Understanding an Arizona Buyer-Broker Agreement: Everything You Need to Know

What is a Buyer-Broker Agreement?

The buyer-broker agreement, or exclusive buyer broker agreement, is a legally binding contract or a non-binding document usually signed by a homebuyer and a real estate broker in Arizona. Their purpose is to outline the legal relationship between the two parties while creating a framework for their concurrent work. When appropriately handled, a buyer-broker agreement puts processes in place to help a transaction complete smoothly with the least possible issues or concerns.
The buyer-broker agreement essentially states that the buyer must work with the designated real estate broker exclusively to find the best possible properties. Upon the successful purchase of the property, the seller pays the buyer’s broker from the realtor’s commission, the same commission that was paid to the seller’s broker. In an agreement between the buyer and the buyer’s broker, both parties have duties to each other. Whereas the buyer has a duty to work exclusively with the designated broker, the broker also has a duty to find the best possible property for his or her client .
Your buyer-broker agreement in Arizona may be for a limited or an indefinite period. If you have reservations about working with a specific Arizona real estate broker, you can limit your contract and then renegotiate with the broker. Alternatively, you can sign an indefinite contract to allow the real estate broker time to find the right property for you. Some are optional, while others are mandatory depending on the circumstances. Again, your buyer-broker contract will change based on the property type, location and broker involved.
In addition, a buyer-broker agreement is A.R.S. §32-2153. This means that the buyer-broker contract is similar to all other contracts in Arizona. This means that any disputes related to it will be handled in the appropriate court, and the parties should agree appropriately to their expectations, payment schedules and obligations before signing the contract. The most common types of buyer-broker agreements outline whether the contract is an exclusive buyer-broker agreement or a non-exclusive buyer-broker agreement. They also differentiate between agreements for a specific term and indefinite agreements.

Essential Elements of an Arizona Buyer-Broker Agreement

The buyer-broker agreement commonly found in Arizona is designed to protect the interests of home buyers and help them find suitable properties. In this section, we will explore key components of a typical Arizona buyer-broker agreement.
Terms of Agreement: Most buyer-broker agreements in Arizona will go into effect once they are signed by both the buyer and the broker. However, there may also be conditions surrounding the agreement that need to be met prior to it going into effect.
Responsibilities of the Broker: The agreement will outline the tasks and responsibilities that the broker will handle for the buyer, such as showing homes, making offers, and providing advice throughout the process.
Buyer Responsibilities: The buyer will be expected to fulfill certain duties as well, such as maintaining regular communication with the broker, discussing their needs, and being up-front about their finances and other important matters.
Compensation: Typically, the compensation discussions will be reserved for later in the process, but particularly concerning a buyer-broker agreement that features a set fee rather than a commission, the compensation amount will be clearly laid out in the buyer-broker agreement.
In addition to the items listed above, a typical buyer-broker agreement in Arizona will also include a confidentiality clause, as well as a stipulation that the buyer acknowledges the role of the broker. This indicates that the buyer understands that the broker has legal duties to them, and that their role is distinct from that of the listing agent for any potential homes.

Why Sign a Buyer-Broker Agreement in Arizona

When you enter into a buyer-broker agreement in the state of Arizona, you are provided with key advantages that help ensure your best interests are kept in mind throughout the buying process. Imagine having someone who completely understands the market and your preferences to assist you on your home search. The home buying process may seem like an overwhelming decision in the present, but a buyer’s agent will work on your behalf to ensure that you are fully represented.
One of the most notable advantages of entering into the agreement is that it creates a "fiduciary relationship" with the agent. Under Arizona law, when you sign a buyer-broker agreement with a licensed Realtor, you have ensured and secured that person as your advocate. These agents hold unique legal responsibilities to their clients and are meant to work only for those who have signed with them. It’s important that not only a Realtor, but yourself, is aware of the implications the buyer-broker agreement brings.
When entering into this agreement, you have provided your agent a legally-binding legal responsibility to do the following:
The buyer-broker agreement signs you up for around 3 months of devoted "exclusive representation." The most common length of time for an Arizona buyer-broker agreement is 90 days, but with the right buyer’s agent, you are able to easily extend that time frame if you find it necessary. This way, no matter how long it takes you to find your dream house, you know you’ll be working with a professional who is capable of getting the job done in your favor.
The buyer-broker agreement, above all, helps to ensure you are working with a truly trusted partner in the Arizona real estate market. When you have someone who has taken the time to properly represent your needs and interests, you’ll have much more satisfaction in your final purchase.

