After publishing a scathing critique of the association's buyer agreements last week, the CFA has released a new report focusing on CAR's listing agreements.
The Consumer Federation of America released a 20-page memo highlighting the California Association of Realtors' concerns about seller-listing contracts.
The report follows up on last week's criticism of CAR's buyer representation agreements, which the watchdog group called “too confusing and complicated for the average homebuyer to understand.” CFA also argued that provisions in the buyer representation agreements appear to sidestep the NAR settlement.
Now, the CFA has made similar criticisms of CAR's listing agreements, saying the 7,000-word, seven-page agreements are particularly long and “substantially unfair” to sellers.
'Overwhelming' for sellers: The CFA took issue with the length of CAR's seller agreement and questioned its structure and readability. Tanya Monestier, a CFA researcher and law professor at the University at Buffalo, said the agreement contains “too much background information” about MLS and other logistical aspects, while key clauses are unclear and there are too many cross-references.
“The sheer volume of information would be overwhelming to a potential seller, and it is highly unlikely that they would take the time to read this document,” Monestier wrote.
Inducements and Conflicts of Interest: The biggest issue the CFA had with the seller agreement was that it “induces sellers to pay fees to the buyer's broker” and “specifically asks sellers if they would be willing to consider designating a percentage of the list price as a 'concession.'” According to the CFA, this turns “concessions” into “a new real estate agent compensation area.”
Monestier said the contract concessions were “a blatant attempt to circumvent the NAR settlement provisions that prohibit the offering of compensation on MLS.”
Additionally, Monestier took issue with the agreements because they “authorize seller's brokers to attempt to engage unrepresented buyers who attend open houses and other property showings,” effectively soliciting buyer clients and “pre-approving” dual agency conflicts of interest. “The NAR settlement that prompted these formatting changes did not anticipate seller's brokers using the 'requirements' of buyer representation agreements to their advantage in securing clients,” Monestier wrote.
CAR says: Similar to its response to the CFA memo on buyer representation agreements, CAR board member Brian Manson dismissed the CFA’s criticism of seller listing agreements and denied the assertion that the form circumvents new NAR settlement rules.
“The report contains the wild speculation that brokers who use CAR forms will try to avoid the NAR settlement. CAR supports the goals of the settlement and is committed to helping our members have clear discussions with sellers about compensation options,” Munson said.
“The report also states that the draft form contains too much information about what sellers can expect regarding the sale of their home. Instead, it believes information about the MLS and the offer process would help educate sellers and make the form more consumer-friendly. The assertion that the contract is overwhelming and unlikely to be read or understood by the average seller underestimates the capabilities and responsibilities of both the seller and the real estate agent.”