The regulator said this week that a new draft seller contract distributed by eXp Realty to its brokers and agents largely complies with a newly released set of standards from the Consumer Federation of America.
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With just over two weeks to go before a critical deadline, consumer advocacy groups have unveiled a new set of seller contract guidelines designed to help protect consumers and ensure full compliance with NAR settlement requirements.
The Consumer Federation of America (CFA) on Wednesday unveiled its proposed contract standards for sellers, which are largely consistent with buyer contract guidance the organization released earlier this month.
The organization also provided Inman with a copy of the eXp Realty seller contract, which is currently being distributed to eXp brokers and agents. The contract is an example of a document that the CFA considered to be broadly consistent with its standards.
“These standards will help regulators, consumer groups and the industry itself assess the fairness of new seller contracts,” CFA senior fellow Stephen Brobeck said in a statement. “Recent CFA research has shown that these contracts may harm or Helps home sellers depending on clarity and content. ”
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Among other provisions, the eXp seller contract expressly states that the buyer may require concessions from the seller to cover various fees, including a “buyer’s agent fee.” It also provides that all seller concessions are negotiable and are not required or fixed by law.
The CFA described the eXp contract as “understandable and fair to consumers”. However, the eXp documents do appear to deviate from some CFA standards in some meaningful ways.
Although the CFA recommends seller commission “Should always be expressed as a dollar figure or hourly rate,” the eXp contract offers the option to define the seller’s commission as a dollar value, a percentage of the sales price, or an empty “Other” field that can be filled in by the broker or client.
Please read below the complete list of criteria for the CFA Appraisal Brokerage Home Seller Contract Form.
Format: Is the contract readable and easy to understand?
- length: The contract should not contain marginal provisions designed solely to protect the broker’s interests, and the agency agreement should be kept as a separate document.
- Type size: Most courts recommend 12 points. Any smaller size will be difficult for some people to read.
- organize: The most important information, including compensation arrangements, should be at the beginning of the document and clearly labeled.
- Plain language: The contract should be written in a form that the home seller can understand. It should not contain words and language that only lawyers can understand.
Contents: Are the contract contents fair to the home seller?
- Contract term: The contract should clearly state when it will be terminated.
- Contract termination: The broker has the right to terminate the contract at any time; the seller should have the same right without any fees.
- Compensation, continuing obligations: The seller may be obligated to compensate the agent who showed the home purchased after the contract was terminated. However, this obligation shall last for a reasonable period of time, not exceeding 60 days.
- Compensation, disclosure: The contract should clearly state that the broker’s fee is not set by law but is completely negotiable.
- Remuneration, commission: The listing agent’s commission should be completely separate from any concessions to the buyer, which may include funds to compensate the buyer’s agent. This commission should always be expressed as a dollar figure or an hourly rate.
- Remuneration and fees: In a home sale, any additional costs should be deducted from the commission.
- Compensation in case of arrears: Only after successful completion of sale.
- Seller discount: Offers must never include a dollar figure representing buyer’s agent compensation. Instead, the contract should simply state whether the seller is prepared to consider negotiating concessions.
- Unrepresented buyer: The property must be shown to unrepresented buyers. If the buyer is unrepresented and does not bear this cost, the contract may include a provision for a modest administration fee (expressed in U.S. dollars). This clause should be signed by the seller.
- Buyer discounts: The contract should provide that all written offers from the buyer will be presented to and determined by the seller.
- Dual agency: Dual agency should not be pre-approved by contract. If a dual agency situation arises—for example, a buyer wants to purchase a listing from the seller’s agent—the seller’s written approval should be obtained at this time.
- Seller Remedies: Seller’s remedies shall not be limited. The seller should not be required to first submit to mediation or arbitration to file a grievance.
Read the complete eXp Seller Contract Language at this link.
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