Arizona's New Real Estate Commission Rules: What Changed and What It Means for You

Hello, Scottsdale! Jeff Hernandez here, your go-to resource for all things real estate and legal in Arizona. In August 2024, the real estate industry went through one of its biggest changes in decades. The changes came out of a class action lawsuit that ended in a $418 million settlement agreement with the National Association of Realtors (NAR), and they took effect nationwide on August 17, 2024. Here's what changed, what it means for buyers and sellers in Arizona today, and what to keep in mind before your next move.

1. No More "Co-Broke" Commissions on MLS Listings

"Co-broke," or cooperative compensation, is compensation a seller offers to a buyer's broker for helping get a deal done. Historically, those offers were published in listings on the multiple listing service ("MLS"), which most real estate agents use to advertise properties and find homes for clients. Since August 17, 2024, offers of compensation to buyer's brokers no longer appear in MLS listings. That doesn't mean compensation can't be offered; it simply can't be advertised in the listing itself. Buyers and their agents can learn whether compensation is offered by contacting the seller's agent directly or, in some cases, by checking the listing broker's website.

2. Flexibility in Cooperative Compensation

For those of us working in Scottsdale's real estate market, the flexibility in cooperative compensation wasn't news. Offers of compensation to a buyer's broker have always been negotiable. The new rules simply underscore that flexibility: sellers aren't required to offer compensation to buyer's agents, but negotiations and agreements can still happen off the MLS through direct communication.

3. Seller Concessions Are Still in Play

Good news for Scottsdale home buyers: sellers can still offer concessions toward a buyer's closing costs, and those concessions can still be advertised on the MLS. In practice, concessions have become one of the main ways a buyer's agent fee gets covered. A seller may offer a percentage of the sales price as a concession, giving the buyer a way to compensate their agent without paying entirely out of pocket.

4. No More Compensation-Based Listing Filters

Searching for a home in Scottsdale, Paradise Valley, Fountain Hills, or anywhere else in the Phoenix metro area? Broker compensation won't limit your options. Every listing is accessible to everyone who subscribes to the MLS, with no filters based on what a broker will be paid.

5. Written Buyer-Broker Agreements Before Property Tours

If you're a buyer, your agent is now required to have you sign a written agreement before you tour a home, whether in person or on a live virtual tour. You don't need one just to chat with an agent at an open house or to ask an agent about their services. The agreement sets clear expectations about compensation, part of which may come from you, before the first showing.

6. Clear Compensation in Buyer-Broker Agreements

Although this has been true in Arizona for years, the national rules now require REALTORS® to state a clear compensation amount or rate in buyer-broker agreements, and agents can't receive more than the amount agreed to in that agreement from any source. Buyers know their broker's fee upfront, before the first showing, and may be responsible for paying their own broker rather than relying on the seller to cover it. The money for a buyer's brokerage fee can come from seller concessions (see item 3 above), an off-MLS offer of compensation, the buyer's own funds, or a combination. This was a sea change for the industry, and it matters most for buyers who can barely afford a down payment, let alone a buyer broker fee.

7. Transparency in REALTOR® Services

Gone are the days of buyer's agents promoting their services as "free." REALTORS® must be upfront about how they're paid, so buyers and sellers understand any fees involved and who is responsible for paying them.

8. Seller Approval for Buyer's Broker Compensation

In Scottsdale, as across Arizona, written seller approval to pay a buyer's broker has been required for years. The settlement made it a nationwide standard, so for Arizona buyers and sellers, nothing changed here.

9. Commissions Are Negotiable

Finally, commissions are, and always have been, negotiable. They aren't set by law or by any trade organization, and buyer agreements must now say so in writing. That transparency builds trust and makes sure clients understand their room to negotiate.

What This Means for Arizona Buyers and Sellers Today

More than two years in, these rules are simply how real estate works in Arizona. For buyers, the biggest practical difference is signing an agreement before your first tour, so it pays to understand that document and negotiate its terms before you sign. For sellers, the key decision is whether to offer concessions or compensation that make your home more attractive to buyers who would otherwise pay their agent out of pocket. In both cases, the details are in the contract, which is exactly where an attorney's eye helps.

Jeff Hernandez, Your Trusted Real Estate Advisor

As a licensed Arizona attorney and REALTOR®, I read every agreement with an attorney's eye before a client signs it. If you have questions about a buyer-broker agreement, how compensation works on a specific home, or how to structure an offer, call me at (602) 550-1114 or send me a message.

Here's to making your real estate experience as smooth and successful as possible!

Your friend in real estate,

Jeff Hernandez, Esq.