Buyer Representation and Broker Compensation Agreement (BRBCA)

Buyer Representation and Broker Compensation Agreement (BRBCA)

  • The Kohl Team
  • 07/8/24

As you may have heard, beginning on August 16th, 2024, Realtors will be required to have clients sign a Buyer Representation and Broker Compensation Agreement (BRBCA). This is in response to the recent class action lawsuit against the National Association of Realtors and is designed to increase transparency surrounding Broker compensation (a good thing!). 

In most cases, we suspect Sellers will continue to cooperate with their Listing Agent to offer a commission to the Buyer’s Agent in order to attract the largest pool of Buyers possible. Traditionally, the Seller has agreed to a 5-6% commission to the Listing Agent, with 2.5-3% commission being advertised to the Buyer’s Agent. Going forward, Agents may no longer advertise this cooperating compensation in the MLS. 

The BRBCA details how the Buyer’s Agent will be compensated during a transaction. The agreement includes the following key points:

  • Representation Period: Maximum period is 3 months, but Buyers can specify shorter.
  • Type of Representation: Non-Exclusive vs. Exclusive depending on whether Buyers plan on working with multiple agents to identify a property for purchase.
  • Location: A particular property can be identified (limiting the agreement to that one) or it can be widened to Los Angeles County so Buyers do not have to sign one for every property prior to a showing.
  • Amount of Compensation: We include the maximum allowable commission at 3% as Agents are legally bound to accept no more than what is indicated in the Agreement, even if the Seller is offering more.
  • Cancellation Notice: Buyers have the right to cancel the Agreement according to the terms outlined.

What does this mean for you? As Buyers, you will be required to sign a BRBCA with any Agent who represents you in a transaction as of August 16th. In order to be compensated, a Buyer’s Agent will need to submit this agreement, along with a Cooperating Broker Compensation Agreement and Escrow Instruction with an offer package. This legally binds the Listing Agent to cooperate, and escrow is instructed to pay the Buyer’s Agent the agreed upon commission outlined at the time of closing.

When first communicating with a Listing Agent, we will now be asking if there will be a cooperating compensation to the Buyer’s Agent. You will be notified immediately regarding whether or not the Buyer’s Agent commission is being offered by the Seller. If there is a situation where the Seller is not offering to compensate the Buyer’s Agent, you can request the compensation to be paid by the Seller in the form of a credit in your offer and it becomes a term/consideration in your negotiation process. If the Seller refuses to offer any credit to accommodate for the compensation, we will discuss and confirm the details of our compensation at that time and it will determine how you’d like to proceed with the offer.

This new format, and all of these new Agreements are designed to protect Sellers, Buyers, Agents and all parties involved in a real estate transaction. While they may seem overwhelming, the language increases transparency on both sides and will become standard practice starting in August.  

Please contact us to request a copy of the new Buyer Representation and Broker Compensation Agreement. We are happy to answer any questions you may have about the forms and how to proceed with the process of identifying and purchasing a home. 

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