November 1st, 2022 at 4:08 pm
Not yet. But at some point, they will be for a number of reasons. First, the US stopped manufacturing R-22 refrigerant Freon in January 2020, and imposed an “import ban”. Knowing this ban was approaching for almost a decade, companies had begun stockpiling R-22 refrigerant. Thus, it is available and might be for another decade, but will start to face issues with availability.
Second, when the US adopted the “Montreal Protocol” American manufacturers began switching their manufacturing from R-22 units to R410-a, also known by the brand name Puron.
Here we are 11 years later, and there are tens of millions of properties that use a refrigerant of some sort.
Why does this matter? 5 years ago, a pound of R-22 cost about $14. If your system lost all its refrigerant, and you needed 10 pounds, the cost was $140. Manageable.
Today, delivered and installed by a qualified AC tech, a pound of R-22 is close to $180 retail. That same unit needing 10 pounds, that could cost the seller (or the buyer who now owns) $1800. Big difference.
As an agent, it is NOT your obligation to determine the age or refrigerant usage of your seller’s system. It is their obligation. But the older the system, there might be more disclosure obligations. Will every property inspector identify the age and the refrigerant of a system? No. Some will, but mostly that is up to the seller.
Let’s assume that your seller had a new system installed in the spring of 2017. Is that R-22, or R-410a? Odds are it is the newer refrigerant. But not guaranteed.
Simply put, listing agents, it's a great idea to have a conversation with the seller about the system so that both you and the seller would make the proper disclosures.
Run this through your broker if you are not sure.
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October 3rd, 2022 at 11:21 am
Certain markets over time create the question for the listing agent; I have 5 offers for my seller, and I wrote one of them. Is there a specific order in which I present them to my seller?
To answer that question, the answer is No, there is no specific order. Some of that could be addressed with the seller, asking the seller how she would like the offers presented, such as lowest to highest net, or vice versa, closing time sooner versus later, order in which received, and numerous other factors. It is best the listing agent provide the options to the seller and let the seller decide.
Another choice is the method of presentation; put all 5 on the table in front of them (assuming you got into your car and met with the seller in person) or once an order is selected, present one at a time. That should be the seller’s choice. Always be mindful of the seller’s reaction; read their body language. Some offers might really intrigue them, while, for whatever reason, some others totally bore and/or insult them. Be sure to be sensitive to their reaction; both verbal and non-verbal.
Lastly, now the seller has reviewed all 5. What are their options?
- Accept one and reject the other 4
- Accept one and sit on the other 4
- Accept one, and offer back-up to one of the others
- Counter 1, and sit on 4
- Counter 3, reject one and sit on the other one (you must use the multiple counter form when countering more than 1)
- Counter all 5 of them (you must use the multiple counter form when countering more than 1)
- Sit on all 5 waiting for a few more to be presented.
Needless to say, there are dozens of combinations including those above, meaning the seller has a great deal of flexibility. While in many cases, we are obligated to play by the rules, in most cases, sellers have no rules. One misconception is that the seller if obligated to sign the rejection part of the contract and return that to the buyer if they are in fact rejecting the offer. That is simply not true. As the listing agent, you should encourage and/or gently insist that they do that, yet they have no obligation to do so.
Give them the choice and proceed, with one caveat; Do not keep the buyer agents in the dark…Tell them exactly what is happening. This is professional courtesy. Remember, that buyer’s agent has a pesky buyer calling them 10 times a day, and all the agent is trying to do, is help you uphold your obligation to the seller, and put money in everyone’s pocket.
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August 31st, 2022 at 4:17 pm
Possibly, although not yet. In most cases, the refusal of the seller to offer VA financing stems from the listing agent making possible false comments to the seller, or creating a cost fear for the seller, stating “…it will cost you more if the buyer uses their VA eligibility…” or say “it will require you to make certain repairs…”
While it is true that with VA loans, the seller might incur additional costs that are not required on FHA or Fannie Mae loans. And it is also true that the VA appraisal might require certain items fixed for the loan to be approved, versus a BINSR request which is negotiable.
Which in and of themselves, might cost the seller some money versus other financing that possibly would not.
BUT, this is a Veteran, a person who represents our country and probably put their life on the line to defend the country. They deserve every benefit we can offer.
Sometimes, the VA appraiser notes that the roof is deficient, or the stove has a bad burner, which could result in the seller being required to repair or replace. However, VA has an appeals process which often takes a day or two whereby the loan officer could appeal that request for the benefit of the veteran trying to buy the property. If the appeal is successful, that benefits all parties involved.
