BUYER BROKER AGREEMENTS
Understanding Buyer Broker Agreements and Commissions in the New Real Estate Landscape
In today’s evolving real estate market, commissions must now be disclosed and agreed upon before viewing a home. This shift emphasizes the importance of homebuyers fully understanding the terms and conditions of their agreements with buyer agents.
Clear communication and well-structured Buyer Broker Agreements are essential to:
- Protect Your Interests: Ensure your rights as a buyer are safeguarded.
- Clarify Expectations: Define the services your agent will provide.
- Agree on Commissions and Fees: Avoid misunderstandings by establishing clear terms for compensation upfront.
Understanding these agreements empowers buyers to make informed decisions, ensuring a transparent and fair home-buying process.
Two Different Buyer Broker Forms
The Arizona Association of REALTORS® (AAR) provides two types of Buyer-Broker agreements, both updated as of August 2024. Each serves a different purpose, depending on how committed you are to working with an agent.
- Buyer-Broker Agreement to Show Property: This is a short-term, limited agreement designed specifically for viewing homes. It allows you to tour properties with a licensed agent without making a long-term commitment. This option is ideal if you’re just starting your home search or want to explore different agents before deciding who to work with exclusively. Your obligations under this agreement are limited to the homes shown during the agreement period. Arizona Association of REALTORS®
- Buyer-Broker Exclusive Employment Agreement: This is a full-service agreement that creates an exclusive relationship between you and your agent. It outlines the services your agent will provide, how they’ll be compensated, and how long the agreement lasts. You’ll need to sign this agreement before your agent can submit offers, negotiate terms, or represent you in a real estate transaction. It helps ensure transparency and sets clear expectations for both you and your agent. (click blue links to see copies of the AAR forms). Arizona Association of REALTORS®
Which Agreement Is Right for You?
If you’re still browsing and not ready to commit, the Agreement to Show Property offers flexibility without pressure.
If you’re ready to get serious—make offers, negotiate, and buy a home—then the Exclusive Employment Agreement is the next step.
Your agent can walk you through both forms and answer any questions so you feel confident and informed before signing anything.
Ensure you fully understand the terms of any Buyer-Broker Agreement before signing, as it may create binding obligations—including potential responsibility for paying commissions.
Guidelines for using the Buyer-Broker Exclusive Employment Agreement
Below are general guidelines for completing this form. An attorney did not write these; we cannot accept responsibility for any misuse, misrepresentation, or misstatements. Use this guidance at your own discretion or consult with a legal or professional advisor for further assistance.
Important Tips for Adding Terms and Conditions
If your additional terms and conditions exceed the three lines provided on the Buyer Broker Exclusive Employment Agreement, consider the following:
- Write the extended terms and conditions on a separate page.
- Clearly title the additional page as an Addendum to the agreement.
On Line 78 of the Buyer Broker Agreement, reference the addendum by writing:
“See attached addendum for additional terms and conditions.”Ensure the addendum is signed and dated by both the buyer and the broker to confirm mutual understanding and agreement.
Clauses and Tips
Below are general terms, clauses, and considerations for use in the agreement. It is always recommended to consult a licensed real estate attorney or professional to ensure your documents are correctly prepared and legally compliant.
$10KGuarantee Clause
(Copy/paste as an attachment to the Buyer Broker Exclusive Employment Agreement)
- “The buyer’s agent guarantees services in accordance with the attached terms and conditions, with a maximum liability of up to $10,000
Refund and Rebate Terms and Conditions
1. Eligibility Requirements for Refunds or Rebates
a. To qualify for a refund or rebate, the client must engage the services of a licensed real estate agent affiliated with 10KGuarantee.com and successfully close on the property with said agent.
b. The client retains the right to transfer representation to another licensed real estate agent within 10KGuarantee at any time prior to entering into a legally binding purchase contract.
c. Source of Funds:
- Refunds or rebates shall be issued exclusively from commissions received upon the successful completion of a transaction.
- No refund or rebate shall be provided from any other source, nor shall any refund or rebate be issued before the commission has been received.
d. Discrepancies or Disputes:
- In the event of any discrepancy or dispute regarding a refund or rebate, decisions shall favor the buyer’s request for such refund or rebate, unless otherwise determined by applicable laws or contractual terms.
e. Compliance with Arizona State Law:
- Pursuant to Arizona law, any rebate or monetary incentive offered by a real estate licensee must be processed through escrow.
- This requires explicit written instructions from the designated broker overseeing the transaction.
- Any request for a rebate must be submitted prior to the title company preparing the final settlement statements to ensure proper documentation and disclosure.
This policy is subject to all applicable real estate laws and regulations and may be modified as necessary to maintain legal compliance.
