Q: The listing broker has conveyed the seller’s willingness to pay buyer broker compensation, and shared a specific amount, how is this best memorialized in a contract?

A: The first step is to determine if this is an offer directly from the seller or one that flows through the listing broker.  Please note, edits were made to show the differences in Berkshire County when we go direct to Purchase and Sale. The most important lesson of this question is that broker-to-broker compensation needs to be secured and agreed upon by the brokers outside of the purchase agreement, even if mentioned there.

If the offer is directly from the seller and the buyer would like the seller to pay their broker, then the compensation should be reflected directly in the Contract to Purchase (or Purchase & Sale in Berkshire’s case). The Contract to Purchase provides the opportunity to memorialize the seller’s agreement to pay the buyer’s broker as a term of the parties’ agreement. If broker compensation is being reflected as a term of the buyer’s offer to purchase and there is no other compensation being offered through the listing broker, then the second box should also be checked.

Conversely, if the offer of compensation is flowing through the listing broker as a part of their contractual relationship with the seller, look to memorialize that offer and acceptance on Form 311 (or its equivalent). (Note: In Berkshire County, you can identify the compensation to be paid by the listing brokerage in the Purchase Agreement option 1, but you should be binding that offer and acceptance of the brokerage paid compensation via a contract between the buyer agent and seller agents outside of the Purchase and Sale, Form 311).  

As brokerages develop different policies, it’s important to note that a broker is not obligated to accept an offer of compensation from the listing broker and in consultation with their client can seek to have compensation be solely reflected as a term of the agreement between the buyer and seller on the Contract to Purchase. In this case, whatever amount of compensation the buyer would like to see paid by the seller as a term of their offer should be reflected in on the Purchase and Sale and the second box should be checked.

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