The 24 Points that have gotten agents in legal trouble: PLEASE READ: A post by your broker

Dear KW Team;

This is an important reminder about issues that have shown up on various transactions. I want to send this list as a reminder of how to handle things that will keep you and your clients in good relationships, with fewer challenges in your transactions. Here they are:

1. RETURN CALLS AND EMAILS PROMPTLY: Always return your clients, and other agents’ calls and emails as quickly as you can. In addition doing this to be a great businessperson, it helps keep issues that come up less volatile. People get most frustrated when they feel are being ignored. Take care of everyone they same way you would want to be taken care of.

2. TURN LISTING AND SALES CONTRACTS AND ANY SIGNED DOCUMENTS IN WITHIN 24 HOURS: As the broker, we have to review every signed document within 72 hours of it being agreed to; if we can’t do that we are in violation of DRE regulations. If you don’t turn those documents in you are putting our broker’s license in jeopardy. If you do it right away, it helps us stay in compliance.

3. IF YOUR CONTRACT DOES NOT GET ACCEPTED, TURN IT IN FOR OUR MASTER FILE. We are responsible to address anything that is done via the activity of our agents. If you write contracts that are not accepted, please be sure to turn them into the MCA. She will put them in a master file of unaccepted contracts.

4. TAKE EXACT CONTRACT DATES SERIOUSLY: (i.e. contingency removals, funds to escrow, inspection dates, loan approval, walk through, etc.) Everything needs to fall within the dates AGREED TO in the contract. If it cannot happen because situations have changed, you must have an extension or modification of terms signed by all parties to continue forward. Don’t let contract dates go unperformed without an agreement to extend those dates IN WRITING. Doing so may put your clients in jeopardy and may cause them to lose out.

5. HAVE CLIENTS REVIEW AND SIGN ON ALL DISCLOSURES AS SOON AS POSSIBLE: This should never wait until the close of escrow. If the clients feel they were under duress to close an escrow after receiving a disclosure at the end of the process, they have the right to sue for damages. Everyone needs to really focus on getting everything disclosed to the buyers, and making sure it is done as early as possible in the transaction, and absolutely within the time specified in the contract. If challenges exist in the disclosure the client then has ample time to decide what to do, and you will be representing them properly. It is mush preferred to have sellers prepared with these their disclosures and inspection reports fully completed, and presented to each buyer at the time they present a contract.  Everyone is in the loop on anything that needs further discussion, and it’s better and safer for every single party involved.

6. DOCUMENT EVERYTHING DISCUSSED: When you and your clients, or your clients and the other parties, agree to anything, it needs to be documented and included in the file. In addition to all contractual items, anything else that is discussed should be followed up in email, and then uploaded to the file. This keeps everything clear, and there is less room for disagreement on what happened later on. MAKE SURE THAT ALL YOUR EMAIL DISCUSSION BACK AND FOR ARE UPLOADED TO THE FILE AS CLOSE OF ESCROW. THIS WILL HELP A LOT IF SOMEONE COMES BACK MONTHS OR YEARS, AND SAYS THEY DIDN’T KNOW SOMETHING, THAT WAS DOCUMENTED IN THE EMAILS.

7. MULTIPLE OFFERS REPRESENTING THE SELLER: a. Make sure all the agents who bring buyers to your listing are treated respectfully. Keep them in the loop about how many offers are coming in, and let them know when you will be presenting offers. NEVER represent more offers than you expect in order to “trick” anyone. This is not how we work at Keller Williams. Contact them right after a seller decision has been made, and let them know the result. You may be on the opposite side of one of their listings one day. Make sure you treat everyone with the same respect and care you would want for yourself and your own clients. b. If you send off multiple counter offers, be sure you ALWAYS check the box that on the contract that allows the seller to accept which ever signed counter they prefer when any of the counter offers come back agreed to. This is a MUST to keep your seller from being in contract with two parties as the same time.

