Addendum Regarding Brokers' Fees (TXR 2406)

As of December 16, 2024, the Addendum Regarding Brokers’ Fees (TXR 2406) and the Amendment to Representation Agreement (TXR 2701) will no longer be available for use on the Texas REALTORS® website or through approved form vendors. These forms filled gaps during the transition to the new NAR MLS rules regarding broker compensation.

The Addendum Regarding Brokers’ Fees (TXR 2406) allowed sellers and buyers to agree to the payment of broker compensation in a way that was not available in the One to Four Family Residential Contract (TXR 1601). On December 16, 2024, the updated TREC residential sales contracts will be available on zipForm and other approved forms providers. The updated agreements allow the parties to negotiate seller concessions to cover buyer’s broker compensation within the contract. With the updated forms, TXR 2406 is no longer needed for broker compensation.

The Amendment to Representation Agreement (TXR 2701) was created to allow brokers to easily comply with the new requirements for representation agreements by amending the Texas REALTORS® representation agreements that were in use prior to June 24, 2024. Texas REALTORS® representation agreements entered into after June 24 are already in full compliance and do not need TXR 2701. At this time, REALTORS® should only use the most recent versions of the representation agreements available on al10669.com and through approved forms vendors.

First, check the box next to Paragraph D(2) which states, “Seller shall pay.” Then check either D(2)(a) or D(2)(b) depending on which contract is used to establish buyer’s broker’s compensation.

• Check box D(2)(a) if the seller has signed a separate compensation agreement with the buyer’s broker, such as the Compensation Agreement Between Broker and Owner (TXR 2401).
• Check box D(2)(b) if the seller agrees to pay any of the buyer’s broker’s fees as an additional term under the sales contract. This option creates a new obligation for the seller to pay the buyer’s broker’s fee as stated in this addendum.

First, check the box next to Paragraph D(2) which states, “Seller shall pay.” Then check either D(2)(a) or D(2)(b) or both, depending on which contract is used to establish buyer’s broker’s compensation.

• Check box D(2)(a) if the seller has signed a separate compensation agreement with the buyer’s broker, such as the Compensation Agreement Between Broker and Owner (TXR 2401).
• Check box D(2)(b) if the seller agrees to pay any of the buyer’s broker’s fees as an additional term under the sales contract. This option creates a new obligation for the seller to pay the buyer’s broker’s fee as stated in this addendum.

• Paragraph 12A of TREC residential sales contracts allow the parties to agree that the seller will pay a negotiated amount towards buyer’s expenses. “Buyer’s expenses” is a defined term in the contract and does not include broker fees. Buyer’s expenses includes items such as appraisal fees, loan origination charges, and credit reports.
• Paragraph D(2)(a) and D(2)(b) of Addendum Regarding Brokers’ Fees (TXR 2406) allow the parties to agree that the seller will pay an amount specifically for buyer’s broker’s fees. This is a separate obligation from paying buyer’s expenses under Paragraph 12.
• Both provisions can be used depending on what expense seller agrees to contribute to, either buyer’s expenses under the sales contract, buyer’s broker’s fees under the addendum, or a combination.

No. The Addendum Regarding Brokers’ Fees (TXR 2406) does not have to be used in every transaction. However, it should be used under two scenarios.

First, it's used when the seller agrees to pay an intermediary broker additional compensation. In this case, Paragraph E should be used for the seller to pay the intermediary broker additional compensation to be applied to the buyer-side broker’s fees.

Second, it's used when the seller agrees to pay the buyer’s broker under the sales contract. In this case, Paragraph D(2)(b) must be checked to specify the amount and authorize the payment. For the other options listed in the Addendum Regarding Brokers’ Fees, the form can still be used to provide information to the title company on how the parties are handling brokers’ fees. So, it would be good to use but is not required.

The Addendum Regarding Brokers’ Fees (TXR 2406) is designed to be used when the seller agrees to pay buyer’s broker fees under a sales contract. It will typically be included as part of an offer package delivered to a seller. But it may also be executed later in the transaction.

Brokers can continue to use a compensation/commission disbursement authorization (CDA) form supplied by their brokerage to notify title companies of disbursement instructions.

Yes. With an intermediary transaction, the same broker represents both the seller and buyer in the transaction. Both the seller and buyer have agreed to pay the broker a fee in their representation agreements. If the seller or listing broker does not offer to compensate the buyer’s broker, the buyer would be responsible for paying broker fees under the buyer representation agreement. If the buyer wants to request the seller to also pay the buyer-side broker’s fees, the buyer can attach the Addendum Regarding Brokers' Fees (TXR 2406) to the offer. Use Paragraph E, Intermediary Broker’s Fees, to include the amount of compensation the buyer is requesting the seller pay. Any amount inserted in Paragraph E will be in addition to the amount the seller is already paying the broker under the listing agreement.

Note: Do not use Paragraph D, Other Broker’s Fees, for intermediary transactions. The seller and buyer have the same broker. The buyer is not asking the seller to pay the “other” broker. The buyer is asking the seller to pay their broker additional compensation that will be applied to the broker fees the buyer owes under the buyer representation agreement.