure to be the consummate REALTOR® and consummate professional.