The Federal Government versus the Real Estate Industry

The Federal Government versus the Real Estate Industry

In 2008 the federal government and the real estate industry (NAR?) entered into a 10 year agreement where the government would not pursue what they perceived as anti-trust violations, if the real estate industry focused on cleaning-up some of it’s practices.  At the most recent Legal Symposium sponsored by the Washington Realtors Association it was revealed that the federal government is once again targeting the real estate industry and how it has failed in some areas.  Apparently, there is a joint Federal Trade Commission and Department of Justice Workshop on June 5th to explore and discuss potential options/penalties for them to pursue.

One area of focus is whether as independent contractors if we discuss with virtually anyone in the industry about the setting of standard commissions (price fixing), requiring specific terms and conditions be included in Offers to Purchase or, requiring the removal of language in Offers to Purchase (paragraph W) when receiving Offers (conspiring to restrain trade).  Stating in front of any competitor (and independent real estate agent) that you would not recommend using a specific lender, attorney, inspector, etc.  This could be construed as a “boycott” of that individual.

Not only does this apply to individuals within an office or agency, but it applies to every real estate Team.  For example, a Team Leader cannot state in any conversation with members of their Team that “they will not use a specific inspector again”.  Because every real estate agent on that Team is a potential competitor, now, or in the future.  That conversation would be considered “boycotting” and fall under federal Anti-Trust Violations.  A Team Leader cannot set a standard commission rate that any, or all, of their Team Members must adhere to.  The Designated Broker of an agency is the only person who can set the commission rates within that agency.

Food for thought.

If you have any questions or comments about this article, please contact Steve Meyers at smeyers@kw.com or (206) 972-3328.

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Photographic Licensing

Photographic Licensing

by Steve Meyers

Prior to engaging a photographer, it’s very important to have them execute NWMLS Form 13 (specific property) or Form 13A (all photographs used by the agency) along with Form 13B (NWMLS use of photographs).  In this digital world where your photographs are distributed to many web-sites, it’s imperative that realtors protect themselves from allegations of copyright infringement for distribution of the photographs to sites that were not agreed to by the photographer and/or for a duration not agreed to.  The unauthorized distribution of photographs is the number one litigated legal issue for realtors across the United States with substantial monetary penalties.  You need to gain the broadest permission from the photographer for use of the photo’s to protect yourself.

If the home owner offers to provide you with photographs, ascertain their origin.  If the owner took the photo’s, have the owner execute Forms 13 and 13B.  If the owner received the photographs from someone else, you must have that person execute Forms 13 or 13A and Form 13B.

Off-Market Transactions – 2

Off-Market Transaction, again

by Steve Meyers

Writing up the Purchase and Sales Agreement in an off-market transaction is very risky and could result in lawsuits from multiple parties including; the Seller, the Buyer, family members, other real estate agents, etc.  You should consult with our Designated Broker and Lead Managing Broker prior to entering into this relationship to discuss how to best protect yourself and the agency from future legal action.

In this capacity, you’ll be acting as a DUEL Agent and must follow; the Revised Codes of Washington (RCW’s), the guidelines of the NWMLS, and the requirements of our agency.  At a minimum you’ll need to execute Forms 41A and 47 and receive a receipt of the Pamphlet of Agency, Mold, and Lead Based Paint from both parties along with the necessary Purchase and Sale documents.  You should also have receipt of delivery of an exhaustive CMA that you supply to both parties.  I personally recommend that an appraisal is done by an independent third-party appraiser and distributed to both the buyer and the seller.

Once all of the documents are executed, they must be uploaded onto Dot Loop within 48 hours for review by our agency.  Within 3 days of Closing, you’re required to enter all of the information on the NWMLS as a closed sale with details and a photograph of the exterior of the property and up to 24 additional photographs.

If you have any questions about this article, please contact me at smeyers@kw.com or call me at (206) 972-3328.  Steve Meyers, Managing Broker, Keller Williams Greater Seattle

Common Ownership Interest Act

Common Ownership Interest Act

by Steve Meyers

On July 1st, 2018 the new Common Ownership Interest Act will go into effect.  Any condominium, Co-Op’s or Planned Unit Development (PUD) that includes “Shared Common Elements” will be known as Common Interest Communities (CIC) and will be governed by new legislation passed by the Washington State Senate in Senate Bill (SB) 6175. These will be the new rules and regulations for all condominiums, Co-Op’s or PUD’s after July 1st.

However, once enacted, any condo, Co-Op or PUD constructed prior to July 1st can elect to “Opt-Into” the new rules and regulations if approved by the owners.

If you have any questions or comments about this article, please contact me at smeyers@kw.com or (206) 972-3328.  Steve Meyers, Managing Broker, Keller Williams Greater Seattle

Investment Sales

I recently attended a short class presented by a mortgage loan officer that provided some ideas and formulas for assisting buyers of residential real estate who would like to purchase real estate as part of their investment portfolio.  Real estate agents can obviously assist people with their purchases.  In this tight market agents are looking for every opportunity to get involved in a transaction.

