Here’s a hodgepodge of random questions. Usually I try to keep a theme but 2020 has proven to be odd so why shouldn’t we have a mixed question broker moment?

Question #1: When a seller signs a backup offer but there is not earnest money until first position, do these contracts need to be uploaded in command? 

Yes. Anything that is ever signed by the client or any offer received on a listing must be part of the file.
The state’s definition of a brokerage record is the following:

(7) “Brokerage record” means any record related to the business of a principal broker, including:
(a) record of an offer to purchase real estate;
(b) record of a real estate transaction, regardless of whether the transaction closed;
Question #2. – Can you help me understand what would be included from these two addenda?
The following addendum #1 was written by the Buyer:
1. Seller’s Contribution to Closing Costs. Seller agrees to contribute at Settlement the amount of $2,000.00 to be applied at Buyer’s discretion toward any or all of the following: (a) a permanent reduction, or temporary reduction, in the mortgage loan interest rate; (b) mortgage financing costs; (c) closing costs; and (d) Prepaids/Escrows. Any unused portion of Seller’s contribution may, at Buyer’s option, be used to reduce the Purchase Price.
2. Expansion tank and earthquake straps installed on water heater
3. The power ‘mast’ to the home is leaning and will be straightened.
4. Failing support post in the carport will be replaced
5. Anti-tip bracket installed on kitchen stove
6. Upstairs toilet correctly affixed to floor
7. Buyers will be able to verify all repairs by walkthrough within 5 days of closing.
The following Counteroffer #2 was written by the Seller.
1. Mast will be secured using and the tree branches were removed to prevent further leaning, electrician said it was in good working condition without straightening.
So the question is what items has the Seller agreed to take care of?
We know that an acceptance of an addendum or counteroffer is an acceptance of all previous addenda. Counteroffer #2 accepts all the terms of #1 if they were not specifically removed. In this example, the Seller has agreed to items 1,2,4,5,6,7 on the Addendum #1 because item #3 is the only one discussed on the Counteroffer #2. This is Real Estate 101 and is imperative that you understand this concept: AN ADDENDUM OR COUNTEROFFER ACCEPTS ALL PRIOR ADDENDA UNLESS IT’S SPECIFICALLY REJECTED!
Question #3 – Can I advertise that I will contribute $100 to the Red Cross for every transaction that I close?
The answer to this may surprise you but this is PROHIBITED. Let me expand why. An Inducement gift is an advertisement that states that if you Buy/Sell with me then you will receive ____________. In this example, the Red Cross is not the Buyer or the Seller so they aren’t allowed to receive the inducement. This would be an unauthorized sharing of the commission.
Question #4 – I have an agent wanting to auction something off at a fundraiser- ” Bid on this to get Free Closing cost when you sell your house with me” Something like this… How does she do this and stay compliant? 
This would be an inducement. “Bid on this item and get _________ when you sell a home with me*”
*= terms and conditions apply
The terms and conditions are: “_______ is subject to the buyer or a seller complying with the underwriting guidelines that apply to any loan in the transaction for which the inducement has been offered.
This IS legal because the person bidding is also the buyer/seller and is allowed an inducement if it complies with the underwriting guidelines.
Question #5 – Do I need the Buyer’s Permission to put a listing on the MLS at “Backup” status?
No. You need their permission for “Active T/C” (Active Time Clause) through the Active Time Clause Addendum but not for the “Backup” status.
Question #6 – Am I allowed to show homes to a Buyer even when we are in a Secondary/Backup position on another home?
Question #7 – When is the earnest money to be deposited for a Secondary/Backup Offer?
The standard secondary offer states within seven calendar days of the Seller notifying the Buyer that their offer is now the new primary contract. In other words, as long as you are on the sidelines as a backup offer then no earnest money needs to be deposited.
Question #8 – if a listing includes the washer/dryer but the buyer doesn’t want the appliances, does a seller have to remove them?
If the washer/dryer say they are included in the REPC then it’ll be the Buyer’s responsibility to remove them if they don’t want them. However, if you put it in the “Scrap Metal” section of it’ll probably be removed within hours of posting. If the REPC states that something is included then it’s required to be included, even if all parties think it’s a piece of junk. All parties MUST follow the written contract.
Question #9 – What kind of recourse a buyer would have if something were to happen to the home between the settlement deadline and the possession date.
On this question I’m going to assume that Closing takes place on Monday and Possession takes place on Friday.
There’s two paragraphs that we may want to focus on for this question. The first one is section 3.3: “Any contracted rental of the Property prior to or after Closing, between Buyer and Seller, shall be by separate written agreement. Seller and Buyer shall each be responsible for any insurance coverage each party deems necessary for the Property including any personal property and belongings. The provisions of this Section 3.3 shall survive Closing.”
The other one is Section 10.3  Condition of Property/Seller Acknowledgements. “Seller acknowledges and agrees that in reference to the physical condition of the Property, Seller agrees to: (a) disclose in writing to Buyer defects in the Property known to Seller that materially affect the value of the Property that cannot be discovered by a reasonable inspection by an ordinary prudent Buyer; (b) carefully review, complete, and provide to Buyer a written Seller property condition disclosure as stated in Section 7(a); (c) deliver the Property to Buyer in substantially the same general condition as it was on the date of Acceptance, as defined in Section 23, ordinary wear and tear excepted; (d) deliver the Property to Buyer in broom-clean condition and free of debris and personal belongings; and (e) repair any Seller or tenant moving-related damage to the Property at Seller’s expense. The provisions of Section 10.3 shall survive Closing.”
Because the possession date was agreed upon for Friday then 10.3(c) would be based off of Friday and not four days prior at Closing. The best practice here would be for both the Buyer and Seller’s insurance to be in place for those four days and let their attorney’s figure it out if it was something catastrophic like a fire, however, 10.3(c) makes it clear how the condition will be at the time of possession.
Question #10 – Can I use the Effective Year Built when determining whether to use the Lead-Based Paint Disclosure?
No. It’s based on the actual year built.
Question #11 – Why do we have to specify that earnest money would go to a title company over a brokerage trust account?
The REPC states the following: “After Acceptance of the REPC by Buyer and Seller, and receipt of the Earnest Money by the Brokerage, the Brokerage shall have four (4) calendar days in which to deposit the Earnest Money into the Brokerage Real Estate Trust Account.” Submitting the Earnest Money to the wrong location could make the Buyer in default of the contract. Even though it’s a technicality, the REPC is very clear where the Earnest Money will be deposited. It will be at the Buyer’s Brokerage unless otherwise agreed to in an addendum.
Question #12- What are the primary differences between holding EM at title vs brokerage? I understand that the difference is that title insurance companies are bound by insurance law/regulations, but what does that mean to me and my clients?
The broker has clear rules from the division of real estate on how to handle earnest money. The main benefits of both locations:
At the Brokerage
1. The broker can release the earnest money without both parties agreeing to it, if the REPC is clear that it needs to be released.
At the Title Company
1. If the earnest money is larger than the commission then the brokerage will need to release some/all of the Earnest Money to the Title Company in order for the home to record.
2. The title companies oftentimes have runners that will pick up the earnest money for your client.
3. Title companies typically will accept wire transfers as earnest money.
Question 13 – What can you LEGALLY disclose to parties in a multiple offer situation, as a listing agent? I’ve heard it suggested that it’s “illegal” to disclose how much another offer is, but I’m not convinced that its actually law. Of course, the ethics of it could be complicated and your duty of confidentiality would be at play as well.
A listing agent does what the Seller instructs them to do. There was one time my Seller received two offers. He asked me to share the highest offer with the lower offer and see if they wanted to increase their offer, which they did. Then the Seller had me take that higher offer to the original highest offer to see if they’d increase their offer, which they also did. Then the Buyer had me take the new highest offer back to the original party. Even though I felt like a schmuck approaching the agent agent seeing if they would go higher, this was the direction of my client and we have a fiduciary of obedience, so I presented that offer again.
In regards to confidentiality, you have a fiduciary of confidentiality to your client. Receiving an offer from another party does not require your Seller to keep that offer confidential. We know that the definition of confidentiality is: “confidentiality, which prohibits the agent from disclosing, without permission, any information given to the agent by the principal that would likely weaken the principal’s bargaining position if it were known.” 
Question 14 – What are some ways a client get out of their current lease in order to buy a home?
You could see what the early buy out of the lease would be and include that on an addendum that the Seller will pay off the Buyer’s lease.
Question 15 – What rights does a buyer have if the repairs that were in a normal addendum are not completed by settlement?
Typically an underwriter isn’t going to allow settlement to take place if a repair on the addendum is not complete. If the Seller hasn’t don’t everything agreed upon then the Seller would be in default. Please see section 16 of the REPC for Buyer’s recourse. This is a good place to remind you that all repairs must be done through an addendum and not through a separate note signed by the Seller and Buyer as that would be FRAUD.
Question 16 – What steps should you take if your Buyer who you have a signed BBA with, goes under contract with another agent while you are out of town or possibly sick?
Unfortunately, anyone who has been in the business for a few years has had this happen. If you know the agent purposely interfered then you could file a complaint with the board of realtors. My best recommendation for you is to know that you will be burned sometime in this industry and to NOT let it ruin your other deals. Please, talk with me when this happens. 

