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A contracts law professor, Tanya Monestier, has released her own sample buyer representation agreement in an effort to push the real estate industry to create fairer forms for buyers. She criticizes the current forms created after the National Association of Realtors’ proposed settlement of multiple antitrust suits.
Monestier points out that many existing buyer agreements are drafted with the interests of brokers in mind, rather than the buyers. She emphasizes the need for contracts that are fair and understandable to consumers.
Her sample contract, accompanied by commentary, aims to start a conversation on creating new forms or modifying existing ones. Monestier stresses the importance of moving towards practical and clear language in contracts.
She acknowledges that her sample contract may not be perfect and encourages state and local realtor associations, MLSs, state regulators, and private brokerages to do better in creating consumer-friendly contracts.
Monestier’s form is designed to be easily understood by the general audience, with a focus on simplicity and clarity. She emphasizes the importance of adhering to the Realtor Code of Ethics, which requires transaction forms to be written in clear and understandable language.
Monestier’s ultimate goal is to create contracts that prioritize consumer protection and transparency. She urges industry participants to consider the necessity of each provision in their forms and to focus on practicality and real-world scenarios.
She concludes by highlighting the need for contracts that prioritize consumer protection over legal jargon and unnecessary provisions. Monestier’s form serves as a starting point for a larger conversation on improving transaction forms in the real estate industry.
Monestier’s form states that buyer broker commissions are subject to negotiation between buyers and brokers. She intentionally avoided stating that commissions are “fully negotiable” to prevent buyers from assuming that brokers are required to negotiate their fees. The form clearly states that the buyer is responsible for compensating the broker upon successfully closing a transaction, with options for either a percentage of the purchase price or a flat fee. Despite objections from consumer advocates regarding potential conflicts of interest, Monestier believes that a percentage fee based on the purchase price simplifies the payment model. The form includes a conversion chart for reference, showing how percentages translate to dollar amounts for a home purchased at the average U.S. price.
Additionally, the form outlines two ways in which seller compensation for the buyer broker may be covered: through a direct offer or concession. While some advocate against pre-set offers of compensation, Monestier believes they are not prohibited by the settlement agreement. The form clarifies that the broker cannot receive more compensation than agreed upon with the buyer, and pre-emptive offers of compensation from the seller will not influence which properties the buyer broker shows the buyer. The contract allows either party to cancel in writing, with the broker required to provide a list of properties for which they provided services. Only properties where the broker’s services were more than minimal will be included on this list.
Monestier’s form aims to ensure that brokers present all relevant properties to buyers, regardless of commission offers, in alignment with NAR guidance. The agreement also addresses the buyer’s obligation to pay the agreed-upon commission if they purchase a property from the list provided by the broker within a certain timeframe. Monestier clarifies that simply sending listings to the buyer does not constitute providing substantial services on the broker’s part, emphasizing the intent of the agreement.
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