The problem is twofold. Many veteran groups rally the cause by stating that a seller’s refusal to allow VA financing should be a violation of Fair Housing rules and statutes. Right now, under both the Federal laws and the REALTOR Code of Ethics, Veterans are not a protected class, but the groundswell of energy is pushing that forward.
To this author, this could mostly be solved if Congress offered legislation to strip away all the overlays on VA loans, and make them look, feel, act and cost the same as FHA and FNMA loans. With purchase contracts in most states, any buyer could reject a home if the stove had a non-functional burner, or the house had a bad roof.
And if Congress acts and makes Veterans a protected class under the Federal law, and NAR added Veterans to our Code of Ethics, those will go a long way to provide the much-needed protection and caring of the people who deserve the respect and protection of all Americans.
If you agree, please contact our Senators
Mark Kelly https://www.kelly.senate.gov/contact/contact-form/
(602) 671-7901
Kyrsten Sinema https://www.sinema.senate.gov/contact-kyrsten
602-598-7327
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July 25th, 2022 at 2:48 pm
While a good part of the country uses an Exclusive Buyer Agreement, the brokers and agents in Arizona have been very slow to embrace the use. Let me pose this issue.
How many times have you worked your heart out for a buyer, spending weeks, months or longer working for them, only to find that they bought a property on their own or through someone else. And often, they bought something that they swore they would not buy.
Many agents claim that a buyer going elsewhere is simply a part of the process, sort of like the need to kiss a lot of frogs before finding the prince (or princess). It does not need to be like that.
Think of a baseball player. There are many metrics to determine a superstar, such as the number of home runs, RBIs, on base percentage and plenty more. But the most common is batting average. If a ballplayer failed 7 out of 10 times at the plate, yet was successful only 3 out of ten times, they would be batting .300. A ball player that does that is coveted and offered huge salaries and perks. A superstar.
Most real estate agents have similar averages. If you closed 3 out of every 10 buyers, every month, you would be making a good living, closing 36 deals a year.
So I ask; if you could or actually close 3 deals a month, would you rather work with 10 buyers and close 3, or would you prefer to work with 4 buyers and close 3? Imagine all that free time, to work with more buyers, or play golf, travel, or spend more time with family.
I can hear the arguments already.
Most buyers won’t sign it. NOT TRUE.
Most buyers will walk away and work with a different agent. Good, send them away, as they are not serious. Let them waste someone else’s time. They might actually buy, but they want a tour guide and someone to buy them lunch.
You know this! How many buyers approach you and bristle when you talk about pre-qualification? They are not serious.
How many buyers ask you for a rebate or some concession, claiming that other agents are willing to do that?
If you have a license to make a living, then you owe it to yourself to consider this. To prove this, I also ask, what does it cost you to have someone waste your time? What are you worth? What did you earn the last full year you were active? If you worked all year, and determine how much you earned, divide that by the total number of hours you spent with buyers, showing, previewing, researching, negotiating and all the other activities.
If you earned $80,000 and worked a total of 200 hours over the year (this does not include peripheral times, such as classes, meeting with your broker, office team and all activities not connected with a buyer.
With those numbers, you earned $400 an hour. Some attorneys don’t earn that. When an agent in your office wants to chat about nothing for 30 minutes, that costs you $200. Think of all the people and conversations that cost you thousands of dollars.
Once you calculate what you are worth, you will be less likely to allow anyone waste your time, including buyers that are not qualified or not serious about buying.
Full circle; the way to do that is to have them sign a Buyer Broker Agreement. Ask 10 buyers to sign it, 2 or 3 might.
Those people will buy from you and close. The others, again, will waste someone else’s time.
Find an ABR class, typically one full day of training, or maybe over 2 days. And make sure your broker is on board.
Do this and you will make more money, have more free time to spend with your family and your hobbies, and you will have less stress and be more productive.
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June 23rd, 2022 at 2:48 pm
Most agents readily recognize that they are licensed with a broker and are unable to be licensed with two brokers at the same time. Thus, the agent works for one broker and only that one broker.
How or when would an agent work for two brokers at the same time? Simple. Mark works for broker Jennifer, and one day decides to leave Jennifer’s company. Mark approaches Jennifer and tells her that he decided to leave and go work for Richard. While disappointed, Jennifer agrees to review Mark’s activity to determine what needs to be done with any listings or contracts, property management agreements, etc. Mark has no listings, yet has two deals in escrow, one closing in 3 weeks and the other closing about 5 weeks later.
Jennifer should instruct Mark on what happens with those deals. Jennifer should tell him that she will either work the deals or assign the deals to another agent in the company, and Mark will be paid, when the deal closes, according to his IC Agreement and/or Commission Agreement. Jennifer should also warn Mark not to do anything involved in those two deals, since if he does, he would be working for two brokers at the same time. Working a deal still at Jennifer’s company, while licensed with Richard’s company violates several state statutes, specifically ARS §32-2153.A.8
That being said, sadly, Jennifer often tells the agent the wrong instructions. Those might be “sorry you are leaving, but if you want to be paid, you need to work those deals to closing…” If Jennifer says that, Jennifer is telling the agent to violate state statute.
