Friday, September 5, 2014

Never Agree to Dual Agency

Dual agency means serving two masters.  No other profession is permitted to routinely engage in this practice that most professionals feel should be banned (see our attorney survey on this topic).  No other profession has special laws written for them that automatically reduces their liability in these relationships. And real estate agents are perhaps the least qualified to handle this conflict.  Dual agency occurs when real estate agents represent both the buyers and sellers on the same transaction.  When that happens real estate brokers collect a double commission and  they are prohibited from doing anything to the detriment of either party.  That means that they can not help you negotiate price or terms of your real estate transaction.  It means that they are getting paid twice as much for doing a tenth of the work.  

Dual Agency is a conflictive relationship that strips buyers and sellers of service to a level that can best be described as abandonment. Dual agency arises when the real estate broker is representing both the buyer and the seller. It is illegal in every other fiduciary profession except under the most extreme circumstances. It is routinely practiced in residential real estate where there is the least amount of training. When a real estate broker engages in dual agency they may not work to the advantage or the detriment of the buyer or seller. In other words, all the reasons you hired your broker vanish - often with little warning.

Dual agents are legally prevented from negotiating price or terms (two of the most important reasons consumers hire Realtors). And perhaps the biggest problem with this betrayal is that it usually presents itself with little warning to the client - it is a bait and switch. The broker could be acting in the client's best interests all the way up to finding the house that creates a dual agency. At that point the buyer or seller are on their own.

In a dual agency, brokers don't have to share the commission with other brokers so they make twice as much money. They profit greatly from this practice. Realtors, who typically have no understanding of the legal ramifications of their own fiduciary relationship with their clients, often illegally counsel their clients of the so-called "benefits" of dual agency. We're here to tell you that there are NO benefits and that you should NEVER agree to dual agency. Find a small brokerage firm with highly qualified real estate agents and demand that they not engage in dual agency. The likelihood of dual agency arising with a smaller firm is far less than with a large firm.

http://www.caare.org/DualAgency

DOUBLE BUBBLE, DOUBLE DIP, ME-ME

Would you hire the same Divorce Attorney that is representing your ex partner?
Why would anyone think they are getting a better deal when their Agent also represents the seller?
Back in the Day…
Back in the day, when interest rates were 18%, and the MLS consisted of a huge 3-ring binder, agents and brokers mostly represented sellers, but the public didn’t exactly understand this. They would call up an office, or a listing agent to see a home, write an offer, and assume that whoever wrote that offer, was representing them. They had no clue that the listing company and agent were actually representing the seller!
Over the years, and many lawsuits later, the evolution of agency has emerged. And to be honest, the public still doesn’t get it, and neither do many agents.  The National Association of Realtors has released their Bi-Annual Legal Scan, and while agency in and of itself isn’t the leading cause of disputes, dual agency came out as a high ranking issue.

What is Dual Agency?
Dual agency occurs when one agent represents both the seller and buyer in the same real estate transaction.
When a potential buyer sees the advertising for a home for sale and calls the listing agent, the listing agent has a choice to show the buyer the home but only represent the seller or to convince both parties to agree to dual agency.

SOME CASES ARE NOT DUAL AGENCY

For example, a buyer wants representation by a REALTOR® while purchasing a FSBO. This can be confused with dual agency, and often is, but as both  parties are not represented (the seller is representing them self), there is no dual agency.
Some people may  not need to have representation. If we think of the experienced  investor, the lawyer selling a FSBO that only needs their house in the  MLS but is fine to handle negotiating, the contracts, and closing, or  possibly the buyer who has purchased before, and feels comfortable  enough to buy without the use of a buyer’s agent, but wishes that the agent  coordinates the closing details.

