BIC Tip #1084 — Compensation Clarity: Using the 220 As Addendum
The real-estate landscape is shifting fast, especially regarding buyer-agent compensation. In order to protect yourself, your firm, and your clients, you need to make sure all compensation agreements are in writing prior to (or at the time of) contract.
In North Carolina, that means knowing exactly how to use Form 220 – Buyer Agent Compensation Addendum alongside the standard 2-T Offer to Purchase and Contract.
📑 What Is the 220?
Form 220 is an NC REALTORS® addendum designed to spell out the buyer-agent’s compensation. It clearly identifies:
- Who is paying the buyer-agent (seller, buyer, or combination)
- How much (flat fee or percentage)
- When and how payment is due (at closing, from proceeds, etc.)
🏠 How It Works with the 2-T
When a buyer makes an offer using the 2-T form, that offer represents the entire binding agreement between buyer and seller — unless another form is referenced and attached.
By attaching Form 220, you bring the buyer-agent’s compensation directly into the terms of the contract. You can:
- Reference “Form 220 – Buyer Agent Compensation Addendum” as and addendum of the 2-T.
- Physically or electronically attach the signed 220 form to the offer.
- Make sure all initials and signatures match the 2-T signatories.
💬 Why Include Compensation in the Contract?
- Transparency.
Everyone — buyer, seller, and both agents — sees exactly how compensation is handled.
- Enforceability.
If compensation is part of the contract, you can actually enforce it.
- Compliance.
The NC Real Estate Commission and the Department of Justice are both watching how brokers disclose and structure compensation. Attaching the 220 keeps you transparent and protected.
⚠️ Common Mistakes to Avoid
- ❌ Failing to reference the 220 form in paragraph 31 of the 2-T.
- ❌ Sending the 220 separately after acceptance (too late — it must be part of the offer or agreed upon prior to the contract)
- ❌ Verbal agreements are not enough.
