BIC TIP #1138: Form 220 and Agent Commission in Offers
Buyer agent compensation has been the hot topic in real estate, and North Carolina brokers have been looking for a clean way to put it on the table. Stephen Long points out that a recent North Carolina law change allows compensation to be attached to an offer to purchase. The catch? The NC REALTORS standard forms do not yet have a dedicated form for it. In the meantime, there is a workable solution: attach Form 220 to the Offer to Purchase and Contract.
Two Documents, One Package
As a buyer’s agent, you can attach Form 220 to your Offer to Purchase and Contract and send them to the seller together. That gives the seller the chance to review the offer terms and the compensation being requested from the seller for the buyer’s agent at the same time.
Instead of a side conversation about commission after the fact, everything is in front of the seller in one package. That transparency tends to make negotiations cleaner for everyone.
Neither One Works Alone
Stephen highlights an important feature of this approach. Because the documents travel together, neither one is effective without both signatures. The seller cannot accept the price and quietly ignore the compensation request, and the compensation agreement does not stand on its own without the contract.
That linkage is exactly what a buyer’s agent wants when compensation is part of the deal.
List It Where Everyone Will Look
Do not just staple it to the back and hope someone notices. Stephen recommends listing Form 220 as an additional addendum in the addenda section of the Offer to Purchase and Contract. That way, everyone, from the listing agent to the closing attorney, knows it lives there and treats it as part of the contract.
Clear documentation now prevents a lot of confusion at the closing table later. If you have questions about how your firm wants these packages assembled, ask your broker-in-charge.
The Practical Takeaway
Until a dedicated standard form exists, buyer’s agents who need to negotiate compensation into an offer can attach Form 220 to the Offer to Purchase and Contract. Send them together, list Form 220 in the addenda section, and remember that both need signatures to be effective. It is a legal, straightforward way to keep compensation out in the open.
