How to Properly Complete the Compensation Section for Exclusive Buyer Agency
QUESTION: As the Broker-In-Charge, I am concerned about ensuring my agents properly complete the compensation section in the Exclusive Buyer Agency Agreement (Standard Form 201). In paragraph 4(b), my agents often provide a range for the commission charged to the buyer. Alternatively, they may use language stating “up to” a negotiated figure or add language about seeking cooperating commissions. Is there a more appropriate way to fill in these blanks?
ANSWER: Yes, there is. According to Real Estate Commission Rule 21 NCAC 58A .0109, brokers must specify the exact amount and source of all compensation. Utilizing a range or a cap on fees does not meet this requirement and may result in disciplinary action for violating the Commission’s rules. Instead, it is proper to state an exact dollar amount owed by the buyer, a specific negotiated percentage, or another arrangement that can be precisely quantified.
Additionally, agents should refrain from adding phrases like “to be paid by the seller or listing firm.” Paragraph 4(b)(i) of Standard Form 201 already explains that any cooperating offer of compensation will be credited to the buyer to fulfill the obligations of the agency agreement. Using such language could also be misleading, as agents should explicitly clarify that clients are responsible, under the agency agreement, for directly paying the fee if no cooperative compensation offer is extended for a property they choose to purchase.
Lastly, if your firm does not intend to seek compensation directly from buyer clients and only wishes to be compensated when a cooperative offer is made by a listing firm, you may consider using the Non-Exclusive Buyer Agency (Standard Form 203) agreement. Paragraph 3(a) of Form 203 explicitly states: “This agreement does not obligate Buyer to pay a brokerage fee or assure the payment of a brokerage fee to the Firm.”
Release Date: 2/1/2024
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