Mind Your Ps and Qs


A Broker’s Guide to Feeling Good at the End of the Day

As a child from east Texas and later, the wife and life-time partner of a West Point graduate/career army officer, my mother was a living illustration of Southern grace and charm, tempered further by an abiding commitment to service of her country, her community and above all, her family. When I, as a child, would dash out the door, racing into this adventure or that, her parting comment to me would often be "mind your ’Ps’ and ’Qs’." At its most basic, this loving reminder meant that I should remember to say "please" and "thank you" whenever possible. Beyond that, it was a general admonition to mind my manners and at its core, it was a subtle and quiet life-foundation that said "remember who you are, where you came from, the quality of person you are and the person you want to become."

Ps-and-Qs

When I contemplate the adventure of yet another seller’s market into which our industry is racing with great speed and enthusiasm, my mother’s bedrock reminder floods my mind. "REALTORS®…mind your ’Ps’ and ’Qs’." Practice good manners, abide by the Code of Ethics and daily re-commit yourself to professionalism and competence. Seems simple, doesn’t it? Tether this simple reminder to the chaotic, adrenalin-driven need to compete, on your client’s behalf, in a constantly escalating market place where there are too many buyers and not enough sellers and you will emerge not only as a successful broker, but as a person and a professional you will be proud to be.

Good Manners

You are the listing broker and you represent a seller confronted with numerous competing buyers and a sale price that surpassed the list price thousands of dollars ago. You have to balance closing dates against contingency waivers against escalated purchase prices against pre-approval letters and the quality of lender that authored the letter. How on earth are you supposed to find time to notify the buyer brokers whose buyers are no longer in the running that their offer was rejected?! I don’t know, but find the time you must. It is grossly unfair to buyers and their brokers to leave them hanging, not knowing whether they may have purchased a home or whether they should keep looking. Remember that while you are the listing broker today, you may be the buyer’s broker tomorrow. Remember also that while the marketplace favors listing brokers today, there will undoubtedly come another day when listing brokers desperately court buyer brokers. Communicate. Take the 30 seconds required to dictate a text to a buyer’s broker to let them know their buyer’s offer was rejected. If doing the right thing is not motivation enough, then know that this simple communication may also prevent a complaint being filed against you with the Department of Licensing. When a buyer and their broker cannot get confirmation from the listing broker that an offer was presented and rejected, the only recourse may be to assume that it was not, file a complaint and request that DOL either get the proof or discipline the failure.

As important as you are to the transaction, remember that there will be no pay day without the competence and skill of escrow officers, title officers, lenders, inspectors, appraisers, repair persons and all of their assistants and support personnel. When you are barking out orders and declaring edicts, remember that these folks are also juggling the requirements of a fast paced market and that for all human beings, it is more preferable to assist a friend than a bully. Create reasonable timelines and avoid last minute deadlines whenever possible. Regardless of your schedule, thank each person who plays a role in completing the transaction, including your office staff, the brokers who show your listing, the professionals and their support staff who provide services during the closing process and every other human being who displays graciousness and courtesy.

Believe in and advocate (as long as possible) for the integrity of the other broker and their client. When a broker disparages or questions the motives and intent of the broker or the party on the other side of the transaction, the client taking guidance from the broker naturally develops a distrust and resentment for that other broker and party. To get from offer to closing, parties and brokers must share trust in and commitment to one another. Poisoning the relationship between the parties and the brokers in some effort to inflate personal value or to mask transaction problems is short-sighted and destructive. For example, if buyer’s broker fails to advise buyer of the risk that seller may deliver a Notice of Right to Terminate, buyer’s broker should not demonize seller and listing broker when the Notice of Right to Terminate is delivered. If listing broker fails to include the escalating offer when a buyer’s purchase price is escalated using Form 35E, buyer broker should not proclaim that seller is lying or that listing broker is incompetent but rather, should assume an error and make a courteous request for production of the escalating offer. Remember that in a real estate transaction, the parties operate largely in a world of emotional highs and lows. It is up to the brokers to encourage logic-based, long-term, productive decisions. This is not to say that you deny obvious problems or red flags but rather, that you give the benefit of doubt whenever and for as long as possible in each and every transaction.

