Q1. Why was the Buyer-Broker Agreement to Show Property drafted?

A1. For over 20 years, the Arizona REALTORS® has published a Buyer Broker Exclusive Employment Agreement. That was before the new practice change that requires REALTORS® and their buyers to enter into a signed written agreement prior to touring a home. Because these agreements are now required, and because some buyers may not want to enter into an exclusive employment agreement, this new non-exclusive Agreement to Show Property was drafted as an additional option.

Q2. Does the Buyer-Broker Agreement to Show Property establish an exclusive relationship?

A2. As mentioned above, this form does not establish an exclusive relationship. Meaning, a buyer can enter into a hundred different Agreements to Show Property with a hundred different buyer brokers. In this scenario, the buyer is responsible for compensating only that buyer broker who successfully executed an accepted purchase offer on behalf of the buyer who closed escrow on the purchase. If the parties wish to enter into an exclusive relationship, the Buyer Broker Exclusive Employment Agreement is available for that purpose.

Q3. On Monday, Broker A shows the property to the buyer. On Tuesday, Broker B shows the same property to the same buyer. Broker B then submits an offer on the buyer’s behalf to purchase the property. Assuming that the Buyer-Broker Agreement to Show Property was utilized by both Brokers, which broker is entitled to compensation?

A3. Broker B. Pursuant to the Agreement to Show Property, the broker whose name appears on the accepted purchase contract is the broker to whom compensation is owed.

Q4. Is there a minimum length of time that must be entered on Line 7 titled “Term”?

A4. No. There is no minimum length of time required and the buyer and broker can negotiate any length of time they deem mutually acceptable.

Q5. Can  a specific property address be entered on line 9 following the option titled “Other”?

A5. Yes, a specific property address can be written on line 9. If that occurs, the Agreement to Show Property will be limited strictly to that property. If the broker subsequently shows other properties to the buyer, an additional written agreement will need to be signed or the Buyer/Tenant Employment Agreement Addendum can be used.

Q6. Can the broker receive compensation in excess of what is set on lines 17-19?

A6. No.  As explained on lines 21-22, the broker cannot receive any amount, from any source, for services provided for in this Agreement that exceed the agreed upon “Broker Compensation.”  This is required by the NAR Settlement.

Q7. The buyer and buyer broker agree upon compensation in the amount of 100 apples, which is documented in the Agreement to Show Property. Ultimately, the buyer purchases a property pursuant to which cooperative compensation is offered to the buyer broker in the amount of 100 apples. In this scenario, will the buyer still owe the buyer broker 100 apples at close of escrow? 

A7. No. The buyer broker cannot receive compensation in excess of the amount specified in the Agreement to Show Property. Because in this scenario the buyer broker is receiving 100 apples in cooperative compensation, the buyer is not required to compensate the buyer broker.

Q8. The buyer and buyer broker agree upon compensation in the amount of 100 apples, which is documented in the Agreement to Show Property. Ultimately, the buyer purchases a property pursuant to which cooperative compensation is offered to the buyer broker in the amount of 150 apples. In this scenario, can the buyer broker accept 150 apples in cooperative compensation? 

A8. No. As stated above, the broker cannot receive any amount, from any source, for services provided for in this Agreement to Show Property that exceed the agreed upon “Broker Compensation.” However, with the lender’s permission, the additional 50 apples should be credited to the buyer to reduce their closing costs.

Q9. The buyer and buyer broker agree upon compensation in the amount of 100 apples, which is documented in the Agreement to Show Property. Ultimately, the buyer purchases a property pursuant to which cooperative compensation is offered to the buyer broker in the amount of 90 apples. In this scenario, can the buyer broker accept 90 apples in cooperative compensation and waive the right to the additional 10 apples? 

A9. Yes.  The parties can always revise the terms to their agreement.  Best practice would be for the buyer and buyer broker to modify the “Broker Compensation” in the Buyer/Tenant Employment Agreement Addendum.

Q10. In stating the rate of compensation in the Agreement to Show Property, can the parties agree to write in “buyer broker compensation shall be whatever amount the seller is offering by way of a co-broke?”

A10. No. The amount of compensation must be objectively ascertainable and may not be open-ended.  This is required by the NAR Settlement.

Q11. Can a buyer instruct the buyer broker only to show them properties that are offering cooperative compensation?

A11. Yes, provided that the buyer sets forth that request in writing. Otherwise, as explained on lines 23-24, the buyer broker “shall show property listings that fit the Buyer’s criteria regardless of compensation offered to Broker by seller or seller’s broker…”. NOTE – This decision must be made by the buyer.

Q12. How is broker compensation determined?

A12. A broker’s compensation for services rendered is solely a matter of negotiation between the broker and his or her client, and is not fixed, controlled, recommended, or maintained by any persons not a party to the agreement. For this reason, lines 12-13 state as follows: “BROKER COMPENSATION IS NOT SET BY LAW, NOR BY ANY BOARD, ASSOCIATION OF REALTORS®, MULTIPLE LISTING SERVICE OR IN ANY MANNER OTHER THAN AS FULLY NEGOTIATED BETWEEN BROKER AND BUYER IN THIS AGREEMENT.”

Q13. Why is the ADR paragraph and other standard clauses not present in the Agreement to Show Property?

A13. The workgroup felt it important for the non-exclusive Agreement to Show Property to be easily understandable and fit on one (1) page to be less intimidating.

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.