Systems are the saving grace for keeping your broker, agent, manager, buyer, seller, title company, mortgage company, inspector, appraiser, surveyor out of trouble. Knowing that systems work why do we sometimes get sloppy in keeping systems in place?
Here are some definitive suggestions that have come across in conversation with long time pros that every office should consider to “stay out of trouble”.
Allowing real estate licensees to give an IABS, Information About Brokerage Services, to the seller or buyer at the time of contract. The information in the form was intended to be given prior to any substantive conversations taking place. Commercial agents readily state they hand over the IABS to the buyer at the same time the agent writes the lease or offer to purchase contract. They have stated many times they would not even use it except they cannot get office funding without handing a signed IABS over to the office manager along with the lease or contract of sale. The IABS is to be given at first contact where substantive conversation takes place. The agent as a practice should give it to the buyer or seller at time of first contact.
Agreement to show and sell property as an intermediary is on the TAR® or a company’s Buyer Representation Agreement. The time to get permission to be an intermediary is not when the buyer is ready to write an offer. Agents often use the TAR® Intermediary Relationship Notice at the same time they write the offer for the buyer to submit to the seller. This again is not correct practice as this is “after the fact” notification. If the agent used a signed Tenant Representation Agreement or Buyer Representation Agreement at first contact which authorizes intermediary by the client then all is well as you, the agent, begin to show property.
Decorating allowances are a red flag at the closing or any conversation with a buyer, seller, agent, lender etc. Money given back at closing to the buyer is a red flag unless it is spelled out to the mortgage lender what it is for and the lender agrees. These situations where a lender agrees to money being given back to the buyer at closing are “far and few” between.
A BTSA, Bonus to Selling Agent, must have written permission from the seller for the bonus to be given to the Selling Agent. Any money given back to a real estate agent after the closing in the form of a BTSA must have been on the closing statement and have the authorization of the seller and buyer. If an agent were to give their BTSA to the buyer-client, the seller needs to know this as fees, bonuses, must have the permission of both principals to the transaction. If the agent were to give their bonus to the buyer, general practice is to disclose it on the HUD closing statement and it is used for closing costs at the time of closing. Any kickback to the buyer would need to be disclosed to the lender. Disclosure means written notice.
These are just a few of the day to day situations that can be remedied by using correct business systems. These correct practices make you more valuable to your clients as they know their chances of being in a lawsuit and in court are limited. Doing the right thing today will not cost you the sale. It will relieve you of attorney’s fees which will far surpass your commission dollars received on the sale.
Rita Santamaria is the owner of Champions School of Real Estate in Texas with 3 campuses in Houston: FM 1960 Campus, Far West Campus, Galleria Campus as well as campuses in Austin, San Antonio, Coppell, Dallas/Plano. For more information and a list of “Common Agent Mistakes” contact Rita@ChampionsSchool.com.