This section will be password-protected once a modest member fee is established. For the time being enjoy the limited sample information provided. Once closed to all but members, there will be weekly postings relating to topics of interest to all appraisers nationally.

     Topics such as handling real estate buyer broker fees, a list of words and terms that might be considered biased or racist, and ways to keep reviewers from calling for added information or corrections already in the report. These are a few topics you'll find here. Some "how to" items will be in-depth and adaptable by a simple copy & paste.

     When a new item is added, it will have the date and topic in bold and the most recent post first,

7/2/24 - Solar 

     There are new battery manufacturing plants popping up in several states, scheduled to go online manufacturing lithium-ion batteries. This should lower the cost of batteries and cars as these factories come online. Tesla has created a Power Wall with higher capacity and, of course, a higher price. On the plus side, all solar system batteries qualify for the federal tax credit. Also, remember not to mount these batteries on the house side wall. They are a possible fire hazard.

     New non-fire hazard batteries are part of the future. Experiments with sodium as an active agent is one current activity. 

8/18/24 / Buyer Broker fees

     All multiple listing systems have now removed the agent fee (compensation) section from the listing sheet. It's the responsibility of the appraiser to determine if agent compensation affects the value of the subject property. We suggest you contact the agents involved in the sale, determine the seller/buyer compensation, and then determine if an adjustment to the sale is warranted. We also recommend you document the agent contact process; dates, times, method, and reply person's name and brokerage affiliation.

8/27/24 - Added / Pending Federal Legislation

The Real Estate Valuation Fairness and Improvement Act was introduced in 2023 to establish an inter-agency task force on real estate valuation. The task force would study causes of appraisal bias and make recommendations to enhance fairness and accuracy in appraisals. 

8/30/24 - New Compensation Process 

This article is reprinted exactly as it appeared in a recent newsletter produced by AAREA. If you are not a member of this active Arizona appraisal organization, consider joining; there is no membership fee!

AAREA Special Report - August 29, 2024

NAR Settlement – Buyer/Broker Compensation: Impact on Appraisers

By Joanna Conde, AQB Certified USPAP Instructor. President of AAREA, and

Global Real Estate Advisor, GRI, ABR, SRES, rCRMS Russ Lyon Sotheby's International Realty

Significant changes in how real estate compensation is negotiated and paid went into effect on August 1st in Arizona and on August 17th nationwide. What was once referred to as "Commission" is now termed "Compensation," and these payments are no longer automatically processed through the Seller at the close of escrow.

Historically, appraisers did not account for real estate commissions in their evaluations for several reasons: commissions were generally consistent between Buyers' and Sellers' agents; they were deducted from the payment made by the Buyer to the Seller; and the entire process was handled by the Title Company. Furthermore, the details of the Sellers' Agents' commissions were not disclosed to the Buyer.

Going forward, compensation will play a crucial role in real estate appraisals, similar to how financing conditions or seller concessions are considered when making adjustments to Comparables in a report. This new approach requires appraisers to discuss compensation arrangements within their contract analyses.

Compensation disclosures were removed from multiple listing services (MLS) in Arizona on August 1st and in all MLSs nationwide on August 17th. In the short term, this shift may not significantly impact the appraisal process, as most comparables currently used will reflect data from before these new regulations. However, as we approach mid-September, the need to consider compensation in appraisals will become increasingly important.

To navigate these changes, appraisers are advised to verify the listing dates of comparables before making any adjustments, particularly if the comparable was listed before August 1st.

If the comparable property was listed prior to August 1, 2024, the compensation to the Buyers' Broker was stated in the Listing Agreement and published in the MLS (even though it is now removed, if it was published, it is a contractual obligation). Since this was standard practice, it is covered by the statement on page 4 of the URAR under the comment to Definitions of Market Value, which states: "No adjustments are necessary for those costs which are normally paid by sellers as a result of tradition or law in a market area; these costs are readily identifiable since the seller pays these costs in virtually all sales transactions."

Contracts negotiated after August 1st in Arizona will involve one of four possible compensation scenarios that will influence the final Selling Price:

1. The Seller pays only the Seller’s Broker, with no compensation provided to the Buyers’ Broker.

2. The Seller covers part or all of the Buyers' Broker compensation through the Title Company at Closing. This compensation may be part of the listing agreement or negotiated during the contract process, potentially affecting how adjustments are made.

3. The Buyer represents themselves, resulting in no Buyers’ Broker compensation.

4. The Buyer pays all or part of the Buyers' Broker compensation.



The Arizona Association of Realtors© (AAR) has prepared new forms that an appraiser should receive when an appraisal is ordered for a sale, provided these documents are incorporated in the Purchase Contract. The information the appraiser should request is as follows.

1. Compensation Agreement Between Brokers (CABB). This must be submitted with any offer. New form.

2. Seller Compensation Addendum, which states what the Seller is offering the Buyers' Broker as compensation (this used to be included in the Listing Agreement and was published on the MLS - appraisers did not see the Listing Agreement). New Form.

3. Residential Resale Real Estate Purchase Contract. Updated form.

4. Any and all Addendums that refer to compensation or concessions, including any Addendum in response to the BINSR if one is available at the time of the appraisal. Some will be new forms

A wise appraiser also checks the document section on the MLS or asks for a copy of the SPDS (Sellers Property Disclosure Statement) as this contains valuable information regarding the subject property. This is not a new form.

These four scenarios introduce a new challenge for appraisers, as compensation terms will no longer be published in MLS. Appraisers will need to independently gather this information.

In terms of responsibilities, appraisers must now determine, on a case-by-case basis, whether compensation impacts the Selling Price of a property. For purchase appraisals, understanding the compensation terms is essential to accurately compare each Comparable to the Subject property.

For residential properties listed after August 1, 2024, in Arizona, appraisers will need to determine the compensation arrangements for each Comparable, compare these to the Subject, and assess whether an adjustment is necessary, as well as the appropriate amount.

To ensure compliance, appraisers should review Standards 1-2(c) and 2-2(iv) of the Uniform Standards of Professional Appraisal Practice (USPAP).

Appraisers have an absolute obligation to gather all necessary information to complete an assignment. If certain information is unavailable, appraisers may rely on "extraordinary assumptions" as defined by USPAP. Regarding the Scope of Work, appraisers must now reach out to relevant agents to confirm compensation details and document their efforts in their workfiles.

When it comes to reporting, appraisers must clearly explain in the Appraisal Report why an adjustment was or was not made. This documentation is crucial to comply with USPAP Standard 2.

Looking ahead, these changes will likely increase the workload for appraisers, as obtaining accurate compensation information from agents becomes more challenging over time.

Experienced appraisers who already contact agents for Comparable information will find compensation terms to be an additional query in their process. Others will need to adapt to these new requirements to maintain compliance.

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