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How to Avoid Being Dumb and Dumber in Real Estate

Aug 18, 2007
We shall examine some of the more common dumb things agents do. Put sold signs on houses that have gone under contract. In some states, this is illegal to do unless the house has closed. Have you ever had a contract fall through? If you haven't, you probably are new in the business, lucky, or don't do many transactions. As the listing agent, you are supposed to protect the seller and get the best offer. Putting sold on the signs usually stops any offers coming in. This is not good for the seller and can lead to them dropping the listing, or yes, filing suit. It is not good for the agent as it tells a potential buyer not to call you. Pretty dumb. Your sign is your billboard announcing your business. Sold sign says this is no longer your business. So, never put sold on a sign. Putting pending or sold on a magazine ad. Same logic as above. Advertise homes for sale to solicit business. People don't call on pending or sold.

Being a buyer's agent involves a fiduciary responsibility to protect your client. Agents do several dumb things as a buyer's agent. One is they don't stress the importance of the buyer getting an inspection from a licensed home inspector. The public thinks that an agent knows houses and is the same as an inspector. Wrong! It is also dumb to recommend a particular inspector. If they mess up the buyer can try to sue you for the recommendation. If the buyer doesn't want an inspection, get it in writing, this protects you from a later suit saying you didn't recommend one. Some buyers are liars!

When representing the seller one way to protect a seller is through a home warranty. You should sell the advantages to the seller of the protection during the Listing and a good selling feature for the buyer. If the seller fails to do this at time of listing, don't be dumb, have them sign that you suggested it and they declined. As a buyer's agent likewise to protect your client, encourage your buyer to ask the seller for one. If the seller refuses and the buyer doesn't insist on one, get it in writing, or you are leaving yourself open to exposure, which is real dumb. If the seller in negotiations with a buyer agrees to pay for a warranty and you represent the seller, don't be dumb and let the seller pay at closing and the buyer's agent writes the warranty. If the seller agrees to pay, you need to be their advocate by protecting them during the duration of the listing until closing. Don't be dumb and nice by letting the other agent provide it at closing.

Termite companies and Heating and Air Companies can be unethical and so can Agents. It is dumb to let a buyer's agent pick their buddy to do inspections. Give them a choice of three to select from. If a problem is diagnosed, before the inspection, tell that company they are only to do the inspections and no repairs. This prevents the dumb mistake of letting them generate work for themselves for questionable repairs. If a huge repair is suggested it can be dumb to get one opinion. Being nice to fellow agents does not protect your client! Don't be nice and dumb.

It can be dumb to suggest a mortgage company for the buyer. If they could have gotten a better deal somewhere else, they can blame you for it. Suggest places they can compare. Always encourage them to get prequalified before you show them any houses. It is dumb to waste your time with deadbeat buyers. Make sure they get a good faith estimate of financing costs. Let them drive their cars with you as a passenger or follow you to avoid lawsuits from accidents. Don't be dumb. Protect yourself with an umbrella policy.

Cash buyers are a good thing for the buyer's agent. Don't be dumb and give away their bargaining position too early. In the initial offer, suggest they need financing. Offering $250,000 cash for a house of this price is dumb. Offer less and act like the buyer is coming in with 20% down.

Closing costs are a necessary thing. If you represent the buyer, try to get the seller to pay them for your buyer. It is better for your buyer to use their cash towards the down payment. Dumb if they don't.

Many agents are dumb when it comes to contracts. When you make offers: get all initials and signatures of owners. Some investors have control but are not on title. Get good faith estimates for the sellers and the buyers. Get dates on all initials and changes. Write in the final acceptance date. Give small windows to respond to offers and counters. Get all expiration and extension dates in writing. Provide all written documentation as required for inspections. Reports, summaries and signed addendums. Failure to do so waives the right of the buyer. Very dumb to provide partial information.

When representing buyers make sure you are not dumb about contingency contracts. Put in a time frame to get first right of refusal to remove the contingency if another offer comes in. When removing contingency, provide contracts or mortgage info expediently or you may forfeit this important contingency. Dumb, and good for greedy lawyers and buyers to sue you.
About the Author
Charles W. Moore, has a Real Estate and Computer background. Bob Mandel a Real Estate Broker in South Carolina, was one of the first to offer discount brokerage. Together they built SCFlatFeeMultipleListing.com South Carolina's premiere Flat Fee & Discount MLS Provider.
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