New report shines light on buyer representation agreements as brokerages and Realtor organizations move to update forms and comply with legal settlements this summer.

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A consumer watchdog group put Realtor organizations on notice on Tuesday and said it was in touch with state and federal regulators about rules and documents it believes stack the deck in favor of brokers and against buyers.

The report comes at a time when state and local organizations nationwide are updating the forms that govern the real estate industry following landmark litigation in recent months. Among them are buyer representation agreements that will soon be required before agents tour homes with buyers.


Many of the drafts of the updated forms are “anti-consumer,” according to the Consumer Federation of America, a watchdog group that has long advocated for reforms to the real estate industry.

The CFA released a statement on Tuesday in which it said it was in contact with the Department of Justice and the offices of unspecified attorneys general about what it said were new forms that were anti-consumer.

“The Consumer Federation of America (CFA) has been evaluating industry buyer contracts over the past several months,” the CFA said in a statement on Tuesday. “It has learned that many contracts are anti-consumer but also found one that is understandable and much fairer to everyday buyers.”

Tanya Monestier | University of Buffalo

CFA commissioned a report by University of Buffalo contracts law professor Tanya Monestier, dated June 9 and shared publicly on Tuesday. In her report, Monestier analyzed a draft buyer representation agreement from the California Association of Realtors that was dated May 9.

The draft, Monestier wrote, appeared to “disguise the obligation of the buyer to pay his agent.” 

“It is virtually unreadable,” Monestier wrote. “No layperson will be able to understand and appreciate the terms they are truly agreeing to.”

Buyer representation agreements are among the critical contracts that will soon be central to real estate transactions for the first time in much of the country.

According to the terms in a settlement agreement by the National Association of Realtors, agents will be required to have signed buyer representation agreements before touring homes later this summer. The form will specify how much the buyer’s agent will be compensated.

Seller offers of compensation will also be removed from the multiple listing services, putting the buyer representation agreement center of agent compensation moving forward.

CAR responds

CAR fired back at CFA’s criticisms, saying the report was based on an outdated version of its buyer representation agreement and calling the critique “misguided” and “absurd.” 

The group said its latest version of the form, which it declined to share with Inman, addressed “many of the concerns” noted in CFA’s report. 

“For example, the CFA piece says the form doesn’t comply with the NAR settlement. That is wrong,” CAR General Counsel Brian Manson told Inman in a statement. “Both the draft reviewed and the latest draft of the form comply with all practice changes required by the NAR settlement, as well as with California law.”

“Hardworking buyers’ agents are entitled to be compensated by their clients according to the terms of their agreements,” Manson continued.

CFA countered Manson’s statement by saying that CAR’s potential changes to its proposed buyer representation agreement were being made in response to Monestier and the CFA report.

“While CAR clearly does not like her views, that does not make them not worth considering,” CFA told Inman.

The CFA report was only the latest form of scrutiny placed on the second-largest state Realtor organization in the U.S.

Inman reported on Friday that CAR delayed the release of nearly two dozen updated documents after receiving an inquiry from the Department of Justice, which has been keeping an eye on the industry amid ongoing litigation and calls for reform.

It wasn’t clear at the time whether the updated buyer representation agreement was among the delayed forms. On Tuesday, after Inman requested the updated buyer representation agreement that Manson said addressed most of the CFA’s criticisms, a CAR spokesperson said that “because the form release has been postponed, we can’t provide a copy.”

A focus on buyer rep agreements

James Dwiggins

James Dwiggins, CEO of NextHome, told Inman these agreements are one of the main issues for the real estate industry at the moment. Of interest were buyer representation agreements that weren’t fair to buyers and which favor agents.

“This is a massive issue that’s about to occur — especially in states where they haven’t had them or state regulations require them,” Dwiggins said. 

About 16 states already mandate that brokerages have buyer representation agreements in place when agents work with clients. That means forms are being put in place for the first time in over half the country.

In its report, the CFA pointed to a new version of a buyer representation agreement that agents at eXp told Inman it started using this month.

“The contrast between the CAR and eXp contracts could not be sharper,” said Stephen Brobeck, a CFA senior fellow. “The eXp contract is written with the buyer in mind. The CAR contract is written with the interests of the Realtor in mind.” 

In response to the praise it received in the CFA report, Holly Mabery, vice president of brokerage operations for eXp, said the firm had created its buyer representation agreements with the goal of promoting clarity and transparency.

These forms are part of our ongoing efforts to simplify the real estate process for both consumers and agents,” Mabery said. “We believe in providing clear expectations and straightforward agreements to empower our clients.” 

Mabery said eXp would release a standardized listing agreement next month, though she didn’t clarify what changes would be included in the update.

Email Taylor Anderson

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