It’s my belief that agents should proceed with great caution.  I would stick to writing contracts, negotiating inspection items, and providing very, very limited advice on potential income, expenses, and appreciation.  Unless you have been properly trained in researching and evaluating income streams and all of the expenses association with an investment property, you should refer the client to someone who is experienced in this field.  And don’t provide a future appreciation rate that the client relies on for their analysis.  The National Association of Realtors has a series of (5) week-long courses to educate realtors on investment real estate, Certified Commercial Investment Member, a (CCIM) Certificate.

The investment analysis spreadsheet presented in the short class, that a real estate agent currently uses for their analysis, was fraught with assumptions and errors.  If an agent becomes involved with a buyer of properties to be used for investment purposes, direct the buyers to sources of information to answer the questions that you may not be qualified to answer, an accountant, a real estate attorney, a property management company, etc.

Buyers – Position Yourself to Win

It’s extremely difficult for residential buyers to purchase properties in the Seattle Area.  The supply of inventory is at historic lows and there are multiple buyers submitting Offers to Purchase on each property.  Buyers are performing “Pre-Inspections” and then waiving their Inspection Contingencies, 30% of buyers are purchasing with all-cash and “Closing” in 10-14 days, and many buyers are submitting Offers without a Financing Contingency yet, retaining the appraisal inspection.

Here are some ideas to better position yourself as a buyer to succeed when submitting an Offer to Purchase in today’s environment.

  •      Be fully underwritten by your lender. This means the only item the lender needs to fund the loan is an appraisal verifying the loan-to-value ratio of the loan. Submit your Offer without a Financing Contingency while retaining the appraisal inspection.  Have enough cash in reserve as equity in case the appraisal comes in below the agreed price.  Your earnest money is at risk if you do not purchase the property.
  •      Your lender should be someone local who has worked in the industry for many years and knows how to properly communicate with the Listing Agent. Consider using the favorite lender of the Listing Agent.  The Listing Agent knows their lender will do everything possible to fund the loan.
  •      Select a Buyer’s Agent who has the experience, skill, and expertise to impress the Listing Agent and move it to the top of the pile. A great Buyer’s Agent will know how to properly communicate with the Listing Agent to not only present the price, terms, and conditions in the Offer that the seller is most likely to accept but, they’ll know the nuances of when and how to communicate with the Listing Agent.
  •      Include a “Love Letter” with the Offer that touches the heart of the Seller. What you like about the home; layout, remodel, gardens, sunny rooms, architecture, etc.  Describe what you like in nearby parks.  The Seller knows the features and benefits of the home and neighborhood.  They want to hear that you also know the features and benefits.
  •      Waive as many of the Contingencies in your Offer to Purchase as you feel comfortable. Remember that every Contingency is a protection for you as the Buyer.  Discuss these with you experienced agent to fully understand what you’re waiving.
  •      Visit the Listing Agent at an Open House and introduce yourself. Enjoy a brief conversation.  Make sure your Buyer’s Agent also visits an Open House to get to know that person.  Go separately.
  •      In this market homes are selling at 105% to 115% above List Price. You should visit homes at the price point to allow you to escalate your Offer and still feel comfortable with the purchase price.  Oh, did I say submit an Escalation Clause?  An experienced agent will know the nuances of the escalation amount and how to protect you from escalating, if at all.  If you have a financing contingency will your Offer include a larger escalation amount if the other Offer is all-cash?
  •      Present the cleanest Offer possible. The Seller is very unlikely to make any changes/corrections to your Offer and then submit it back to you.
  •      Submit a large down payment amount, if possible. The seller will likely accept the Offer with the largest down payment amount if the top two Offers are identical.

If you have any questions or comments about this article please contact me.  Steve Meyers, Managing Broker, Keller Williams Greater Seattle, (206) 972-3328, smeyers@kw.com

A Seller Must Disclose!

Prior to listing a condominium or single-family home for sale an owner in the State of Washington is required to complete a very detailed state prepared Seller Disclosure Statement that must be available to all potential buyers.  Buyers have the opportunity to review this document and can terminate the transaction if the buyer finds something unusual or unacceptable to the buyer.  The buyers Earnest Money Deposit will be returned to the buyer without any objection from the seller.

Here’s the tricky part.  If a buyer performs an inspection of the property and communicates a concern to the owner that was not disclosed on the Seller Disclosure Statement, the owner must immediately update the Seller Disclosure Statement to reflect what they’ve learned.  This is not unusual.  Generally, an owner doesn’t hire and inspector to perform an independent inspection of the property prior to listing the property for sale.  An inspection may uncover something that should be disclosed on the Seller Disclosure Statement that the owner didn’t previously know about.

Rather than providing copies of any pages from the inspection report to the owner, buyers should simply request specific actions/repairs to be performed by the owner prior to “Closing” on the Inspection Response Form.  A buyer should request copies of the invoices paid for the repair and, require those repairs to be performed by a licensed/bonded/insured contractor.  The buyer should also gain written approval for a re-inspection of those items 2 or 3 days prior to “Closing” to confirm the work has been properly completed.  The buyer should allow the owner to perform those actions/repairs that do not require specific expertise to perform.



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