At times we all perhaps feel that we are smothering in paperwork, strangling in red tape, drowning in a sea of rules and regulations, and overcome with the complexities and technicalities of modern real estate practice. At these times it is perhaps prudent for today's real estate broker and salesman to pause and reflect for a moment upon their fundamental duties and responsibilities as agents in real estate transactions.
Summarized below are some of the basic acts and services performed by real estate agents during the various phases of real estate sales transactions. While the list is by no means all-inclusive, it does cover many areas of real estate practice which, when neglected, frequently result in dissatisfied clients and customers, costly litigation, disciplinary action by the Real Estate Licensing Board, or all of the above.
LISTINGS
Estimate the value of the property based upon sound appraisal techniques, and avoid over-priced listings.
Record complete and accurate information about the property in your listing agreement, especially the location of the boundary lines of the property, an accurate measurement of the square footage of improvements, utility services, (water, sewerage, etc.) fixtures and any personal property which will be included in the sale, details concerning existing financing, and a list of any defects in the property (leaky roof, defective air conditioner, etc.). If the seller furnishes you information which you have not personally verified, note that fact on each unverified item on your listing sheet.
Then review your listing information with the seller to ensure that you have correctly recorded the data, and carefully explain the terms of the listing agreement to the seller, especially the conditions under which you will be due a commission. [REMEMBER: Your brokerage fee is completely negotiable between you and your principal.]
Upon acceptance of the listing agreement by the seller, give him a copy, and retain a copy for your files. In co-brokered or MLS transactions, make absolutely certain that the property data which you furnish is complete and accurate.
ADVERTISING
Clearly identify yourself in your ads as a real estate broker or brokerage firm; when selling or leasing your own property, include the words "owner/broker."
If you include financing information, be certain that you comply with the Federal Truth4n-Lending Law. If you quote an interest rate, include the words "variable" or "adjustable" if such is the case.
SHOWING
Be thoroughly familiar with and comply with the requirements of the Federal Fair Housing Act.
Advise potential buyers of any defects in the property of which you are aware. [REMEMBER: The failure to disclose material facts of which you are aware or should reasonably be aware can also constitute misrepresentation.] If you make representations or statements about the property which you have not personally verified, tell the buyer, and identify the source of your information.
OFFER AND EARNEST MONEY
Include all of the essential terms and conditions of the offer in your Offer to Purchase form, especially details concerning any financing which the buyer may require, any repairs or improvements to the property which the buyer may require, any items of personal property being included in the sale, and who will pay the various closing costs. Use a good Offer to Purchase form, such as the one jointly approved by the N. C. Bar Association and the N. C. Association of REALTORS.
For the protection of the seller, attempt to obtain a substantial earnest money deposit, but do not refuse to submit the offer without earnest money. Stipulate in the offer how the earnest money will be used; unless otherwise stated, the earnest money must be held in your trust account in toto until the closing or termination of the transaction. Also, specify what will happen to the earnest money in the event the sale is not closed. [REMEMBER: In the event of a dispute over the disposition of trust funds, hold the funds in your trust account-]
Have the buyer (and spouse) sign the offer in quadruplicate (4 copies) giving the buyer a copy. Then immediately deliver the offer to the seller (or the listing agent for presentation to the seller).
ACCEPTANCE AND TRUST ACCOUNT
Carefully review the offer with the seller, and give him all information in your possession which could affect his decision to accept or reject the offer.
If the seller rejects the offer, write "Rejected" on it, have the seller initial and date the rejected offer, and promptly return it to the buyer (retaining a copy for Your files). If the seller rejects some, but not all, of the terms of the offer, make the necessary changes in the offer, have the seller initial each change, and leave a copy of the counter-offer with the seller. [REMEMBER: A counter-offer constitutes a rejection of the original offer.] Then immediately return the counter-offer to the buyer for his decision as to whether to accept the offer as amended.
Upon acceptance of the offer (or counter-offer), have the accepting party (and spouse) sign it, and give him a copy. Then immediately communicate the acceptance of the offer to the party who made the offer (or counter-offer), and give him a signed copy of the accepted offer (contract), again retaining a copy for your files.
If you have not already deposited the earnest money in your trust account, do so immediately. [Refer to the Licensing Board's Trust Account Guidelines or contact the Board office should you have questions concerning the handling of trust funds.]
FINANCING AND CLOSING
Stay abreast of all available sources and methods of financing. Give the lender correct information concerning the sales price of the property and the actual amount of earnest money and/or down payment to be paid by the buyer. Be certain that the lender explains to the buyer the details concerning the loan for which the buyer is applying. [NOTE: This is especially important if the loan involves some form of variable or adjustable interest rate.]
In advance of the closing, review with the seller and buyer those closing expenses which they will be expected to pay, and at the closing make certain that no unexpected or hidden expenses surface. Also, advise the buyer to have a title search performed (and to have the property surveyed if there is any question as to the boundary lines or possible encroachments). [NOTE: Real estate closings should be conducted only by persons who are competent to handle such matters. Brokers who attempt to close real estate transactions themselves will be subject to strict disciplinary action by the Licensing Board in the event of any errors or omissions.]
At the closing, or immediately thereafter, furnish the buyer and seller a complete statement of all receipts and disbursements which occurred in the transaction. Or you may accept statements prepared by the person who closed the transaction (lender, attorney, etc.) provided they cover all receipts and disbursements in the transaction-, however, you will be field responsible for the accuracy of such statements. Retain a copy of each closing statement in your files.