What are the Agents Responsibilities in a Dual Agency Situation?
If they are a REALTOR®, ethics says confidentiality for both parties   should be the norm. So even though the agent is working now for both   buyer and seller they have to provide fair business dealing to both.
However, the practice of representing both parties in a transaction  is  SLIPPERY.  One basic rule of agency requires maintaining   confidentiality.  When an agent represents both parties, the rules of   confidentiality essentially make the agent a document preparer at best.    They can’t share information about either party with the other.
For   instance, an agent representing both cannot tell a seller what the   buyer is willing to spend.  Conversely, the agent cannot tell the buyer   what the seller is willing to take.  Within the rules of agency   representation, it’s required that when an agent knows a material fact,   they must share that fact with their client.
The most important point for you to know about dual agency is that if   your agent is also representing the other side, your agent cannot advocate for you in negotiations or give you advice on pricing. This means that when you hit a stumbling block in the negotiations, your agent can’t fight for your needs.
Let’s say that a buyer and seller are negotiating and they are $5,000 apart on purchase price. When we represent the buyer, our job is to convince the seller that our buyer will not pay more and that they should take our offer because it is the best they will do. As a seller’s agent, our job is to convince the buyer that the house is worth more than they are offering, and the seller won’t reduce the price any more.
Dual agents can’t take either of these positions.
All a dual agent can do is present to each client what the other side has responded, and ask if the offer on the table is acceptable or if they want to make a counteroffer.

Who Benefits from Dual Agency?
With real estate agents coining terms like Double Bubble, Double Dip, Me-Me it’s no wonder there is a perception that Buyers and Sellers don’t benefit from dual agency. 
The only person who benefits from dual agency is the agent.
Many agents are eager to act as dual agents because they get to keep the entire commission. When an agent is hired to sell a home, a portion of the commission paid to the listing agent is given to the buyer’s broker. If the agent represents both sides, then they get to keep the entire commission.
How do I handle Dual Agency Situations?

I don’t do dual agency except in rare situations.
I think it is a bad idea and not in my clients best interests.
If I have a listing and show the property to buyers without their own agent, I explain that I am represent the seller. I let them know that they have 3 choices if they like the property and want to make an offer:
  • I can assist with the paperwork  and the contract details just like a store salesperson can assist  the people that are purchasing products from the store. I represent  the seller and will encourage the buyer to accept the terms that the  seller wants. By the way, this is exactly what new construction  salespeople are doing when a buyer purchases a new home without a  buyer’s agent.  But this would be illegal when the Realtor/Broker is part owner of the construction company. This information must be disclosed to all buyers and when this information is not disclosed this would be considered a violation of license law. In this scenario you will end up losing more and paying more for your new home.
  • I can refer them to another agent  that can act as their buyer’s agent…an agent that can represent  just their interests.
  • They can find a buyer’s agent on their own, and have that  agent submit an offer on the house.
The next time you are in a market to buy, make sure you have your own agent.
If you discover a home through an ad or a yard sign, call an agent that you can trust and that will represent you– not try to sell you on dual agency. Rather than calling the agent working for the seller, and I can arrange a private showing for properties anywhere in Bloomington, Indiana.
http://www.welcomehomebtown.com/double-bubble-double-dip-me-me/

Thursday, September 4, 2014

MY AGENT SAYS HE WILL BE DOUBLE DIPPING - THAT SOUNDS GROSS

First-time buyer – My agent showed me a house that I like and for which he is the listing agent.  I heard him use the term double-dipping. I know you’re not supposed to do that with chips and dips, but what is that all about in real estate?

Answer - Double dipping at the chips and dip station is a nasty party etiquette faux pas and it can be a nasty real estate practice too, involving not so much etiquette as ethics. Some states have enacted real estate laws and practices to limit the practice or at least to bring full transparency to it. Michigan is what is called a Designated Agency state. That means that we have laws that define the agency role and responsibilities when a Realtor signs a client up to be their listing agent or their buyer agent and it requires a clear definition and agreement with the client about what role the agent is playing.  The cornerstone of the concept of agency is the agent’s fiduciary responsibility to the client.

Curt Vonnegut used to do a commercial for TIAA-CREF, the retirement programs people, in which he had fun with the word fiduciary. It does sound funny. 

