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BAM Key Details: 

  • On July 2, 2024, the Consumer Federation of America (CFA) released its Report on C.A.R. Proposed Seller Listing Agreement. 
  • The report was authored by the same law professor who wrote the Report on C.A.R. Proposed Buyer Representation Agreement released on June 25th: Tanya Monestier of the University at Buffalo Faculty of Law, with 15 years experience teaching contract law.
  • Monestier criticized the proposed seller agreement as unreadable, incomprehensible, and deeply problematic—much like CAR’s proposed buyer representation agreement.

You knew this was coming. 

Last week, we wrote about a law professor’s detailed critique of the proposed buyer representation agreement by the California Association of Realtors (C.A.R.). 

On July 2nd, a week after they released that report, the Consumer Federation of America (CFA) released a critique of the C.A.R. Proposed Seller Listing Agreement, authored by the same law professor, Tanya Monestier of the University at Buffalo Faculty of Law. 

Monestier teaches contracts, and no doubt she’s had to evaluate hundreds if not thousands of them before looking through C.A.R.’s new proposed agreements for buyer and listing agents. 

If anyone can make sense of the legalese, Monestier can. It’s her job to see past the jargon to identify the strengths and weaknesses of each contract. 

If you’ve read her Report on C.A.R. Proposed Buyer Agent Representation Agreement, what you’re about to read probably won’t come as a surprise. 

But this is something every agent should know about. Because C.A.R. is not an outlier. 

How did we get here?

Both of CAR’s proposed agreements date from May. On June 10, CFA sent to the U.S. Department of Justice (DOJ) two reports by Monestier critiquing the C.A.R. seller and buyer agreements. The evaluations totaled 38 pages. 

On June 25, CFA released Monestier’s Report on C.A.R. Proposed Buyer Representation Agreement to the press, which we covered last week by Byron Lazine on last Tuesday’s episode of The Real Word and in a BAM article. 

Then, a week later, on July 2nd, CFA released her Report on C.A.R. Proposed Seller Listing Agreement. 

As with the C.A.R. buyer agreement, Monestier criticized the seller agreement as “unreadable.”

“No seller will read this monster of a document – much less be able to understand it…” 

As a tenured law professor with 15 years of experience teaching contract law, even Monestier found it a challenge to get through the document. 

So, it’s reasonable to doubt the average listing agent will find it easy to not only make sense of the document themselves but also to help sellers understand it. 

And that’s not the only reason Monestier criticizes the C.A.R. Listing Agreement as unfair to consumers: 

“The Listing Agreement authorizes a seller’s broker to attempt to sign up unrepresented buyers who attend open houses or other property showings.  In other words, the Listing Agreement functions to pre-authorize a conflict of interest that the realtor plans to create.” 

Another problematic contract from C.A.R.

Monestier’s report highlighted several “problematic features” in the C.A.R. listing agreement, including: 

  • Steering home sellers in the direction of compensating buyer brokers 
  • Specifically asking sellers to consider designating a percentage of their home’s list price as “concessions” (thereby making “concessions” the new buyer agent compensation field)
  • Failing to clearly lay out the compensation options
  • Mandating mediation in the event of a dispute 
  • Telegraphing that listing agents will attempt to secure contracts with buyers, which would create a dual agency relationship with the buyer and seller, which is illegal in eight states and would deprive sellers of fiduciary representation

The CFA press release does acknowledge that C.A.R. has withdrawn its seller agreement form. But Monestier’s report is still worth sharing and discussing because the C.A.R. forms represent the type of agreements developed by other Realtor groups. 

Stephen Brobeck, a senior fellow for CFA, expressed his concern with some of the agreements designed in the wake of the NAR settlement: 

For some industry groups, the new listing agreements seek to limit changes proposed by the litigation settlement. The agreements also represent a continuing effort by the industry to thwart the efforts of DOJ to establish a more price-competitive marketplace.

Stephen Brobeck

CFA senior fellow

Throughout the summer, up to and likely beyond August 17—the date by which Realtor groups are supposed to have new and compliant buyer and seller agreements in place—Monestier and CFA will continue researching and evaluating new agreements issued by Realtor associations. 

And not for nothing are they submitting their critiques to the DOJ, which may, through its own legal action, succeed in delaying the implementation of the NAR settlement. 

At the very least, all three seem more than ready to sound the alarm on contracts like those from C.A.R., all (hopefully) with the aim of ensuring real estate agreements put consumers first.

CFA’s advice to home sellers

CFA’s press release wraps up with a list of recommendations for home sellers, which are similar to those offered to homebuyers last week: 

  • Ask for the seller agreement in your first communications with a listing agent
  • Make sure you take enough time to understand the document and what it means for you, and don’t hesitate, if needed, to consult with an attorney to help decipher the legalese. 
  • Then, discuss the contract with the listing agent—with particular attention to how the agent compensation will be paid. 
  • Try to negotiate the listing broker’s compensation.
  • Resist the listing agent’s advice to make an offer of compensation to the buyer agent. But consider indicating to the buyer that you’re willing to help them cover this expense in exchange for a higher list price. 
  • If you do agree to offer compensation to the buyer broker, make sure any excess reverts back to you and not to the listing agent. 
  • Do not sign any contract that “is not satisfactory.” Shop around for a different agent or consider selling the property yourself with the help of an attorney you have on retainer.

Read the full report for more information.