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Part Two(b) of Five: Buyer Broker Agreement to Show Property

The National Association of REALTORS® settlement in the Sitzer-Burnett class action lawsuit includes significant practice changes that will be implemented in mid-August 2024.  To assist its members prepare for practice changes and be successful in the new environment, the Arizona REALTORS® has created and revised eighteen (18) forms.[1]  The new/revised forms, redlines, videos and articles on their use is available here.  This article and frequently asked questions (FAQs) is part two “b” (2b) of a five part series that will introduce the forms prior to their publication on August 1, 2024.

One of the most significant practice changes of the NAR settlement is the requirement that MLS participants working with buyers must enter into a written agreement with the buyer prior to touring a home.  (New MLS Policy Statement 8.13, p. 10).  Furthermore, the written agreement must include: 1) a specific and conspicuous disclosure of the amount or rate of compensation; 2) the amount of compensation must by objectively ascertainable and not open-ended; 3) a term that prohibits the MLS participant from receiving compensation that exceeds the amount in the written agreement from any source; and 4) a conspicuous statement that broker fees are not set by law and fully negotiable.

To comply with the practice change described above, the Arizona REALTORS® significantly revised the Buyer-Broker Exclusive Employment Agreement and created two (2) new forms: Buyer-Broker Agreement to Show Property (Show Property) and Buyer/Tenant Employment Agreement Addendum (Addendum).  The Show Property form is a non-exclusive buyer broker agreement.  The Addendum can be used to modify or add term(s) of either buyer broker agreement.

This article discusses the new Buyer-Broker Agreement to Show Property and a sample of the form can be found here.

Lines 1-3 identify the buyer, the broker and their agent.  The form matches the BBEEA.

Line 4 includes the same “Notice to Buyer” on the BBEEA that all REALTORS® are required to have a signed written agreement prior to showing a home to a buyer.

Lines 5-6 states that the Buyer is engaging the Broker to view property and other real estate services at the Buyer’s discretion.

The Term paragraph provides a commencement date and expiration date.

The Property paragraph identifies the general description of the property being sought and shown.

The Agency Paragraph states the agency relationship will be documented in the Real Estate Agency Disclosure and Election form.

The disclosure language on lines 12-13 matches the BBEEA to comply with the practice change to conspicuously state that broker compensation is not set by law and is fully negotiable.  The disclosure is in bold and placed directly above the compensation paragraph to make it prominent.  Similar language will be found in the revised Residential Listing Contract, purchase contracts, and all Arizona REALTOR® forms that discuss broker compensation.

The Broker Compensation paragraph provides the terms for the Broker to earn compensation.  Specifically, the Broker must represent the Buyer in the purchase of a property as indicated on the purchase contract signed within the term.  The rate or amount of broker compensation is chosen via a click box with the compensation filled in by the Buyer and Broker.  The form educates the Buyer and Broker that only one method of compensation is to be chosen and the actual rate or amount must be filled in.  The paragraph states the compensation is to be paid at, and a condition of, closing.  Finally, the Buyer authorizes their Broker to accept compensation from a seller or seller’s broker as a credit against the Broker Compensation but the Broker will not receive any amount greater that the compensation agreed upon in the written agreement from any source. 

The Buyer Showing Instructions paragraph states that the Broker will show all property listings that fit the Buyer’s criteria regardless of any compensation that may or may not be offered by a seller or seller’s broker unless instructed otherwise in writing.  The paragraph also includes that, if necessary, Buyer instructs Broker to negotiate the Broker Compensation be paid by the seller or seller’s broker and that doing so will not jeopardize the initiation, processing, or finalizing of a transaction.

The Equal Housing Opportunity paragraph notifies the Buyer that the Broker’s policy is to abide by all laws prohibiting discrimination.

Best Practices and Frequently Asked Questions for the Buyer-Broker Agreement to Show Property can be found here.

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.

[1] Please note there are an additional two (2) Arizona REALTOR® forms that will also be released in August 2024, but they are not related to the NAR Settlement.