Risks and Disadvantages

In the realm of Arizona real estate, a "buyer-broker" agreement might be the best friend you’ve never known. But before you jump right into the plunge, be aware that committing to a single broker may not be in your best interests.
Unlike most exclusive listing agreements, which obligate the seller to work with only one agent, an Arizona buyer-broker agreement can mean that YOU have to work with just one agent. Should you no longer want to work with your buyer-broker agent, releasing yourself from obligations may not be so easy.
The key question is: Are you sure you want to work exclusively with that one broker? In some cases, having an exclusive relationship may be beneficial to you. Under the right circumstances, such an arrangement works great. But as the saying goes, "nothing is ever entirely free."
Consider, for example, that you’ve agreed to work with an exclusive buyer-broker agent. When you ask him or her why you should do so, you’re likely to be told that you’ll certainly benefit from having someone out there looking for a home that fills all your needs. You’ve been assured that your agent will work tirelessly to find the right house for you . But, will they?
This is where potential conflict of interest comes into play – sometimes without the buyer’s knowledge. While your agent may seem like a good choice, much of that depends on the type of person he or she is, and very little of that is determined by the paperwork that you sign.
A professional real estate agent should have the network needed to find your dream home. Ask them what makes them an expert in their field. Have them tell you about their experience. Talk to other people who have used them in the past to buy and/or sell a home.
Otherwise, without doing this research, if you enter into an exclusive agreement with an agent that you ended up disliking, you may have quite the problem on your hands.
Basic buyer-broker agreements in Arizona have sections covering how to end the agreement. Simply put, if you don’t want to work with the broker any longer, you give them proper notice of termination in writing, as indicated in the contract. However, if you want to make sure that you are finding someone exactly right for you, don’t rush into signing a buyer-broker agreement.

Consumer Rights and Legal Needs

Under Arizona law, any contract that cannot be performed within the next year must be made in writing; otherwise, it is not enforceable against the buyer even if you did not receive a commission. Given this provision of law, unless the contract is committed to writing and both the broker and you sign, the law holds that the real estate broker does not have a business relationship with you and thus his or her right to enforcement (the broker’s enforceable right to force you to pay a commission) and your right to recover for breach of the agreement and damages will not be enforceable against each party.
The solution to this problem is simple: have the contract be in writing and signed by both parties. Otherwise, the entire deal will be off the table for good. Generally speaking, a person cannot waive his or her rights under the law; and if the law requires something to be in writing, then it must be. Any attempt to change or modify the law outside the prescribed legal framework will probably do little more than cause the relationship between you and the broker to become increasingly adversarial and complicated. It’s therefore best that you consult with an attorney before taking such an approach; otherwise, if a contractual dispute were to occur later on it will be more difficult to get the results you desire.

Deciding on the Right Broker in Arizona

It is critically important that you do your homework and choose a broker to represent you in your home search. Before you even sign a buyer-broker agreement with them, you should thoroughly interview them, check their references and their records with the Arizona Department of Real Estate to determine that they are competent, honest and enthusiastic about representing you. If they aren’t, then they should not be representing you as a buyer’s exclusive agent.
There are many real estate agents who believe there is no such thing as an incompetent broker these days because the Internet has greatly reduced the number of transactions and therefore there are a limited number of buyers every month. Many agents have said they often meet other agents at open houses and if they notice that they haven’t seen that agent at previous open houses, then they assume that agent should not be there because they are not competent. There are probably some competent brokers in this situation, but given the very large number of new agents, I doubt that this is the case for many.
If you are new to an area, you should call each agent you are considering to determine your impressions of them. After speaking with them , you should conduct an internet search and read their client reviews, if available. You can also search for them by entering their name into the Arizona Department of Real Estate website and review their license status. It will also detail whether they have ever had a complaint filed against them. Complaints are public information and the Department of Real Estate records are available for everyone to see. If they don’t have a good record, then you don’t want them representing you.
Interviewing prospective brokers is incredibly important and don’t be shy about asking the hard questions. It is after all, your money they are spending. You want someone you can trust to look out for your best interests. How you choose a broker is just as important as how your broker chooses their broker. Remember, you are going to be spending a lot of your time with this person, so make sure you choose wisely. Once you settle on a broker who you believe to be competent, then enter into a written buyer-broker agreement. It should be clear from the buyer-broker agreement that they are working exclusively for you and not anyone else.