Understanding Buyer Agent Compensation: FAQs After NAR Lawsuit

With recent changes in real estate practices following the NAR lawsuit, there have been updates regarding how buyer agents are compensated. Here are some frequently asked questions to help clarify these changes:

1. Can buyers still work with buyer agents? Yes, buyers can still work with buyer agents. The NAR lawsuit primarily impacts how buyer agent compensation is disclosed and handled.

2. How is buyer agent compensation affected by the NAR changes? Buyer agent compensation can still be paid by the seller. However, it is no longer publicly listed in the MLS (Multiple Listing Service).  In some cases it might be a negotiation point on the purchase contract.  In the event that it is not paid for by the seller, it can be paid for by the buyer or the buyer might choose a different home if that line item of the contract is important to them.  Buyer agent compensation has always been negotiable, and even prior to the lawsuit there have been some sellers not offering compensation making that a point for buyers to consider when making an offer.

3. What does it mean that buyer agent compensation is not publicly listed in the MLS? Previously, the commission offered to buyer agents was often publicly displayed on the MLS and therefore Zillow, RedFin, Trulia, etc. Now, while it may not be listed, sellers may still have a pre-negotiated rate with their listing agent that is provided to your agent via email.

4. How can buyers find out about buyer agent compensation? Buyers should discuss compensation with their buyer agent. Even if not publicly listed, many sellers still have a pre-negotiated rate for buyer agent commissions. 

5. What if a seller doesn't have a pre-negotiated rate for buyer agent compensation? If the seller does not have a pre-negotiated rate, there is a provision in the purchase contract where this can be specified as part of the negotiation process. 
Sample Contracts Linked.
See line 37 to check Seller Compensation Addendum to incorporate that addendum into the contract. https://www.aaronline.com/wp-content/uploads/2024/07/01/Residential-Resale-Real-Estate-Purchase-Contract-Form-August-2024-FINAL.pdf
And here is a sample of the addendum itself: https://www.aaronline.com/wp-content/uploads/2024/09/12/Seller-Compensation-Addendum-SAMPLE-Revised-8-8-24-August-2024-.pdf

6. Where can I find more information about these changes? For detailed information, you can refer to the National Association of REALTORS® website FAQ here: https://www.nar.realtor/the-facts/nar-settlement-faqs#consumer

7. Do I have to sign a buyer broker agreement to go into an open house?
No, you typically do not need to sign a buyer broker agreement to attend an open house. Open houses are generally open to the public, allowing you to tour the property without any obligations. The agent there represents the seller. However, if you are actively working with a buyer's agent, it’s a good idea to let them know you’re attending an open house, as they may provide valuable insights about the property and the surrounding area.
8. Do I have to sign a buyer broker agreement for a buyer’s agent to take me to see a home? What does that mean?
Yes, a buyer’s agent will ask you to sign a buyer broker agreement before taking you on private home showings. This agreement outlines the terms of the relationship between you and the buyer's agent, including how they will be compensated. It formalizes the agent's role in representing your interests, and you gain the assurance of dedicated service and guidance throughout the home-buying process. However, you can negotiate that this form only be used for a short period of time, or even for one specific property while you are still getting to know this agent.  There is also a showing agreement form that could be used when you are still in the getting to know you phase of working with your agent.  See both forms here:
Buyer Broker Exclusive: https://www.aaronline.com/wp-content/uploads/2024/09/12/BUYER-BROKER-EXCLUSIVE-EMPLOYMENT-AGREEMENT-SAMPLE-Rev-8-8-24-August-2024.pdf
Showing Agreement: https://www.aaronline.com/wp-content/uploads/2024/07/01/Buyer-Broker-Agreement-to-Show-Property-SAMPLE-August-2024-FINAL.pdf

9. Can my buyer's agent lower their rate they charge if we cannot get that rate negotiated to be paid for by the seller?
Yes.  However they are not bound to doing that, so be sure to have some very specific conversation, and ask for an addendum to the buyer broker agreement before finalizing a contract if the rate is changing. 


Notes The purchase contract discussed is specific to Arizona.  Also compensation is always negotiable.  If you have further questions or need assistance navigating these changes, feel free to reach out to us.