If you decide not to talk to Jennifer, go on-line to ADRE and sever your license from Jennifer, you would be required to check the box affirming that three items are true; 1. you will not work for more than one broker at any time 2. you will settle any business issues with Jennifer and return any corporate collateral material, and 3. You have settled any financial issues with Jennifer.
If you check that affirmation box, yet violate any of that, you are violating state statute. The penalty could be severe.
Often there is a conversation about transferring the deal from Jennifer to Richard. Jennifer might even suggest that, yet it is not commonly done. In most cases, Richard does not want the deal for many reasons, mostly that he did not approve the deal, the terms, the forms, nor supervised the agent on the deal. And if transferred, the buyer and seller must agree in writing that the deal is being transferred from Jennifer to Richard.
It is probably best just to leave it with Jennifer, let her work it or assign it, and then Jennifer pays everyone when it closes. Mark would be paid according to his agreements with Jennifer, and Jennifer is allowed to pay the commission directly to Mark, (per ADRE Substantive Policy 2005.08) and not through Richard. In most cases, Richard does not want the money since they have no file to attach it to.
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April 26th, 2022 at 10:44 am
Of course, you would not do that, for so many reasons. Image, safety, reliability and so much more.
But another part/tool of our business is often unnoticed yet could create as much havoc. Our technology. Our devices on which we conduct our business, communicate with clients, title company, lender, inspectors, prospects, other agents, etc. We often use old, out-of-date devices that are also not maintained properly.
Did your computer ever freeze on you? Go to the blank blue screen-of-death? Often, we tolerate technology issues as normal, yet do not desire to get to the root cause and fix whatever is causing the problem.
If the check-engine light on your car activates, do you ignore it, or at some point, check it out?
Why am I making mention of this? Well, first, productivity. I am not suggesting that you change your devices every year or so, but I am suggesting that you pay attention and maintain them, I don’t have the time or room here to go through everything now in a blog. But, computers, phones, printers, scanners and all your devices need some TLC, often. With the proper care and attention paid, they could last longer. But ignored, they can make your life miserable.
That said, you should ALWAYS do the following:
- Keep your devices’ operating systems updated. Usually, they are pushed to you from the manufacturer or internet company, so be sure to accept and schedule their download and installation.
- Keep virus programs up to date. No need for expensive, invasive programs.For example, if you have a Windows device, Windows Defender does a good job. And a good malware program.
- Routinely clear your browsing history, at least weekly or more often. Failure to do so could slow down and clog your systems and could leave lethal links and malware in your device.
These are just for starters. If you own a car for 5 years, how often do you change the oil, check the brakes, rotate the tires, lube the joints, check tire pressure and do routine normal maintenance? Let’s hope you do, and not think about it while doing 70 MPH on the freeway. Routine care and maintenance will help the car last years. Do the same for all your devices.
As devices and their operating systems age, they become more susceptible to breakdown and more available for hackers to break into and steal information.
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April 5th, 2022 at 7:12 am
Don't make the mistakes Real Estate Agents may make that would cause a judge and the court to consider the agent a property manager.
We will also explore the rules that govern Arizona real estate licensees regarding property management, as it is one of the more common complaints to ADRE. Arizona Residential Landlord & Tenant Act, the statutes that deal with property management, trust account rules and the eviction process.
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March 28th, 2022 at 9:12 am
About a decade or so ago, buyer’s agents began convincing their buyers to write a letter to seller to be included with their offer. Often those letters told the seller how much the buyer and the family loved the house, and often included not only personal information but photos of the family including the pets. The hope was that the seller would consider the offer when in a competing market, or if/when the buyer wanted to offer a lower price and ask the seller for concessions, certain appliances, or some personal property such as furniture, draperies and other items.
All seemed all well and fine, until it started becoming apparent that the seller was looking at the letters from a different perspective.
First, real estate transactions often include some intense negotiations, including the guessing game of one party trying to determine what the other party is thinking. In this case, a seller must wonder how much the buyer really wants the property, and how much are they willing to pay and give up asking for something. That guessing game is the leverage many clients recognize.
However, with these letters, it became apparent to the seller that the buyer would often pay top dollar and give up concessions and more, since the letter said that the kids already picked out their bedrooms. Why should a seller drop their price or offer more concessions, when the buyer has pretty much indicated that they will buy this house at almost any reasonable price and terms. Thus, the concept of negotiation is off the table.
