Use the word ‘fee’ vs the words ‘compensation‘ and ‘commission‘
There are a variety of reasons for making this shift.
Due to the commission litigation, “commission” and “compensation” have become hot-button words.
Sellers have repeatedly heard through the media that they only need to pay their half of the commission. Using the word “fee” opens up an infinite number of possibilities for how the sellers may choose to help the buyer — for example, a credit to repair the roof or to provide the buyer with an interest rate buy-down.
Buyers are more likely to push back on paying their own “commissions” because they may not be able to afford it, haven’t had to do so in the past or simply don’t like the idea.
Using the word “fee,” also encompasses the fee for service (menu of services) business model where the buyer may elect to pay their agent for completing specific transaction tasks, such as locating and showing the property, negotiating the offer, and/or handling transaction problems required to close the deal.
The Department of Justice (DOJ) and the Consumer Federation of America (CFA) want our forms to be “consumer-focused” rather than “Realtor-focused”
The new eXp Buyer-Broker Representation Agreement offers one possible way to address this concern. This document uses the term “broker fee” throughout the agreement.
It also references how the fee will be “paid,” i.e., not how the broker will be “compensated.” In fact, the word “compensation” is used only twice in the agreement:
COLLECTING BROKER FEE FROM THE SELLER:
Credit to Buyer, at Closing. Buyer may choose to negotiate that the Broker Fee be paid, in whole or in part, by the seller, through a seller-credit to Buyer, at closing. At Buyer’s instruction, Broker will write this request into Buyer’s offer to purchase the Property.
AND
Direct Seller-to Broker Compensation: Buyer authorizes Broker (eXp) to request that the Broker Fee be paid, in whole or in part, by the seller, to Broker (eXp), at closing. Any such arrangement will be memorialized in a separate compensation agreement as between the seller and Broker (eXp). Buyer understands that Broker (eXp) cannot communicate with the seller without first receiving the seller’s broker’s permission to do so.
Use ‘terms and/or conditions,’ not ‘concessions’
For decades, there has been a field in most purchase contracts where agents can write in additional terms or conditions their buyers want, such as “repairing the roof,” “buying down the buyer’s interest rate,” or “including the dining room chandelier in the purchase price.”
