Disclosures. Commissions. Money.
Whereas Article 1 is all about honesty, Article 2 is all about dishonesty.
I think it’s pretty clear that you can’t disclose what you don’t know. The question is “What should you know?” You should know your market. You should know the very basics of construction, pertinent functions in your market (ie: city water, well or coop; septic or sewer, etc.) and other things that are important to a reasonable buyer and seller. Just because you know these things doesn’t mean you want to be the source of the information. I suggest that you should be the Source of the Source. Meaning, when you see a crack in the wall point it out and encourage the buyer to discuss it with their inspector and possibly an engineer. If you know or suspect a prison is being built at the end of the street, direct the client to newspaper articles, city councilman or other appropriate sources for specific information. You are not required to know if a water spot is from a plumbing leak or a spill. You are required to point it out if you see it.
Article 3 is about cooperation and money. How many times have you heard that a broker can’t ask another broker to reduce their commission after the sales offer has been presented? It’s not true. You can ask. However, you cannot require it. One broker cannot unilaterally change the amount of compensation being offered. The two brokers can agree though.
While were in Article 3, let’s talk about Variable Rate Commissions. An example when the listing agreement requires the seller to pay a different fee based on who brings the buyer. Such as 10% if a second broker is involved and 8% if it’s an in-house transaction. Most MLS’s have a field to disclose if there is a VRC. If the property is a VRC, it is the responsibility of the buyer’s agent to ask what the variable is. The listing agent is required to answer truthfully.
Article 3 has a number of issues that we see in our markets daily. It’s a good article to review for your business.
Next time we’ll discuss buying and selling property that you have ownership in.
leighyork 