For internal use

Make Every Deal a

Win-Win

Compliance Tips & Winning Strategies

At REILLY, REALTORS®, our goal is to provide the best possible service while protecting the best interests of our clients, agents,

and our firm. We’ve put together this guide to help our REALTORS®

avoid common real estate pitfalls so every deal is a win-win.

INSIDE THIS GUIDE

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Be Professional!

Document Important Info with Email

Remember! Verbal Agreements are not Enforceable!

Don't Help Your Seller Complete their Seller's Disclosure!

Use this Language when Negotiating for your Seller

Get it Inspected!

Understand the Lead Based Paint Addendum

Complete Documents Correctly

Handle Potential Appraisal Issues the Right Way

Understand the Intermediary Relationship

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The number one tip to staying out of trouble in real estate is to be professional! That means you work hard to provide the highest level of service to your clients. It means you are kind, fair, honorable, and honest in all your dealings. And it means you strive to increase your knowledge of the market and industry to better serve your clients. 

Take the high road and show respect to all parties in everything you do! 

 

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BE PROFESSIONAL!

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Watch your Words!

Everyone looks at everyone online - make sure your presence is professional! Would someone want to work with - or run from! -  you after reviewing your Facebook posts or Twitter feed?  

Even if the other side is behaving poorly, don't follow suit!  A calm demeanor can help your side win, especially if things get difficult.

Keep Social Media Clean!

Carefully consider everything you communicate - especially text, email, and social media communication - it reflects on you and how you do business. If issues come up, your written words also provide a record that can be used in court.

Pro Tips

Kindness Wins!

Email provides an important documentation trail you may need down the road, so be sure to deliver any contracts, addendums, important documents, or important advice to relevant parties via email, even if you are also providing the information in person. For example, if you had a great verbal conversation with another agent or your client about expectations, document it with a follow-up email like this:

 

“Sally, it was great talking to you today! As we discussed, ....”

 

This way, if there is ever a question related to that conversation, you have it documented.

 

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Document important info with an email

By the same token, realize anything you say in email or text could come back to haunt you in a court of law. Therefore, as a REALTOR®, please be extremely careful about offering your opinion on matters where you are not a subject matter expert to avoid exposing yourself and REILLY, REALTORS® to unnecessary risk. If a client has a question about a subject that you are not 100% sure and qualified to answer, you should always put in writing that the client needs to seek the advice of an expert.

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From the Texas Association of REALTORS® website:

 

While verbal negotiations of contracts can be a quicker way to reach an agreement, verbal agreements are not enforceable for the sale of real property.

 

Only written agreements, signed by the buyer and the seller, are valid. The best practice is to put it in writing!

 

Remind your buyer:

Only signed contracts/amendments are enforceable.
Time is of the essence when negotiating. If documentation is not signed by both parties, there is nothing to enforce.
If your buyer submits a counteroffer, the original offer is null and void and without the seller’s signature, 

there isn’t a contract

to uphold. 

 

 

 

 

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REMEMBER: VERBAL AGREEMENTS ARE NOT ENFORCEABLE!

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Pro Tips

Never make promises on behalf

of your client(s). 

 

Always write agreements on a contract or amendment! If you are negotiating verbally or via text or email, until you have a signed contract, you should use a disclaimer such as: “E-mails or texts sent or received shall neither constitute acceptance of conducting transactions via electronic means nor create a binding contract until and unless a written contract is signed by the parties.”  

 

 

What does we have a deal mean, anyway? The better thing to say is "we have a contract!” And of course, you can only say that once all signatures are in order. Let the signed contract or amendment speak for itself!

 

 

Never say "we have a deal!"

Did you know the #1 cause of home sale lawsuits is related to mistakes on the Seller’s Disclosure? Did you know if you help your seller complete their Seller’s Disclosure you and REILLY, REALTORS® are exposed to legal liability? NEVER complete or help your seller complete their Seller’s Disclosure.

 

Read the Texas Association's article "12 Things You Should Know About the Seller's Disclosure" and then encourage your seller to purchase Seller's Shield, a helpful resource that also provides your seller with litigation insurance.

 

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Don't help your seller with their seller's Disclosure!

