Read If You Dare - Compensation and How It Should Work
Uh!! this is not legal advice just a writer opining on what he reads.
Compensation From Sellers and Due From Buyers. Oh What to Do?
A. The Seller Side (The Florida Listing Agreement)
Paragraphs 8 through 10 of the standard transaction broker listing agreement control how agency compensation is structured — and this is where most of the industry immediately goes off the rails.
Paragraph 8 — Total Agency Compensation to the Listing Brokerage
This paragraph is often misunderstood. It is not only the “listing-side half.” It represents the entire gross agency compensation the seller authorizes for the brokerage to complete the sale — whether the buyer comes through another firm or through the same brokerage that holds the listing. Full stop.
Even if a listing brokerage sets policy that it does not want broker-to-broker compensation or seller-to-broker compensation, the listing agreement cannot dictate the policy of another brokerage firm in its request to ask for compensation. Tricky but true. Just as brokerages cannot plan together to set compensation, they also cannot plan together to dictate how compensation will be shared.
So Section 8 compensation should be that number which reflects the total compensation the seller is willing to pay to get the property sold — period. The total, plain and simple, to the brokerage that is listing the home.
Yet most agents still fill in only “their half,” as if they are pre-allocating money for someone else later in the agreement — someone they haven’t even met. That’s lazy, wrong, and inconsistent with how the form actually reads. A competent agent completes Paragraph 8 as the total compensation for the transaction, not just the listing portion. The broker, by definition, is the listing brokerage, and the statement below is a closed loop of activity confined to that brokerage. Why?
“Seller will compensate Broker as specified below if a buyer is procured who is ready, willing, and able to purchase the Property or any interest in the Property on the terms of this Agreement or on any other terms acceptable to Seller. Seller will pay Broker as follows:”
Paragraph 10 — How (and Whether) a Buyer’s Broker Is Paid
First, Paragraph 10 can be easily construed to mean “another” broker — other than the listing broker. While not plainly stated, it’s clearly implied. Where people go wrong is forgetting that in Florida, Agent and Broker are not the same thing.
Paragraph 10 describes how any portion of that Paragraph 8 total might be shared with the brokerage of another agent not within the listing brokerage. But the drafting leaves traps and glossed-over inconsistencies:
10(a) – Seller authorizes Broker to pay a Buyer’s Broker out of the Paragraph 8 amount.
This is the logical path: the total in 8 stays fixed, and the listing broker can allocate a portion of it to another brokerage via a CABB-1 agreement submitted when the offer comes from the buyer’s brokerage.
Many brokerages prefer this broker-to-broker structure because it keeps negotiations professional and avoids placing the seller and buyer’s broker in direct financial conversation. That policy can make sense — it maintains clean fiduciary lines and minimizes conflict — but it must be grounded in the seller’s written authorization, not assumption.
Some brokerages may not like this form. But technically, it’s the buyer’s choice — how compensation is requested is the buyer’s decision, not the agent’s. The buyer does have to be aware that the agent will request compensation from the seller. Hence the Buyer Brokerage and Showing Agreement forms: they force this conversation, and buyers must be aware of it under the settlement.
10(b) – Seller authorizes Broker to offer compensation to a Buyer’s Broker from Seller in the amount of ___.
Here’s where the form gets silly. Nothing in 10(b) ties that payment back to Paragraph 8. Read literally, 10(b) creates an additional payment obligation — a second layer of agency compensation that stacks on top of 8.
But remember, the brokerage might still bring the buyer. So electing 10(b) creates risk. That “broker” in section 10 is another outside broker, most likely — and the form isn’t written perfectly. It’s a natural assumption when taking Sections 8 and 10 together.
If a listing selects 10(b) and the offer from another brokerage comes in with broker-to-broker compensation but 10(a) isn’t checked, then there is no compensation offered under those terms. You see the issue?
