Important Deadlines:

• June 11: Bright launches new “Seller Concessions” field alongside “Listing Entry Cooperative Compensation” field.
• July 1: NVAR releases its biannual Standard Forms updates, including new changes to the brokerage agreements and sales contracts.
• August 14: Bright removes “Listing Entry Cooperative Compensation” field and implements practice changes, including preventing listing agents or sellers from advertising any commissions offered or paid to buyer brokers.
• August 17: All Realtors® covered under the proposed NAR class action settlement agreement must conform with all practice changes spelled out in the proposed settlement agreement.
  • This includes removing/amending any terms in previous brokerage agreements that conflict with the terms of the proposed settlement agreement.

Between July 1 and August 14 (the “Interim Period”):

• Beginning on July 1, NVAR recommends implementing the new versions of its forms, including the brokerage agreements and sales contracts. Don’t forget: many new Virginia laws go into effect on July 1! 
• If you have a pre-July 1 brokerage agreement in place during the Interim Period, you will not need to amend the brokerage agreement, as the practice changes are not yet required.
• However, please note:
  • If a listing agent receives an offer with an amount listed under Seller-Paid Buyer Brokerage Compensation (new line-item 2E of the sales contract), keep in mind that this amount will be IN ADDITION TO any cooperative compensation offered by the listing broker on the MLS or otherwise.
    • This means that the buyer’s broker may get paid twice (meaning, by both the seller and listing broker) unless the buyer’s broker agrees to modify the offer of cooperative compensation or the parties agree to remove any Seller-Paid Buyer Brokerage Compensation from the sales contract.
  Remember: The MLS cooperative compensation field is a separate, binding agreement between the brokerages. Once an offer is made and accepted, it is final unless both brokerages agree to modify it.
  

• This means that during this Interim Period, the listing broker may be responsible for paying the buyer’s broker cooperative compensation even if there is $0 or a different amount agreed upon in line-item 2E of the sales contract under “Seller-Paid Buyer Brokerage Compensation.”

After August 14:

• NVAR’s new brokerage agreement (both listing and buyer-broker agreements) will be required beginning on August 17^th. This means that all clients should sign the new versions of the brokerage agreements.
  • This important because the pre-July 1 versions of the brokerage agreements do not fully comply with the practice changes required by the settlement agreement.
    • For example: Buyer’s agents are prohibited from receiving any compensation in excess of what is agreed to in Paragraph 8 of the Buyer-Broker Agreement after August 17, 2024.
  • Listing brokers should inform their clients that offers of compensation will no longer be an option on Bright MLS.
  • If your client is unable or unwilling to execute a new brokerage agreement, please consult an attorney to advise on how to properly amend the brokerage agreement to ensure accuracy.

FAQS:

• In the Interim Period, if I am using NVAR’s new forms, how should I use the cooperative compensation field?
  • That depends. Since the new forms do not facilitate cooperative compensation, in the event the seller wishes to pay all or a portion of the buyer’s broker compensation, the seller and buyer should negotiate an amount to include in paragraph 2D and/or 2E of the sales contract. In that case, the seller would not need to include any amount in the cooperative compensation Bright MLS field.
  • If the seller and listing broker do wish to offer an amount in cooperative compensation after July 1, please consult your broker on their individual policy on how to do so.

• Can buyers and buyer brokers rely on an offer of compensation that was on an MLS prior to the effective date of the MLS policy changes (August 14, 2024)?
  • If the sales contract is executed before the MLS policy change, the buyer broker should be able to rely upon the offer of compensation even if closing occurs after the date of the policy change.
  • But if a sales contract is not executed before August 14, 2024, the offer on an MLS will not be valid and buyers and buyer brokers may wish to protect themselves in writing with the listing broker or seller through a broker agreement or by including the offer of compensation in the sales contract.

• If a buyer broker puts any amount above zero into the Seller-Paid Buyer Brokerage Compensation line in the sales contract, does that mean they are requesting the cooperative compensation amount in MLS + Seller-Paid Buyer Brokerage Compensation? 
  • Yes. The MLS field is a separate contract – one between the listing broker and the buyer’s broker – while the sales contract is its own contract between the seller and the buyer/buyer’s agent. Both are valid and binding (until August 14th). Thus, cooperative compensation is a separate agreement that the listing agent will be bound to regardless of what is agreed to in the contract.

• After August 17^th, If the seller offers a bonus or financial incentive in addition to the offer of broker compensation, can the buyer broker accept the extra compensation?
  • The buyer broker may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.

• What if the seller changes their mind? If the parties agree to a different amount for Seller-Paid Buyer’s Broker Compensation and/or Seller Subsidy in the sales contract from what is in the listing agreement, does the listing agreement have to be amended?
  • No. The final agreement between the parties in the sales contract controls what amount, if any, is paid by the seller. The language of the listing agreement allows for the seller and buyer to ultimately decide these amounts – not the listing agent.

• How can I prove what offers of compensation were made when it is time for the settlement agent to disburse the funds?
  • After July 1^st, the sales contract represents the final agreement between the parties as to what, if any, financial contribution(s) the seller is making to the buyer and/or the buyer’s broker. This is why you want to ensure Paragraph 2 of the sales contract is filled out properly and correctly.

• Will the settlement agent need to see the buyer-broker agreement to know what to disburse? What about the buyer’s lender?
  • Likely yes. Plan to provide the buyer-broker agreement to the lender so that the lender is aware of the buyer’s financial obligations, and provide it to the settlement agent as well if needed for disbursement. Remember: Buyer is ultimately responsible for compensating the buyer’s agent. At the seller's discretion, seller can offer a credit to reduce the buyer’s obligation through a subsidy and/or compensation directly to the buyer’s agent.

•  Do the forms changes impact dual agency?
  • No. Dual agency is still legal in Virginia, although agents should consult their broker as to their broker’s own rules and policies. Remember to make the proper disclosures when undertaking a dual agency situation.

• How will offers of compensation work for rentals?
  • Bright MLS will be removing the fields for offers of compensation from the MLS for rental listings as well. After July 1^st, NVAR forms will still allow for cooperative compensation (landlord’s broker to tenant’s broker), only if approved/authorized by the Landlord, for leasing transactions. However, because the field will no longer be on the MLS, you must ensure the final amount is reflected in a separate agreement between the brokerages.

For more detailed FAQs, please visit facts.realtor or contact NVAR’s Legal Hotline for individual questions.