The Synergy Point of View

Just When You Thought You Understood Agency Law, the Black and White Turns Grey 

Answer:  Unless you have a listing contract in place with a seller before your appointment, anything that they tell you can be used against them if your buyer client subsequently makes and offer to purchase the home and you are not the listing agent.

Da, Di, Da, Dum, Da, Di, Da. Da, Di, Da, Dum, Da, Di Di, Da Dum Dum...

Question: If I go on a listing appointment and I end up not getting the listing, am I obligated to fulfill the duty of confidentiality?

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This was an actual discussion of a "hypothetical" event during a recent discussion between the Chairs and Vice-Chairs of our Board's Professional Standards Committee and its General Counsel.

The answer may be surprising to many of us.  But let me clarify a bit.

In Massachusetts, real estate licensees are required under the Commonwealth's Consumer Protection Statutes to inform a consumer, at the first meeting, whether they are an agent of the seller, the buyer, or a facilitator to a transaction.  Technically, that's wrong.  What the Mandatory Licensee Consumer Relationship Disclosure form actually is intended to do is to inform the consumer that if a contractual relationship is established, then  the licensee will serve in an agency capacity of either a buyer's agent, a seller's agent, or a facilitator to the transaction (Forget Dual Agency for a moment - you are still a buyers agent to the buyer and a seller's agent to the seller, else you are not a dual agent.)

The bottom line is that unless your seller customer lists the home with you, you have no contractual relationship, no agency relationship and anything they tell you can and should be held against them if you are representing a buyer, in an agency capacity, or else you may be violating your fiduciary duty to that client.

How do you get out of this uncomfortable position?  Well honesty, integrity and full disclosure and discussion with the consumer is often the best remedy.

Many real estate agents feel that once the consumer disclosure is signed, they have the right (entitlement) to be considered as the procuring cause for any transaction with this consumer.  Unfortunately, this is not the case, and to make things more confusing, the existence or non-existence of this legally required form is not entirely relevant or may be considered by a hearing panel of your local professional standards committee for an ethics or procuring cause complaint against a REALTOR® member.

• Inform the prospective listing customer that you may be obligated to disclose anything they tell you about listing the home to a buyer client if you do not become the listing agent.  This is an excellent way to encourage prospective sellers to interview only one or two agents before listing their home.
• Tell prospective buyer clients that you may have knowledge about a particular property because you were asked to meet with the sellers and have them sign an acknowledgment that you are refraining from providing information gained during the listing presentation to these buyer clients.
• Provide,  up-front, a written disclosure to both the listing customer and your buyer client's your firm's policy with regards to "confidential" information obtained directly or indirectly from parties prior to an agency relationship being consummated.

It is important to note that this was a discussion of a hypothetical situation and no formal recommendation or conclusion was drawn by the panelists, nor was legal advise ever provided.  If you see yourself in a similar situation, discuss the matter with your broker, the firm's legal counsel or call the legal advise hotline for your local board or state association of REALTORS®

The Tenants You Love So Much Are Actually Hurting Your Chances of Selling Your Home

We've all had them - the showing with Tenants From Hell.  If you live in a state like Massachusetts, where Tenant Rights reign supreme, you probably know what I mean.  Like a scene from the movie Pacific Heights, I've got a seller client who just can't seem to get rid of these nuisance tenants.

I took this listing a few weeks back.  The kids inherited the home from their father and, after renting it out for a couple of years, decided to put it on the market.  Not the best timing, they knew, but they also weren't looking for more than what the current market will bear.  Oh, and there was a tenant in the house - shouldn't be a problem to schedule showings, though because she was a good tenant.  She always paid her rent on time and never caused any problems. 

"Can I get in to take some pictures?" I asked. 

"Sure, just give the tenant a call and work out a time." came the response.

This is where the trouble began.  I have been constantly hampered in scheduling appointments because the tenant doesn't feel like letting me show it.  She plans to move out (she's buying a foreclosure), but this has been going on since before I took the listing.  On the few occasions that I have been inside the home, I can't begin to describe the deplorable conditions that this home is in.  I think that it's so bad, even the cockroaches won't stop by to visit.

We're selling the home for the value of the land.  Realistically, the home is a complete gut renovation.  The ceiling height isn't up to current Code, the electrical is still knob and tube wiring with fuses, the roof is old and the siding is asbestos shingles.  But, prospective buyers still want to get in to see the home, so I have to accommodate their wishes.

Occassionally, I've reached out to the seller to let him know about the problems that I have been encountering.  The last time was when the tenant moved my sign to another side of the yard where it was less visible.  Today, I have a showing scheduled.  I have tried to be optimistic with the buyers agent, but also realistic in what they might see.

However, I wasn't prepared for yesterday's text message from the tenant....

" Sorry I forgot to respond.  Tomorrow should be ok.  FYI, my kids are sick with a stomach virus so there is a bit of a barf smell in the house.  Please text us when done..."

