Monday, December 29, 2008
Sunday, December 28, 2008
It seems like everyday I run into a local real estate agent who does not know the basic rules and laws of Buyer Representation. They tell prospective buyers or their clients that there is "no need" to sign an agreement, and then people wonder why I make them sign one. The fact is, here in Minnesota, you are not represented until you enter into a written agreement with a brokerage.
Upon first meeting an agent, he or she should give you what is called an Agency Disclosure form. This form is just a disclosure for the different types of representations available for sellers and buyers, which are:
- Seller's Broker
- Buyer's Broker
- Dual Agency
You'll notice that I said the disclosure is JUST a disclosure. It is NOT a contract for representation. People always get confused over this one. If you want an agent to represent your interests, then you must, by Minnesota law, enter into a written contract.
Yep, that's correct...a written contract/agreement.
So here's a scenario: Buyer Bob calls Agent A and tells her he just moved to the area and needs to find a home. Agent A meets with Bob, finds out his needs, and they go house hunting. Buyer Bob really likes a home and wants to put in an offer. Agent A doesn't return his phone calls. After two days, Buyer Bob finally hears from the agent and is told the agent is working with another client on the same home. Bob is really upset and wants to know why "his agent" is not putting his best interests first. Agent A reminds Buyer Bob that he refused to sign a Buyer's Representation contract, and so the Agent owes no fiduciary duties to Bob.
Hmmm...what's going on here?
Well, on the disclosure form that was presented to Buyer Bob, it reads that if a buyer or seller does not enter into a written contract, that they:
"will be treated as a customer and will not receive any representation from the broker or salesperson...and will be working as a facilitator"
Yes, there is a difference between a "client" and a "customer". Buyers and sellers do not become clients until they sign a written agreement with an agent. So, this leaves us with the question, what is a facilitator?
For the simplest definition, a facilitator performs limited services for a buyer or seller. They do not owe any Fiduciary Duties to the customer, except confidentiality. Oh, no, I have brought up another topic! What the heck are Fiduciary Duties?
Whenever an agent represents a client, that agent owes the client certain duties:
- Loyalty (agent acts for the client's best interests)
- Obedience (agent will carry out the client's lawful instructions)
- Disclosure (agent will disclose all material facts known by the agent)
- Reasonable Care (agent will use reasonable care in performing duties)
- Accounting (agent will account for client's funds received)
Now I ask you, what type of relationship do you want to have with an agent? One in which you can actually say she is "your agent" (because you entered into a written agreement). Or do you want the other one, where no one is really looking out for your best interests and you are left out in the cold, blowing around, lost in the wind?
Thursday, December 11, 2008
For the price of $6.3 Million, Minnehaha Falls will have its crumbling retaining walls repaired, hiking trails fixed, creek banks stabilized, etc. Work will be going on during the winter because the area will be frozen over, and workers will not have to fight the water current. I visit Minnehaha Park a couple times a year and the banks are indeed eroded very badly. As long as the parks department keeps the renovations natural looking, I think everyone will welcome the improvements.
Wednesday, December 10, 2008
- First, we had to wait for the property to be assigned to a short sale rep in the loss mitigation department. (Some banks will not do this until an offer comes in). Sadly, this delays the process.
- Next, we have to wait for a BPO (broker's price opinion) to be completed on the home. It follows the line of a CMA (comparative market analysis) and falls short of an appraisal.
- Once we here from the bank regarding the offer, two weeks after the initial submission, the short sale rep decides to counter offer, reducing the buyer's requests and slashing the real estate commission. (Don't get me started on that part)
- Next we have to negotiate back to the bank and tell them the deal will walk out the door unless they give the buyer such and such for closing costs. Not too mention that if they try and make the seller sign a promissory note at closing, the owner will just let the property go into foreclosure and the bank will lose everything.
Now, I call the bank at least two times a day, trying to push the transaction along. Christmas is just weeks away and both parties want to be in and out before then. Today I find out I have to wait until end of the week for the final approval because some other person at the bank has to sign off on the deal. Geez!
Needless to say, but the whole thing has been more aggravating than I can put in words.
People say real estate agents don't do anything and are not worth the money, but I tell you this, if you had any idea of the "behind the scenes" things we do to keep a deal from falling apart, you would change your mind. Someone once told me that real estate agents earn their money best, by keeping the deal out of trouble, and that when the deal does go south, buyers and sellers really see our true value. You can kind of equate it with insurance. You pay into it for years, and nothing happens. But finally when something does happen, you thank God for having the safety net there, even while the whole time, you didn't think you needed it.