Buyers beware: Some agreements appear to violate NAR terms 

While the industry practice changes brought about by the NAR settlement are intended to increase transparency for consumers and agents alike, the sheer number of new forms being produced by state associations could be causing, rather than alleviating, confusion. 

Some brokerages — including giants like eXp and Anywhere — are advising their agents to use proprietary forms and avoid those from state associations, largely due to concerns with length, legal jargon and provisions that could be deemed unfriendly to consumers. 

And an even bigger concern, said law professor Tanya Monestier, is that some association forms — particularly new buyer agreements — appear to violate the terms of the settlement.

Monestier, who previously criticized C.A.R.'s seller agreement form, has released a detailed new report that looks at dozens of buyer agreements as well as training materials from 19 different state associations, highlighting pitfalls buyers should be aware of. 

Here are five issues she called out:  

Buyer agent compensation details 'buried in fine print'

In her research, Monestier found a handful of forms that featured provisions where a buyer was effectively guaranteeing compensation when going under contract on a home. 

"Several standard forms are even more anti-consumer and say that commission is earned when the buyer signs the agreement for purchase and sale, or if the buyer breaches the buyer representation agreement," she wrote, highlighting forms from Florida Realtors, Texas Realtors and the Pennsylvania Association of Realtors.

"Most buyers understand that if they breach a contract for purchase and sale, they will forfeit their earnest money deposit; they do not anticipate that they will also have to pay tens of thousands of dollars to their agent. An obligation of this magnitude should not be buried in the fine print." 

Agreeing to seller-provided bonuses at closing

Monestier found instances where buyer agreements had sections that allowed agents to collect bonuses from sellers. She believes that this type of provision is not permitted by the NAR settlement terms and offers more insight into how it could represent a conflict of interest.

"Bonuses are particularly prevalent with new-build construction. Builders do not like discounting properties because it sets a bad precedent for future sales. Instead, they often give significant bonuses to agents so that they steer their clients toward the builders' properties (something that the NAR settlement was designed to put an end to)."

Paying extra agent fees for FSBOs

Monestier found at least two forms with language permitting an agent to charge additional fees when working with a buyer to purchase a "for sale by owner" property. 

Such additional charges, Monestier believes, are "intended to discourage buyers from purchasing property from sellers who have not hired a listing agent."

Doubling up on commission 

One of the more surprising line items Monestier uncovered during her research was a provision in two forms that could result in agents receiving an out-of-pocket payment from their buyer as well as any buy-side compensation being offered by the seller or their agent. 

In these instances, "it seems like the buyer's agent can collect full commission from the buyer and top that off with whatever commission the seller or the seller's agent is offering. This could mean that the buyer's agent earns 6% commission," she explained. While she believes honest agents will do right by their clients, "the possibility remains for agents to game the system."

Including a range of compensation

Monestier called out the Georgia Association of Realtor's form and training materials for appearing to allow buyer agents to collect one fee from the buyer and additional fees from the seller or their agent in violation of NAR's rule that compensation must be "objectively ascertainable" and "not open-ended." 

While Monestier believes this section of the form "will almost certainly fail scrutiny," she noted that "until the provision is challenged, it remains in the contracts — enabling buyers' agents to walk away with outsized commissions."