While it might be bold to say, we are excited for the opportunities in front of us in the wake of the recent NAR settlement. Change is never easy, but it often brings growth, innovation, and new possibilities. We can leverage this moment to strengthen our position as leaders in the market. This change will separate the hobbyist from the professionals, and we are excited to see the evolution!
Compensation Options:
Then vs. Now
There is considerable confusion and an irresponsible amount of misinformation regarding compensation. The visual below outlines the four primary methods by which a Buyer’s Agent and Brokerage can be compensated. The compensation options available prior to the NAR settlement remain unchanged post-settlement. What has shifted is the order in which these options are likely to be utilized. Feel free to use the visual with Buyers, Sellers, or other Agents to clarify the compensation options available.
Working With Buyers
The NAR settlement underscored the importance of transparency in our interactions with Buyers and has spotlighted the lack of knowledge in the industry. By clearly communicating compensation structures and ensuring Buyers understand every step of the process, we can build a more transparent path and foster greater trust with our Buyers.
Buyer Workflow
Below is a snapshot of the 2 most likely paths for working with Buyers. The path on the left provides the easiest flow and greatest transparency, while the one on the right takes more steps to wind up at the same place.
Note – Click on the image for an enlarged view
Buyer Forms
We have revised or created new forms to help facilitate a smoother Buyer process for you. These forms were designed with the actual practice of working with Buyers in mind and to offer you the greatest protection for the great work you do with Buyers. Moving forward, an agent cannot tour a property for or with a Buyer without a signed agreement prior to the tour. Also, a Buyer’s Brokerage cannot be compensated any amount greater than what was agreed to in the Buyer Brokerage Agreement.
Buyer Brokerage Agreement- REVISED
This form was rewritten to include the touring notice and the statement of commissions not being set by law in conspicuous print. We also included standard authorizations for our trained New Homes Specialists to be paid and for authorization for you to pursue the Seller for your compensation. An important factor of this form, in Item 7, addresses whether the Buyer wants to be shown homes in which the Seller is not offering full or partial compensation. It is important to note you will not know this until you set up showings for the Buyer.
Amendment to Buyer Brokerage Agreement- NEW
Commission Agreement- New
This form was created to give you clarity and documented evidence of the compensation you will receive from the Seller or Listing Brokerage. You will send this form to the listing agent for them to complete and sign PRIOR to any showings. This form SHOULD be attached as an addendum to any offer presented to the Seller.
Working With Sellers
The NAR settlement has now removed the compensation field from MLS, removing transparency inside the industry. As a result, how we compensate Buyer’s Brokers, communicate compensation, and interact with Selling Agents will change. Let’s dive into the details for working with Sellers and Buyers’ agents moving forward. Sellers can still pay a Buyer Brokerage commission. Instead of a co-op commission, which we are most accustomed to, we will adapt and become a Direct by Seller Option.
Seller Workflow
Below is a snapshot of the 3 most likely paths for working with Sellers. The bold path will be the most likely workflow as we anticipate most buyers requesting compensation. As a listing agent, you will need to be diligent in reviewing, signing, and returning any compensation forms to Buyer’s Agents.
Pro Tip: In Showing Time, put the following: If you are requesting compensation, please visit BHHSPay.com to download our Commission Agreement form. Please note that our Seller pays the commission directly, and it does not come in the form of a co-op from us as the Listing Brokerage anymore.
Note – Click on the image for an enlarged view
Seller Forms
We have revised or created new forms to help facilitate a smoother process for you, the customers, and the agents we have the privilege of working with. These forms were designed with practical application in mind and to offer you the greatest protection and transparency. Moving forward, our ERTS will change from a co-op commission to a Direct By Seller commission. This means that instead of the Seller paying us, the Listing Brokerage, the full commission, and us sharing a portion of that with the Selling Brokerage, the Seller will pay the Listing and Selling Brokerages separately and directly.
Exclusive Right to Sell- REVISED
Commission Agreement- New
Watch The Town Hall
Our company-wide Town Hall, hosted by Casey Bryan on June 20th, 2024, covers all of this content thoroughly and can be watched, or rewatched, at any time here!
FAQ’s
Q. Is an MLS Fee still an option?
A. The short answer is yes BUT it cannot be called an MLS fee, and without a way of documenting it, this practice will most likely become extinct.
Q. Do I have to have all open house guests sign a BBA?
A. No. You are there as a representative of the Seller, not a touring agent of the Buyer. However, if you leave and show the Buyer any other houses, they would have to sign a BBA
Q. If I am showing my own listing to an unrepresented Buyer, do they have to sign a BBA?
A. No, but you can request one. You are there as a representative of the Seller, not a touring agent of the Buyer. However, if you leave and show the Buyer any other houses, they would have to sign a BBA prior to viewing any other homes.
