Buyer’s Agent Commissions in Arizona
Who Pays the Buyer’s Agent—and How
Many homebuyers are surprised when asked to sign an agreement stating how their real estate agent will be paid. The natural question is: “Why am I agreeing to pay my agent when the seller usually pays the commission?”
The clearest answer is this: You are responsible for compensating the agent representing you. However, your purchase offer will typically ask the seller to pay that compensation on your behalf.
If the seller agrees to pay the full amount, you ordinarily will not have to pay your agent separately.
Why You Need a Buyer-Broker Agreement
Before showing you homes, most Arizona real estate agents will ask you to sign a written buyer-broker agreement. This agreement establishes your relationship with the agent and explains the services you will receive, how long the agreement will remain in effect, whether the relationship is exclusive, how the agent’s brokerage will be compensated and what happens if the seller does not pay the full amount.
Arizona law also requires real estate employment agreements to clearly state their material terms, compensation and expiration date. Your agent cannot receive more from any source than the amount you authorize in the Buyer-Broker Agreement.
For that reason, entering zero is not a way to avoid responsibility while expecting the seller to pay the agent later. Unless the agent agrees to work for free, the agreement must provide for compensation; if it states zero, the agent generally cannot later accept payment from you, the seller or the listing broker.
The Buyer Is Responsible for the Compensation
Your buyer-broker agreement is between you and your agent’s brokerage. By signing it, you agree that the brokerage will be paid the stated amount for representing you.
That does not necessarily mean the money must come directly out of your pocket. Instead, your purchase offer will typically include a provision asking the seller to pay your buyer broker’s compensation at closing.
When the seller agrees, that payment is credited toward the amount you agreed to pay under your buyer-broker agreement. In practical terms, the seller’s payment satisfies your obligation.
However, the seller is not automatically required to agree. Buyer-agent compensation is one of the terms negotiated as part of the offer.
A Simple Example
Suppose your buyer-broker agreement provides for compensation equal to 3% of the purchase price. Your agent prepares an offer requesting that the seller pay the 3% buyer-broker compensation at closing.
- If the seller agrees to pay 3%, your obligation is fully satisfied.
- If the seller agrees to pay only 2%, you could be responsible for the remaining 1%, or re-negotiate your buyer-agent compensation agreement;
- If the seller refuses to pay any buyer-broker compensation, you could be responsible for the full amount, or an amount you re-negotiate with your buyers agent.
Before accepting a seller’s counter offer that changes the requested commission, you and your buyers agent can discuss whether you will pay the difference, revise the offer or renegotiate your buyer-broker agreement. This should be resolved before you become contractually committed to purchasing the home.
Doesn’t the Seller Normally Pay?
In most Arizona transactions, the seller still pays the buyer’s broker. What has changed is how that payment is established.
Historically, sellers commonly offered buyer-agent compensation through the Multiple Listing Service. Compensation offers can no longer be published in the MLS. Instead, your purchase offer will typically request that the seller pay your buyer broker directly at closing.
The seller may accept that request, reject it or negotiate a different amount—just as the seller can negotiate the purchase price, closing costs and other terms of the offer.
Why Would a Seller Agree to Pay?
Paying the buyer’s agent can make a home accessible to a larger pool of buyers. Buyers already need money for a down payment, inspections, closing costs, moving expenses and other costs associated with buying a home. Requiring them to pay their agent separately could make the property less affordable or affect how much they can offer.
The seller should consider buyer-agent compensation as part of the offer’s overall economics. Purchase price, financing, closing-cost requests, buyer-broker compensation and other negotiated terms all affect what the seller ultimately receives.
What If You Choose to Be Unrepresented?
You are not required to hire a buyer’s agent. If you choose to represent yourself, you do not need to sign a buyer-broker agreement because no agent is being hired to represent you. You may also attend an open house independently without signing an agreement.
The listing agent may show you the property, answer factual questions and assist with administrative details, but that agent represents the seller and has no fiduciary duty to you. The listing agent must deal honestly with you and disclose known material facts, but cannot advise you or advocate for your interests as a buyer’s agent would.
You will also be asked to sign an Unrepresented Buyer Disclosure confirming that you understand the listing agent represents the seller. This is not an agreement to pay the listing agent, nor does it provide you with buyer representation.
While remaining unrepresented will avoid any buyer-agent compensation obligation, it also means handling your own property evaluation, offer strategy, contract terms, inspections, negotiations and transaction deadlines.
The Bottom Line
As the buyer, you are responsible for compensating the agent you hire to represent you. However, your purchase offer will typically ask the seller to pay that compensation at closing.
When the seller agrees to pay the full amount, the seller’s payment satisfies your obligation and you normally owe nothing additional. If the seller pays less—or nothing—you may be responsible for the difference unless you and your agent agree otherwise.
