April 19th, 2021 at 3:45 pm
Multiple Choice Question: As a follow-up question, can a buyer’s agent insert an offer to pay that bonus in the buyer’s offer to purchase? Pick the best answer:
A. Yes.
B. No as a matter of law only.
C. No as a matter of ethics only.
D. No as a matter of both law and ethics.
Answer: The correct answer is C. The NAR Code of Ethics specifically prohibits REALTORS® from using the terms of a buyer’s offer to attempt to modify the listing broker’s offer of compensation (see Standard of Practice 16-16). Of course, it’s very likely that the underlying intent of Standard of Practice 16-16 was merely to prohibit a buyer’s agent who sees, for example, only a 2% offer of compensation in the MLS, from using a buyer’s offer to ask for a 3% commission instead. However, the actual language of Standard of Practice 16-16 does not differentiate between a buyer’s agent who uses a buyer’s offer to ask for more commission as opposed to less commission.
Additionally, it’s easy enough for a buyer’s agent to just inform the listing agent about the bonus through an email, cover sheet, or C.A.R.’s Cooperating Broker Compensation Agreement (CBC).
Putting aside the NAR Code of Ethics, nothing in the law specifically prohibits a buyer’s agent from inserting a bonus in a buyer’s offer. Hence, Answers A, B, and D are wrong. There may, however, be some logistical issues, such as whether an offer of a bonus in a contract between a buyer and seller is binding against a buyer’s agent who is not a true party to that contract.
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