Fact Pattern: An agent named Busy Bee works in a certain neighborhood with very few listings available for sale. Busy is not working with any buyer at the present time. However, Busy would nevertheless like to ask all the listing agents in the neighborhood to have their seller sign a C.A.R. Single Party Compensation Agreement (SP) agreeing to pay Busy as a buyer’s agent.

Multiple Choice Question: Can Busy Bee ask the listing agents to have their seller-clients sign an SP? Pick the best answer:

A. Yes.
B. No, because Busy must identify a specific buyer in the SP.
C. No, because that would violate the NAR Settlement Agreement.
D. No, because Busy will not be representing the seller. 

Answer: Answer A is the correct answer! This is a possible way to use the SP, as further discussed below.

Answer B is wrong, although this may have been C.A.R.’s original intent when drafting the SP form many years ago. As background, even before the NAR Settlement Agreement, there were situations when an agent would want to obligate a seller to pay compensation if a certain buyer were to buy the property. Examples include For-Sale-By-Owner (FSBO) transactions, pocket listings, and other situations with no offer of compensation to the listing agent, buyer’s agent, or both.

Under that traditional scenario, let’s say that a seller has a pocket listing with a listing agent, but no offer of compensation to any buyer’s agent. Yet, a man named Bob Byer, who is represented by a buyer’s agent, wants to buy the property. In that situation, the SP could be used to require the seller to pay the buyer’s agent if Bob Byer purchases the property. To do that, the name “Bob Byer” can be inserted in the blank space provided in the SP for “Other Party” (see paragraph 1A of the SP).

Yet, you don’t have to insert a specific name in the blank space provided for “Other Party.” In Busy Bee’s situation, instead of inserting an actual name like “Bob Byer,” Busy could just insert “Any buyer who will be represented by Busy Bee.” If the seller agrees to sign, the seller would be obligated to pay Busy if any buyer represented by Busy bought the property.

Answer C is wrong. The NAR Settlement Agreement does not allow coop comp in the MLS, and it requires an agent working with a buyer to have a signed buyer-broker compensation agreement before touring the property. Neither rule prevents a buyer’s agent from asking a seller to sign an SP for “Any buyer who will be represented by” that buyer’s agent. Of course, a seller may decide not to sign the SP, but Busy is allowed to ask.

After all, a few signed SPs could sure come in handy for Busy. When Busy eventually meets a new buyer for that neighborhood, it should be pretty easy for Busy to get the buyer to sign a buyer-broker agreement with Busy. All Busy would have to do is show the buyer that certain sellers in that neighborhood have already agreed to pay Busy.

Answer D is wrong. The SP form has an “Agency Representation” paragraph that can be used to spell out whether Busy will be acting as the listing agent, buyer’s agent, or dual agent (see paragraph 2B).

Copyright© 2024 Shared Success Center, LLC (serving HomeServices of America companies). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of November 11, 2024. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. Written by Stella Ling, Esq.