The National Association of Realtors (NAR) has updated its frequently asked questions page related to the commission lawsuit settlement, including clarifying a new rule on buyer-broker agreements.
The NAR recently published an FAQ page related to the Sitzer/Burnett settlement. Under the terms of the settlement agreement, real estate agents will be required to have written agreements with a client to work with them as a buyer's agent.
In the FAQ page, the NAR clarified that written agreements would only be required in residential transactions and not in commercial transactions or leases.
It also clarifies that the phrase "working with" is meant to "distinguish MLS participants who provide brokerage services to a buyer." Such services include identifying potential properties, scheduling home tours for the buyer, performing or facilitating negotiations on behalf of the buyer, or presenting offers by the buyer.
The recent change means agents would not be required to have written agreements with the buyer if they are only "providing an unrepresented buyer access to a house they have listed," are working only as an agent or subagent of the seller, or if they are performing ministerial acts without the expectation of receiving compensation.
When Are Agents Required To Enter Written Agreements With Buyers?
The NAR's update noted that agents would be required to have a written buyer-broker agreement if they are representing both the buyer and the seller in a transaction. They would also need to have a written agreement with the buyer before the agent takes their client on any home tours. However, a written agreement could also be required earlier in the transaction in various states.
Additionally, the written agreement should state an "objectively ascertainable" compensation for the agent.
"For example, the range cannot be "buyer broker compensation shall be whatever amount the seller is offering to the buyer," the FAQ read.
Agents can still earn compensation in multiple ways. First, the buyer can pay them a commission based on the sales price using their own funds. They can also charge the buyer for individual services or on an hourly basis. Furthermore, the buyer can still ask the seller during the negotiation to pay for all or part of their agent's commission.
The updates come after the NAR reached a settlement agreement in March of this year, with a federal court judge granting preliminary approval to the deal on April 24.