A listing agreement filled out improperly is already violating the buyer’s right to negotiate compensation with their agent. A contract between two parties is attempting to bind a third, unknown party to specific behavior.
And are sellers really being informed of the real options they have — or are agents too uninformed to explain them?
A seller who doesn’t read carefully (and a typical untrained agent who doesn’t understand it) will miss that distinction and could easily require a double pay.
A good agent will stop and explain: if the intent is for all compensation — regardless of how it’s divided — to come from the total in Paragraph 8, then 10(b) should have said so. It doesn’t. That’s a drafting failure, and pretending otherwise is malpractice in plain English.
And here’s why the confusion exists: under the NAR settlement, the buyer and the buyer’s agent are the ones who determine how to ask for compensation — not the seller or the seller’s agent.
The seller can decide whether to offer it but cannot dictate how a buyer pays or negotiates their own agent’s fee. When listing agents pre-fill a CASB-1 or CABB-1 before any offer exists, they’re effectively setting compensation terms for a relationship that isn’t theirs. That undermines the entire intent of the settlement: to return compensation decisions to the principals — the buyer and the seller — each represented by their own broker.
Practical Guidance
Paragraph 8 should always reflect the total gross agency compensation authorized by the seller for the entire transaction.
After all, a great brokerage with great Realtors is very likely to also represent the buyer. In Florida there’s a method for that which is perfectly acceptable. Our team represented 19% of our sales volume this year representing both buyer and seller in the same transaction under the rules in Florida. Our listing agreement protected this process.
If a seller places 3% in line 8 and the brokerage later produces the buyer internally — whether through the listing agent or another agent in the same firm — the brokerage has fully satisfied its obligation under Paragraph 8. The seller can legitimately state that all compensation under line 8 has been earned, and no other compensation is required under Section 10. I predict this Florida Listing Agreement is going to be redone.
If the agents are within that same brokerage, the firm can direct internal fee distributions without any new buyer-broker agreement, because the listing agreement already contemplated that outcome.
But if an agent naively enters only “half” the fee in 8 and later also represents the buyer, the firm is stuck — the listing agreement caps the total at that half. There’s no contractual right to the remainder.
It’s possible some might argue Section 10 also refers to the listing broker. But under the law and this agreement, because compensation in line 8 is reduced for offers under 10(a), it’s logical to conclude the “broker” in Section 10 is not the listing broker. The listing broker need not concern itself with 10 if it also procures the buyer, as Section 8 already defines.
The confusion starts when a listing broker thinks agents are actually parties to the transaction. They are not. The broker is the only “agent” in the transaction. Real estate agents act on behalf of the broker.
Once that’s understood, it’s logical that both 10(a) and 10(b) refer to a broker other than the listing broker. The industry conflates broker with agent — and the Florida standard listing agreement seems to have been crafted with that conflation in mind.
“Seller will compensate Broker as specified below if a buyer is procured who is ready, willing, and able…”
That clause presumes the listing brokerage earned its compensation by producing the buyer — not merely by posting a sign.
So as written, Paragraphs 8 and 10 together create a legal loophole. The form’s plain reading assumes the listing brokerage is entitled to full compensation once it procures the buyer, yet the industry keeps pretending 8 only means “the listing side.”
A great agent, however, seeks counsel with a qualified attorney to evaluate the shortcomings of the listing agreement as written — and to craft an additional clause (which does exist but is proprietary to this author) that clarifies and corrects Section 10(b).
This added clause protects the seller by ensuring any buyer-broker payment under 10(b) is offset by a corresponding reduction in the total owed under 8(a). It closes the loophole and prevents double compensation.
Frankly, the way this listing agreement is drafted by the Florida Real Estate Commission is cumbersome at best and amateurish at worst. It needs revision. On its face, it arguably violates the spirit of the NAR settlement by allowing a seller to dictate not only how much compensation is offered (permissible) but also how it’s paid — which is not consistent with the settlement’s intent to restore that choice to each principal.