8. MULTIPLE OFFERS REPRESENTING THE BUYER: a. Always include a cover letter on ALL offers to introduce and give the seller and listing agents more details who your clients are, and more about them and the offer. It makes your offer more professional, and represents your clients, as you should be doing for them. b. Make sure your buyers are PRE-APPROVED for a loan, subject to finding a property-including confirmation that funds to close have been verified, and the credit check has been completed. Provide the lender details to the listing agent, along with a strong letter from the lender showing their ability to purchase this property, subject to the property appraising. c. Be available to the listing agent for any further questions or concerns, and always be very professional and GREAT to work with. The agent on representing the seller wants to know you will not be a nightmare to the transaction. d. Write a strong offer, but never put anything in your offer the client cannot do, just to get into first position. Go over the contract with your client, and make sure they understand each paragraph, so they can be sure they can perform when called upon to do so. If they cannot, don’t let them agree to it.

9. BIDDING OVER THE ASKING PRICE: Whether you represent the buyer or the seller. Be cautious when handling multiple offers. a. If an offer comes in well over the asking price, and it is subject to appraisal, will the property appraise for the price being bid? If it is likely it will not, you many not have a real offer that will stay together, unless: i. The buyer is paying cash or has a substantial down payment that can allow for them to pay the difference in cash, and they are willing to do that. If this is the case you can suggest they make the offer, and it will NOT be subject to appraisal. ii. Don’t remove the appraisal contingency if you have not had funds verified that the buyer can pay the difference, if the property does not appraise.

10. “As is”: a. This does not mean the buyer has to take what ever they end up with. It only means that the buyer is aware of the specific conditions that were disclosed to them on the property, and they agree to take the property with those conditions as they are. IF it has not been disclosed to them, the “as is” clause does not apply.

11. PROPERTY INSPECTIONS: The purpose of property inspections is to make sure the buyer is getting what they expect, and to uncover anything that both parties may not be aware of. This should not be represented to the buyer as the time to renegotiate the contract because the seller has taken their home off the market. If substantial issues show up in the inspection, renegotiation on that issue may be valid. However, don’t set this expectation up at the time you are writing the contract with your buyers. You will have a much greater chance of the seller becoming angry and becoming difficult to work with, and the buyers’ expectations not being met because they had been advised to renegotiate at this time. Lots of transactions fall apart because both parties get stubborn or upset, versus everyone working together for an agreeable close. If the property has ANY previous inspections, even from many years past, you are required to dig them up, and present them to the buyers for review. 

12. NON-REFUNDABLE DEPOSITS: If the seller is requesting a non-refundable deposit, please contact your team leader before writing the offer for your client to discuss. This is a very, very precarious condition that can lead to many challenges if the buyer is not clear on what they would be agreeing to.

13. WALK THROUGH INSPECTIONS AND VERIFICATION OF REPAIRS: This is not the time to renegotiate the contract. The walk through is to confirm that the property is being delivered in the same condition it was in when purchased, and all repairs that were agreed would be done by the seller in writing have been completed, and were done appropriately.

a. Always do a walk though inspection with your buyers (ALL BUYERS NEED TO ATTEND) before close of escrow, and do not let your clients waive this option.

b. Always put the findings of the walk-through in writing and make sure the seller has signed off on them.

c. Make sure receipts for permits are provided, and licensed contractor receipts are provided for any work requiring a contract and/or permits.

d. If the seller is still in the property, the walk though done 5 days prior to close needs to state the seller is still in the property, and upon them vacating another walk through inspection will be done to verify condition after they vacate.

e. If the seller is staying after close of escrow per the contract, it is a good idea for a deposit to stay in escrow until after the final verification is done, which is released to them upon the after-close walk through.

f. PLEASE NOTE, YOU ALWAYS DO A WALK-THROUGH 5 DAYS PRIOR TO CLOSE, AND THEN DO A SECOND IF SELLER IS STILL IN POSSESSION OF THE PROPERTY. BOTH NEED TO BE DOCUMENTED WITH BOTH BUYER AND SELLER SIGNING OFF, AND IN THE OFFICE FILE.

