Q1. Does the Buyer-Broker Exclusive Employment Agreement establish an exclusive relationship?

A1. Yes.  As the title of the form indicates, the buyer and the buyer broker are committing to one another during the term.  Best practice is for the buyer broker to clearly explain the relationship as spelled out in the Agreement paragraph.

Q2. Broker A enters into a Buyer-Broker Exclusive Employment Agreement with the buyer.  On Monday, Broker A shows the property to the buyer. On Tuesday, Broker B shows the same property to the same buyer. Broker B then submits an offer on the buyer’s behalf to purchase the property and later closes escrow on the transaction.  Is Broker A entitled to compensation?

A2. Yes.  The buyer hired Broker A to exclusively represent them and promised to compensate Broker A if the buyer purchased a property within the geographic area and within the Term.  Best practice is for the buyer broker to clearly explain the relationship as spelled out in the Agreement paragraph.

Q3. Does this mean that a buyer broker can abandon the buyer once a Buyer-Broker Exclusive Employment Agreement is entered into?

A3. Of course not.  The buyer broker owes a fiduciary duty to the buyer and is contractually bound to assist the buyer locate, negotiate and facilitate the purchase of a property.  No compensation would be due to the buyer broker if they breach the BBEEA or breach their fiduciary duty to the buyer.

Q4. Broker A enters into a Buyer-Broker Exclusive Employment Agreement with the buyer.  On Monday, Broker A shows the property to the buyer.  Broker B then enters into a Buyer-Broker Exclusive Employment Agreement with the buyer.  On Tuesday, Broker B shows the same property to the same buyer.  Broker B then submits an offer on the buyer’s behalf to purchase the property and later closes escrow on the transaction.  Is it possible that the buyer may be required to compensate both Broker A and Broker B?

A4. Yes.  As explained on lines 7-8, by entering into multiple Buyer-Broker Exclusive Employment Agreements, the buyer puts themselves at risk of owing compensation to more than one broker.  Although buyers may not always be honest, best practice is for the agent to ask the buyer prior to signing if they have entered into a representation agreement with another broker and explain to them the potential consequences of doing so.

Q5. Is there a minimum length of time that must be entered on Lines 9-10 titled “Term”?

A5. No. There is no minimum length of time required and the buyer and broker can negotiate any length of time they deem mutually acceptable.

Q6. Can a specific property address be entered on line 14 following the option titled “Other”?

A6. Yes, a specific property address can be written on line 14. If that occurs, the BBEEA will be limited strictly to that property. If the broker subsequently shows other properties to the buyer, an additional written agreement will need to be signed or the Buyer/Tenant Employment Agreement Addendum can be used to expand the employment of the broker.

Q7. Can the broker receive compensation in excess of what is set on lines 34-36?

A7. No. As explained on lines 42-43 the broker cannot receive any amount, from any source, for services provided for in this Agreement that exceed the agreed upon “Broker Compensation.”  This is required by the NAR Settlement.

Q8. The buyer and buyer broker agree upon compensation in the amount of 100 apples, which is documented in the BBEEA.  Ultimately, the buyer purchases a property pursuant to which cooperative compensation is offered to the buyer broker in the amount of 100 apples. In this scenario, will the buyer still owe the buyer broker 100 apples at close of escrow? 

A8. No. The buyer broker cannot receive compensation in excess of the amount specified in the BBEEA. Because in this scenario the buyer broker is receiving 100 apples in cooperative compensation (the amount agreed upon in the BBEEA), the buyer is not required to compensate the buyer broker.

Q9. The buyer and buyer broker agree upon compensation in the amount of 100 apples, which is documented in the BBEEA.  Ultimately, the buyer purchases a property pursuant to which cooperative compensation is offered to the buyer broker in the amount of 150 apples. In this scenario, can the buyer broker accept 150 apples in cooperative compensation? 

A9. No. As stated above, the broker cannot receive any amount, from any source, for services provided for in this Agreement that exceed the agreed upon “Broker Compensation.” However, with the lender’s permission, the additional 50 apples must be credited to the buyer to reduce their closing costs as stated in lines 41-42.

Q10. The buyer and buyer broker agree upon compensation in the amount of 100 apples, which is documented in the BBEEA.  Ultimately, the buyer purchases a property pursuant to which cooperative compensation is offered to the buyer broker in the amount of 90 apples. In this scenario, can the buyer broker accept 90 apples in cooperative compensation and waive the right to the additional 10 apples? 

A10. Yes.  The parties can always revise the terms of their agreement.  Best practice would be for the buyer and buyer broker to modify the “Broker Compensation” in the Buyer/Tenant Employment Agreement Addendum.

Q11. In stating the rate of compensation in the BBEEA, can the parties agree to write in “buyer broker compensation shall be whatever amount the seller is offering by way of a co-broke?”

A11. No. The amount of compensation must be objectively ascertainable and may not be open-ended.  This is required by the NAR Settlement.

Q12. Can a buyer instruct the buyer broker only to show them properties that are offering cooperative compensation?

A12. Yes, provided that the buyer sets forth that request in writing. Otherwise, as explained on lines 58-59. the buyer broker “shall show property listings that fit the Buyer’s criteria regardless of compensation offered to Broker by seller or seller’s broker…”. NOTE – This decision must be made by the buyer.

Q13. How is broker compensation determined?

A13. A broker’s compensation for services rendered is solely a matter of negotiation between the broker and his or her client, and is not fixed, controlled, recommended, or maintained by any persons not a party to the agreement. For this reason, lines 25-26 state: “BROKER COMPENSATION IS NOT SET BY LAW, NOR BY ANY BOARD, ASSOCIATION OF REALTORS®, MULTIPLE LISTING SERVICE OR IN ANY MANNER OTHER THAN AS FULLY NEGOTIATED BETWEEN BROKER AND BUYER IN THIS AGREEMENT.”

Q14. Why is there a notice box on line 47-48?  I thought the VA now allow a vet to pay the buyer broker compensation?

A14. Yes, thanks to advocacy of the NAR the VA is instituting a new rule that would allow a vet to pay the buyer broker compensation.  However, the rule is temporary and we do not know what final policy the VA may implement.  The language is therefore flexible and accommodates whatever VA rule is currently in place.