An older couple speaks with a real estate agent about a contract.

Consumer watchdog returns with new criticisms of C.A.R. 

After unveiling a scathing critique of the association’s buyer agreement last week, the CFA is back with a new report focused on C.A.R.’s listing contract.

July 2, 2024
3 minutes

The Consumer Federation of America has released a 20-page memo highlighting concerns over the California Association of Realtors' seller listing agreement. 

The report is a follow-up to last week's critique of C.A.R.'s buyer agency agreement, which the watchdog group described as "far too disorganized and complex for the average homebuyer to understand." The CFA also alleged that provisions in the buyer contract appeared to circumvent the NAR Settlement.

Now, the CFA is offering similar critiques of C.A.R.'s listing agreement, describing the 7,000-word, seven-page contract as being particularly long and "substantively unfair" to sellers. 

'Overwhelming' to sellers: The CFA took issue with the length of C.A.R.'s seller agreement and questioned its structure and readability. CFA researcher and University at Buffalo law professor Tanya Monestier said the contract included "far too much background information" on the MLS and other logistical aspects, while being unclear on important provisions and including too many cross-references.

"The sheer amount of information will be overwhelming to a prospective seller. There is virtually zero chance that a seller will slog through this document," Monestier wrote. 

Steering and conflicts of interest: Among the biggest problems the CFA had with the seller contract is that, allegedly, "it steers sellers in the direction of compensating buyer's brokers" and "specifically asks sellers if they would be willing to consider designating a percentage of the list price as 'concessions'" — which the CFA said turns "concessions" into "the new Realtor compensation field." 

Monestier said the contract's concessions field is a "blatant attempt to get around the NAR Settlement provision that prohibits offers of compensation on the MLS."

Additionally, Monestier saw the contract as problematic because it "authorizes a seller's broker to attempt to sign up unrepresented buyers who attend open houses or other property showings," effectively soliciting buyer clients and "pre-authorizing" a conflict of interest via dual agency. "The NAR Settlement, which precipitated these form changes, did not envision a seller's broker using the 'requirement' for buyer representation agreements to his advantage to secure clients," Monestier wrote. 

What C.A.R. said: Similar to its response to CFA's memo on buyer agency agreements, C.A.R. General Council Brian Manson dismissed CFA's critique of its seller listing agreement and pushed back on claims that the forms skirted new NAR settlement rules.

"The report contains wild speculations that brokers using C.A.R. forms will try to get around the NAR settlement. C.A.R. supports the goals of the settlement and is working to help members have clear conversations with their sellers around compensation options," Manson said.

"The report also says that the draft form has too much information about what sellers can expect regarding marketing their home. Instead, we think information about the MLS and the offer process helps educate the seller and makes the form more consumer friendly. The assertion that the agreement is overwhelming and unlikely to be read or understood by the average seller underestimates the capabilities and responsibilities of both sellers and their real estate agents."

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