The second, and even more disturbing fact is when the seller uses the information provided to discriminate against a buyer. Case in point, a family in Virginia provided the letter and photos of the family. Those photos revealed the parents of different colors, mixed-race kids, and some other adopted kids of a different ethnicity. The seller rejected their offer, clearly on racial grounds. The buyer’s agent picked up on this, and the buyers filed a fair housing complaint against the seller and the listing agent.
And, as a good measure, they filed complaints against their agent, who convinced them to write and provide the letter.
As a result, NAR has taken the position that these “love letters” are a bad idea, and strongly recommend not doing them, for any transaction. Here is a link to one of many articles on NAR regarding these letters:
https://www.nar.realtor/fair-housing-corner/love-letters-or-liability-letters
Result, no need to give up negotiation ability, nor give a seller a clear path to discrimination. While that discrimination could occur without the letter, it is advisable not to add fuel to the fire, ending in disappointment for the buyer and possible liability for you, your broker and the company.
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February 28th, 2022 at 10:48 am
Your investor buyer wants to identify properties to purchase, then to use as an investment, placing a tenant in the property. The investor buyer makes an offer to a seller, which is now accepted and in escrow.
Question: May the buyer now list the property for rent, and even show it during the escrow period?
Yes.
Let's assume that the property is vacant. Must they wait until they close on it and have title, or can they list it now and show it?
Certainly, unless the contract they wrote with the seller forbids that activity the buyer has the right to market the property. It would be better to obtain the sellers permission, especially if the buyer wants access to show the property, but again, that is not absolutely required. Any such investor buyer would be considered an owner-in-acquisition.
A buyer in escrow, anticipating a successful close, has an equitable interest in the property. While they do not have title to the property, an equitable interest provides them with certain rights, which includes the right to list it for sale or lease.
That being said, if that investor, rather then rent the property, is more inclined to fix it and flip it, the same rules exist. Just be mindful of the current seller having a form contract with the buyer for, let’s say, $624,000. That buyer wants to fix it, flip and sell it for, let’s say $810,000. The current seller might see that and wonder why they could not sell it for that amount and might be inclined to attempt to cancel the current escrow. While they do not have a lot of options to cancel a contract, they could dig in their heels and not provide the buyer with any repairs, concessions or any benefit, in the hopes the buyer would cancel. This author recommends not listing it for sale until the escrow closes, for that very reason.
Any such listing, and certainly any contract they execute with a buyer or tenant must contain a disclosure that the seller is acquiring title but does not yet have title, and a contract for sale or lease should be contingent on the seller or landlord obtaining title. There should be no prepossession, a tenancy could not begin until the client owns the property, and while a buyer might be allowed to do inspections and a walkthrough, they would not be allowed to begin any work or move anything into the property. If a lease that the investor executes requires the landlord to redecorate, repair, paint or clean, that should not commence until after they own the property.
Be sure to discuss any potential transaction such as this with your broker.
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January 24th, 2022 at 3:59 pm
In a word, yes!
Let’s face it, we are all faced with a common dilemma; how far can we go in what we say, what we write, and who we refuse to work with. The current mood and sentiment of the country has allowed a good amount of hatred and racism, which as always been with us, to bubble to the surface and become more prevalent.
The events of the past 18 or so months has escalated the conversation, as we witnessed more and more examples of hatred and racism show themselves in the mainstream media, social media, in rallies and protests. Interspersed through all of those platforms, we have seen Realtors acting in such a way that clearly demonstrated their racism and hatred of a person or persons.
The 1.5 million Realtors in the US joined the organization at some point and signed on to our principles and beliefs, and affirmed that they will uphold our laws, rules, and standards on how we interact with buyers, sellers, landlords and tenants. But our own body of rules (NAR By-Laws and the Code of Ethics} does not prescribe our activities out in public; in our towns, communities, developments, etc. Thus many of the examples of hatred and racism that we saw in the spring and summer of 2020 did not fall under our body of rules, even Article 10 of the Code of Ethics Our Fair Housing article).
In the spring and summer of 2020, the NAR Professional Standards Committee (I was a member then) and the NAR Interpretations and Policies Advisory Board (I was also a member), wrote the new Realtor Standard of Practice, SOP 10-5. We now had the body of rules to require Realtors to act in a professional, anti-discriminatory manner in public, in their marketing, and in their actions out in the world.
I grew up in a home with family members that survived the depression, saw the hatred and atrocities of WWII and then in Southeast Asia, and heard many comments for grandparents, uncles and others about certain races, colors and nationalities of people. I heard all that as a child and young adult, yet when I became an adult on my own, I realized that was then, this is now. We can all make that choice.
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