How to Correctly Amend a Buyer Agreement

Key Points:

• As long as a buyer agreement includes specific compensation details, agents have significant leeway to tailor the form to meet their needs.
• An agreement can be amended, but "it cannot and should not solely be for the purpose of matching compensation."
• Except where required by state law, buyer agents shouldn't share their signed agreements with listing brokers.

Can a buyer agreement specify an hourly rate? Or cover multiple homes or a set timeframe?

Yes, yes and yes. It must include the required compensation provisions, but agents can shape the agreement to fit their needs. If you want to work hourly, set a flat fee, a percentage — all of that is up to the real estate professional and the brokerage to decide what works for their business model and how they want to compete.

Agents can have an agreement for one home, multiple homes, one day, one week, one month, as long as you have those required provisions in that written agreement — and the terms don't conflict with state law. California, for example, passed a law in September limiting the duration of a buyer agreement to three months.

Once the agreement is signed, can it be amended?

It can, but only under certain circumstances — and not as a way to get additional compensation, even if the listing broker or seller is offering more than what was spelled out in the buyer agreement. 

The settlement does not speak to amendments, so it does not prohibit amendments — but agents must act in good faith, and where an amendment is contemplated, you need to be sure there is a business justification for that amendment. … This is not to circumvent the practice changes. It cannot and should not solely be for the purpose of matching compensation.

Scenarios that might justify an amendment

Did you contemplate that this was going to take a month, but it ended up taking a year and a half? Did you contemplate viewing one home but you ended up touring 100 homes? … [If] the scope of your services and your time and what you're going to provide to that consumer changes, then an amendment might be justifiable in that circumstance because you're doing something different and more than what was originally contemplated. 

But the agent doesn't simply get to decide: This is not a unilateral amendment. The buyer would have to agree to that amendment. And in discussing that with the buyer, you want to make sure they understand what you're asking of them and their options when it comes to increasing compensation. 

Can an agent ask their buyer to sign two agreements, one for existing home sales and one for new home sales?

While the guidance on NAR's website says agents "should not enter into multiple agreements with a buyer at one time for the same services," it would be allowed in this scenario since the services offered may differ when working with a traditional seller versus a builder.

Or you can have one buyer agreement … that articulates a specific compensation for new homes, new builds or existing properties. "So you can delineate on that and make clear, as long as it's objectively ascertainable, that the buyer understands what they're paying. 

What if a listing agent asks to see the buyer agreement?

If a seller is offering buy-side compensation, a listing agent might want to confirm what the buyer agreed to pay their agent (since accepting compensation beyond what's spelled out in the agreement is a no-no). Can the buyer agent share a copy of the contract? 

In most cases, no, that's a confidential agreement. There's very sensitive information there that's material to the negotiation process, so you shouldn't be sharing your agreements with competitors.