Whenever I train a new agent or lead a seminar on Realtor association forms (California Association of Realtors in the house), I always start with, “Every single line on a purchase or listing agreement has at one time been a lawsuit.”
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While that statement is hyperbole, Realtor association disclosures and contracts are critical, and agents need to know the agreements well enough to explain them to clients and use them to save themselves from getting sued.
We all get questioned about disclosures or contract agreements at the worst time, usually when things are getting signed. We cannot always be expected to immediately recall what Section 2.B. (confirmation of agency relationships in California) “does.”
This is where real-time AI saves you. Here are some essential ways that I use AI to help explain contracts and disclosures to overwhelmed clients.
Editor’s Note: Before using AI to explain contracts and disclosures to clients, make sure that the information is correct, your supervising broker is aware, and check local and state laws to make sure you are not violating any terms by using AI in client education.
Buyer confused
Buyer: “What’s a liquidated damages clause? Am I signing away my rights?”
You: Pull up your phone. Paste this prompt into the assistant:
“Explain liquidated damages in a real estate purchase agreement in two sentences, like I’m talking to a first-time buyer who’s nervous. Keep it reassuring but honest.”
AI gives you:
“Liquidated damages means if you back out after removing your inspection contingency without a valid reason, the seller keeps your deposit. That’s why we always keep your contingencies until you’re 100 percent sure.”
You say aloud:
“This clause protects the seller if you commit to the deal and then back out. As long as you keep your inspection period active, you’re protected. Once you waive that contingency, you’re saying ‘I’m ready to move forward, no matter what.’ Does that make sense?”
Seller confused
Seller: “Do I have to check ‘Yes’ to every possible repair issue? Won’t that scare buyers away?”
You: Pull up your phone. Paste:
“A seller is filling out a Transfer Disclosure Statement. They’re worried that checking ‘Yes’ to issues will kill their sale. Explain the legal requirement and the risk of checking ‘No’ when there’s actually a problem.”
AI gives you:
“You must disclose what you actually know about. Checking ‘No’ when there’s a real issue exposes you to lawsuits after closing. Checking ‘Yes’ is annoying but legally sound. Buyers expect some disclosures — it’s normal.”
You say aloud:
“Look, if you check ‘No’ when there’s actually a roof leak, the buyer can sue you after closing. That’s worse than losing a few buyers now. We disclose everything you know about, and those are no longer points for negotiation.”
Agent confused
Buyer: “There’s an easement on the property title report. What does that mean? Can I back out?”
This is a title and escrow question, and agents are not title and escrow people. Paste:
A home has an easement in the title report. Explain to a buyer:
-
- What it is in simple terms
- Whether it’s a dealbreaker,
- When to worry vs. when to ignore it.
AI gives you:
“An easement means someone else has the right to use part of your property for a specific purpose — like a utility company accessing a line in your backyard. Most easements don’t affect daily life. Worry if it’s something like a right-of-way cutting through your living space. Otherwise, it’s standard.”
You text back:
“An easement means a utility company or neighbor has the right to access part of your land for maintenance. Most don’t affect your use at all. We see these on 80 percent of properties. Unless it’s blocking your driveway or something major, it’s not a dealbreaker. Want me to dig into the specifics?”
Prepare
Download an AI app right now — it takes 60 seconds. Create a Notes folder with three go-to prompts: One for quick clause explanations, one for document confusion and one for title issue triage. This is your field toolkit, ready for when a client points to a clause and asks, “What does this mean?”
Pitfall pause: Always know your limits. AIs are tools, but they sometimes hallucinate and make things up. Escalate complex legal issues to your broker immediately. “Let me verify this” is professional; confidently explaining something wrong is negligent. Your expertise is in knowing when to use the tool and when to call in the professional.
It’s OK to say, even after asking the AI, “I don’t know for certain, but I can find out,” or “This doesn’t sound right, let me check with…”.
The prompts
Use the notes app on your phone to save these prompts for use while out and about:
- Quick clause explanation: “Explain [clause name] to a nervous buyer in two sentences.”
- Document confusion: “A [buyer/seller] is confused about [document]. What’s the simple explanation?”
- Title or disclosure issue: “A [title issue/disclosure item] came up. Is it a dealbreaker? What’s the next step?”
You cannot be replaced
This isn’t about replacing expertise. It’s about having basic answers ready, so you don’t sound confused or scrambling when clients ask tough questions in real-time.
The 30 seconds it takes to get an AI answer beats the 10 minutes of “let me research that and call you back” — especially when the client is standing right in front of you.
Scripts and documents that you create in advance will help you become a “sharper” agent and also help build your communication skills with clients.
America Foy is a broker associate at The Grubb Co. Connect with him on LinkedIn and Instagram.
