Answers to common questions Realtors have about buyer broker agreements related to the NAR settlement.
1. How is a Buyer Broker Agreement enforced?
All agreements are negotiable, and the Florida Realtors Exclusive Buyer Representation agreement is intended to protect your commission. It is very important that practitioners discuss how they are paid with their buyers to ensure everyone understands how brokers are paid.
2. Are there outs if you don’t have a rapport with someone?
As a Buyer’s Agent you also can decide if you no longer wish to work with a client – just like with the listing agreements. However, you are never allowed to violate the Fair Housing Act.
3. How do we work with another agent if they are not willing to negotiate the commission?
The other agent is not paying your commission. You would need to focus on working with the BUYER who would be paying your fee, if the seller is not providing any compensation. The buyer can also negotiate these terms in their offer with the seller, much like they have always done with closing costs and other seller concessions.
4. I’m looking for guidance on what to charge buyers and tenants for retainer fees.
This would be a violation of anti-trust for us to answer this question. Please speak with your broker.
5. Will the buyer’s agent form change?
A revised Florida Realtors Exclusive Buyer Brokerage Agreement form was posted on July 9, 2024, and is available for use by all Florida Realtor members.
6. How is this going to affect buyers who have enough money for the house and such, but not enough to pay additional fees to a buyer's agent?
As the buyer’s agent, you may need to find additional properties that would sell for a different price point to allow a buyer agent fee to be paid or find properties where the seller is providing a fee for the buyer’s agent. The buyer can also choose to negotiate the broker compensation directly with the seller in their offer, essentially asking the seller to pay the compensation as part of the transaction. You should discuss all possibilities first with your buyer and let them direct you in their choices.
7. Will buyers negotiate directly with a listing agent to avoid paying a broker on the buying side?
Maybe. However, this is just like the buyer calling the name that is on the sign listing the property for sale. Buyers have always had that choice.
8. How do we discuss commissions with listing agents?
Everyone will need to start communicating directly with the listing agents. This may be done through a phone call, text message, email, etc.
9. What’s an effective way to explain the changes we are facing to the consumer?
Probably the best thing to do would be to state that the issues we are currently facing are brought about from the NAR Burnett Lawsuit and provide them with the public links to the lawsuit at NAR for more information. Those links can be found at RealEstateCommissionFacts.com and Competition.Realtor.
10. What changes will the new agreement bring?
Effective in August, you will no longer be able to place compensation information of any kind in the MLS. In addition, as a member of NAR, you will be required to sign a Buyer Broker Agreement and disclose how you will be paid. This is a new rule change going into effect from NAR in August, based on the pending settlement.
The practice change requiring written agreements with buyers is triggered by two (2) conditions: 1) it only applies to MLS Participants "working with" buyers and 2) the written agreement must be entered into prior to "touring a home."
11. If I list a property and the seller wants to offer compensation to a buyer’s agent, how can I share this with buyer agents?
You will be able to market and promote this information on social media, company websites, etc. From what has been provided by NAR:
MLS Participants and Subscribers may communicate offers of compensation to buyer brokers or other buyer representatives on their own websites for only listings of their own brokerage. (See Settlement FAQ 42).
12. How can we request to be paid? Who would pay the buyer agent commission?
Sign a Buyer Broker Agreement! The purpose of the written Buyer Broker Agreement is to specify your compensation as well as disclose how you are getting paid and what your role in the transaction is. Fees to the buyer’s agent would be paid directly by the buyer OR from the seller if they decide to do so.
13. Where on the MLS listing can a listing agent disclose how much of a buyer's agent compensation a seller is paying?
Nowhere – at all. Compensation will not be allowed anywhere in the MLS. From what has been explained, no information of any kind can be placed in the MLS. Here is the information as provided by NAR:
Effective August 17, MLS Policy will eliminate and prohibit MLS Participants, Subscribers, and sellers from making any offers of compensation on an MLS to buyer brokers or other buyer representatives. This includes offers of compensation from the seller in notes, remarks, or any other MLS field.
14. How do I find speaking points about presenting the Buyer Broker Agreement?
Florida Realtors will be offering a class on this soon. There is also some information at the NAR website. Additional information will also be released by FR soon. In the meantime, speak with your broker for talking points.
15. Does this make me a single agent? Am I still considered a transaction agent? How is our brokerage relationship affected by signing a BBA?
By signing a Buyer Broker Agreement – it does NOT change your agency status. You may use this agreement in any of the authorized brokerage relationships that Florida Statute 475.278 authorizes.