Paragraph 10(a) lets the listing broker disburse part of that total to another broker — no additional cost to the seller.
Paragraph 10(b) adds a separate seller obligation and must be explained carefully; it’s easy for an untrained agent to trigger double compensation.
Paragraph 10(c) (“no compensation offered”) is perfectly valid and lawful.
In short:
A good agent fills in Paragraph 8 as the total agency compensation, clarifies how 10(a) or 10(b) interacts with that number, and prevents double payment.
A great agent brings legal counsel to improve the form itself.
A bad agent keeps pretending 8 is “their side” only — a relic of MLS thinking that has no place in today’s agency-based world.
B. The Buyer Side (SA-4 Showing Agreement & Buyer Brokerage Forms)
The Showing Agreement (SA-4) and its longer buyer-brokerage counterparts make one thing absolutely clear:
The consumer — the buyer — engages a brokerage to provide professional services and agrees to pay that brokerage an agreed agency fee. That agreement is between those two parties only. It’s not a community negotiation, and it’s certainly not an invitation for agents to start fishing for money from strangers.
What the Contract Actually Says
Paragraph 5 of the SA-4 spells it out:
Broker’s compensation is earned when, during the term of this Agreement, the Consumer contracts to acquire real property as specified.
The buyer owes that compensation because the brokerage delivered professional service, not because someone else agreed to fund it. If the brokerage later receives compensation from a seller or listing broker, it reduces the buyer’s owed amount — but only up to the limit the buyer agreed to pay. The broker may not receive any other payment that exceeds what the buyer authorized.
In short: the buyer owns the compensation conversation. The agent’s role is to explain the options and document them — not to chase money from someone else’s client or pretend there’s a “standard” offer waiting somewhere.
Where the System Has Gone Off the Rails
A buyer absolutely can agree to pay their agent for representation — and that obligation is real, enforceable, and personal to them. The possibility of the seller contributing to that compensation is optional, not automatic.
This is the new version of the old sin: steering by fee instead of by fit.
What the Buyer Needs to Understand
You are the client.
When you hire a brokerage, you are contracting for professional service — not for whatever someone else decides to pay.
You are responsible for your agreed agency fee. That’s the deal.
If a seller later chooses to offset part or all of it, that’s between the sellers and their broker — not a guarantee you can count on.
Your agent’s job is to represent you — not to pre-negotiate their own pay. They can disclose options and ask if you want to request seller participation, but they cannot demand it without your consent.
Transparency cuts both ways. Just as sellers must decide whether they’ll offer compensation, buyers must decide what they’re willing to pay — before stepping foot in the first showing.
The Legal Intent — and the Practical Breakdown
The NAR settlement was designed to create independent compensation negotiations:
Sellers decide what they’re willing to offer.
Buyers decide what they’re willing to pay.
Those terms meet only when an offer is presented.
That separation was intentional — to eliminate steering, price-fixing, and the myth of a “standard rate.”
But what’s happening in the field is the opposite. Agents are still treating compensation like a menu item instead of a fiduciary discussion. Buyer agents are chasing seller dollars before buyers even know what they owe, and listing agents are pre-printing compensation forms that force outcomes.
The result? The same anti-competitive behavior under a new name — exactly what the settlement sought to prevent.
What a Great Buyer’s Agent Does
Has the compensation conversation up front, before showing anything.
Documents it clearly in the SA-4 or full Buyer Brokerage Agreement.
Explains that any seller-side payment simply offsets the buyer’s fee.
Never steers by compensation.
Includes any buyer-directed request for seller contribution as a term of the offer — not as a back-channel “commission question.”
That’s how the law intended it to work.
The Takeaway
The buyer’s agent is not a bounty hunter. The buyer’s agent is a fiduciary professional whose compensation flows from a private agreement with their client. Anything the seller later chooses to offer is a credit, not a command.
When agents understand that — and when buyers realize they actually are the ones paying for representation — the market will finally start to function the way the settlement envisioned.