1. KEEP EVERYTHING IN WRITING
It is crucial to have all fee and brokerage agreements in writing. If you have your fee agreement in writing and executed by your clients, your ability to collect such fees will be based on a legally binding document. If you don’t have a fee agreement and work has been done, ask your client to acknowledge your fee in an email or text message. Any relevant writing will avoid the “he said, she said” scenario.
2. MENTAL CAPACITY
If an owner of a property is mentally unstable, e.g. has Alzheimer’s, that owner may not be able to sign off on the documents needed to sell their property. Unless someone contains a power of attorney executed prior to them becoming mentally unstable, this matter will need to go through probate court to have an estate established. If the mentally unstable owner signs documents during the time when a court can determine they were no longer capable of making rational decisions, those documents may be set aside as null and void.
3. BUYER BROKER FEES
When you are showing a property to a buyer to purchase and the seller’s agent is not willing to share their commission, you CAN and SHOULD require a buyer broker fee from the buyer. This is normal and should be negotiated BEFORE your buyer submits an offer to the seller. You should have your buyer execute a buyer broker fee agreement to keep this arrangement in writing. A buyer broker fee can even be negotiated if you are receiving a share of the seller’s agent commission, if you are looking to make more on the transaction. However, make sure you don’t lose the buyer to another brokerage or agency that may not charge the buyer a broker fee for the same transaction. Good Luck!
4. BIDDING WARS
If the property you have listed to sell is involved in a bidding war you should not disclose the highest bid price to the prospective bidders. If asked, you should simply reply “I am sorry buyer, but you have to give me your highest offer on this property. I cannot disclose the current highest offer to You.” You owe a fiduciary duty to your seller to seek out the highest possible offer and this is how to do it.
5. STUBBORN TENANTS
Many times you will run into a situation where you will find a stubborn tenant in a transaction that you represent a buyer or seller on. Don’t let this stop you from pursuing to close the transaction. If you can negotiate with the buyer or seller to pick up the cost of paying the tenant, in return for their vacating the premises, you are on your way to closing the transaction. Many times we see tenants which are paying rent, not paying rent or being evicted, accepting a negotiated amount of consideration to move out of the premises before the deal is set to close. Speak to the buyer and seller and find out how much they would be willing to pay such a tenant in order to make the deal work. Keep in mind, it must make sense for the tenant as well.
6. TIME IS OF THE ESSENCE
When a real estate contract contains terms referring to “time is of the essence,” this refers to a strict deadline being imposed by a party to the transaction, to when the transaction must close. Often times, if the closing date in a contract for a purchase and sale has passed, one of the parties will send the other party a notice stating that a new closing date is being provided for some time in the future and “time is of the essence.” If the closing doesn’t occur by the set date due to the fault of the seller, the buyer can cancel the transaction and request the return of all down payment funds. Additionally, the buyer has the right to pursue an action for specific performance to force the seller into selling the property. If the closing doesn’t occur by the set date due to the fault of the buyer, the seller may request the contract to be terminated. Additionally, the seller usually will not release the down payment funds being held in escrow, if any, until the buyer agrees to pay the seller a negotiated amount for costs and expenses resulting from the delay in the sale of the property.
7. IMPORTANCE OF SIGNED BROKER FEE AGREEMENTS
Please be careful when dealing with open listings…we have said this many times but make sure to have a brokerage fee agreement signed before you put the buyer and seller together… Otherwise you are left at the mercy of the party’s’ good will to pay you at closing.