2. Maximum Refund or Rebate:
Unless otherwise specified, the agent is entitled to receive a minimum commission of 1.5% of the final sales price of the property.
The buyer’s agent guarantees services in accordance with the attached terms and conditions, with a maximum liability of up to $10,000.
Refunds or rebates are limited solely to services provided by our real estate agents to the buyer.
3. Partial Refunds or Rebates:
Partial refunds or rebates may be requested and will be considered at our sole discretion, based on the specific details of the transaction.
4. Scope and Limitations of the Guarantee
This guarantee applies exclusively to the services provided by our real estate agents during the home-buying process.
- It does not cover any property-related issues, including but not limited to structural defects, damages, or any other condition of the home.
- This guarantee excludes any decisions made by the buyer, including location, size, price or other particulars, regarding the home.
- It does not extend to the services of third parties outside the agent’s control, such as loan officers, home inspectors, title companies, or other service providers.
- The guarantee is not intended as a discount on agent services but rather as a commitment to service excellence.
- In the event of a dispute regarding service quality, consideration will favor the client, as our primary goal is to foster trust and confidence in our agents’ services.
5. Commission Shortages:
A shortfall in commission payments does not qualify for a refund or rebate under this guarantee. However, negotiations with your agent and broker may address these situations separately.
6. Acknowledgment and Agreement:
By accessing this website and using our real estate services, you confirm that you have read, understood, and agreed to these terms and conditions.
These terms may be updated at any time. Changes will apply only to future transactions and will not affect any agreements already in place.
7. Legal Compliance:
This guarantee is provided in accordance with all relevant real estate laws and regulations in the state of Arizona. For legal advice or questions about these terms, please consult with a qualified real estate attorney.
Option to hire another agent from $10KGuarantee.com Clause
To ensure buyer satisfaction, the buyer may choose a different agent from this website at any time before entering into a legally binding contract.
- “The buyer retains the right to select a different agent from $10KGuarantee.com at any time prior to the execution of a legally binding purchase contract by all parties.”
Limited Out-of-Pocket Commissions Paid Clause
- Lines 62-63: “”The Buyer’s obligation to pay any additional compensation shall not exceed [percentage or dollar amount]. If the compensation provided by the Seller or Seller’s Broker falls short of the agreed-upon Buyer Agent fees, the Buyer’s liability will be capped at [percentage or dollar amount].
Specific properties agreement clause. Suppose you want to specify only certain properties.
- “This employment agreement is exclusively for specific addresses listed below.”
More Information on Buyer Broker Agreements
A class action lawsuit that was filed and won against the National Association of Realtors changed things.
Understanding Buyer Agent Commissions
Before an agent can show properties, buyers must sign a buyer-broker agreement. This agreement outlines the commissions and fees the buyer’s agent will charge. Recent changes in industry practices now require commissions to be negotiated separately rather than offered through MLS services. As a result, buyers and their agents must confirm commission terms with the seller before viewing properties.
If the seller doesn’t cover the buyer agent’s commission, the buyer may be responsible for paying it, depending on the terms of the buyer-broker agreement. Before previewing homes with an agent, ensure you fully understand the agreement you’re signing and the financial obligations involved. Many agents typically charge a 2% to 3% commission on the sales price.
Understanding Buyer/Agent Broker Agreements
Need to Know
As of August 17, 2024, many real estate professionals nationwide will be asking buyers to enter into a written agreement prior to touring a home. Here’s what you should know:
No. If you are simply visiting an open house on your own or asking a real estate professional about their services, you do not need to sign a written buyer agreement.
No. In this case, since the agent is only there at the direction of the listing broker or seller, the agent is not required to have a written agreement with the buyers touring the home.
After you begin "working with" an agent and at any point before you tour your first house together.
A buyer is "working with" an agent as soon as the agent begins to provide services, such as identifying potential properties and arranging tours. Agents who are simply marketing their services or speaking to a buyer—at an open house or by providing a buyer access to a house they have listed—are not considered to be working with the Buyer.
Under the terms of the settlement, a "tour" is when a buyer who is working with an agent enters a home that is for sale or directs their agent to enter the home on their behalf. This includes when the Buyer's agent provides a live, virtual tour to a buyer not physically present.
Clarity and transparency. Written buyer agreements lay out the services your real estate professional will provide and what they will be paid. Buyers should not sign anything that includes terms they do not agree with or do not understand. You are in the driver's seat with these agreements, which are fully negotiable.
NAR has created a dedicated resource on written buyer agreements here.
Practices may vary based on state and local law. Consult your real estate professional and/or consult an attorney for details about state law where you are purchasing a home. Please visit facts.realtor for more information and resources.