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Our easy-to-use SMART Seller Tools PREVENT sellers from making critical mistakes disclosing the condition of their home, stopping lawsuits before they happen. Our Interactive Sellers Disclosure Notice allows you to easily fill out your form online as our LEGAL WIZARD seamlessly educates and guides you through each question. We keep sellers out of trouble, but if a lawsuit occurs, WE HANDLE IT offering the SECURITY of our $20,000 Promise.

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Do not commit your seller

to anything! 

Put the onus on the buyer

to submit new offer.

Whenever you are negotiating on behalf of your seller, convey what your seller wants from the buyer without making a formal counteroffer to the buyer. The best way to do this is to use the "Seller's Invitation to Buyer to Submit a New Offer" (TAR-1926 Form). The form makes it clear that your communication is NOT a counter offer, but rather a list of items the seller would like to see on a new offer.

 

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Use this language when negotiating for your seller

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MULTIPLE OFFER SITUATION

Let's say you have a very popular listing that will get multiple offers. If you make a counteroffer to Buyer #1 and then you get an offer you like better from Buyer #2, you have to formally withdraw any outstanding counter offers to Buyer #1 before you agree to a contract with Buyer #2.  If you had used the TAR-1926 Form (or the form's language in your email) to communicate your desired goals to Buyer #1 instead of submitting a counteroffer, you would have no obligation to Buyer #1.

Examples

If you say "Thanks for the offer but my seller really wants $310,000!" in response to a formal offer and the buyer's agent writes back saying "ok, we've got a deal!", you may find yourself in a situation where the buyer thinks you have a meeting of minds, even though you haven't formally checked with the seller or negotiated other parts of the contract. A better text would be: "Thanks for the offer!  My sellers would more favorably consider an offer of $310,000 with a close date a week earlier than you proposed. This is not a counteroffer, but a request to your buyer to submit a new offer. We look forward to hearing from you!"

 

 

TEXT OR EMAIL NEGOTIATIONS

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You should always recommend that your buyer has their subject property inspected! Be sure to provide at least three licensed inspector recommendations so your buyer can make their own decision on whom to hire. By giving only one name, you could be put in an awkward position if the inspector misses something.

 

If your buyer opts out of getting an inspection, get it in writing! Use our Buyer Home Inspection Form to document your client's decision to use (or not use!) an inspector.

 

 

 

 

 

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Get it inspected!

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INSPECTION TYPES

A standard home inspection should always be encouraged, but additional inspections may also be needed, depending on the property. If applicable, encourage your buyer to get the following inspections:

DISCLOSE REPORTS!

If your seller has prior inspection reports, whether from a buyer that terminated or from a report your seller purchased, you absolutely must share the report in its entirety with the next buyer. Whether you read the report or not, once you have it, disclose it!

  • Pre-sheetrock (new, custom homes)

  • Lead Based Paint (homes built prior to 1978 - read more)

  • Stucco

  • Pool and/or Hot Tub

  • Septic

  • Well

If the subject property is a home built before 1978, a signed Lead-based Paint Addendum is required BEFORE the contract is executed! Additionally:

  1. The seller must sign first because the seller has the obligation to provide information to the buyer regarding any known lead-based paint and/or lead-based paint hazards, including any records or reports the seller has pertaining to lead-based paint/hazards. Your buyer must sign AFTER the seller!

  2. You must provide the EPA’s “Protect Your Family from Lead in Your Home” pamphlet.  Be sure to send the pamphlet via email so you have a record of delivery!

  3. Have the addendum signed before you execute the contract! All sections must be completed (checkboxes in B, C, and D) and signatures from all parties are required (buyer, buyer’s agent, seller and seller’s agent).

 

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understand the Lead-based paint addendum

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Incomplete or mistakes on contracts, amendments, or other deal files can open you and your client up to unnecessary risk. You can avoid many problems by thoroughly reviewing your documents before finalizing them! While a missed detail may not seem like a big deal, it can make you look unprofessional, nullify a contract, lead to confusion requiring the court's input, or result in disciplinary action with TREC. Review common mistakes to avoid in your documentation.  

 

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Complete DOCUMENTS CORRECTLY!

