Many
state
Realtor
associations’

new
forms—such
as
buyer
representation
agreements—are
largely
incomprehensible
to
the
average
homebuyer
or
seller
and
have
language
that
seeks
to
avoid
the
terms
of
the National
Association
of
Realtors‘
(NAR)
nationwide commission
lawsuit settlement
agreement,
according
to

a
report
released
earlier
this
month.

The
report
was
written
and
prepared
by
Tanya
Monestier,
a
contracts
law
professor
at
the

University
of
Buffalo.
Monestier
previously
worked
with
the

Consumer
Federation
of
America
on
the
new
buyer
agency
agreement
and
listing
agreement

promulgated
by
the

California
Association
of
Realtors
earlier
this
summer.
This
latest
report
is
not
affiliated
with
the
CFA.

“You
should
not
need
to
hire
a
lawyer
to
understand
a
listing
agreement
or
buyer
representation
agreement,”
Monestier
wrote.
“These
forms
do
not
need
to
be
this
complicated.
Lawyers
and
[R]ealtor
groups
have
made
them
this
complicated.
They
then
claim
that
it’s
the
buyer’s
or
the
seller’s
responsibility
to
read
the
forms
and
that
consumers
are
fully
capable
of
figuring
out
the
terms.
Assertions
like
this
fly
in
the
face
of
common
sense
and
everything
we
know
about
consumer
contracting.”

In
the
report,
Monestier
singles
out
forms
from
19
state
and
local
Realtor
associations,
identifying
issues
with
all
except
those
distributed
by
the
Realtor
associations
in
hode
Island,
Massachusetts
and
Utah.
In
addition
to
those
three
states,
Monestier
also
analyzed
forms
distributed
by
CAR,

Texas
Realtors,

Florida
Realtors,

North
Carolina
Realtors,

New
Mexico
Association
of
Realtors,

Northwest
MLS,

Colorado
Association
of
Realtors,

Tenessee
Association
of
Realtors,

Western
New
York
REIS,

Georgia
Association
of
Realtors,

Oklahoma
Association
of
Realtors,

Pennsylvania
Association
of
Realtors,

Minnesota
Realtors,

Oregon
Real
Estate
Forms,

Northern
Virginia
Association
of
Realtors,
and

South
Carolina
Realtors.
The
report
did
not
touch
on
forms
created
by
individual
brokerages.

“I
do
not
claim
that
the
forms
are
a
representative
sample
of
all
the
forms
out
there
—
but
have
reviewed
enough
of
them
to
be
able
to
identify
patterns
and
problems.
I
have
reviewed
several
dozen
of
these
new
forms,”
Monestier
wrote.
“By
and
large,
they
are
all
very
complicated
and
will
not
be
understood
by
the
average
buyer
and
seller.
Many
of
these
contain
terms
that
would
come
as
a
surprise
to
a
buyer
or
seller,
and
terms
that
signal
how
[R]ealtors
plan
to
circumvent
the
NAR
Settlement.”

Due
to
the
terms
of
the NAR
settlement,
buyer’s
agents
are
now
required
to
have
a
signed

buyer
representation
agreement
prior
to
going
on
the
first
house
tour
with
their
homebuying
client.
Due
to
this
brokerages
and
Realtors
associations
across
the
country
have
had
to
create
and
distribute
forms
for
their
agents
and
members
to
use
in
order
to
comply
with
the
terms
of
the
settlement.

According
to
the
report
many
of
the
buyer
representation
agreement
allow
buyer’s 
agents
to
collect
more
compensation
than
they
agreed
to
with
their
buyer,
in
violation
of
the
settlement
agreement.
Additionally,
the
report
claims
that
many
of
the
terms
outlined
in
the
agreements
are
confusing
or
appear
to
be
designed
to
“scare”
buyers
to
behave
a
certain
way.

Monestier
also
noted
that
asking
buyers
to
modify
their
existing
buyer
agency
agreement
so
that
the
agent
can
be
paid
more
is
in
violation
of
the
settlement,
and
the
buyers
may
feel
pressured
to
agree
to
the
modifications
and
they
may
not
understand
the
implications
of
what
they
are
agreeing
to.
She
also
notes
that
these
modified
agreements
are
an
example
of
the
agent
putting
his
or
her
financial
interests
ahead
of
their
buyer’s.

“In
almost
all
cases,
a
buyer
will
be
all
too
happy
to
sign
a
modified
agreement
after
a
guarantee
of
payment
for
the
buyer’s
agent
has
been
secured,”
Monestier
wrote.
“After
all,
it’s:
a)
not
his
money;
and
b)
failing
to
sign
a
modification
could
lead
to
an
awkward
or
acrimonious
relationship
with
the
agent
going
forward.
With
respect
to
(b),
it’s
important
to
realize
that
the
agent’s
request
for
a
modification
to
the
compensation
comes
at
the
same
time
the
agent
is
submitting
and
negotiating
an
offer
for
the
buyer.
Why
would
a
buyer
want
to
alienate
his
agent
at
this
pivotal
moment
in
the
process?
If
an
extra
1
percent
is
on
the
table,
why
should
that
money
go
to
the
agent?”

Overall
the
report
highlights
10
terms
in
contracts
buyers
should
be
aware
of.

These
terms
include
provisions
that:

• Require
  buyers
  to
  pay
  compensation
  to
  their
  agent
  if
  a
  transaction
  does
  not
  close
  due
  to
  the
  buyer’s
  breach
• Potentially
  allow
  for
  buyers
  and
  their
  agents
  to
  modify
  the
  compensation
  amount
  upward
• Allow
  agents
  to
  collect
  “bonuses”
  from
  sellers
• Charge
  an
  extra
  fee
  if
  the
  seller
  is
  unrepresented
• Create
  a
  range
  of
  compensation
  or
  that
  allow
  for
  the
  buyer’s
  agent
  to
  collect
  “whatever
  is
  being
  offered
  by
  the
  seller’s
  agent,”
• Allow
  the
  buyer’s
  agents
  not
  to
  credit
  the
  amount
  sought
  from
  the
  seller
  to
  the
  amount
  of
  compensation
  owed
  by
  the
  buyer
• Are
  challenging
  for
  the
  buyer
  to
  understand
  or
  are
  designed
  to
  scare
  buyers
• Typically
  are
  not
  included
  in
  buyer
  agreements,
  like
  those
  that
  the
  agent
  may
  or
  will
  receive
  compensation
  for
  referrals
  to
  third-party
  service
  providers

Monestier
has
also
created
buyer’s
guide
to
signing
a
buyer
rep
agreement
and
a
seller’s
guide
to
signing
a
listing
agreement.
“I
would
ask
regulators
and
those
drafting
these
forms:
Do
you
think
your
mother
or
father
would
understand
this?”
Monestier
wrote.
“Would
you
want
your
son
or
daughter
to
sign
these
forms?
If
the
answer
to
either
of
these
questions
is
no,
then
it
is
time
for
a
do-over.”

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