Ewww.  what kind of people are these that they can't either have the decency to clean the place up for showings or be up-front and tell me that the timing isn't right for a showing?

Sellers.  Do you know what your tenants are up to?

New Jobs Created By Lenders Actually Slows Down Home Sales

This post is a bit tongue-in-cheek.  But I just couldn't help myself from falling out of my chair when I read this little tidbit from a fairly large mortgage lender.  After reading it, if you are scratching your head thinking "...are they serious?" you are not alone.  With all of the extra people needed to look at loan documentation, it's a mystery to me why we have any unemployment in this country.  Unless they are hiring illegal immigrants or farming this work out to Wichita, India  Mexico....

Reasons Why We Need So Much Documentation From You

Holidays unleash a myriad of emotions for new home buyers

I'm the type of guy who reads e-mails and then replies.  Not "reply to all" but just a simple "reply" to the sender.  I also get really, really  mad when someone forwards my emails to other people without my acknowledgment.  Case in point.  A couple of weeks ago, I sent an email to a listing broker letting her know that my clients were getting fidgety because their lawyer said that he was waiting for some documentation that hadn't yet been received from the seller's attorneys.  I urged the listing broker to have a conversation with the relevant parties on her side to help facilitate the buyers' attorney's requests (tongue twister).

Well, what ensued was the unleashing of Hell.  Not only did my email get forwarded, replied upon and re-replied upon, but a bigger issue came up in that the buyer's lender who had been uncomfortably silent, finally spoke up and said "No Commitment Letter For You..." despite a conversation literally 20 minutes before stating that the loan had been approved and a commitment letter would be forthcoming.  You can only imagine the barrage of e-mails that ensued.

But there is a human (emotional) aspect to all of this.  When all the boxes are checked and documentation filed, will we have forgotten that my buyer clients are the innocent victims of the mass confusion caused by service providers that are stretched too far and not on top of things?  I'm talking about the short sale negotiator who doesn't know the file and repeatedly ignores the closing attorney's requests for some form of acknowledgment by the primary lien-holder that the second lien-holder and seller have agreed to settle the extinguishment of debt for more than what the primary has offered.  Or the lender for the buyers asking for information about the proceeds from the sale of a car over six months ago (lender has had this file since August).

We were supposed to close on November 30, then December 14, then today.  Because no one is playing nicely, we don't have a loan commitment, the short sale approvals need to be extended, as do the purchase and sale contracts.

Where are my buyers in all of this?  Well, they already packed up their apartment and moved out.  Most of their possessions are in storage.  They are living with friends and the three year old son keeps on asking "when are we going to live in our new home?"

I know that this scenario is common place.  That's why I want to syndicate a new Realtity TV show called "Buyers Gone Wild".  Here's the first segment, written compliments of my buyer clients when they heard that Larry, Moe and Curly were back at it last week.

"That is unacceptable, we will turn this down if that is the case. My house is packed, I'm living out of boxes, I have a distressed three year old who doesn't have a Christmas tree. I am leaving on vacation to see my parents on the 28th and am swamped with work until then. Jxxx and I have jumped through every hoop we have been asked to. We were promised a Dec 14th close and I expect  someone to do something about this immediately. I understand that this is a short sale, but there is no reason that we shouldn't have been able to close this deal in the allotted time. If there is something that the underwriter needs for closing we should have been made aware of that immediately not today. I'm tired of being pushed around and I will not have my sons Christmas be ruined bc people are not communicating effectively. Someone needs to get in touch with me or Jxxx immediately to discuss this...."

Modifications to the Home Affordable Refinance Program (HARP) due out November 15

For borrowers who haven’t been able to take advantage of today’s interest rate environment due to declining property values and erosion of equity, there may be hope yet. The Federal Housing Finance Agency (FHFA) just announced that it will expand eligibility for the Home Affordable Refinance Program (HARP) to include more Fannie Mae and Freddie Mac borrowers who have been timely in making payments, but may have very little equity or may already be under water. Industry experts estimate that the HARP program has benefitted around 900,000 borrowers to stay in their homes via refinancing;  the FHFA expects this guideline enhancement will substantially increase the number of eligible borrowers under the HARP program guidelines. Some estimate over 10 million households could now be eligible to refinance. FHFA’s goal is two-fold: By allowing these borrowers to refinance, not only is the financial position of these existing borrowers improved, but the borrowers are more able to continue to make mortgage payments which will, in turn, help Fannie Mae and Freddie Mac by not adding more defaulted loans to further increase their workload. Details regarding implementation are planned to be announced on Nov 15, at which point lenders will start to build out how to pass this through to borrowers.

Over the past few weeks, some of the impact of the Federal Reserve’s latest stimulus plan (dubbed ‘Operation Twist’) has been seen by its purchasing of approximately $1 billion of the $2 billion in daily mortgage-backed securities volume. However, there continues to be much public discussion and controversy amongst the Federal Reserve Governors regarding the Fed's stimulus plans, with some Fed officials pointing to additional asset purchases being needed in order to truly boost the economy. Whether this will create any real impact for the housing market has not yet been seen as mortgage rates remain fairly stable.  In fact, at a recent presentation by Chase Bank that I attended in Boston last week, the Chief Economist of Freddie Mac also supported this position by demonstrating how the home affordability index continues to climb as rates remain low and housing prices dip lower, but buyer confidence is at historical lows because of low GDP growth and uncertainty caused by high national unemployment rates.

