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zz Buyer Broker Terms & Considerations

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 AAR (Arizona Association of Realtors) currently provides two different but similar Buyer Broker forms. The first (recommended) is more specific, the second is more general. Forms dated August 2024.

  1. Buyer-Broker Agreement to Show Property: This is a more limited agreement, focusing specifically on showing properties to the buyer. Arizona Association of REALTORS®
  2. Buyer-Broker Exclusive Employment Agreement: This comprehensive agreement outlines the terms of the exclusive relationship between the buyer and broker, detailing services, compensation, and the duration of the agreements (click blue links to see copies of the AAR forms). Arizona Association of REALTORS®

The Agreement to Show Properties is a flexible option for buyers who want to view homes with an agent without committing to a long-term agreement. This form limits your obligations to the agent, making it a great choice if you’re still exploring your options. If you’re not ready to sign an exclusive employment agreement, this form allows you to tour properties without a firm commitment.

However, when you’re ready to negotiate commissions, submit offers, and enter contracts, you’ll need to sign a Buyer-Broker Exclusive Employment Agreement. This agreement clearly defines expectations, responsibilities, and commission terms, ensuring transparency for both you and your agent. Your agent can walk you through the details and help you understand how it works.

Tips for Negotiating with Your Agent

Below are some key guidelines to help you navigate commission discussions and ensure a fair agreement that works for both parties.

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

  1. 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.

  2. On Line 78 of the Buyer Broker Agreement, reference the addendum by writing:
    “See attached addendum for additional terms and conditions.”

  3. 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 properly prepared and legally compliant.

  • Line 34: If you agree to a negotiated commission %, enter that here. 
  • Line 35: If you agree to a Flat Fee for all agent services, enter that amount here.
  • Line 36: If you agree to specific services and amounts enter them here, or enter “see atttached addendum.” then list each service and agreed fee there.

Commission Rebate clause. Be sure to add a clause to ensure that any extra commission monies are rebated to you, the buyer. Below are examples of clauses.

  • Line 41-43: “Any additional seller compensation exceeding the agreed-upon Broker Compensation amount, and not applied as a credit to the Buyer at closing, shall be rebated to the Buyer by the Buyer’s Broker after the closing. This rebate must be fully disclosed to all parties involved in the transaction and comply with all applicable laws and regulations.”

    This ensures transparency, legal compliance, and guarantees that any excess commission is returned to the Buyer. Always consult with a legal professional to ensure this clause aligns with state laws and your specific transaction.

No Out-of-Pocket Commissions Paid Clause

  • Lines 62-63: “The Buyer shall not be responsible for any commissions or fees that are not fully covered by the Seller or the Seller’s Broker. In the event that the Seller or Seller’s Broker does not provide adequate compensation to cover the agreed-upon Buyer Agent fees, the Buyer shall have no obligation to pay any additional commissions or fees out of pocket. This clause shall be fully disclosed and comply with all applicable laws and regulations governing the transaction.”

Minimum Commission or Flat Fee Clause : Your agent may want to add this clause to ensure a minimal service fee or commission.

  • “The Buyer agrees that the minimum commission or flat fee paid to the Broker for services rendered shall be $________. This amount represents the minimum compensation due to the Broker and shall be payable upon the successful closing of the transaction. This fee must comply with all applicable laws and regulations and be fully disclosed to all parties involved in the transaction.”

Broker Transaction Fee Clause: Your agent may add this clause to cover fees paid to their employing broker.

  • “The Buyer agrees that a Broker Transaction Fee of $________ shall be paid to the Broker to cover administrative, processing, and related services associated with the transaction. This fee is due upon the successful closing of the transaction and shall comply with all applicable laws and regulations. The transaction fee shall be fully disclosed to all parties involved in the transaction.”

Specific properties agreement clause. Suppose you want to specify only certain properties. 

  • “This employment agreement is exclusively for specific addresses listed below.”

Additional terms clause as per lines 101-104.

  • As stated in Line 101-104: Can be modified only by a writing signed by Buyer and Broker.