You Won’t Believe How These New Forms are Dodging NAR Settlement!

Real Estate Contracts: Understanding the Fine Print

Contracts in the real estate world can be a labyrinth of confusion for buyers and sellers alike. In a recent study by University of Buffalo contracts law professor Tanya Monestier, alarming details have emerged about the ways in which contracts allow buyer agents to collect more compensation than agreed upon with the buyer.

Navigating the complex world of real estate transactions requires a keen eye for legal details, especially in the aftermath of the National Association of Realtors’ proposed settlement of multiple antitrust lawsuits. Here are some key points to be aware of:

1. Complexity of New Forms: New transaction forms created post-NAR settlement are often incomprehensible to the average homebuyer or seller. These forms contain language that seeks to avoid the terms of the settlement, potentially harming consumers by keeping commissions high.
2. Rampant Revamping of Forms: Due to the changes brought about by the NAR deal, real estate brokerages and associations are overhauling their forms, particularly buyer representation agreements and seller listing agreements. This has led to the creation of numerous new transaction forms, each more convoluted than the last.
3. Dubious Buyer Contracts: Buyer contracts often allow agents to collect more compensation than initially agreed upon, a practice prohibited by the settlement. Terms in these contracts can be confusing or designed to pressure buyers into certain actions.
4. Problematic Provisions: The study identifies several troubling provisions in the contracts that buyers should be aware of, including clauses that push buyers to pay agents even if a transaction falls through due to the buyer’s breach. Moreover, some contracts allow agents to collect bonuses from sellers or charge buyers additional fees.
5. Call to Action: Monestier urges regulators to reevaluate the complexity of these forms and consider whether they are truly consumer-friendly. The tangled web of legal jargon and questionable provisions in these contracts raises concerns about transparency and fairness in real estate transactions.

Understanding the intricacies of real estate contracts is crucial for buyers and sellers alike. With the landscape of transactions evolving rapidly post-NAR settlement, consumers must be vigilant about the terms they are agreeing to. By staying informed and aware, individuals can protect themselves from potential pitfalls in the world of real estate transactions.