Now that NAR’s settlement has been applied to the MLS rules statewide, a question continues to arise: “Given that I cannot accept more compensation than I have in my Buyer Representation Agreement, if the seller side is offering a bigger sum of money in Buyer-Agent compensation, can I just amend my buyer representation agreement and charge a larger number? I wouldn’t be accepting money in excess of the representation agreement anymore at that point…”
The answer is somewhat complicated. On a strictly legal level, by mutual agreement you and your client are permitted to amend your representation agreements, amending the compensation, terms of services, length of the representation term, etc. so long as that amendment doesn’t torpedo the buyer-seller contract. For example, after buyer and seller are already under contract, a buyer and agent would not want to amend their buyer rep. agreement to increase the amount of compensation that buyer owes agent at closing if doing so would mean buyer no longer has enough money to purchase the property and pay their agent. Doing so would interfere with the buyer-seller contract.
But the primary question posed in this tip is: can I amend the buyer representation agreement up specifically to meet what the Seller/Seller Agent is offering? Short answer: likely no, because one element of the settlement is that MLS rules prohibit Buyer Agents from setting their compensation rate on non-fixed numbers, such as “what the seller is offering.” If a Buyer Agent charges a fixed price for services, but modifies it to meet the seller’s offer of compensation, the Buyer Agent is, for all intents and purposes, allowing the price for their buyer agent services to be set based on what the Seller/Seller Agent are willing to pay. This is precisely one of the core issues that was at play in the Sitzer/Burnett lawsuits, the concept that the seller side of the transaction was setting the prices for the buyer agent service. It is equally one of the DOJ’s stated targets in their Statement of Interest in Nosalek v. MLS Pin. In large enough quantities, brokers amending representation agreements to match seller’s upfront offers of compensation could result in a reopening of the industry’s Sitzer wounds.
The risk management answer is to simply set your price at what you believe your services are worth and be content with that number. For more information on this and related questions, check out the FAQ on our Buyer Representation and NAR Litigation Hub.