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Blanks on the Contract 

A contract with missing signatures or details is unforgivable! Paragraphs with checkboxes that have not been selected are not enforceable. Missing contact information can make it difficult for parties involved in the transaction to communicate important information. Take the time to protect yourself and your client - review the details of all required deal documentation! 

Common Issues

Missing Effective Date 

Performance is calculated based on the effective date, so once everything is signed, make sure you or the other side enters the effective date and that you have a copy of the executed contract. No effective date? The brokers or the court may have to decide the date, and your buyer may not be able to terminate the contract! 

Contract Questions? Contact Michael Reilly or call the TAR Legal Hotline at 1-800-873-9155

Your clients depend on you to be a contract expert - do your best to be one!

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Misuse of Special Provisions

Do not write language in Special Provisions that is covered by a TREC promulgated form or that is not a fact. If/then statements in this section would likely be deemed the unauthorized practice of law. When in doubt, check with Michael Reilly or the TAR legal hotline before you write or accept anything written into special provisions.

Survey Paragraph

Checking box 6C1 on the One to Four Family Residential Contract will require the seller to provide a survey. If the seller has a survey, a T-47 is also required. If the seller does not have one, the seller will have to purchase a survey to fulfill the requirement. Always encourage your buyer to get a new survey to ensure they have the most up-to-date info!

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If you are working on a deal where the appraisal is a potential issue, rather than include an “appraisal clause” in the contract that obliges the buyer to increase the down payment in the case of an appraisal shortfall, we encourage you to consider alternatives such as:

 

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Handle Potential Appraisal issues The Right Way!

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Increase the down payment on the initial contract up front to handle the anticipated appraisal shortfall. If the appraisal comes in fine, you can always write an amendment to change the down payment back to 20%.  

 

Include a phrase in special provisions that simply states, "Buyer to order appraisal and deliver deliver copy to seller within 10 after days of executed contract date."  While this doesn't necessarily obligate the buyer to put up more, it moves the issue to the beginning of the transaction usually during the option period and keeps it from becoming a last minute issue. 

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SPECIAL PROVISIONS & APPRAISAL CONCERNS

If a seller insists on contract language to obligate the buyer to put up more, please do the following:

 

1. Write an email that advises your client to review the following language with their attorney. This language was written by our attorneys but TREC has stated that you can not "re-use" attorney approved language and any additions to the contract must be reviewed on a case by case basis. Here's the language:

 

In the event the property appraisal is less than the sales price, the buyer will contribute additional down payment of up to $XXXXX to satisfy the lender's down payment requirement.

 

The key to this language is that it puts a limit on the amount the buyer is required to put up in the case of an appraisal shortfall.

 

2. Upon the client's direction,  add the lawyer reviewed and agreed upon language to the contract in Special Provisions.

Intermediary relationships exist if you have a situation where you or two agents within REILLY, REALTORS® represent both sides of a transaction. Just because there is no Buyer Agent does not make you an intermediary! An intermediary relationship only occurs when our represented buyer wants to see or buy one of our listings. If an intermediary relationship exists, you must:

 

Have both parties complete the TAR Intermediary Relationship Notice, TAR Form 1409.

 

You must also have written consent from both parties which must state who will pay the Broker and, in conspicuous bold or underlined print, set forth the Broker’s obligations as an intermediary.

 

 

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understand the intermediary relationship

If someone calls you directly to see one of our listings and they don't have an agent, they are a customer, NOT a client. You are legally allowed to assist the customer, but you must disclose that REILLY, REALTORS® represents the seller and we cannot offer advice. In this case, when you are NOT acting as Intermediary, review our policy and ensure the TREC Information About Brokerage Services disclosure and Notice to Unrepresented Buyer is signed by the buyer, include this disclaimer in all written communication, and review our commission considerations.

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Thanks for your help in making REILLY, REALTORS® a team of top agents by demonstrating love for your work, your clients, your community, our city, and each other. We appreciate your efforts to take the high road and show respect to all parties in everything you do!

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Copyright © 2017 REILLY, REALTORS® - All Rights Reserved.  

This document contains information confidential and proprietary to REILLY, REALTORS® and may not be used, disclosed or reproduced without the prior written authorization of REILLY, REALTORS®. Only real estate agents sponsored by REILLY, REALTORS® and employees of REILLY, REALTORS® may view this document.