16. How can I get an ABR?
Reach out to your local association to see if and when they are offering the class. Also go to the NAR Website at: https://www.nar.realtor/education/designations-and-certifications/accredited-buyers-representative-abr.
17. How to complete the form correctly, including language, if seller compensation is offered?
The Buyer Broker Agreement currently has, and any new form developed will have, specific information regarding how the compensation is being paid. It is and will continue to be a simple fill in the blank form. Contact the legal hotline for more information.
18. Are we not allowed to have Sellers continue paying the commission as they have been?
Sellers can continue to offer buyer brokerage compensation if they choose in the amount they choose; or they can choose not to offer any compensation to the buyer broker, in which the buyer would be responsible for payment.
19. Is it best to transition to listing agent?
This would be a personal business decision to move forward and only deal with sellers or not.
20. How will the ABR apply to the new laws?
There are no new laws. NAR is making rules changes for members, effective in July. As a member of NAR, you will no longer be able to place compensation information of any kind in the MLS. In addition, as a member of NAR, you will be required to sign a Buyer Broker Agreement and disclose how you will be paid. The ABR course is designed to provide you with education to help you learn how to work directly with buyers.
21. How will the NAR settlement change the way we do business?
As a member of NAR, you will no longer be able to place compensation information of any kind in the MLS. In addition, as a member of NAR, you will be required to sign a Buyer Broker Agreement and disclose how you will be paid. NAR is making the rule change effective in August regardless of the timing of the pending court approval of the settlement.
22. Will you need to have a Buyer Broker Agreement signed with anyone who wants to walk through an open house?
It depends. It really all comes down to if the realtor is “working with” the buyer or not. The NAR FAQ page clarifies that the phrase “working with” is meant to “distinguish MLS participants who provide brokerage services to a buyer from MLS participants who simply market their services or just talk to a buyer.”
Examples of broker-provided services include identifying potential properties, arranging for the buyer to tour a property, facilitating negotiations on behalf of the buyer, or presenting offers by the buyer.
Conversely, a broker who is “providing an unrepresented buyer access to a house they have listed” is an example of someone who is not “working with” a buyer.
Additionally, the FAQ states that an agent is NOT working with a buyer if they are working only as an agent or subagent of the seller, or if they are only performing administrative duties without the expectation of being paid for these duties
Under these circumstances, the agent or MLS participant would not need a written agreement with the buyer. But if the agent is representing both the buyer and the seller in the transaction, then a written buyer broker agreement is needed.
NAR also noted that a written agreement between an agent and a buyer would be necessary prior to that agent taking the buyer on any home tours (unless state law requires that the agreement be signed earlier in the process).
The FAQs also noted, that if an MLS participant hosts an open house on behalf of their seller and an unrepresented buyer comes to look at the house, the listing agent hosting the open house would not need to have a written agreement with that buyer since the agent is not working with them.
Here is the exact information as provided by NAR:
An MLS Participant hosting an open house or providing access to a property to an unrepresented buyer is working for the seller at time the unrepresented buyer tours the home. Therefore, the MLS Participant does not need to enter into a written agreement with the buyer, although state law may require certain disclosures to the unrepresented buyer. If the unrepresented buyer later contacts the MLS Participant who hosted the open house and wants to write an offer on the home, the MLS Participant may perform ministerial acts on behalf of the seller and assist the buyer in preparing an offer without providing advice or representation. The MLS Participant may also choose to work with the buyer, including as a dual or designated agent, with appropriate disclosure and consent. In these scenarios the MLS Participant is not required by MLS Policy to enter into a written buyer agreement since the buyer is not touring a home. However, the MLS Participant may wish to enter into a written agreement with the buyer to memorialize the relationship. (See Settlement FAQs 56, 57, 60, 61, 62, 64 & 65).
23. Will listing agents charge a lower commission to seller?
This may happen, as all fees are negotiable.
24. Can you mention anywhere in an MLS listing that the owner and listing agent are cooperating with buyer's agents?
From what has been explained, no information of any kind can be placed in the MLS. Here is the information as provided by NAR:
Effective August 17, MLS Policy will eliminate and prohibit MLS Participants, Subscribers, and sellers from making any offers of compensation on an MLS to buyer brokers or other buyer representatives. This includes offers of compensation from the seller in notes, remarks, or any other MLS field.
