Agents,
There are multiple funny memes that I could’ve shared where they say a meeting could have been an email. Well you are in luck, this meeting is an email! It should take you less than 10 minutes to read. It would be at least an hour meeting for me to go over this content, so… you’re welcome.
I’ve done my best to collect many of the questions I’ve been asked last month. From these questions here are some of my favorites that I felt like should be shared with the agents at brokerage.
Multiple Offers
Question: If I am the listing agent and have received only one offer on the home, can I send out the “Seller’s Notice to Buyers of Multiple Offers” if instructed by my client to give the appearance that there’s more interest in the property than there really is?
On the one hand, we as agents have a fiduciary duty of obedience, yet on the other hand, we have an ethical responsibility to the public of honesty. In my opinion, if your client requests to use this disclosure then you wouldn’t be able to use it. I think the only way a client suggests this option is if the agent claims that this is an ok route to pursue. It’s not. Being honest with all parties is required.
Question: If I represent a Buyer, may my client write offers on multiple homes to increase the likelihood of one of the offers being accepted even though my Buyer only intends to purchase one home?
Yes. Prior to accepting an offer, a listing agent should ask the Buyer’s agent if there are any other properties the Buyer is under contract on or currently negotiating. If the Buyer does go under contract on multiple properties then each contract MUST have separate earnest money turned in for each property. If your client only wants to move forward with whichever offer accepts the terms, then once you have an accepted offer, the other offers should be rescinded.
Question: What should I do when I’m the listing agent and the buyer agent asks if you have any offers?
I would suggest finding out how your Seller wants you to answer this question before it comes up. If you haven’t had the discussion and you answer the question then you could be in violation of the fiduciary of confidentiality as this could possibly weaken the Seller’s negotiation position. If you are asked this question and you don’t have direction then you could use this generic response. “This is a great property and we are currently not under contract. If your client likes the property I would suggest they submit a strong offer.”
The MLS
Question: Can I cancel an MLS listing and immediately relist it so the “days on market” (DOM) on the MLS resets to zero?
Yes. The MLS will require paperwork for any canceled listings that are subsequently relisted. In order for this to be legal, you MUST actually cancel the Exclusive Right to Sell Listing Agreement. Afterward, you will need to reestablish agency with a new Exclusive Right to Sell Listing Agreement signed by all parties. The MLS will request these forms and failure to provide them will result in a fine.
In other words, you may NOT just cancel the MLS listing and re-list it with the same original Exclusive Right to Sell Listing Agreement.
Question: What legal ramifications are there for an incorrect MLS listing?
The MLS listing is binding between two parties and it’s NOT the Seller and Buyer. The MLS listing is a binding agreement between the listing broker and selling broker on what sort of compensation will be offered. Most of the other items on the MLS printout should be as accurate as possible. The most common complaints are about the square footage and promises that are made in the remarks section of what will be included (see the next question). That being said, you need to make sure what is advertised on the MLS has been signed off by the Seller on the MLS input pages.
Question: The MLS listing states that with a full price offer that the Seller will install landscaping and sod in the backyard. Is this binding?
Please understand that in this example the Seller has disclosed something they are willing to do, BUT it is the responsibility of the Buyer to ask for those items in the REPC. If the Buyer and Seller go under contract and there is no addendum clarifying that the seller will install sod and landscaping then the Seller is NOT required to install those items. In fact, if you don’t put it in the contract the Seller shouldn’t do any of the landscaping based on section 12.1 of the REPC which says: “No substantial alterations or improvements to the Property shall be made or undertaken without the prior written consent of Buyer.”
In my opinion, if an MLS listing states that the Seller will include something in the MLS remarks and the Buyer’s agent doesn’t ask for those items then this would be a lack of the fiduciary duty of reasonable care.
Question: Can a Listing Agent decrease the commission compensation after my clients have previewed the property?
Let’s say you preview a home on Monday and your client waits until Thursday to write an offer. In the meantime, the Buyer Agent Commission (BAC) was changed from 3% to 2% on Wednesday. What commission would be owed to the Buyer’s agent?
Unfortunately, the commission would be 2 percent. What is offered on the MLS when the offer is received by the Seller or their respective agent, is what the compensation will be, however, compensation may not be adjusted once a property is under contract without escrow instructions signed by the principal brokers.
Question: My Buyer’s purchased a home that shows 3000 square feet on the MLS but it’s really only 2680. What can the Buyer do?
When you represent the Buyer, one of the first things you should do when going under contract is to verify the square footage on the MLS is the same as what is disclosed on the county records. It’s very easy, just click on the Tax ID link on the MLS and verify the square footage. If it’s different, make sure you send an email to your client letting them know the discrepancy so they can decide how to proceed.
