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About three weeks after delaying the rollout of transaction forms due to a U.S. Department of Justice investigation, the California Association of Realtors released new forms on Wednesday without broker compensation.
The trade group told Inman in a statement that it had released a total of 30 new and revised forms on July 10 — the remaining forms are part of its semi-annual standard forms update — with one key change : Reference to commission sharing has been removed.
“While there are many changes being made to these forms, we anticipate one change in particular – the removal of the listing broker’s notice to the buyer from these forms,” CAR General Counsel Brian Manson said in a statement. Compensation offered by brokers – will become important in the near future.
“After careful and thoughtful deliberations, CAR has concluded that members and their clients are best served by making informed compensation decisions rather than relying on historically common practices.
“While we recognize that broker-to-broker compensation remains legal, our goal with this change is to be proactive and look ahead to where real estate practices are headed.”
Manson stressed the need for the industry to adapt to changes brought about by legal and regulatory concerns over commission structures in the real estate industry.
“As we have always done, China Car Rental needs to be at the forefront of the industry,” he said.
“In doing so, we will get through this moment, do what we need to do to adapt, and emerge stronger as an industry of professionals who work tirelessly every day to support the dream of homeownership.”
Manson said the 30 forms are intended to help CAR’s more than 180,000 members “work with clients in light of upcoming practice changes” proposed by the National Association of Realtors and home seller plaintiffs in multiple antitrust lawsuits Reconciliation nationwide.
The NAR settlement includes several rule changes that will take effect on August 17, including prohibiting listing brokers from compensating buyer agents for servicing multiple listings and requiring brokers and agents to conduct buyer tours of homes.
On June 21, CAR confirmed to Inman that it would delay issuance of 21 forms related to changes in business practices required by the NAR settlement agreement after receiving DOJ inquiries about the forms and feedback from its members. The trade group did not provide further details about the forms or describe the nature of the Justice Department investigation.
However, in the following days, the Consumer Federation of America published two reports criticizing two of CAR’s new forms of “anti-consumer”: its buyer representation agreements and its listing agreements.
The consumer watchdog said it wrote to the Justice Department in April criticizing CAR’s new seller listing agreement that “appears to allow for provisions requiring broker commission sharing in nearly all current listing contracts,” which “appears to make real estate It is easier for brokers to continue practices with fixed commissions. “
The nonprofit suggested that “these contracts should be amended to remove all references to broker commission sharing,” which is exactly what CAR appears to have done.
Stephen Brobeck
“CAR and its attorneys appear to be in disarray, receiving sharp criticism not only from the Department of Justice and consumer advocates, but also from many California real estate agents,” CFA senior fellow Stephen Brobeck said in a statement. criticism.
“This criticism has left its mark. The July 9 form is very different from previous forms.
Brobeck declined to comment on the specific differences. Tanya Monestier, an author of the CFA report and a professor of contract law at the University at Buffalo, also declined to comment for this article.
CAR declined to share the final forms with Inman, saying they were for members only. The trade group also declined to say which specific parts of the form had changed.
However, Inman got two new forms: Residential Listing Agreement and Multiple Listing Services Addendum.
The final listing agreement removed this contractual provision from the document: “Optional additional compensation, if any, to be provided by the seller’s agent to the buyer’s agent,” regardless of whether the seller offered it as a percentage of the purchase price or a dollar amount, and related language relating to compensating the buyer’s agent for an offer.
The new listing agreement also removes references to seller concessions, what an MLS is, and the National Association of Realtors’ explicit cooperative policy, which requires listing agents to submit listings to their MLS within one business day of marketing a property to the MLS. people.
Instead, this language has been moved to a two-page MLS addendum, and its terms and conditions are incorporated into the seven-page listing agreement, bringing the total number of pages sellers must read to nine.
CAR declined to comment on why the provisions had been moved to a separate appendix.
Asked whether CAR was still revising any forms to address the Justice Department’s concerns, CAR spokesperson Lotus Lou told Inman, “We revise our forms twice a year and our forms are revised based on a variety of factors.”
Ed Zorn
Ed Zorn, general counsel for California MLS, praised CAR’s changes as “courageous” and said they will benefit consumers.
“CAR made the commitment that ‘we will not facilitate or create a document created by a real estate agent that continues the old practice of MLS commission sharing,'” Zorn told Inman in a statement. Kudos to them for doing this.
“I personally think it’s a smart move and support the move to commission sharing.”
He expects the changes to be “impactful” and influence how other states choose to handle their forms. Zorn, himself an agent practicing in Tennessee, said he would not use a form that includes commission sharing.
“The controversy surrounding these forms is this: Are the forms created by your real estate agent supporting and facilitating commission sharing among agents in anticipation of compensation offers outside of the MLS? Does your form say that?” Zorn said.
“If the standardized form keeps commission sharing, you now still have the same old system, just you make the call instead of on the MLS. If we think we end up getting information just because now I get it on the phone instead of MLS It would be foolish to get some different result.
“The only way to use the CAR form right now is… the listing agent will just talk about their fees and then wait until later to deal with, ‘Did the buyer demand something in the offer?'” he added.
The new CAR form will be available to members on July 24th.
“We hope to make the draft available to members on our website so they can begin to become familiar with the forms and begin attending educational courses using the forms,” Lu said.
“Two new courses launched [Wednesday] – Buyer’s Representative Form Course and Residential Listing Form Course – both free to members.
When asked why the number of previously withheld forms was inconsistent with the number of forms just released, Mr. Lou said, “When we make changes to the Residential Listing Agreement or the Residential Purchase Agreement, other listings and purchase agreements are in accordance with changes respectively.
The U.S. Department of Justice declined to comment for this story.
Send an email to Andrea V. Brambila.
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