Should this 3-page buyer agreement be a model for the industry?
University at Buffalo School of Law professor Tanya Monestier’s draft agreement gets most agents “90% of the way there,” she told Real Estate News.
Key points:
- Monestier previously authored reports critical of some buyer agreements, particularly those from the California Association of Realtors.
- Her version includes three sections and fewer than 1,000 words, and she says it can be adapted to comply with state-specific requirements.
- She argues that putting pressure on buyers to sign quickly, or without explaining the terms, could invalidate some contracts.
While the August deadline to enact industry practice changes is well in the rearview mirror, the debate over buyer agreements continues.
Specifically, it's the ethics and readability of these contracts, argues University at Buffalo School of Law professor Tanya Monestier, that remains an issue as various state associations and big brokerages draft their own forms for their respective agents.
Monestier authored a handful of reports this summer highlighting issues with buyer agreements — including a harsh critique of the California Association of Realtors' draft — and made recommendations for pitfalls consumers should watch out for.
Now, she has released a draft buyer agreement that meets her criteria of being short, easy to read and clear about the terms and conditions. It also balances the needs of agents and consumers, she says — in contrast to "largely all" of the existing agreements, which she argues in her companion commentary "are drafted with the interests of the broker (not the buyer) in mind."
What the agreement includes, and how agents can use it
"This gets you 90% of the way there," Monestier told Real Estate News about the draft agreement, which is three pages long with three main sections. While she's making the contract available to anyone in the industry, she acknowledges that each state has different rules and recommends further tailoring.
The first section covers the parties, specific property, the length of the contract term, exclusivity and cancellation language. The second section includes compensation details and conditions, while the third section covers broker duties and disclosures.
She noted that she avoids legal jargon and keeps each section to just one or two sentences each. In total, the draft agreement is roughly 950 words and should only take a few minutes to read.
"We blame consumers, almost like it's their fault that they didn't read a 5,000-word document that was given to them in a driveway right before they entered the house," she explained. "That's just so disingenuous."
The importance of educating buyers
In addition to highlighting the confusing nature of some new agreements, Monestier expressed concerns about the possibility of agents misrepresenting — or at least glossing over — what these contracts are and what signing them means.
"As a contracts professor, I would almost argue that some of these contracts should be invalidated, because if you, as an agent, basically put something in front of somebody and tell them it's just a formality and you don't tell them what it is, I have real concerns about whether that should be binding."
In her commentary, Monestier acknowledges that consumers are faced with confusing and cumbersome contracts all the time. But buying a home is different, she argues, than signing up for a new streaming service. "It is a personal services contract involving a transaction that will likely represent the biggest purchase of a person's life. Because of this, I think — at a minimum — the average person should be able to understand what they are agreeing to."