Therefore, it is very important to keep current owners in their homes to prevent a further onslaught of short sale and foreclosure properties from looming over our heads in terms of shadow inventory and excess supply which would further put downward pressure on home prices.  The HARP guidelines, when announced, could definitely help the economy by meeting this goal of keeping people in their homes.  Only time will tell if what sounds good in concept, will actually work in practice.

FHA/Fannie Mae/Freddie Mac loan limits revert back to lower levels in Massachusetts

The Six Pillars of Character

As many of us celebrate the New Year and the High Holy Days of Rosh Hashana and Yom Kippur, it is a time for reflection and evaluation in all things we do.  I remember hearing a real estate coach once say that "Success is defined as living in alignment with your core values...."  For me that means a lot.

Character Counts!

      The Josephson Institute of Ethics defines ethics in terms of moral duties and virtues that flow from six core ethical values, collectively known as The Six Pillars of Character.

• Trustworthiness: Being honest, having integrity, keeping your promises and being loyal.

• Respect: We must not only respect ourselves, but remember that each person has the right to our respect.

• Responsibility: We must be accountable for our own actions, practice self-restraint and always try our best at whatever we put our hand to.

• Fairness: Sometimes this means doing the right thing even if others don't agree.

• Caring: Concern for the interests of others.

• Citizenship: Being involved in public service, including voting, reporting crimes, testifying as a witness, and protecting the environment.

What is it that makes you respond to an AR Blog Post? 

What is it that makes you want to respond to a blog post?  Is it the title?  Is it the first sentence, the graphics, the author...?

I wrote a blog post that struck a nerve with a lot of people today , but as I read through the comments, it became clear to me that very few people had actually read the entire blog post.

Now, I'm not perfect in many ways.  But I am a good student.  I keep my blog posts short, to the point and keep the graphics and special fonts and characters to a minimum so that everyone will have an easy time downloading my blog.  I don't interact with AR as much as I used to because I get bogged down trying to find unique, timely and topical conversation with all of the paid ads, flash video and listing postings that have obviously been uploaded from a html dump and the author hasn't even bothered to view the posting to see if the formatting worked.

But I digress.  I cannot tell you the number of times that I read a blog post and the related comments and scratch my head thinking "where in the world did that person come up with that thought?  That's no where near close to what the author was writing about."

Is it because people don't take the time to read a post carefully?  Is it because we just like to hear ourselves "talk"?  Or is it because of  "the more posts I respond to, the more points I get on AR" phenomena?

I had to laugh.  I saw someone's blog post today where the author responded to each and every comment.  The only thing was that one of these "replies" was an actual spam ad for some completely unrelated product (like sunglasses or something).  Even so, the author took the time out to thank the person for responding. 

What is it?  People seem to become comatose when it comes to reading and posting comments on blogs.  Maybe some people should go back to school to pick up on reading and comprehension skills. 

Have we all become so automated that we can't even take the time to read and understand something and provide meaningful commentary?  Is this how we behave with our customers?  I hope not, but am afraid that many real estate agents do that exact thing.  They hear what they want to hear, they talk over their customers objections and flaunt their ignorance expertise.

Real estate is not a mechanical process that can be replicated the same way each and every time.  Neither is a blog.  Unless we add some personal value to the process, our customers might as well as work with a robot, or read a blog written by a ghost writer robot.  Hmm.  Maybe that wouldn't be so bad after all.  At least it would probably be spell checked.

Enjoy the rest of the holiday folks.

Every week at our office meeting, our agents practice dialogues, we role-play client "objections" and renew our "purpose".  It is an exercise that never gets old. 

Yesterday, one of my agents shouted at another agent to "Treat Real Estate like your job and not a $#@?# hobby."  This got me thinking.  Perhaps we all need a refresher in why we are here and words we all need to live by. 

Here is our list:

The Most Important Words to Live By in Real Estate

The SIX Most Important Words:

“I AM a Real Estate Professional”

The FIVE Most Important Words:

“Real Estate Is My Career”

The FOUR Most Important Words:

“I Embrace Ethical Behavior”

The THREE Most Important Words:

“I Represent You”

The TWO Most Important Words:

“Customer vs. Client”

The ONE Most Important Word:

“We”

The LEAST Important Word:

“Me”

This is an excellent reminder for all consumers and their real estate agents that practicing law by negotiating short sales is NOT within our level of competence and things can really go bad for both the consumer and the real estate agent (expecially  REALTORS®) if a short sale is negotiated incorrectly.  Although the legal citations are for North Carolina, the same principles apply here in the Commonwealth of Massachusetts.