25. What happens if a prospective buyer wants to see a home and refuses to sign the Buyer Broker Agreement?
We are seeking clarification from NAR on what the outcome would be if the buyer refuses to sign a Buyer Broker Agreement, per the settlement agreement and rule change.
26. What will happen to VA buyers with Buyer Broker Agreement and commissions?
Currently, VA lender guidelines prohibit the buyer from paying any Buyer Broker compensation in the transaction, so the seller MUST pay the compensation. If a Buyer is a VA Loan qualifier, the fees for Buyer Broker compensation can be negotiated in the offer.
If the seller is not offering enough compensation to satisfy the Buyer Broker Agreement, the buyer can choose not to see the property if it doesn’t satisfy their terms of their Buyer Broker Agreement.
NAR recently submitted a letter to the Department of Veterans Affairs (VA) urging them to revise its policies pertaining to fees that veterans with VA Loans are unable to pay when using their VA home loan benefit.
NAR specifically called on the VA to allow their buyers to compensate their representative directly, which is currently prohibited under VA policies. The letter stresses the importance of professional representation for veterans in the purchasing process and outlines the potential consequences for VA buyers in situations where compensation is not offered from a seller.
NAR wants to ensure veterans maintain their access to the VA home loan program, which has been a significant tool in helping service members achieve the American dream of homeownership. NAR is awaiting a reply from the VA.
27. Would Fannie Mae and or Freddie Mac allow for Seller's concessions to cover Buyer's Broker transaction fees?
Yes – most recently both Fannie Mae and Freddie Mac published explicit confirmations that buyers whose agent is compensated by the seller will continue to have access to financing through those institutions. Furthermore, so long as it remains "customary" for the seller to pay commissions, those fees will not be added to the interest party contributions (IPC) and subject to the caps on IPCs.
Interpretation of this rule under the proposed settlement was of great concern, and NAR specifically reached out to Fannie Mae, Freddie Mac, and the FHA seeking confirmation of this information. In a letter to NAR, the FHA did confirm this information to be valid.
However, none of these agencies will allow the buyer to finance a commission into the mortgage at this time.
28. How do you see this affecting first time buyers who get an FHA, VA, or Rural Development loan?
For buyers who may be short on funds, they may want to negotiate with the seller to pay their Buyer Brokerage compensation, if the seller is not readily offering up front to pay it. The buyer always has the right to not see a property if they feel it doesn’t satisfy their requirements.
29. Can real estate commissions be financed?
Financing commissions is not feasible under the current structure of the residential mortgage finance system, and there is no clear short-term legislative or regulatory fix.
Banks would treat such a loan as a personal loan that would have higher rates and they would limit access to those loans to borrowers with better credit profiles. Furthermore, that personal loan would add to the buyers’ liabilities and make it harder to qualify for the mortgage they are seeking.
30. What MLS policies will change?
The following MLS policies will change:
31. What is the difference between the agreements?
A Showing Agreement is used for one of a few related properties and names the specific property addresses. This is not a blanket agreement for all properties.
A Buyer/Broker Representation Agreement is an exclusive agreement that covers all properties found by anyone during the term of the agreement. The Broker has the exclusive right to sell any property to the buyer. This covers all properties as opposed to a specific address like the showing agreement.
A Listing Agreement is used with a seller to list a property for sale.
32. Do we have to sign a Buyer/Broker Agreement for every property?
No; the document covers all properties found by anyone – buyer, broker, or other – that the buyer purchases.
33. Can the amount of compensation on the Buyer/Broker Agreement be indicated as a range?
The practice changes require the agreement to specify and disclose the “amount or rate of compensation,” in which compensation must be “objectively ascertainable and may not be open-ended.”
In short, no; you can’t have range pricing anymore. NAR removed it from the ABR course materials with the recent update. Here is the information from NAR:
Written buyer agreements must include a specific and conspicuous disclosure of the amount or rate of compensation the MLS Participant will receive from any source. The amount of compensation must be objectively ascertainable and not open-ended. The written agreement must include a term that prohibits the Participant from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the written buyer agreement. Including a term in the written buyer agreement that a buyer purchasing new construction will compensate the buyer broker an amount or rate plus any bonus offered by a seller or builder is not objectively ascertainable and is open-ended. Therefore, this would not be permissible under the practice changes and MLS Policy. NAR policy does not dictate what type of relationship the professional has with the potential buyer, the term of the agreement, the services to be provided or the compensation charged. Compensation continues to be negotiable and should always be negotiated between MLS Participants and the buyer with whom they work. (See Settlement FAQs 54, 69 & 70).
