Consumer group is back with listing agreement guidelines 

The Consumer Federation of America is continuing to keep a close watch on the real estate industry. This week, the organization released proposed guidelines for home seller contracts, which the CFA hopes associations and brokerages will consider when drafting new forms ahead of NAR's August 17 deadline for rule changes. 

The group has been vocal in recent weeks on the merits and fairness of both buyer agreements and listing agreements, doling out criticism and praise for forms that it deems to be either problematic or pro-consumer. 

And some MLSs and associations seem to be listening, creating — and revising — forms to avoid further scrutiny, confusion or potential litigation.

A consumer-friendly approach: Similar to the proposed guidelines for buyer agreements released earlier this month, the CFA has shared new recommendations for listing agreements with an emphasis on the consumer experience. 

"Recent CFA research has shown that these contracts have the potential to harm or help home sellers depending on their clarity and content," Stephen Brobeck, CFA senior fellow, said in the announcement.

The group provided a blueprint that covers the content as well as the structure of the agreement, focusing on fairness, readability and organization. 

Drilling into the details: The CFA proposed a number of criteria for listing agreements, including:

• Length of contract

• Termination of contract

• Disclosure of any continuing obligation for compensation

• Disclosure that commission and compensation is fully negotiable

• Disclosure that a listing agent's fee is separate from any concessions offered to the buyer (which may be used to compensate a buyer's agent) 

• Any additional fees a seller may incur

• When compensation is paid 

• Any additional seller concessions

• Language on how to handle unrepresented buyers

• An explicit understanding that all buyer offers will be shown to the seller

• Language addressing dual agency

• Seller remedies 

Additional recommendations: The watchdog group also shared opinions on specific practices related to seller agency and listing agreements. Recommendations include:

• Presenting a listing agent's commission as a dollar figure or hourly rate versus a percentage of the home sale price

• Deducting any additional seller fees from the listing agent commission

• Requiring that commission be paid only upon the successful closing of a home sale

• The option to charge an additional fee for working with unrepresented buyers — similar to the language in the new eXp listing agreement — but this "provision should be initialed by the seller"

• No automatic dual agency: "Dual agency should not be pre-approved by the contract"

What the CFA said: "These criteria will assist regulators, consumer groups, and the industry itself in evaluating the fairness of new seller contracts," Brobeck said. 

"CFA does not oppose monetary assistance from sellers to buyers, only broker manipulation of this assistance to ensure current levels of broker compensation that are strongly influenced by broker collusion," he added.