From Wikipedia comes this definition of a fiduciary –
A fiduciary is a legal or ethical relationship of trust between two or more parties. Typically, a fiduciary prudently takes care of money for another person.  In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance, and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts. A fiduciary duty is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): such that there must be no conflict of duty between fiduciary and principal, and the fiduciary must not profit from his position as a fiduciary (unless the principal consents). This also goes for Realtor working directly with a local builder. This is also called double dipping and when that Realtor/broker is part owner of new homes being built and sold by the same agent, that's illegal.

So, when a client signs up with a real estate agent to list his house, the agent takes on a fiduciary role with that client. That means that the agent may learn things from the client that the client does not want to others to know, such and how much he’d really sell the place for. The agent is bound by his fiduciary relationship not to disclose that to a buyer. The agent owes his loyalty to the seller.

So what happens when that same agent signs up a buyer couple and starts looking for houses for them. He owes fiduciary loyalty to the buyers and shouldn’t disclose things like how much the buyer is willing to pay to any sellers. So far, so good.

Now, suppose that the agent is sending the buyers listings and they happen to see one of his listings and want to see it. Even worse, they love it and want to put in a bid on it. Where do the agents loyalties lay now? Can that agent serve two masters? Some states allow that to happen and some put some pretty good restrictions on what the agent can do and what level of transparency has to be maintained for both parties to the deal.

Michigan requires that the agent get the written permission of both parties before he should even show the house to the buyers. That written permission should state clearly the compromise that the agent will have to make if placed in this position. The things that need to be dealt with in that document include what the agent can and cannot disclose to either side and includes a strict prohibition against sharing any secrets or confidences that either party has already shared with the agent. Potentially a bigger issue is the fact that the dual agent can no longer negotiate for either side. If having the agent there to handle the negotiations was important to either side, that is gone if the agent is allowed to become a dual agent. Some states, like California, that don’t have designated agency laws in effect, are currently dealing with dual agency cases in their court systems that could have major impact across the country.

So, what’s the double dip thing? That means that the agent is going to receive both sides of the commission – double what he/she would normally make – thus a double dip into the commission pot. That’s not an illegal things or necessarily a bad thing, but is does provide the motivation to perhaps not render as much fiduciary responsibility as is still possible. The agent may become more motivated by the opportunity to double dip that to protect the interests of both parties. Money tends to corrupt like that.

How can you protect yourself against the potential problems that could be caused by dual agency? The simple answer is not to allow it. Since the agent needs to have your permission in most states to act in a dual agent role, just tell them that you’d prefer not to do business that way. Ask them to have a different agent represent the buyer or you, so that each of you has an agent who can give you the full fiduciary attention and responsibility that you should have. In states that don’t have Designated Agency laws that may mean finding an agent in a different company.  

Your agent may refer you to another agent and it is perfectly legal for him/her to get a referral fee for doing that. That way you are still rewarding the agent who worked for you and found you the house that you want, even if he/she can’t be there with you through the sale. If your agent refuses to do something about the dual-agency issue, then fire that agent and find another agent. He/she was more interested in double dipping that in making sure your interests were properly served.

The agent might take the position that he can represent only the seller but can still do the paperwork and put the deal together. Listing agents who meet unrepresented buyers at open houses in their own listings often take that approach. You’ll need to decide whether you feel comfortable with that and whether you are concerned that the agent may already know enough about your and your wherewithal to put you at a disadvantage in the negotiations – people do tend to talk at open houses, especially to the friendly, nice man that showed them through. You can see how hard this can be to keep straight. Double dipping has been a fairly common practice in many places and is a favorite with many agents for obvious reasons; but, the bottom line is that it’s up to you and you need to feel completely comfortable with the representation that you will be getting in the deal. If you are not, remember the advice that you used to hear about drugs or teenage sex, just say no.

 http://normwerner.realtytimes.com/advicefromagents1/item/28614-my-agent-says-he-will-be-double-dipping-that-sounds-gross

 

Wednesday, September 3, 2014

Should A Home Buyer Use The Listing Agent?

Very Will said. Excellent article! This is one of the best written articles of dual agency I have seen in a long time. This is a must post article in my area just because of the overwhelmed practice of dual agency. 