But if that wasn’t done and the Buyer purchased the home do they have any recourse? Possibly but probably not.
The Exclusive Buyer Broker Agreement states in paragraph 6: “The Buyer is advised not to rely on the Company, or any agents of the Company, for a determination regarding the physical or legal condition of any property selected by the Buyer, including, but not limited to: the exact square footage or acreage of the property.
The Buyer Due Diligence Checklist has all of paragraph 11 as a disclaimer
11. SQUARE FOOTAGE/ACREAGE: If the square footage or acreage of the Property is of material concern to Buyer, Buyer is advised to verify the square footage or acreage through any independent sources or means deemed appropriate by Buyer. In the event the Company provides any numerical statements regarding these items, such statements are approximations only. Buyer is advised not to rely on seller, the Company, or any agents of the Company for a determination regarding the square footage or acreage of the Property.
Finally it’s also referenced in Section 8.1(a) of the REPC.
(a) Due Diligence Items. Buyer’s Due Diligence shall consist of Buyer’s review and approval of the contents of the Seller Disclosures referenced in Section 7, and any other tests, evaluations and verifications of the Property deemed necessary or appropriate by Buyer, such as: the physical condition of the Property; the existence of any hazardous substances, environmental issues or geologic conditions; the square footage or acreage of the land and/or improvements; the condition of the roof, walls, and foundation; …
In my opinion, if the Buyer’s agent has the Exclusive Buyer-Broker Agreement and the Buyer Due Diligence Checklist signed then the agent is protected. If the accuracy of the square footage is important to a Buyer then they should verify the accuracy of such information.
When you are the listing agent, please ensure that the square footage and acreage are the counties recorded amounts unless you have documentation, THAT YOU INCLUDE IN YOUR TRANSACTION FILE, that shows something different.
Question: How do I prevent getting a late listing fine from the MLS?
I’ve spent multiple pieces of training on this subject yet on average 2-3 agents per month licensed at the brokerage are fined for not following this rule. Just so you know, the fine for this is now $250. Please review some past broker moments regarding this but the quick version: The MLS needs to be notified within five business days when you take a new listing. They need to receive a copy of the MLS Listing Exclusion Form if it’s not going to be published within those initial 5 business days. If you do use the MLS Listing Exclusion Form make sure when you activate the listing that the listing date is the date the Agency was created and NOT the date you are publishing the listing on the MLS.
Question: The wrong transfer fee amount was disclosed on the MLS. Who is responsible to pay the difference?
Section 4 of the REPC shows who pays for the transfer fees, HOA fees, etc. The listing agent should do their best to get the accurate information prior to listing the home on the MLS. The Buyer’s agent should get with their title company to verify the accuracy of those fees. I would suggest using wording in the agent remarks section of the MLS listing that says the following: “Buyer and Buyer’s Agent are responsible to verify the accuracy of all information on this MLS listing.”
The Buyer-Broker Agreement & Exclusive Right to Sell
Question: My Buyer-Broker Agreement is valid until June 30th. My clients are under contract on a home that will close on July 10th. Do I need to get an extension to my Buyer-Broker Agreement?
No. If your Buyer goes under contract while you have a valid Buyer-Broker Agreement then a commission will be due and you don’t need to put an addendum together to extend the Term of the Agreement. So as long as the REPC was signed prior to 5:00 PM on June 30th then you don’t need to extend the Buyer-Broker Agreement. See the highlighted sections of paragraph 2 of the Buyer Broker Agreement:
“2. BROKERAGE FEE. If, during the Initial Term, or any extension of the Initial Term, the Buyer, or any other person acting in the Buyer’s behalf, acquires an interest in any real property as referenced in Section 1 above, the Buyer agrees to pay to the Company a brokerage fee in the amount of $_____ and _____% of the acquisition price of the property (the “Brokerage Fee”). …”
The same holds true for a listing agreement. If your seller is under contract the listing will NOT expire, however, if the current buyer in escrow cancels then your listing agreement would be immediately terminated.
Question: Can I put a lien on a property with a signed Buyer-Broker agreement?
Let’s suppose you helped a buyer locate a property for a buyer and the seller wasn’t willing to pay a commission and the buyer understood that they would owe you a commission. Could you put a lien on the property to make sure you are paid at Closing? Yes, you can go to your favorite title company and have them file the lien for you.
Question: When is agency official?
Agents!!! Sign the Buyer-Broker Agreement the same day as the Buyer’s and Sign the Exclusive Right to Sell Listing Agreement the same day as the Sellers! It’s that simple. Don’t pretend you can get around some of the MLS or state rules by claiming that agency hadn’t been established because you didn’t sign it. Failing to promptly sign the agency documents only can cause problems, not prevent them!
Question: Do I need to disclose if I have a transaction fee?
