Major Real Estate Settlement Shake-Up: What Arizona Buyers and Sellers Need to Know

Starting Aug. 17, a new rule in Arizona mandates that a buyer’s agent must secure a signed compensation agreement before showing a home.

MESA, Ariz. — Major changes are set to take place in Arizona’s real estate industry this Saturday. The modifications stem from a multi-million dollar settlement with the National Association of Realtors.

Arizona realtor Katie Evans explained that while the changes will impact both buyers and sellers, buyers are expected to feel the shift more profoundly. Previously, the seller’s agent would negotiate both their own fee and the buyer’s agent’s fee, representing the buyer during the sale.

However, starting Aug. 17, the process will change. Before a buyer’s agent can show a home, there must be a signed agreement detailing how much the agent will be paid. Negotiations will play a crucial role.

“Is it going to be the buyer that pays us directly?” Evans questioned. “Will we ask the seller for concessions that the buyer can then use to pay the agent? Or a combination of both? Can the buyer afford to pay the agent directly, or do we need to find a house where the seller will cover these costs?”

If buyers can’t afford to pay their agent directly, they will need to seek homes where the seller is willing to provide concessions, or where the seller’s agent has pre-negotiated terms.

Evans anticipates more buyers will directly approach the listing agent to explore dual agency, where one agent represents both parties. She also expects some buyers may enter the market without representation. Nevertheless, she advises finding an experienced agent due to the complexities involved in home contracts and financial arrangements.

Buyers are encouraged to interview real estate agents before committing. Crucial questions include the agent’s knowledge of contracts, experience, number of homes sold, and their ability to secure offers in competitive scenarios.

Communication is critical, Evans emphasized. Buyers should clarify the agent’s communication strategy, the terms of the agreement, and exit options if the relationship doesn’t work out. These factors gain new importance as buyers take a more active financial role in the transaction.

Sellers, on the other hand, should assess their willingness to offer buyer concessions before listing their properties. This can be a significant factor in attracting buyers.

Evans stressed the importance of understanding the current market conditions, which are tougher now compared to two years ago. Sellers should decide if they’ll pre-negotiate compensation with the buyer’s agent. Although this information can’t be listed on the MLS, agents can advertise it on their websites.

“The biggest change now is that compensation for agents is negotiated directly in the contract,” Evans noted. “Previously, this was not allowed.”

Evans advises sellers to discuss agent compensation upfront and to follow the agent’s guidance on how to navigate the current housing market effectively. Flexibility and a strong marketing plan are essential.

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