The Texas REALTORS® Legal Hotline is receiving many calls about builders and compensation under the updated NAR MLS rules. Download these questions and answers as a PDF.
My buyer client is purchasing a new home from a builder who is demanding to see our buyer representation agreement to verify the amount of compensation my client has authorized me to receive. Do I or the buyer have to share the agreement?
No. It is inappropriate for a builder—or any listing broker or seller—to demand to see brokers’ confidential agreements with their clients. The buyer/tenant representation agreement is a confidential document between the buyer and that buyer’s broker. Under NAR policies, a buyer’s broker is not required to disclose to the builder—or any listing broker or seller—any information in the buyer’s representation agreement.
If the compensation the builder is paying the buyer’s broker is more than what is stated in the buyer representation agreement, it is up to the buyer’s broker to amend the representation agreement with the buyer or make other arrangements on how to account for any overage.
If a builder refuses to sign either a compensation agreement or sales contract without being provided the buyer’s representation agreement, the buyer’s agent should discuss the situation with the buyers. The buyers have several options:
- They can give permission to disclose the terms of the buyer’s representation agreement.
- They may choose to not submit an offer on that property.
- They may choose to submit an offer without providing a copy of the buyer representation agreement to begin negotiations.
Under NAR MLS rules, are buyer’s agents able to receive bonuses from builders?
Yes, a buyer’s agent can receive a bonus if the agent discloses the specific amount of bonus offered to the agent and receives authorization from the buyer to receive that amount. The agent can use the Texas REALTORS® Amendment to Buyer/Tenant Representation Agreement (TXR 1505) to specify the amount of the bonus the agent will receive and obtain the buyer’s authorization. This form requires the bonus to be specific to a particular property. Since the bonus is being paid by the builder, the buyer is not obligated to pay the bonus. All compensation paid to an agent must be paid to that agent’s broker except with the written consent of the agent’s broker.
What about builders or brokers who are NAR members. There argument is they are subject to rules since they are non memberd
“No. It is inappropriate for a builder—or any listing broker or seller—to demand to see brokers’ confidential agreements with their clients. ” Regardless if they are NAR members or not. The only rules we are subject to in this is that we have our BR signed with our buyer before showing.
So far I have had one Builder ask for the Buyer Rep Agreement. My Client Authorized me to send it to the Builder. Not a problem in this case.
Is the key word here NAT MLS rules? What if the builder does not have the property in the MLS? Not all properties that a builder builds go into the MLS? Perhaps the builder could say that the rules do not apply to them because it’s not an MLS listing. I think that perhaps too a real estate agent who is not a REALTOR® could be selling properties via a sign in the yard, etc. and also be like the builder stating these rules do not apply to me. I am not in the MLS…. food for thought.
Youre still bound by those rules and ethics along with the duties to your clients. No matter what their “Rules” are you do not have to show them and especially not without your clients permission. Side not i would make sure i knew what the builder was offering and amend it ahead of time if you plan to do so or if your client is willing. These agreements can be made per offer or per listing and so on.
The article by the lawyer in Inman last week specifically said that builder bonuses were not legal under the new rules – the idea being that they are basically steering agents to their communities. The article is dated 8/27/24. The lawyer pointed out that amendments, like the ones we have in Texas are not following the rules. I think it is ridiculous that someone can tell me whether or not I can get a bonus – in what other industry is this done?????? And what if my client says no to my bonus – uses it to play hardball with… Read more »
I completely agree. In what world is it ok for a client to have to baby sit us and our income when a bonus or higher commission offered by the seller. Especially if it doesn’t effect the price of the home. We only eat what we hunt… Imagine if we charged 33% like the attorneys did.
Your comment about the lawyers is spot on. How much did the lawyers make who represented the individuals who sued the NAR? Was it a percentage or a flat fee or hourly charge? If the DOJ really wants to protect the public then they need to start reigning in some of the incredible (at least to me) contingency fees lawyers are making. There was tort reform in Texas several years ago. Due to that no lawyers would take the case against a doctor that caused my mother to have a massive stroke because the doctor didn’t understand the dangerous interaction… Read more »
Why do the TR forms not have a provision for charging a buyer a “retainer fee”? (This is another thing that lawyers do.) We should not be put in a position where we get paid nothing after showing houses to a buyer. We ought to be able to charge a retainer fee up front, (by the day, the hour, the showing, or a flat fee), and then deduct it from the total commission at closing.
Exactly!!
We need to come up with a different solution to the NAR settlement. Now too many agents, builders and sellers are wildcatting to see what they can get away with.
I assume the same applies to Title Companies that are asking for a copy of the Buyer Rep. Agreement?
I’m having a hard time agreeing with the BA builder bonus. It is my understanding the lawsuit was based on sellers not wanting to pay a BAC. How did the subject of BA getting a builder bonus slip into all this mess? The bonus has nothing to do with sellers paying the BAC. These are two separate issues. I strongly believe NAR turned its back on us. Not happy with them one bit.
Interested how Doctors don’t have to disclose how much they make. What’s the difference? Are we frauds?
What if paragraph 17, Special Provisions (TXR-1501): Buyer’s realtor may receive up to $10,000 bonus from seller(s) and/or builder(s) is indicated and signed by my client. Would this be sufficient?
I do not understand why a Buyer Agent would not want to disclose a BTSA immediately to their Client. All Agents know that there are BTSA’s being offered in this current market… especially on Inventory. Shouldn’t this conversation come up BEFORE signing an Agreement? Are BTSA’s NOT negotiable also? We also know that offering a BTSA by some Builders is a steering tool. We also know that some Realtors will go behind the backs of their Clients; call ahead and ask a salesperson for a BTSA BEFORE the Buyer visits the Builder’s sales office. Dirty laundry.
Can lenders and title companies request the Buyer Rep Agreement. Since It doesn’t say Lenders and Title companies they say they have right to ask