Starting Aug. 17, American home shoppers will have to sign a contract with their real estate agent spelling out how much compensation the agent will get.
This week, the Consumer Federation of America released a list of things such buyer-broker contracts should contain to ensure they’re fair to consumers.
“Some revised (buyer-broker) contracts are very anti-consumer,” said Stephen Brobeck, a senior fellow at the Consumer Federation.
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How can buyers make sure they’re signing a contract that’s in their interest?
According to the Consumer Federation, such contracts should:
— Be readable, with 12-point type and plain language so homebuyers can understand it.
— Clearly state the expiration date. The Consumer Federation recommends three-month contracts, adding that buyers should never agree to anything longer than six months.
— Clearly state the broker’s fee, using a dollar figure or an hourly rate, with no additional compensation.
— Give buyers the right to terminate contracts at any time at no cost.
— Require that fees for agent services (such as showing a home) be deducted from the commission if the buyer purchases a home.
— Require that seller concessions should be paid to buyers, not brokers.
— Not pre-approve an agent’s right to represent both buyers and sellers in a transaction. Written approval should be given separately when such a situation arises.
— Not require buyers to submit to mediation or arbitration or otherwise limit buyer remedies if there’s a dispute.
