How To Stay Out of TROUBLE!

Return calls promptly Communicate clearly Document all activities with details Say you don’t know unless you’re sure Stay in touch at every step Refer questions to experts Give clients copies of all contracts, counter-offers, listings, reports, etc. Understand the other’s point of view and acknowledge it Never ASSUME anything. Live up to your word Being a Professional

Seller’s Property Disclosures Always work as a transaction broker unless a seller or buyer requests you work as a single agent. Have the transaction broker form signed when you list a property OR before you show any property to a buyer. If you show a FSBO, give the seller a No Brokerage Relationship Disclosure. If a buyer refuses to sign anything, give them a No Brokerage Relationship Disclosure and document your file. If a single agent, explain why we can’t work as a dual agent and when we need to convert to a transaction broker. The law assumes transaction brokerage but we still have to disclose and document it until Understand your duties of confidentiality under both types of agency.

Sellers Disclosures cont’d. Take notes of what you observe on a listing presentation and afterward. Look for unsafe conditions, mold, leaks, termites, etc. and make written recommendations to the seller to remedy. Ask if there have been improvements or additions and get a copy of the permits and survey if possible for your file. Take your own room measurements—don’t use a prior listing. If waterfront property, get copies of dock permits. Obtain a copy of the current tax bill showing taxes and square footage or look it up online. Verify HOA, COA or community fees, restrictions, assessments, etc. with association or property manager. Fill out the COA /HOA/Community Disclosures with seller so you’ll have them handy to give to selling agent before an offer comes in. Ask the seller if they know of any material fact that should be disclosed that isn’t in the Seller’s Property Disclosure. Request seller to initial listing fact sheet.

Other Conditions Make sure you represent the lot boundaries correctly—walk a survey with seller if in doubt. Know if there are any off-site conditions and disclose them (train, airports, floods, smells, alligators, traffic noise, etc.) If asked about nuisances, disclose what you know (barking dogs, drunk neighbors, Megan’s Law, etc.) If asked about psychological conditions, disclose what you know (murder, suicide, ghosts, fire, etc.) The rule of thumb is to disclose anything you know about that could be material to the buyer’s decision to buy. If asked, “Do you think it’s a problem,” reply “Only YOU can determine that.”

Environmental The majority of lawsuits filed are the result of problems with the property and failure to disclose by the agent. ALWAYS recommend an inspection. Inspectors use lots of disclaimers—so should you! Attend an inspection, don’t be a part of one. When you attend an inspection for an out of town buyer, tell the buyer you will give the inspector access to the property but they should talk directly to the inspector. If you represent a condition on the word of the seller, document that you just passed on their advice. It’s not enough to disclose—you must disclose the significance of it!

Inspections Be sure to recommend at least 3 inspectors who are insured and reputable (see IPRE list on intranet). Don’t characterize any problems in the inspector’s report—ask the buyer what they want to do without your input. Put the buyer’s request in writing and send it to the listing agent within the time period outlined in the contract. Negotiate what the seller will fix based on the amounts and definitions in the contract—put it in writing and have it signed by both parties. Get receipts and proof that the seller has done the work before closing. Or,agree on a credit that the buyer will receive at closing. Know your inspection clauses and work within the definitions.

Inspections, Cont’d Be sure to recommend at least 3 inspectors who are insured and reputable (see IPRE list on intranet). Don’t characterize any problems in the inspector’s report—ask the buyer what they want to do without your input. Put the buyer’s request in writing and send it to the listing agent within the time period outlined in the contract. Negotiate what the seller will fix based on the amounts and definitions in the contract—put it in writing and have it signed by both parties. Get receipts and proof that the seller has done the work before closing. Or,agree on a credit that the buyer will receive at closing. Know your inspection clauses and work within the definitions.

Time Is Of The Essence It is YOUR responsibility to make sure that the dates called for in the contract are met. Prepare a calendar for each transaction and give a copy to all parties. If you have a delay, get an amendment signed by all parties to extend the date. All notices required by the contract should be in writing and delivered to all parties. The mortgage commitment should be checked for conditions or the contingency is not met. Get your escrow deposit, keys, garage door openers, and utility changes handled well in advance of the closing. Keep the cooperating agent and your client informed at all times.

The Law Johnson vs. Davis—1985 “Sellers and their agents have a duty to disclose all conditions that materially affect a property.” Sellers must know about defect. Agent must either know about defect or “should have known” about defect. Buyers have a duty also to obtain facts. If you get sued, your Errors and Omissions insurance will defend you but you’ll be responsible for a $2,500 deductible and a lot of your time. If a claim is made against you with FREC, fines and penalties are not covered by E&O. Keep all of your files and records for 6 years!

Odds and Ends When you take a listing, have the seller sign your CMA so you avoid lawsuits based on pricing. When you get a referral, get the license number and broker of the referring agent and check it out. Verify that there is enough equity in a property to pay your commission and the commission you are offering other agents. Don’t make verbal offers—EVER. Become familiar with the NAR Code of Ethics and act accordingly. When the hair on the back of your neck gives you a warning that a client is trouble—heed it and “fire” the client. Make sure your buyers are qualified to purchase in advance of contract.

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In Summary Listen, don’t talk—God gave you two ears and one mouth for a reason! Always think before answering questions and refer the questions to an “expert” whenever possible. Always recommend an inspection but don’t become the inspector. Observe a property you are selling carefully and raise any issues that might cause a problem. Disclose everything and anything that might be material to the buyer. Keep notes of all conversations and document your file carefully—it could save you thousands of dollars & time. Be responsive, keep in touch, live up to your word and conduct yourself in accordance with the Golden Rule.

Do Unto Others As You Would Have Them Do Unto You!!