The purpose of this page is to inform real estate consumers and real estate agents about relevant real estate related issues. This page is not intended to constitute legal advice. Before signing any legal documents, please consult your real estate attorney.
Friendly Listing Contract" (Adobe Acrobat Reader Format)
WARNING - This form should only be used as a source of ideas as to many key points of negotiation. Do not attempt to use this form without first consulting an attorney. I helped design this form for the Minnesota State Bar Association. Although it is a standard Minnesota Bar Association form, this form will need substantial modifications if it is to be used in other States, if it is useable at all. Some States require the use of their standard forms. It is often true that the Seller holds the better negotiating position than the Broker when it comes to negotiating the Listing Contract. This Listing Contract takes that superior negotiating position into account and provides an opportunity for the Broker to put their promises in writing. You will find many helpful ideas in this form including terms covering such items as: Early termination of the contract, dual agency issues, marketing plan, compensation issues including reduction in fee for dual agency transactions, referral disclosure, exclusion list (what if you sold to a relative or neighbor?), and much more.
"Danger Open House" WARNING Open houses can be hazardous to your right to representation. Despite the fact that real estate firms advertise open houses and invite you to come visit them, open houses are one of the worst bate and switch traps set in real estate. You could be giving up your right to hire your own buyer representative just by visiting an open house.
"Dual Agency" The term sounds innocent enough. However, imagine having your real estate agent abandon you at the most pivotal point in a real estate transaction- at the point of negotiation. By definition, dual agency is an almost total reduction in the level of service by the agent. Attorneys who are trained to deal with conflicts of interest are not permitted to engage in dual agency. However, real estate agents subject real estate consumers to this poor excuse for service every day. How is this possible? The real estate industry has lobbied for dual agency laws to make it possible for agents to inflict this terrible injustice on real estate consumers. Most of these laws actually replace the Common Law of Agency and make it impossible for dual agency victims to sue for damages. Despite the almost total elimination of service that is lost to dual agency, the agent typically requires a full fee. Don't agree to dual agency without talking to a real estate attorney first.
Your Real Estate agent might not have a a high school education It is hard to believe, but it seems that most States practically promote the advent of incompetence among their licensees. Many of the largest and most influential real estate firms often believe in the business philosophy called the, "Masses of Asses." The more real estate agents that work for them, the more likely that there will be an agent who will sell a house to a friend or relative. Think about it, do you know anyone who doesn't know a real estate agent? It is best for the biggest firms therefore to lobby for laws that make it easy to get a real estate license. The result is that there are many very incompetent real estate agents waiting to inflict mayhem on innocent real estate consumers. You will find that most of the highly qualified real estate professionals abhor the incompetence that exists in their profession.
One Stop Shopping Possibly the next big class action lawsuit for the real estate industry as agents self-deal and forget about their legal duties to their clients. Otherwise known as Controlled Business Arrangements, these arrangements are good only for the real estate professional who is receiving the referral fees. These arrangements are typically over-priced, known for poor service, and a bad deal for the real estate consumer. I recently closed a refinance transaction at my title company for a real estate agent. My title company is independent and refuses to get involved in Controlled Business Arrangements. I asked the agent if she would be bringing her clients to my company. Although she admitted that the service and pricing was far superior to the title company she usually used, she told me that she couldn't bring her clients to my company. When I asked her why, I got what I believe to be a typical response, she told me, "I make about $200 every time I refer someone to my in-house title company." When I asked her why she was at my title company, she told me that she saved about $200 closing at my company.
Referral Fees Most people don't know it, but referral fees are extremely common among real estate agents/brokers. The problem is that most (practically all) agents do not disclose this arrangement to their clients. The agent often leads the client to believe that they are performing a gratuitus act for their client by recommending a skilled professional to assist them. This is often far from the truth.
Hire your Attorney First Yes, you need one. Sorry, but you need someone on your side, the agent is not a lawyer. It is illegal for agents to recommend against hiring a lawyer - and for good reason. Selecting, negotiating and working effectively with a real estate attorney in this article.
Who's Your Attorney Real estate consumers, don't use an attorney whom your real estate professional recommends. Real estate agents, don't use the services of your broker's attorney. They have a terrible conflict of interest. Remember, you may have a legal cause of action against your agent or broker. You don't want an attorney who has loyalty ties to your adversary.