Thinking Hourly? What to Consider Before Using an Hourly Rate in Buyer Representation Agreements.

Q: In Section 5(a) of the Buyer Representation Agreement, can I list an hourly rate and clarify in Additional Provisions that the fee is hourly, with the total due being calculated near closing?

A: While there is nothing specific in the NAR Settlement Agreement prohibiting an hourly fee system, the Settlement Agreement does specifically state, “The amount of the compensation must be objectively ascertainable and may not be open-ended.” Therefore, an hourly rate without a final amount due being known yet may not meet the spirit of the intent of the Settlement Agreement. We recommend speaking with your Managing Principal Broker and legal counsel before proceeding.

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