Q. Should we tell the Seller it is better to pay a fair Buyers Brokerage commission?
A. Yes, for multiple reasons! First, we are proactive advocates for Buyer’s representation and believe buyer agents add value to the buyer and the overall transaction. Two, if we increase demand by increasing the potential buyer pool with those who cannot afford their own representation, the opportunity of netting the Seller a greater profit increases. There are arguably countless more reasons why a Seller should offer fair compensation to a Buyer’s Agent, but those are the most important.
Q. How do we handle VA Buyers?
A. Fortunately, as of today, the VA has implemented a temporary policy allowing Veterans to pay their own commissions.
Q. Do we need to get a copy of the Buyer’s Agent BBA to verify the amount we are offering?
A. No. That is the Buyer’s Agents responsibility to verify they are not collecting more than what is allowed per their own BBA.
Q. If I used an existing ERTS, will I need to have my Seller sign a new one prior to the August 17th deadline?
A. No. Our old ERTS does not include prohibited language, so you will be okay with proceeding with your existing ERTS.
Q. Do we offer a universal Buyer’s Brokerage fee to make it fair to all?
A. The quick answer is no, as that is the basis of the lawsuits. Compensation to the Buyer or Buyer’s Brokerage is not universally offered any longer. It is based on a written request. You should, however, comply with any request up to the maximum amount allowed based on your ERTS. UNLESS you have an older listing using the old ERTS. That form defaults to a co-op commission and should be universally offered.
Q. Can we show our own listings still?
A. Yes! However, you should ALWAYS ask the Buyer if they are working with another agent and if they have signed a BBA with them (which will be common moving forward). You do not want to put the Buyer in a position where they owe a commission to two brokerages.
Q. If a Buyer’s agent calls and asks, “Is the Seller willing to pay me?”, how do we respond?
Q. As a Buyer’s Agent, can I call the Listing Agent to confirm whether they will pay my fee?
A. Yes, but that should not be all you do. You should complete and send the Compensation Agreement to the Listing Agent and get it back prior to showing.
Q. How do we respond if a Seller is misinformed and states, they heard they no longer have to pay a Buyer’s Agent?
A. You tell the Seller that this has ALWAYS been an option but is most likely not the best option. See the question about fairly compensating a Buyer’s Agent.
Q. I’ve been taught to never add commission to a contract. Does this still hold true?
A. You can add it today. To give context, compensation has not been added to the contract because we have been a default compensation model of co-op commission. This means the Listing Brokerage is paying a portion of its commission to the Selling Brokerage. Neither of these are parties to the contract, as generally speaking, only the Buyer and Seller are parties to the contract. Therefore, we did not add it to the contract because it was an agreement between two parties that were not on the contract. Now, where the Seller will most likely be paying the commission, and as the Seller is a party to the contract, you can and should add it to the contract. Please use the Commission Agreement addendum or some comparable addendum.
Q. When a Buyer’s agent contacts the Listing agent, is the Listing agent allowed to email/text or send an addendum to the buyer’s agent notifying them of the amount of commission the Seller is offering?
A. You should not text or rely on a text for compensation. Text is not admissible per the As-Is contract. You should absolutely send or receive a signed commission agreement prior to showing in order to offer protection and give the same confidence and protection.
Q. What happens/what is needed if the commission being offered to the Buyer’s agent exceeds the amount agreed to in the BBA?
A. A Buyer’s agent CANNOT receive payment greater than the amount on their BBA. If a higher commission is being offered, you can use the BHHS form Amendment to Exclusive Buyer Brokerage Agreement, and select the correct box to increase the commission. PRO TIP: It is easier to start higher on your BBA and reduce later if needed than to start low and have to go back and get approval for a higher amount later.
Q. Is there a minimum amount that BHHS FL PG is allowing to be inputted into the BBA?
A. We are a professional service and believe our fee should be commiserate of the high-level of service and expertise we provide. Our default compensation options begins at 2.5%
Q. When will the new forms be uploaded to dotloop?
A. We have submitted the forms to Dotloop for setup. This process usually takes 2 weeks, so we anticipate having the forms by July 1 but will communicate as soon as they are available.
Q. When will we be requiring the use of the new forms?
A. As soon as they are available in Dotloop.
Q. Can the buyer’s agent commission be added to the buyer’s offer to make up the difference (or pay Buyer’s agent commission in full)?
A. Yes, if the house will appraise for the higher amount. Remember if you are doing this you are increasing the price of the house AND asking the Seller to pay a concession or pay the Buyer’s Brokerage commission directly.
Looking for additional information? Check out our related resources on the Agent Help Site:
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