Double Dipping

Dual AgencyHome Buyers should be aware of what Dual Agency means specifically to them and the purchase of a house or condo.   In the real estate business we refer to this as “double dipping.”
It has been written about for years that when a listing agent also represents the home buyer, it either means no one gets represented fully where the real estate agent becomes neutral or the home buyer is left out in the cold with no representation at all. You need to remember that a relationship was established with the home seller long before the home buyer came into the picture.  In other words the fiduciary relationship was originally with the seller.  You can’t serve two masters fairly! And don’t let anyone try and convince you otherwise.

Dual Agency is Double Dipping

A definition of dual agency is “a breach of agency rules” which must be disclosed to the parties because the agent has a conflict of interest when representing both the buyer and the seller. That should tell you something!
I prefer an “arms length” transaction where I totally represent my client and I do NOT do dual agency. Anyone who says they can give both sides equal representation is fooling himself/herself as well as the uneducated client.
Do some real estate agents like dual agency, well sure they get paid twice. But, for the inexperienced real estate agent who thinks only of the double commission, they may find a lawsuit will eat up that double dipping!  The number 1 claim and complaints filed are about Dual Agency. More real estate complaints occur due to Dual Agency where the client’s did not feel they were fully represented.
These are the States that ban Dual Agency:
  • Alabama
  • Florida
  • Kansas
  • Maryland
Now, the uscrupuious listing real estate agent who has lingo down pat of, “I’ll give you your own PRIVATE showing.” Or scares the buyers into thinking they have to write a contract with the listing agent in order to get the house are all examples of an unethical real estate agent. The uneducated, naive home buyer is typically the one who falls for this lingo. And in the end, some of those very home buyers actually think they got a good deal…how sad!
Private showings are always the case whenever a home is shown unless it’s an Open House so don’t fall for the “private showing” gibberish. And scaring a home buyer into thinking they must write the offer with the listing agent in order to get the house is not only unethical, it’s a lie.  The seller will pick the best offer.  The seller only cares about how much money they will net.  So, don’t fall for that lie.
Do you double dip your chip in the dip? Then don’t be represented by the same real estate agent that represents the seller.  Some things are just not Kosher.  And if you have an established relationship with a REALTOR®, then by all means be loyal and don’t fall prey to ridiculous rhetoric from a listing agent.
In summation, this article is for all home buyers.  You have now become educated on the pitfalls of NO REPRESENTATION when going along with Dual Agency.  The first question an ethical REALTOR® asks is, “are you currently working with a real estate agent?”
A unethical agent never asks and ropes you in and hopes you fall for their tricks while smiling all the way to the bank.  Wise up home buyers and don’t be taken! When you go to that Open House without your REALTOR®, then take their business card with you and speak up…I have a REALTOR®.
http://sacramentorealestatevoice.com/should-a-home-buyer-use-the-listing-agent/#comment-44863

Saturday, January 11, 2014

EFFICIENT HOMES MAY BE MORE VALUABLE THAN OTHERS

We are the first and only builder building energy smart custom home builders. All of our homes are built above minimum code with high-end materials and quality labors. We GUARANTEE that our homes are more energy efficient than any other new or existing home built in Thomasville, GA. 

You simply can't buy a  NEW HOME and get a better RATING then "GUARANTEED".

