July 1st, 2024 at 4:03 pm
However, even before the change takes place, you are, as a buyer’s agent, well-advised to go ahead and use buyer-broker agreements for your buyer-clients. C.A.R.’s current Buyer Representation and Broker Compensation Agreement (BRBC) was revised in December 2022. C.A.R. has delayed for now the release of its proposed June 2024 revisions that was previously slated to go into effect on June 25, 2024.
Here are 5 good reasons to use BRBCs before NAR’s Settlement Agreement goes into effect in mid-August:
1. Written Entitlement to Compensation: It’s a great idea to have a written contract that delineates the rights and responsibilities between you and your buyer-client. The BRBC confirms your entitlement to compensation if your buyer-client buys a property as described in your BRBC. But let your buyer-clients know that, even if they sign the BRBC, you will still try to get compensation from the listing agent or seller. Under the BRBC, any compensation you end up receiving from the listing agent or seller will be credited against the amount that the buyer may owe you (see paragraph 4D).
2. Full Transparency Under Sitzer Verdict: The underlying issues that led up to the Sitzer verdict and NAR’s Settlement Agreement generally included buyers’ claims that they did not know how much money their own buyers’ agents were getting, and they did not have a chance to negotiate that amount of compensation. Those concerns are addressed in a BRBC. Under a BRBC, you agree to be fully transparent with your buyer-client about how much money you expect to earn from other sources. You can use an Anticipated Broker Compensation Disclosure (ABCD) to let the buyer know how much money you expect to receive, such as from the listing agent through the MLS (see BRBC paragraph 4F(1)).
3. Big Advantage in Procuring Cause Disputes: A procuring cause dispute generally involves 2 buyers’ brokers who both claim entitlement to the listing agent’s MLS offer of compensation. Usually there is an Intro Broker with one brokerage who initially works with a buyer for a specific property, followed by a Closing Broker from another brokerage who helps that same buyer close escrow for that same property. Procuring cause matters are usually decided through local board arbitration, based upon the weighing of 23 determining factors. However, the existence of a BRBC for either broker should be given “significant weight,” as according to C.A.R.’s Procuring Cause Guidelines (password protected for C.A.R. members only).
4. Exemption From Clear Cooperation Policy (CCP): As background, NAR’s CCP generally requires listings to be submitted to the MLS within one business day after any “public marketing” of the property, such as the posting of a For-Sale sign. However, any one-to-one promotion with one of your own clients is not considered “public marketing” (see NAR’s CCP FAQs). If you have a signed BRBC (including Agency Disclosure Statement), you can share any of our company’s pocket listings one-to-one with that buyer-client, without triggering CCP’s “one business day” rule.
5. Practice Makes Perfect: If BRBCs are new to you, this is a great time to start practicing using them, before BRBCs become mandatory in mid-August 2024. You can familiarize yourself with the different provisions of the agreement. You can figure out the best ways for you to present the BRBC to your clients, overcome their objections, and encourage them to sign.
-Thank You to Jim Vermilya (Laguna Beach Manager) for suggesting this week’s legal tip!
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