Nancy Wittenberg - Realtor® GRI,ABR,SRS,PSA,CNE,AHWD

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Arizona Real Estate Changes August 1: New Buyer Agent Compensation Rules Explained

Buyer| Seller| Investors

August 24, 2024•4 min read

Repeat image and link, cuz it is so IMPORTANT!

August 1st is the date these NEW FORMS will start being used. Click to watch me explain it in a YouTube short.

REAL ESTATE from now on will changed IN A WAY THAT HAS NEVER BEEN DONE IN AZ before!!!

Balanced market (AGAIN). Click here to watch the video.

The uncertain legal and procedural situation, see the class action lawsuit info below, isnotlikely to increase sales volumes and we may instead see the declining closing rate continue for some time before easing mortgage rates are able to stimulate a recovery. Great news for Buyers!!LESS COMPETITION!!
We are at a low level of closing activity with only 70,473 closed listings over the past 12 months across all areas & types. This is down from 74,060 a year ago and well below the long-term average of 85,101.
The DOJ wanted buyer's agent commissions set between the buyer and buyer's agent and not determined at all by the seller or the selling agent. I can agree with that in principle.
The Cromford Market Index (CMI) has buyers and sellers even, which means overall we are in a balanced market. Both buyers and listings are 25% lower than the norm, meaning the problem is with both sides right now.
The average change in CMI over the past month is -5.4%, a smaller fall than the -6.7% we saw last week. The rate of decline has definitely changed direction and this is a positive sign for the market. Things are deteriorating more slowly.
For fun, and for those doomsday folks reading this, the last time the affordability index was really rough was 2014. Many were saying there weren't enough buyers who could afford the expensive homes we had here. We not only survived, but prices are much higher now. We made it through then and we will make it through now. (Especially as the other option is to have everyone quit and go live in tents. Not going to happen!)

Are you considering buying or selling a home? Reply to this email or text me at 602-730-2143.

What is going to be different starting August 1st?

On August 1st, buyers who chose to hire a licensed Realtor will be required to discuss the compensation they will be responsible to pay their buyer's agent BEFORE going to see ANY homes. Let me explain.
In the past, heck up to and including TODAY, sellers negotiated the buyer's agent's commission with the listing agent.The buyer's agent and the buyer had pretty much no say in the matter. If the seller wanted the buyer to have terrible representation, they could choose to pay an unlivable wage. Buyers would then be in an uncomfortable position of not seeing the house, or working with the listing agent and having next to zero professional representation during the transaction.
The Realtor's commissionswere always paid technically by the buyer, though it was an expense on the seller's side of the accounting paperwork. (Yeah, let's not get caught up in the weeds too much on that one.)
Now, however,compensation is negotiated out in the open ahead of time, and lenders allow certain amounts to be added to the loans.
I'm worried that buyers of less expensive homes won't take advantage of the skills, knowledge, and guidance that agents like myself bring to the table, and there will be major financial consequences for them. If you pay with bananas, don't be surprised when you attract monkeys.
Fun tidbit.
- Coldwell Banker Realty settled a while back and the DOJ has signed off on the terms. These docs are what will be used on 8/1/24.
- With the NAR (National Association of Realtors) Commission Settlement hasn't been settled yet, which will impact MLS (multiple listing service), so there is widespread uncertainty and confusion across the industry about how it will all play out. Yep!!! Just oodles of FUN!!!!!