After a flurry of office meetings this week, we have one question that gets asked over and over… can I set a compensation amount in my Buyer contract but have language in ‘additional terms’ that says if the amount offered during the purchase is higher or lower by X% or $ we have permission to accept that instead? First, the buyer contract has been modified to state that the broker shall not accept more compensation than agreed upon in the compensation paragraph. Then, we consulted the NAR FAQ and state legal counsel and both indicate no, a fixed rate is required, not a range. “Objectively ascertainable” is a legal term that means something can be objectively proven with factual certainty. I have included the relevant FAQ’s from NAR below, but as always, MAR legal counsel advises that businesses manage their own willingness for risk so consult with brokerage counsel if considering alternatives. Please also note that the NAR FAQs 74 third bullet is clear that if things in a transaction change, a new or amended buyer agreement might be considered to promote consumer empowerment, choice, and healthy competition.
- No. Under the settlement, any compensation agreed to in the written buyer agreement must be objectively ascertainable and not open-ended.
- For example, a written buyer agreement cannot have a commission that is “buyer broker compensation shall be whatever amount the seller is offering to the buyer” or “between X and Y percent.”
- Importantly, NAR policy will not dictate the amount of compensation agreed between buyers and buyer brokers (e.g., $0, X flat fee, X percent, X hourly rate). (Updated 7/15/2024)
- No. The practice change empowers buyers and brokers to negotiate and agree to services and compensation that work for them. MLS Participants should work with consumers to ensure they fully understand the options available. Compensation continues to be negotiable and should always be negotiated between MLS Participants and the buyers with whom they work.
- At times, a new or amended buyer agreement may be appropriate, and the buyer and broker may agree to amended terms. However, amended agreements must also meet the requirements of the practice changes. The practice changes must be implemented fully and in good faith in the service of promoting consumer empowerment, choice, and healthy competition.
- NAR policy does not dictate:
- What type of relationship the professional has with the potential buyer (e.g., agency, non-agency, subagency, transactional, customer).
- The term of the agreement (e.g., one day, one month, one house, one zip code).
- The services to be provided (e.g., ministerial acts, a certain number of showings, negotiations, presenting offers).
- The compensation charged (e.g., $0, X flat fee, X percent, X hourly rate). (Updated 7/31/2024)