When insurance companies offer discounts for lower risk customers, you can bet it’s based on reliable evidence. Think lower car insurance rates for drivers with no speeding tickets, and discounted life insurance for non-smokers.
Genworth, the large private mortgage insurance firm spun-off from General Electric, now offers a discount for buyer of energy efficient houses.  (OK – Genworth implemented this policy in Canada — but reports suggest it’s coming to the US market….
Genworth is validating that the risk of loss to the mortgage lender is lower when the borrower is in a more energy efficient house.
Blue Sky Homes Desert 2
Image via Blue Sky Building Systems
The policy makes a ton of sense.  Attributes of an energy efficient house — better air sealing, more insulation, high performance appliances — are attributes of a well-built house. These measures make a house more valuable. If the borrower gets into income trouble and can’t afford the mortgage payments, a more efficient house will likely hold its value better than a house built to lower standards.
And home value is a strong predictor of lender losses — if a borrower has home equity, default is rare because the house can be sold for more than the mortgage. For more on that, see this paper by economist John Campbell.
A more efficient house also means lower energy expenses, so the borrower might not get into income trouble in the first place. And, these lower expenses are one reason an efficient house is more valuable.
A funny thing about the mortgage market is that this kind of policy can be self-fulfilling. The fact that more energy efficient houses are more valuable is a basis for the Genworth policy to give a discount, but it’s also likely to be an outcome of the policy. That is, the discount on mortgage insurance should allow some borrowers to pay more for energy efficient houses and increase demand for those houses among homebuyers. This effect should remind lenders, investors, appraisers, and others how the current, conventional policy can be self-fulfilling in the opposite direction — loan policies that make it difficult for a borrower to borrow more to pay a premium for a more energy efficient house can inhibit the very evidence needed to support policy correction.
While most U.S. mortgage borrowers don’t get private mortgage insurance, the fact that Genworth has adopted this new policy should be a strong signal to lenders, investors, appraisers, and others to continually assess how the value of energy efficiency is reflected in the property value and the loan.

Wednesday, December 25, 2013

How to Identify a High Energy Performance Home

Capital Home Builders is the only and first custom and energy smart home builder in South Georgia. Our homes come with more features then any other home built in Georgia and South Georgia. We are also the only builder offering Home Energy Rating System (HERS) Rated homes. We are the only builder with Residential Energy Guarantee. We will guarantee your electrical bill for Two Years and if you go over we will pay you back the Difference. NO other builder in South Georgia will stand behind their homes like we do. We do not believe in building to minimum code and our homes are proof of that. You may pay 5% to 10% more for a High-Performance home, but with all of the energy savings you will make it back the first 2 years. 

So you’re looking to buy a new home…but not just any home. You want one that’s easy on the environment and uses less energy. A comfortable home that saves you money while reducing your carbon footprint.
In other words, what you want is a high energy performance home.
But how do you know when you’ve found one? I mean, how can you tell if the house you’re viewing is actually a high energy performance home? Is there a way to differentiate between a home that’s energy efficient from one that’s not?
Luckily there is and increasing numbers of builders are using it to market energy efficient homes. It’s called a HERS Index score and hopefully one day soon every house will have one.

Energy Performance and the HERS Index Score

So what is a HERS Index score anyway? The home energy rating system (HERS) was developed by RESNET to help homebuyers compare homes based on their energy performance. For example, when a certified RESNET Home Energy Rater does a home energy rating, they’ll give the home a HERS Index score based on its energy performance.

A standard new American construction home that adheres to current energy guidelines is awarded a default HERS Index score of 100, which serves as a benchmark against which all other homes are measured. A higher HERS Index score translates into a less energy efficient home, and vice-versa. A typical American resale home scores 130 on the HERS Index, making it 30% less energy efficient than a new construction home. On the other hand, if a house gets a HERS Index score of 50, it means that it’s 50% more energy efficient than a standard new construction home. And in Thomasville, GA. a typical new home has a score of 130.

Why the HERS Index Score is Important to Builders

Thanks to the HERS Index and HERS Index scores, for the first time homebuyers can actually get an true understanding about how energy efficient a home really is. This naturally changes the way people are viewing homes they’re interested in and builders have been quick to understand that. Consequently, many are now actively marketing their homes using HERS Index scores to advertise potential savings that homebuyers could enjoy when purchasing a high energy performance home.
In addition to this, utility companies too are jumping on the bandwagon by offering builders rebates on energy costs based on their homes’ HERS Index scores. In fact, LG&E and KU Energy, a utility company based in Louisville, Kentucky, recently had their Energy-Saving New Homes Program recognized as a RESNET Energy Smart Program. The program rewards enrolled builders with rebates based on the HERS Index scores of their houses. For example, single family dwellings with HERS Index scores of 85 are eligible for a rebate of $440, and it increases up to $1,200 for homes that score 50 or lower. LG&E and KU Energy are the first utility in the U.S. to earn this designation from RESNET.

