Want to amend a buyer agreement? NAR lawyer explains how 

Editor's note: Buyer agreement rules continue to be a source of confusion for many agents, and Lesley Muchow, NAR's general counsel, wants to clear things up. In a recent conversation with the hosts of Real Estate Insiders Unfiltered, Muchow did a deep dive into buyer agreements — such a deep dive, in fact, that we covered it in two parts. 

In part two, Muchow explains how agents can customize agreements, when (and if) they can amend them, and whether they can be shared. Looking for part one? Find it here.

The National Association of Realtors, along with many local associations and brokerages, has made a concerted effort to educate agents about buyer agreements — but it would be impossible to address every scenario.

That's left some agents wondering how to remain compliant with the new rules while working to meet the unique needs of their business and their clients. 

Lesley Muchow, NAR's general counsel, helped fill in some blanks during a recent appearance on the Real Estate Insiders Unfiltered podcast. She discussed various do's and don'ts, provided examples of how buyer agreements can be customized, and answered this key question: Can an agreement be changed once it's been signed?    

Here's what Muchow had to say.

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, Muchow said. "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."

"They 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, said Muchow — 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. 

"I know this is a point of confusion for members," Muchow acknowledged. "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," Muchow said. 

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." 

And finally, agents need "to know what your state law says about contract enforceability and whether or not that amendment would be enforceable."

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, said Muchow. "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."

Some states, she noted, "may require disclosure of these agreements, and you should always follow your state law." That would likely be "later on in the process," however.  

So…. what can't you do?

"That's a little hard because business practices will differ and real estate professionals should be able to compete and be flexible," said Muchow, "but we encourage members to be innovative in meeting their clients' needs, but also abide by the law and MLS policy."

"It all comes down to transparency. This is your opportunity to sell your services to demonstrate your value. You want the consumer to understand what they're getting and be specific about what they're getting, and to walk away feeling that they know what that value is."

When in doubt, ask your broker

Issues, questions and edge cases are "inevitably going to come up," Muchow said. "When there are 'bumps in the road' questions, agents should be going to their brokers. Some of these things are tricky."

Read part one of the conversation to learn about essential buyer agreement requirements, exceptions, virtual tours and touring agreements, and see what Muchow had to say about compensation and concessions.