Navigating Arizona’s Real Estate Changes: What Home Buyers and Sellers Need to Know
Arizona’s real estate landscape will undergo significant changes on August 1st, 2024, due to the National Association of REALTORS® (NAR) settlement reached in March 2024. These reforms aim to increase industry transparency, fairness, and competition. Whether you’re buying or selling a home, it’s essential to understand how these changes will impact you.
Changes for Home Buyers
Touring a Home
- Buyers must sign a written agreement with your agent before touring a home.
- Written agreements apply to both in-person and live virtual home tours.
- Buyers do not need a written agreement if they speak to an agent at an open house or ask about their services.
Compensation Transparency
- Clarity on Buyer Agent Compensation: Buyers can now negotiate compensation directly with their agent. This transparency allows buyers to assess better the value they’re receiving from their agent.
- Comparison Shopping: With clearer information on compensation rates, buyers can more easily compare and choose agents based on the services offered and their associated costs.
- Greater Competition Among Agents: Better Service Quality: Increased competition among buyer agents will likely drive up service quality as agents strive to differentiate themselves and justify their fees.
- Potential Cost Savings: With agents competing more directly for business, buyers may benefit from more competitive pricing and better value for money.
Preparing for the Transition
- Research and Compare Agents: Take advantage of the increased transparency to research and compare agents based on their fees, services, and client reviews.
- Negotiate Fees: Don’t hesitate to negotiate compensation rates and services with your chosen agent. The new regulations empower you to seek the best value.
- Understand Your Financial Commitment: Factor in the potential direct payment of your agent’s fees into your budget planning.
- Stay Informed: Keep abreast of how these changes are being implemented and interpreted in the market to make well-informed decisions.
For more detailed information, visit the NAR settlement resources for Homebuyers.
Changes for Home Sellers
Compensation Transparency
- Informed Decisions: Sellers will have a more detailed understanding of the portion of the compensation allocated to the buyer’s agent, allowing for better decision-making when setting their listing agreements.
- Sellers still have the choice of offering compensation to buyer brokers. You may consider doing this to market your home or make your listing more attractive to buyers.
- But your agent cannot include compensation on a Multiple Listing Service (MLS)—MLSs are local marketplaces used by both buyer brokers and listing brokers to share information about properties for sale.
Decoupling of Compensation
- Adjusting Listing Prices: With buyers potentially paying their agents separately, sellers might adjust their listing prices to reflect this change. Adjusting the listing price could make homes appear more competitive in the market.
- Marketing Adjustments: Sellers might need to reconsider how they market their properties, emphasizing the overall cost savings to buyers who are now responsible for their agent’s fees.
Greater Competition Among Agents
- Enhanced Marketing Efforts: Sellers may see improved marketing efforts from listing agents working harder to secure listings and prove their worth in a more competitive environment.
- Flexible Compensation Structures: Sellers might encounter more flexible compensation structures as agents innovate to attract and retain clients.
Preparing for the Transition
- Research and Compare Agents: Take advantage of the increased transparency to research and compare agents based on their fees, services, and client reviews.
- Negotiate Fees: Don’t hesitate to negotiate compensation rates and services with your chosen agent. The new regulations empower you to seek the best value.
- Adjust Marketing Strategies: Consider emphasizing the cost savings to buyers in your marketing materials.
- Stay Informed: Keep abreast of how these changes are being implemented and interpreted in the market to make well-informed decisions.
For more detailed information, visit the NAR settlement resources page for Sellers.
While significant, these changes ultimately aim to create a more transparent and competitive real estate market in Arizona. As your REALTOR® and a member of the National Association of REALTORS®, I must abide by the NAR Code of Ethics and have clear and transparent discussions with you about compensation.