What Does All This Mean to Homebuyers?

Thanks to increased efforts and awareness, it’s now getting easier for homebuyers to identify and buy high energy performance homes. As the popularity of HERS Index scores continues to grow, and with builders actively promoting energy efficient homes via their scores, the future is starting to look a little…well…greener than it once did!

Wednesday, June 13, 2012

“Old Homes"Remodling"

EPA Steping Up Lead Paint Enforcement


The EPA has just announced that they will be three more enforcement actions for violations of the Lead Renovation, Repair and Painting Rule (RRP). They are requiring the use of lead safe work practices. It is to insure that activities such as sanding, cutting and demolition, which can create hazardous lead dust, are conducted properly by trained and certified contractors. The problem that occurs during renovations with lead based products present, is that the dust gets thrown into the air. The lead in the product is not very harmful to us. But when it is air born and becomes a fine particle it is then inhaled and this raising the chances for Lead related health problems, such as mesothelioma. The reason these enforcmenta have been made is to protect the property owners, as well help wiht the liablity of lawsuits against landlords. Just recently Colin Wentworth, a rental property owner had to pay 10,000 to resolve a violation of the RRP rules. Which was a complaint that stated he was using power equipment to get paint off of an exterior wall. So the enforcments are about protecting are familys and our neighbor hoods. The more prevelent lead becomes the stricter the rules will become on lead. This is to help keep what is most important safe, our families. This crack down on lead is spreading throughout the nation. Due to the toxic nature of the asbestos material its very important people.

Stay Safe Working Around Lead Paint

In challenging economic times, many homeowners consider remodeling their homes rather than moving. Others are remodeling to improve energy efficiency and Go Green! It is important to stay safe when you remodel, whether you are hiring a contractor or doing it yourself. Learn the facts about working with lead paint. Painting or remodeling a home build before 1978 can disturb lead paint and endanger young children. Lead can harm your child’s brain, causing lifelong learning and behavior problems. Even children who seem healthy can have high levels of lead in their bodies. Children under age six are most at risk. Lead can harm an unborn baby, if the mother is exposed to lead. Removing lead-based paint improperly can increase the danger to your family and require large costs for proper cleanup to ensure a lead-safe environment. Keep your home a Healthy Home by learning the facts about lead.

Where is lead paint found? Most homes built before 1978 have some lead paint. Homes built before 1960 have the most lead paint. Lead paint can be present on any painted surface, but it is most fen found on windows, trim,doors, railing, columns, porches and outside walls.

Sanding, scraping or otherwise disturbing lead paint can release large amounts of toxic lead dust. This dust isn’t always visible and can settle on floors and other surfaces where it gets on children’s hands and into their mouths. The only way to know for certain if a surface has been coated with lead-based paint is to test it.

New rules adopted by the EPA require that if you hire a contractor to remodel your pre 1978 home and the work involves disturbing paint, the contractor is required to give you the Renovate Right pamphlet before starting work. EPA’s Renovation, Repair and Painting Program (RRP) rule also requires that, starting April 2010, contractors performing work that disturbs lead-based paint homes, child care facilities, and schools built before 1978 Must be EPA-certified to work with lead-based paint, and Must follow specific work practices to prevent lead contamination.

http://rdsenvironmental.com/tag/home-remodling/

Thomasville, GA has really old homes that have been Remodeled ASK FOR DOCUMENTATION of these bad materials removed. Lead, Asbestos, Mold

Any home built before 1978 has some type of lead base paint; also do not forget the likely chance of Asbestos and mold. Any home from 1978 and 1900 and 1800 should be tested by a company that specializes in removing Lead, Mold, and Asbestos and they should provide documentation of no findings of these types of hazards and dangerous materials in any old home. No documentation buyers beware. As a real estate agent I would not show this type of property or list without proper documentation.

Hazard Materials