14. HOME FLIPPING:

a. Seller should provide copies of all permits for work, and that city inspections were signed off on.

b. Seller should provide copies of all previous inspections done when they purchased.

c. Seller should provide all information on all licensed contractors that worked on the property prior to putting it back on the market. Seller should disclose if licensed contractors did NOT do the work.

15. TRANSFER DISCLOSURE STATEMENTS:

a. NEVER EVER TOUCH THE SECTION THAT IS SUPPOSED TO BE DONE BY THE SELLER. You can sit with them while they are doing it, but you cannot do it for them, and you cannot tell them what to put on it. If they cannot see well or need help, have them work with a family member to help them. If they don’t know the answer, it is ok for the seller to note they don’t know. IF you complete this for them you are putting us in liability for what is written by you on the sellers portion.

b. If they disclose something you do not believe is correct, add it to the agents written section. Note what you know to be correct.

c. This is where you are to be factual, and NOT to give opinions. You are not qualified to say if something is a problem, or is not. You are not qualified to note if it is “minor” or “major”. You are just to note everything you see, room by room, and all around the property, and to note all conditions that you are aware of affecting that property.

d. A good rule of thumb when questioning, or when the seller asks “SHOULD I DISCLOSE THIS ABOUT THE PROPERTY?” is… “If you are asking the question, the answer is YES”.

e. IF a situation comes up about disclosing an issue about the seller personally, or about someone personally who has lived in the property (not about the property itself), please contact the Team Leader or me to discuss. Some of these situations can vary depending upon the concern. DO NOT PUT THESE IN WRITING UNTIL WE DISCUSS.

16. LISTING AND SELLING IN AREAS OUTSIDE OF YOUR EXPERTISE: a. If the area you asked to work in is not your usual area, it is highly recommended that you refer that business to an agent who works that area. b. If you are new to the area, but it IS in our standard areas of expertise, make sure you talk with agents who do a lot of work in the area for information you need to know to property represent the buyer or seller. c. If it is outside our board association-please discuss with the Team Leader before agreeing to represent the client.

17. IF YOU ARE THE BUYER OR THE SELLER, OR RELATED TO THE BUYER OR SELLER IN ANY WAY: YOU MUST DISCLOSE THIS IN WRITING IN THE PURCHASE CONTRACT AND IN THE LISTING AGREEMENT, IF YOU ARE ON THE SELLER SIDE.

18. ALL PARTIES WHO HAVE ANY OWNERSHIP MUST SIGN THE LISTING AGREEMENT and SALES CONTACT AND ALL SUPPORTING DOCUMENTS AND DISCLOSURES:

a. You cannot proceed to sell any property until you have agreement from ALL parties on the listing agreement to do so. NO exceptions.

b. You cannot proceed to sell any property unless you have all parties in agreement on the sales contract and all supporting documents. NO exceptions.

19. FIDUCIARY CONSULTANTS, NOT ATTORNEYS, CPA’S OR LITIGATORS.

a. We are the facilitators in a real estate transaction. Legal advisors, and attorneys have prepared our CAR contracts, and there is always long discussion about exactly how the wording should be stated to keep the intent clear. Do not give clients legal advice. We consult them, and then advise them to get legal advice if they have further concerns.

b. DO NOT USE OR SIGN ANY DOCUMENTS OUTSIDE OF OUR STANDARD DOCUMENTS, AND DO NOT GIVE THEM TO YOUR CLIENT TO SIGN, UNLESS YOU BRING THEM TO US FIRST TO REVIEW AND APPROVE.

c. DO NOT CRAFT YOUR OWN DOCUMENTS, OR WRITE ADDENDUMS WHERE YOU HAVE TO CREATE THE WORDING. PLEASE CONTACT US FIRST. MOST EVERYTHING YOU NEED FOR YOUR TRANSACTION ALREADY EXISTS AND HAS BEEN WRITTEN BY A LEGAL TEAM. d. We don’t stand in front of the transaction, we stand with our clients and we advise them on their options, and what to expect in each case. We let our clients decide what to do. We are GREAT Real Estate consultants. When it goes into legal or tax advising areas, we have to have them speak with the people who consult them in these areas. e. Make sure you understand what the contact says, and walk your clients through it. Never email a contract and tell them to review and sign, without going over the points, so they know what they are signing. Be a great fiduciary for them. Oversee and help them make great decisions. f. NEVER tell the clients where they stand legally, and never get them believing they should be suing anyone. The attorneys and judges don’t always know what will happen in a lawsuit, how could an agent? The best idea is always to find win-win solutions. Keep drama low, and professionalism high. Care for and respect everyone involved. Listen well, and help move toward agreeable solutions. Nobody ever gets into a real estate transaction because they want to be in a legal or emotional battle. Always be a part of the solution. Let us know if you need help. We are here to help you.

