The A,B,C's Oh, and D's of the NAR Settlement for Buyers

 Do You Know the “ABCs” of the ABCD Form?

(Copied in it's entirety from California Association of Realtors....

so none of my opinions are here, well one is at the bottom.)

The Anticipated Broker Compensation Disclosure (“ABCD”) is an excellent way to inform the buyer about the buyer broker’s compensation and can help to confirm the parties’ negotiations and discussions about compensation.  The ABCD form contains three sections that each serve different purposes.  Specifically, the ABCD form will : 1) Inform the buyer that the broker expects to be paid for the broker’s efforts; 2) Identify any compensation offered to the buyer’s broker from the seller’s broker through the MLS, or via a Cooperating Broker Compensation Agreement; and 3) Confirm and provide documentation to the buyer of any payments actually received by the buyer’s broker from third parties, in the event the buyer closes a transaction. 

Recently, C.A.R. has received several questions from members about using buyer representation agreements.  In addition to using the Buyer Representation and Broker Compensation Agreement (“BRBC”) in transactions, the ABCD form is a very good way to disclose the details of buyer broker compensation and to help the buyer become informed about compensation issues.  The ABCD form may also be a useful way to initiate and support the discussions and negotiations conducted between the buyer’s agent and buyer.

The ABCD form was released in December 2022, along with the release of the BRBC.  C.A.R.’s Standard Forms Committee recognized that on the seller’s side, it is normally easier for a listing agent to disclose and confirm the listing agent’s compensation via a listing agreement or single party compensation agreement.  Accordingly, at the beginning of the relationship between a seller and their agent, the seller knows the compensation they are paying their agent and the closing disclosure will show the amount of broker compensation that is a seller expense.  In comparison, on the buyer’s side, there are various ways to structure a buyer broker’s compensation– the buyer’s agent might use a buyer representation agreement, a Cooperating Broker Compensation Agreement, obtain a Single Party Compensation Agreement from the seller, or rely on an offer of compensation in the MLS. Because of the variety of methods in which a buyer’s broker can be compensated, which may include an agreement between the buyer’s broker and someone other than the buyer, the C.A.R. Standard Forms Committee decided to create a document where the buyer is advised of, and acknowledges, key information related to the buyer broker’s compensation.  Here’s a description of the ABCD’s three sections:

Section 1 has information about where the broker’s compensation can come from.  It is intended to be given to the buyer up front (early in the agency relationship) so the buyer can review it, ask questions to attain a better understanding of how their broker might be paid, and acknowledge receiving this information.

Section 2 has a chart to list various properties that are being shown to the buyer and what the expected compensation is and what the source is.  It also has a place for the buyer to initial at the time that property is shown.

Section 3 is a place for the broker to disclose the final amount of compensation earned in the transaction after close of escrow.  It has a place for the buyer to initial to acknowledge receipt of this information.

In conclusion, though there are alternative ways for a real estate licensee to inform their buyer client about expected compensation and the final amount of compensation (e.g., by providing the buyer with the non-confidential print-out from the MLS showing the compensation amount; by providing the buyer with a copy of the buyer broker’s contract with the listing agent or seller; and/or by providing copies of escrow documents showing the buyer’s agent’s compensation on the buyer’s closing document), using the ABCD may be much simpler and more effective in your practice.

Now, it's my turn to opine.... everyone deserves to get paid for what they do. This just puts it in writing for all to see/know. I'm very satisfied with this. Very much so.