The Arizona Association of REALTORS, the largest trade association in Arizona representing more than 53,000 Arizona REALTORS®, has released new and revised transaction forms for the benefit not only of its members, but the clients they serve.
A primary change will now require REALTORS® to enter into a buyer-broker representation agreement with the prospective buyer before touring a home. This requirement does not apply to an unrepresented individual attending an open house.
This change is of critical importance to consumers as buyer representation agreements memorialize in writing the professional services that the real estate licensee will perform and explain how and when the licensee will be paid. It is a pro-consumer policy that promotes transparency.
According to Scott Drucker, CEO of the Arizona REALTORS®, “It is important for buyers to be professionally represented in what is likely the largest purchase of their life. But it is just as important for the buyer to understand the terms of that representation, including the services the REALTOR® will provide and how they will be compensated. Because only REALTORS®, not all real estate licensees, will be implementing this policy, the members of our association have once again distinguished themselves and proven why the use of a REALTOR® is critical to the consumer.”
When using these REALTOR® representation forms, consumers are guaranteed that the agreement will include:
- A specific and agreed-upon disclosure of the amount or rate of compensation the REALTOR® will receive;
- Compensation that is objective (e.g. X%, $X flat fee, $X hourly rate) and not open-ended;
- A contract term that prohibits the REALTOR® from receiving compensation for brokerage services that exceeds the amount or rate agreed to in the agreement with the buyer; and
- A statement that broker fees and commissions are fully negotiable and not set by law.
Agent compensation for home buyers and sellers is, and always has been, fully negotiable. A variety of business models exist throughout Arizona, allowing the consumer to choose which is best for them. When finding an agent to work with, consumers should ask questions about compensation and understand what services they are receiving.
The Arizona REALTORS® forms are drafted to be easy to read and understand. Consumers should take the time to carefully read each document, ensure that they understand the terms, and ask questions to their REALTOR® or legal advisor if clarity is needed. Buyers should also inform the REALTOR® if they have already entered into a signed representation agreement with another real estate licensee.
An additional change will prohibit a seller’s agent from offering cooperative compensation to a buyer’s agent on any multiple listing service (MLS). Buyers and sellers still have the option to utilize cooperative compensation if they choose and MLSs will remain comprehensive marketplaces that ensure reliable data and promote competition.
As part of the National Association of REALTORS® Court settlement, these practice changes, among others, will take effect on August 17, 2024.
The National Association of REALTORS® has additional resources to help consumers understand the upcoming practice changes — one for sellers and one for buyers, outlining what buyers and sellers should expect after August 17th and the value REALTORS® provide to consumers in these transactions.
REALTORS® are here to help consumers navigate the homebuying process and are ethically obligated to work in their client’s best interest, abiding by the REALTOR® Code of Ethics.