Competency & Professionalism

Buyer brokers, how difficult is it to pick up the phone and notify the listing broker that you are sending over an offer? You might even take the opportunity to advocate for your client and explain why the seller should accept your client’s offer. It is not acceptable for a buyer’s broker to email an offer to a listing broker with no notification. Listing broker should be put on notice to look for the offer and your buyer deserves the advocacy of a personal recommendation.

Know the forms. You cannot competently represent either buyer or seller if you do not know all the forms that are available for your use and how the forms inter-relate. Moreover, the forms are revised, typically, once a year. Not every form is revised every year and the timing of revisions varies depending on whether the changes are driven by necessity or style. It is up to brokers to know when forms are changed, how to access the most current version of the form, how to use the most current version and what to do if your client receives an offer on forms that are not current. Be aware, there are several forms revisions coming this summer (July 2015). Pay attention to emails and publications from Washington REALTORS®, your local REALTOR® Association and your MLS to stay abreast of the changes.

Remember that your buyer’s fervor and zeal to buy a home today, no matter what it takes, will result in a home where your buyer must eventually live and later, will sell. Buyers so desperate to win a bid that they purchase without an inspection or escalate the price to unimaginable highs may find problems they resent when they call the house "home" or may find it impossible to sell, later, for anything close to what they paid. While it is not your job to bridle a buyer’s enthusiasm to secure a home in this market, it is your job to advise the buyer and it is also your job to protect your and your firm’s liability risks. If a buyer is insistent upon purchasing property without an inspection, be certain that buyer waives the inspection contingency by marking the "waiver of inspection" box on Form 35 (even for new construction). Do not simply leave Form 35 out of buyer’s offer. Buyer’s express waiver of the inspection contingency shows that buyer was aware of the contingency language available and that buyer knowingly chose to waive. Broker should also write to buyer (email is fine, so long as there is provable delivery of the email) and advise buyer to consult legal counsel or a home inspector before choosing to waive. A similar warning should be sent, advising buyer to seek the advice of an appraiser or legal counsel, before purchasing at a price above what seems reasonable. In both cases, broker’s written warning and proof of delivery should be printed and retained in the firm’s transaction file.

As buyers and buyer brokers develop additional ways of making buyer’s offer stand out, be sure to temper creative ideas with good judgment. Buyers and their brokers are constantly creating new ways to sweeten buyer’s offer. Buyers have started offering incentives like free rent backs for seller, payment of an upfront sum to induce seller to accept buyer’s offer and payment of "nonrefundable fees." These are examples only and each may be appropriate in a given situation. None are appropriate in every situation. Again, while buyers may operate in an emotional frenzy to win a bid, brokers must be grounded in the professionalism of real estate sales. Help your buyer to understand the risk associated with an incentive offered to seller, advise your buyer to seek appropriate expert advice, document and retain proof of your efforts.

Listing brokers should be familiar with a variety of ways to negotiate multiple offers and should make sure that seller is given the information necessary to advise broker as to seller’s preference…before multiple offers arrive. If seller wants to negotiate multiple offers using a multiple counter offer addendum, then listing broker must obtain a competent multiple counter offer addendum (there is not one available through the statewide forms), listing broker must gain permission of broker’s managing broker before using the form and listing broker must know how the form works. What is the trigger for seller’s entry into a binding agreement with one of the buyers? What must listing broker do to insure that seller does not inadvertently sell the property to more than one buyer?

This seller’s market offers opportunity for all players in a real estate transaction. With opportunity comes risk. Brokers who mind their "Ps" and "Qs" will emerge from this market with a foundation of clients, portfolio building respect from other industry members and a future that is likely free from finger-pointing, unhappy buyers and sellers.

 


 

Annie Fitzsimmons

Hotline Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. If you’d like to submit questions to the Legal Hotline, e‑mail them to legalhotline@warealtor.org or call (800) 562‑6027. Please have your NRDS number ready when you call or e‑mail the Hotline with your question. The Legal Hotline lawyer does not represent Washington Association of REALTORS® members or their clients and customers.

Please contact Cara McNeil with Washington REALTORS®at cara.mcneil@warealtor.org or call 360‑943‑3100 x 126 for reprint rights.

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