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The Real Estate Agency Disclosure and Election form was reviewed by a workgroup[1] of volunteer members and a revised version of the form was just recently released. 

The main revision to the Real Estate Agency Disclosure and Election (READE) form is the addition of a new section that emphasizes information regarding broker compensation that is already contained in other Arizona REALTORS® forms.  Specifically, it states that broker compensation paid by a client is always negotiable and the amount chosen is documented in an employment agreement after discussion.  The new language also states that if a seller enters into a listing agreement, the amount of buyer broker compensation to be offered is also negotiable and agreed upon after a discussion with their broker.  The new section basically restates the same information contained in the Arizona REALTORS® employment agreements that broker compensation is not set by anyone and is negotiated solely between the broker and their client(s).

The READE form remains an agency election form.  The sentence “This document is not an employment agreement” was moved to the top of the form, just under its title.  The new section regarding broker compensation is also introduced by the sentence that “Agency Election Does Not Establish Broker Compensation.”  Finally, a broker representing both the seller and buyer was formally named as a Limited Representation Broker for consistency.

A redlined version of the revised READE form can be found here.

Frequently Asked Questions

Q1. Why is broker compensation being discussed in an agency form?

A1. A portion of the public may still fail to recognize that broker compensation is negotiable even though such information is conveyed to them both verbally and in writing.  Although employment agreements clearly state compensation is not set by anyone and negotiable between the parties, the workgroup felt it important to reiterate this fact.  The agency form was chosen because it is typically signed early in the process by both buyers and sellers.

Q2. What information should agents share with their clients when discussing the revised READE form, their employment contract and compensation? 

A2. Agents should make it clear to clients that the amount of compensation is negotiable. The amount of compensation set forth in an employment agreement should be documented only after a discussion with their client has taken place and an agreement on compensation has been reached.  Seller agents should also discuss the seller’s various options for offering compensation to the buyer’s agent and why it may be advantageous to do so.  Again, seller agents should make it clear that there is no set or established amount of compensation to be offered to the buyer’s agent and it is therefore up to the seller to determine this amount.

Q3. Because broker compensation is negotiable, does this mean an agent has to lower the amount of compensation they are seeking?

A3. No.  The Thirteenth Amendment to the U.S. Constitution protects people’s right to refuse to work unless the terms of employment are acceptable to them.

Q4. Does this mean the seller’s agent is obligated to offer the amount of buyer’s agent compensation determined by the seller?

A4. Yes, if the agent accepts the employment of the seller.  Compensation is always negotiable and this decision belongs to the seller.

Other resources available to discuss broker compensation:

How REALTORS® Should Navigate the “New” Commission Landscape: Part Two of Three: Offers of Compensation Are Still Acceptable

Video: How to Explain Real Estate Compensation to Clients

Aaron M. Green, Esq., a licensed Arizona attorney, is the General Counsel for the Arizona Association of REALTORS®.  This article is of a general nature and reflects only the opinion of the author at the time it was drafted.  It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.

Prior Form Revisions

The Arizona REALTORS® strives to keep all its forms up to date as laws change or industry practice evolves.  Once released, the forms library contained on all of the Arizona REALTORS® forms licensing platforms are updated. 

Form updates are made to minimize your risks and ensure legal compliance. Don’t take a chance with outdated forms.  Prior Arizona REALTORS® form revisions (2014 – 2024) can be found at:  https://www.aaronline.com/2019/05/20/form-revision-updates/

[1] Jim Sexton chaired the workgroup.  Other members participating on the workgroup were Teresa Acuna, Martha Appel, Laurie Beischel, Paul Bruce, Wednesday Enriquez, Cathy Erchull, Duane Fouts, Kyle Fouts, Wendy Shaw, and Mary Ann Shryack.