Three Do's and Do Not's in a Real Estate Transaction: Post 1

By
Real Estate Broker/Owner with Broadpoint Properties Cal BRE #01324959

Errors and Omissions Insurance Providers give you a lot of handy information and advice about how to manage your real estate transaction and stay out of jail.

Thanks to CRES Insurance, I have 10 handy tips-the first three are published below (with my commentary in italics).

As the listing agent, DO have the seller sign and verify the information that is submitted to the Multiple Listing Service. Protect yourself and have the seller's sign the MLS report before you submit the information to the MLS. (This is recommended for the very same reason that many agents use the language ‘Buyer to verify all prior to settlement' or ‘Buyer to verify square footage prior to close of escrow.')

Per telephone call Signatures: DO NOT do it! The buyer or seller should always sign all legally binding documents such as the purchase agreement or counter offer. An agent's signature for their buyer or seller followed by the words per telephone call is not sufficient to form a legally binding document and will not stand up in court. Get a signature! We are in an age with fax machines and email. So, getting signatures should be easy. All aspects of a real estate transaction are and important, and all items should be signed by the buyer and seller. (It is interesting to note that most banks and lien holders in short sales are not accepting electronic signatures on contracts. This decision is likely based on the very same reasoning!)

DO get a release agreement. If you agree to a settlement on condition of the property, obtain an appropriately drafted Settlement and Release Form and have both parties sign. Often sellers will credit buyers for a condition of the property. For the seller's protection, have the buyers sign a Settlement and Release Form stating that a settlement of x amount of dollars was agreed for x condition. With this form, the buyers are on notice that they have agreed to this dollar amount and therefore will not hold the sellers liable for damages later for that condition. (We frequently credit funds for termite work, a roof repair, or even a cracked slab. It's best to follow this advice so that I do not have to visit you in San Quentin.)

Stay tuned . . . or subscribe to my blog. I'll be following up with tips 4, 5, and 6 later in the week!

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Rainer
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Steve Merson
Keller Williams Realty - Austin, TX
CNE, e-PRO

Very wise advice Melissa. I look forward to the remaining posts.

Steve

Oct 01, 2009 03:53 PM #1
Rainer
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Christina Morabito
RE/MAX Realty Team - Cape Coral, FL

What happens if the info on MLS is false? 

I know the buyer should verify, but what if it was something that cost them nearly 20k after closing....due to false/misleading information on MLS?  Is the listing agent to blame?

Oct 01, 2009 05:39 PM #2
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Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

Christina: I am not an attorney, and that would be a good question for your brokerage attorney. But, if the seller initials the MLS listing and you have collected the information from the seller, then you liability is probably pretty limited. But, if you write something that is false, then you could be liable--especially if that statement impacts value.

Oct 01, 2009 05:49 PM #3
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Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
Destin FL Real Estate

Melissa - #1 I ALWAYS email the MLS to sellers for approval/corrections. #2 I have never heard of "per telephone" interesting #3 I  Does it mean "buyers accept property in 'as is' condition with respect to??"  That seems to be covered in my Florida "as is" addendum?

Oct 01, 2009 05:52 PM #4
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Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

Wendy: I think you are probably right. The as-is addendum for your state may cover it. California does not have such an addendum. With regard to the telephone, I have seen some agents who have spoken with their clients and received verbal approval on something use an electronic signature or a per telephone signature. Probably not such a good idea, huh?

Why are so many people under the false impression that real estate is simple? Maybe that's a topic for a future blog post!

Oct 01, 2009 06:10 PM #5
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Melissa Zavala

Broker, Escondido Real Estate, San Diego County
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