20. NEVER HAVE A CLIENT SIGN A FORM THAT YOU REPRESENT A CLIENT WHEN YOU DO NOT REPRESENT THEM:

a. It is never okay to say, or sign a form saying, that you are representing a client when you are not their agent.

b. It is never okay to ask another agent to say they are representing a client for any reason, when YOU are actually representing that client, and they are not.

c. It is never okay to lie to a lender or anyone else about anything. That is fraud.

d. As the broker of this office, this is a reminder to all of our associates that misrepresentation of an agency relationship is not permissible and we will immediately dismiss any agent doing so from our company.

e. It has come to my attention that agents in the market place may be asking others to represent their buyers on short sales, so the lender will pay a higher commission on the full transaction. This is absolutely fraud.

f. If you don’t tell the truth-it’s fraud, that’s how you can remember.

21. WE CANNOT REFER OUR ATTORNEY TO THE CLIENTS FOR ADVICE.  If we refer our own attorney we may not be able to work with them, if they represent a client in any way. Clients will have to contact their own attorneys for representation on any issue they need legal advice on.

22. WHEN CHALLENGES COME UP: a. Go directly to the Team leader and let them know.

b. Do not contact our attorney directly. We need to be in the loop, and the process needs to be followed from TL to the broker, and if we see the need, we will contact our attorney.

c. SO YOU KNOW-IF I GET DIRECT CONTACT AS THE BROKER-I will always contact you to see what happened. It is helpful if our TL is already aware of the situation. I will always hear both sides so I can understand the situation. I will be looking for you to have remained very high minded, honest, professional, and responsive, and will assume that is the case, unless I learn otherwise. I will be looking for ways to solve the misunderstanding, or issue, and will want to hear from you on that as well.

d. KEEP YOUR DISCUSSIONS, CORRESPONDENCE AND ATTITUDE VERY HIGH MINDED, APPROPRIATE AND PROFESSIONAL AT ALL TIMES.

• Do not get angry
• Do not be a know it all.
• Do not us inappropriate language.
• Be calm and try to understand everyone sees things from different angles.
• Ask questions, and listen.
• Don’t make accusations, or slander anyone else in the transaction.
• Don’t put another agent or the other client down, ever.
• Do not lower our standards of high minded, professional communication.
• Be connected and kind.
• Don’t be removed and/or unkind.
• Really hear what they are saying and write it down.
• Clarify that you understand what their concerns are.
• Always respond, and follow up.
• Don’t disappear.
• Be proactive, not reactive.

23. BUYERS CANNOT MOVE INTO THE PROPERTY PRIOR TO CLOSE OF ESCROW. a. This is a big potential problem! b. If you have this come up, and need to discuss it, let us know.

23. BUYERS CANNOT DO WORK ON THE PROPERTY PRIOR TO CLOSE OF ESCROW. a. This is a big potential problem! b. If you have this come up, and need to discuss it, let us know.

24. AFTER CLOSE OF ESCROW-WHEN SITUATIONS ARISE: If a client is unhappy and it cannot be resolved, let us know as soon as possible. We are here to help you.

Thank you all so, so much for your attention to these matters.

We always want everyone to have great, smooth transactions, and to make sure our agents are helping their clients have a great experience.

By paying attention to these details we hope to have fewer unexpected challenges, and great continue relationships with everyone we are in business with.

If they do show up, we will have everyone documented and they will be much easier to resolve if we handle everything well.

Most Sincerely and respectfully,

Your broker,

Beverly Steiner