Question 17 – How to best handle when an agent holds monies hostage because they fill an extra steps needs to be done in the home? For example they feel the home is dirty and the seller should pay for a cleaner. 
As an agent we can’t solve these problems. Once it’s closed if there is a dispute it’s good to get the broker involved, but usually if it can’t quickly be solved then we advise the client that this is outside the scope of our practice as we don’t practice law.
Question 18 – How do you write an increase in BAC into an offer? For instance; say a seller is offering to pay 2% commission on their listing but you and your client have agreed that your compensation will be 3%. In order to make sure that the 3% is being paid, your client has asked you to request the seller pay 3% instead of 2%. How do you go about that?
You can use escrow instructions prior to showing the home or you could use the Real Estate Brokerage Payment Addendum.
Question #19 – If I am reimbursing part of my commission on a deal I can’t just give that back in cash at the end, right? Doesn’t it need to apply towards closing costs or something like that? To get this deal, I am giving back 1% of my commission but he asked if I could just do it in cash at the end, but I don’t want to because I don’t want to pay taxes on that money.
If you agree to give back some of your commission then this would be an inducement. Questions #3 and #4 also talked briefly about inducements. If you were to write a buyer broker agreement that stated you were going to give back 1% of the commission then it would need to be on an addendum to the Exclusive Buyer-Broker Agreement (which the Broker also has to sign) and should say something like:
“Buyer’s Brokerage agrees to gift back 33% of the commission to the Buyer. This will be done in the form of Closing Costs, a reduced purchase price, cash, etc, however, this gift must comply with the underwriting guidelines that apply to any loan in the transaction for which the inducement has been offered. In the event the underwriting guidelines prohibit any gift, then the Buyer understands there will be no gift. Any inducement gift will be disclosed to the lender and will be referenced on the Closing Disclosure. Buyer understands that no gift will be given outside or closing or after the completed transaction as this is illegal.”
Just a reminder. All inducement gifts require my signature. Don’t catch yourself promising something in an email but not putting it on an addendum to the agency agreement.
I hope this helps you all. I enjoyed answering your questions. I’d love to get more of your questions for the next email.