The SCR120 Compensation Agreement was originally created as a "Swiss Army Knife" form that handles multiple situations without creating a form for each situation.

This multiple use of SCR120 can create confusion with choices on SCR120.
More blanks to fill in equals more confusion and more mistakes can occur.

So, there may be future compensation agreements in the SCR forms library where each different compensation agreement only handles one type of deal.
With fewer "fill in the blank" choices, hopefully fewer choices can mean less confusion and fewer mistakes.

Pre-Settlement MLS Rules, SCR120 is often used when a brokerage is helping a buyer to buy a FSBO and the FSBO seller is compensating the buyer brokerage.
or
Pre-Settlement MLS Rules, SCR120 was often used when a brokerage is helping a buyer to buy a listing in an MLS where the buyer brokerage is not a participant and the listing brokerage is compensating the buyer brokerage.

Both of these pre-settlement situations still work with SCR120.

Additionally, SCR120 can handle some of the common post-settlement MLS rules situations.

Post-Settlement MLS Rules, SCR120 is still used with FSBO sellers paying.

Post-Settlement MLS Rules, SCR120 can be used with the listed seller paying.

Post-Settlement MLS Rules, SCR120 is still used with the listing brokerage paying.

One way to think of SCR120 is that it operates somewhat like a paper check:

These numbers correlate with the SCR120 section numbers.

1. The person/company paying is identified just like a check ("pay to" notation).
[Checkbox only one.  Write the payor name in the blank.]

2. The purpose of the payment is stated just like a check ("memo" notation).
[Checkbox "Buying on Behalf Of" and write the Buyer's Name in the blank.]

3. The address of the transaction is stated. ("memo" notation).
[Fill in as many of these property being bought address/info blanks as you can.]

4. Terms. The length of any contract is generally required. Longer is usually better than shorter. Typically, expires post-closing date plus anticipated delays/extensions is ideal.

5. Compensation, this section is important.
Typically, write in a percentage of gross sales price or a dollar amount.

There are blanks for more atypical situations where a different manner of compensation is desired (e.g., leasing, base price, net price, other).

Checkbox when the payment is due. Choose one (e.g., Closing, Assumption of Lease, As Otherwise Agreed).

6. Disclosure. Signatures.

ONLY THE PARTIES TO THIS SCR120 SIGN (e.g., Payor, Payee).
The payment-receiving party is typically always the buyer brokerage.
The paying party is typically either the seller or the listing brokerage.

The SCR120 does not label these signature area blanks at this time because the parties can vary with the transaction.

Future SCR compensation agreements may label these blanks about who goes in this blank (e.g., seller, listing brokerage, buyer brokerage).

If you only use one blank, this is potentially a problem.
Contracts generally require two parties.

If you need two blanks, use two blanks.

If you need three blanks, use three blanks.

If you need four blanks, use four blanks.

Since signatures may be illegible or unclear as to the party, print the name and role near the signature ( /s/ ).

/s/
(e.g., Bobby Brooke – buyer brokerage)

/s/
(e.g., Homer Q. Ownerman – seller)
or
/s/
(e.g., Lisbeth Realtyson – listing brokerage)

If you need more room for anything on SCR120, use SCR390 as an addendum/amendment.

There are many legal business models.
So, the seller might pay the buyer brokerage.
Or, the listing brokerage might pay the buyer brokerage.
Or, other.

Also, the timing of the SCR120 can vary under the legal business models.
Sometimes, the SCR120 might be agreed pre-showing/touring, or pre-offer.
Sometimes, the SCR120 might be agree post-showing/touring, or post-offer.
Sometimes, the SCR120 might never be agreed.
Sometimes, the compensation might be handled in the contract (e.g., SCR310 Section 6).
Or other.

The buyer paying the buyer brokerage is often the simplest/safest way for a buyer brokerage to be paid.

But, some buyers need assistance with money (e.g., gifts, savings, credit, assistance programs, rebates, seller-paid buyer’s transaction costs in SCR310, seller concessions, seller-paid repairs/replacement, transfer costs, owners association, memberships).

Buyers have a lot of costs to buy (e.g., downpayment, moving, connections/deposits/water/sewer/electricity, buyer’s transaction costs).

SCR310 buyer’s transaction costs:
Buyer’s transaction costs include
all costs and closing costs resulting from selected financing,
pre-paid recurring items,
insurance
(including but not limited to mortgage insurance, title insurance lender/owner, flood, insurance, and hazard insurance)
discount points,
interest,
non-recurring closing costs,
title exam,
FHA/VA allowable costs, fees
and expenses of
Buyer’s attorney,
contractually required real estate broker compensation,
and the cost of any
inspector,
appraiser,
or
surveyor.

Some buyers might not yet be able to afford to buy and need to remain renters/guests.

Some buyer brokerages will quickly evaluate the buyer alongside a lender to determine what the buyer can afford to buy, and perhaps more importantly, afford to keep after buying.

There are many post-closing expenses (e.g., mortgage payments, adjustable interest rates, property taxes, insurance policies, repairs/replacement, preventative maintenance, unanticipated costs, deductibles, not worth filing a claim, upgrades, lawn maintenance, utilities, filters, building up reserves for future lifespans – HVAC/roof, owners association costs, memberships, unanticipated costs, emergencies, tree maintenance, other).

This information is only accurate as of 10/03/24. You must contact SCR for updates and changes to this information after 10/03/24 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org or email byron at screaltors.org)

This information is not legal advice. This information is intended only to provide general information and may not be relied upon as specific legal guidance. Legal counsel should always be consulted before acting in reliance on this information.