Real Estate Update – Buyer Broker Compensation

On behalf of the Relocation Center, I want to provide our clients with an update on process changes related to buyer broker compensation or commission related to the recent settlement of the actions brought against the National Association of Realtors (NAR). Effective 8/17/2024, the commissions paid to a listing broker by the seller of a property will no longer include payment to a cooperative agent who is able to deliver a buyer for the property. These changes represent the decoupling of the real estate compensation practice between sellers and buyers that has been the historical norm.

The amount of commission or compensation paid to brokers has been, and will continue to always be, negotiable. Sellers of properties can still offer a cooperative broker fee to increase the pool of potential buyers and pay a commission percentage or a flat dollar amount. Listings, however, can no longer advertise the amount of compensation sellers will pay cooperating brokers. Companies who offer Buyer Value Option (BVO) programs will need to determine if the benefit will include compensation to the

buyer’s agent. Companies should give consideration as to revision of existing policies to address this. Ultimately, your policies shape the transferee experience and provide the parameters for relocation and mobility programs that we are managing on your behalf.

A recent survey of corporate members conducted by the Worldwide Employee Relocation Council indicates most companies are still considering their options after the NAR settlement-related changes. For home sale transactions, organizations are considering covering part or all the buyer agent’s compensation either as a flat dollar amount or as a percentage of the property’s sales price – for example 2 ½ – 3%. Thus, the total commissions paid out on an employee’s home would approximate the historical selling commission spend of past transactions.

Similarly, most organizations are considering covering the employee’s agent’s compensation on the employees’ new home purchase, should the seller of that property decline to participate. Again, covering it as a flat amount or as a small percentage. This was a cost not normally incurred in past transactions and will raise your relocation spend and require a change to relocation policy as an approved New Home Purchase closing cost. Your employee will need to sign a buyer agency agreement prior to viewing any property. This agreement must reflect the amount of expected compensation your employee will pay and the term of the agreement. Again, all compensation is negotiable.

It is at the discretion of each company to decide to pay the buyer broker compensation their employee incurs when purchasing a home. Unfortunately, we must treat the expense as a taxable employee benefit like most other relocation costs. Your company must decide whether to provide tax assistance gross-up on this expense the company bears.

If your company is unwilling to pay the buyer broker compensation, your employee will have several choices to make:

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Attempt to find an agent who will work for free or hope the seller will pay

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Try to get an exception to their policy

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Represent themselves without an agent

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Pay the commission out of their pocket

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Refuse the transfer

The above scenarios may lead to poor employee experiences. Paying the buyer’s agent commission is probably going to be the current cost of doing business to capture the best and most diverse talent to ensure growth, employee satisfaction, and innovation for the organization. If you have decided how you want to address the buyer broker compensation, please let us know. We are happy to assist you by discussing this matter in more detail or suggesting policy changes that reflect how your company would like to address this recent shift in how real estate agents are compensated. We very much value and appreciate your continued business.

Regards,

Jeff Walker, President

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