Section 2 of both the agency contracts allow for a dollar amount and a percentage amount. I would suggest using the dollar amount for the transaction fee and the percentage amount for the commission amount. It’s important to understand that both of these fees are commissions even though some of it may be used to pay your licensed transaction coordinator for helping with the transaction.
Legal REPC Questions
Question: Closing takes place on June 9th but the Possession date for the Buyer’s isn’t until June 16th. Whose insurance is in place for the seven days between closing and possession?
In Section 20.1 of the REPC it states: As of Closing, Buyer shall be responsible to obtain casualty and liability insurance coverage on the Property in amounts acceptable to Buyer and Buyer’s Lender.
Section 3.3 states: Seller and Buyer shall each be responsible for any insurance coverage each party deems necessary for the property including any personal property and belongings.
I don’t know the answer to this question but the best practice, when possession isn’t upon recording, would be to include a clause in an addendum that states that the Seller will be responsible to keep insurance on the property until the Possession has been transferred to the Buyer. I hope the forms committee adds this to the REPC one day. I’m curious to see how many agents read these emails in their entirety. The first twenty agents at the brokerage that respond to this email and tell me something they learned will get a five dollar swig gift card. My prediction is that it will take at least three days.
Stigmatized Properties
Question: My client doesn’t want to disclose that a murder took place in the home. Does this need to be disclosed?
In Utah there some things that stigmatize a property: Murder, Suicide, Ghosts, Previous Owner with HIV, and a previous Meth House. I would say the one with the most questions is Meth. Meth needs to be disclosed once a Seller is aware of it, however, once the health department certifies that it’s cleaned up and removes the property from the list of contaminated properties then it no longer needs to be disclosed as stigmatized properties don’t need to be disclosed in Utah. A home with Meth previously needs to be disclosed until the health department has removed the home from the list of contaminated properties. Once it’s cleaned up and certified by the health department then it doesn’t need to be voluntarily disclosed, however, if a Buyer specifically asks if any previous meth cleanup has taken place then it would need to be disclosed. The same goes for the other stigmatized options. If the buyer asks if a murder has taken place in the property you would need to answer it honestly but you don’t need to openly disclose a murder that took place at the property.
Paying Showing Agents
Question: I have agreed to pay an agent $50 so show homes for me. Can I just pay them directly?
No! Any payments that require a real estate license must be paid for by the Brokerage. Since showing homes requires a real estate license you would need to be paid by the brokerage. The brokerage will not take a split on any showing costs but we still need to process the payment. In this example, the agent could Venmo the brokerage (@kwsouthvalley) or write a check to the brokerage and let Amy know who that payment is for.
Social Media
I need to give some soapbox advice regarding social media.
#1 – You are not allowed to give unsolicited negative advice regarding builders or other agents. This goes against the code of ethics. If you are unhappy with an agent or builder and plan to post something negatively, please discuss the situation with me first.
#2 – Less is generally more. If you get a negative review and you want to respond, I’d recommend you keep the responses short and precise and ALWAYS wait at least a day before responding so that cooler heads may respond.
#3 – Make sure the brokerage name (KW South Valley Keller Williams) is included in any advertisements. I’d suggest branding the primary photo with the logo.
#4 – Don’t feed the trolls.
#5 – Don’t be a troll.
Earnest Money
Question: Can earnest money be a check larger than $10,000?
Yes. The brokerage will accept earnest money checks in any amount but no money will be released or transferred until it has been cleared by the bank.
Home Warranties, Title Companies, Mortgages
Question: Can I let the client know if their loan terms sound unreasonable?
As an agent, you should have the discussion early on that they are encouraged to get multiple quotes from all the companies. You are a real estate agent that specializes in the marketing and sales of property. If you think the terms of their loan are not good then you could ask if they compared that rate with any other companies but much more than that is getting involved with a part of the transaction that you are not licensed to do.
In regards to home warranties. DO NOT say something will be repaired or replaced by the home warranty company. You should refer them to their policy so they know exactly what the policy covers. When I explain the home warranty I’ll tell the client “A home warranty covers many heating, cooling, electrical, plumbing and appliance issues that are not known to the buyer. You will want to compare the policies to determine which one is best for you”
Time Clause Addendum
Question: If you represent the Seller and your client currently has an accepted offer with a time clause (which is probably contingent upon that Buyer selling their home) and then receive an offer with no contingencies that you want to accept, how is that done without having two valid contracts.
With the second offer, you would counter their offer with a secondary/backup offer addendum. Once that is accepted, you can notify the primary offer that you have accepted another offer and that they need to remove those contingencies. If they remove them, you stay in contract with offer #1, if they don’t remove them then you can move offer #2 to the primary position with the appropriate disclosure which is in the MLS forms.
I hope this helps,
