Big Changes in Real Estate Industry: Buyer Compensation Agreement Required in Arizona

On August 17th, a significant change is coming to the real estate industry in Arizona. Before a buyer’s agent can take a buyer to view a home on the market, a signed compensation agreement must be in place. This new requirement stems from a multi-million dollar settlement with the National Association of Realtors.

Katie Evans, a realtor in Arizona, emphasized that these changes will impact both buyers and sellers, with buyers expected to feel a greater effect. Previously, the seller’s agent would negotiate the commission for both listing and buyer’s agents. However, with the upcoming changes, a signed compensation agreement is necessary before a buyer’s agent can show a property to a potential buyer.

Evans highlighted the need for negotiation in determining how the buyer’s agent will be compensated. Options include direct payment from the buyer, seller concessions, or a combination of both. In cases where the buyer cannot pay directly, finding a property with seller concessions becomes crucial.

With these changes, Evans anticipates more buyers engaging directly with listing agents or entering the process unrepresented. She stressed the importance of partnering with a knowledgeable agent given the complexities of contracts, timelines, and financial implications of a home sale.

For buyers, Evans recommended interviewing agents before signing, focusing on their experience, familiarity with contracts, and success in competitive situations. Communication was identified as a key aspect to consider when selecting an agent.

These changes put the onus on the buyer to negotiate and determine how their agent will be compensated. Sellers, on the other hand, need to decide if they will offer any concessions to attract buyers. Market conditions and pre-negotiating broker compensation were highlighted as key considerations for sellers.

Evans advised sellers to have upfront compensation discussions with their real estate agent and be open to negotiation to devise a successful marketing strategy in the current housing market.

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