Don't make the mistakes Real Estate Agents may make that would cause a judge and the court to consider the agent a property manager.

We will also explore the rules that govern Arizona real estate licensees regarding property management, as it is one of the more common complaints to ADRE. Arizona Residential Landlord & Tenant Act, the statutes that deal with property management, trust account rules and the eviction process.

About a decade or so ago, buyer’s agents began convincing their buyers to write a letter to seller to be included with their offer. Often those letters told the seller how much the buyer and the family loved the house, and often included not only personal information but photos of the family including the pets. The hope was that the seller would consider the offer when in a competing market, or if/when the buyer wanted to offer a lower price and ask the seller for concessions, certain appliances, or some personal property such as furniture, draperies and other items.

All seemed all well and fine, until it started becoming apparent that the seller was looking at the letters from a different perspective.

First, real estate transactions often include some intense negotiations, including the guessing game of one party trying to determine what the other party is thinking. In this case, a seller must wonder how much the buyer really wants the property, and how much are they willing to pay and give up asking for something. That guessing game is the leverage many clients recognize.

 However, with these letters, it became apparent to the seller that the buyer would often pay top dollar and give up concessions and more, since the letter said that the kids already picked out their bedrooms. Why should a seller drop their price or offer more concessions, when the buyer has pretty much indicated that they will buy this house at almost any reasonable price and terms. Thus, the concept of negotiation is off the table.

 The second, and even more disturbing fact is when the seller uses the information provided to discriminate against a buyer. Case in point, a family in Virginia provided the letter and photos of the family. Those photos revealed the parents of different colors, mixed-race kids, and some other adopted kids of a different ethnicity. The seller rejected their offer, clearly on racial grounds. The buyer’s agent picked up on this, and the buyers filed a fair housing complaint against the seller and the listing agent.

 And, as a good measure, they filed complaints against their agent, who convinced them to write and provide the letter.

As a result, NAR has taken the position that these “love letters” are a bad idea, and strongly recommend not doing them, for any transaction. Here is a link to one of many articles on NAR regarding these letters:

https://www.nar.realtor/fair-housing-corner/love-letters-or-liability-letters

Result, no need to give up negotiation ability, nor give a seller a clear path to discrimination. While that discrimination could occur without the letter, it is advisable not to add fuel to the fire, ending in disappointment for the buyer and possible liability for you, your broker and the company.

Your investor buyer wants to identify properties to purchase, then to use as an investment, placing a tenant in the property. The investor buyer makes an offer to a seller, which is now accepted and in escrow.

Question: May the buyer now list the property for rent, and even show it during the escrow period?

Yes.

Let's assume that the property is vacant. Must they wait until they close on it and have title, or can they list it now and show it?

Certainly, unless the contract they wrote with the seller forbids that activity the buyer has the right to market the property. It would be better to obtain the sellers permission, especially if the buyer wants access to show the property, but again, that is not absolutely required. Any such investor buyer would be considered an owner-in-acquisition. 

A buyer in escrow, anticipating a successful close, has an equitable interest in the property. While they do not have title to the property, an equitable interest provides them with certain rights, which includes the right to list it for sale or lease.

That being said, if that investor, rather then rent the property, is more inclined to fix it and flip it, the same rules exist. Just be mindful of the current seller having a form contract with the buyer for, let’s say, $624,000. That buyer wants to fix it, flip and sell it for, let’s say $810,000. The current seller might see that and wonder why they could not sell it for that amount and might be inclined to attempt to cancel the current escrow. While they do not have a lot of options to cancel a contract, they could dig in their heels and not provide the buyer with any repairs, concessions or any benefit, in the hopes the buyer would cancel. This author recommends not listing it for sale until the escrow closes, for that very reason.

Any such listing, and certainly any contract they execute with a buyer or tenant must contain a disclosure that the seller is acquiring title but does not yet have title, and a contract for sale or lease should be contingent on the seller or landlord obtaining title. There should be no prepossession, a tenancy could not begin until the client owns the property, and while a buyer might be allowed to do inspections and a walkthrough, they would not be allowed to begin any work or move anything into the property. If a lease that the investor executes requires the landlord to redecorate, repair, paint or clean, that should not commence until after they own the property.

Be sure to discuss any potential transaction such as this with your broker.

In a word, yes!

Let’s face it, we are all faced with a common dilemma; how far can we go in what we say, what we write, and who we refuse to work with. The current mood and sentiment of the country has allowed a good amount of hatred and racism, which as always been with us, to bubble to the surface and become more prevalent.

The events of the past 18 or so months has escalated the conversation, as we witnessed more and more examples of hatred and racism show themselves in the mainstream media, social media, in rallies and protests. Interspersed through all of those platforms, we have seen Realtors acting in such a way that clearly demonstrated their racism and hatred of a person or persons.

The 1.5 million Realtors in the US joined the organization at some point and signed on to our principles and beliefs, and affirmed that they will uphold our laws, rules, and standards on how we interact with buyers, sellers, landlords and tenants. But our own body of rules (NAR By-Laws and the Code of Ethics} does not prescribe our activities out in public; in our towns, communities, developments, etc. Thus many of the examples of hatred and racism that we saw in the spring and summer of 2020 did not fall under our body of rules, even Article 10 of the Code of Ethics Our Fair Housing article).

In the spring and summer of 2020, the NAR Professional Standards Committee (I was a member then) and the NAR Interpretations and Policies Advisory Board (I was also a member), wrote the new Realtor Standard of Practice, SOP 10-5. We now had the body of rules to require Realtors to act in a professional, anti-discriminatory manner in public, in their marketing, and in their actions out in the world.

I grew up in a home with family members that survived the depression, saw the hatred and atrocities of WWII and then in Southeast Asia, and heard many comments for grandparents, uncles and others about certain races, colors and nationalities of people. I heard all that as a child and young adult, yet when I became an adult on my own, I realized that was then, this is now. We can all make that choice.

The AAR Residential Purchase Contract has many time obligations for each party. Failing to comply with those obligations could cause the deal to fail and could cost the party money.

Within the entirety of the agreement, the buyer has about 11 obligations, while the seller has 17. Each obligation carries with it a timeline in which the party must comply.

Does every buyer know what they must do and by when?

Does every seller know that they must do and by when?

The answer to both is a resounding NO!

Most clients have little to no knowledge or understanding of those timelines or the issue itself, simply due to the fact that they have never seen that document prior to entering this contract. Thus, who must they lean on to keep them on track?

YOU!

Every client is different. A cash buyer has fewer obligations and some different ones compared to a buyer obtaining a loan. Same is true for the seller.

The role of every agent is first to know the party’s obligations. Not word for word, but at least a knowledge of the obligation, the timing of that obligation and where to find it on the contract.

Every agent must be able to build a timeline and keep the client informed. And the agent must determine the timing of advance notice of an upcoming obligation, meaning, how long the client has before the obligation is due. Each one is different.

Again, know the contract and supporting addenda. No need to know word for word, but at least the concept and where it is located. If your client runs past an obligation, which impacts their ability to perform, they will look to you as to why that occurred. That will be a tough conversation to have with your client.

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Real estate agents are a slice of society as a whole. As members of this society, we have the same concerns and possibilities as any other sales person, any other business field and any other member of society. Bookstores have complete sections on self-help, motivation, sales tools, marketing and business promotion. We have all watched the sales gurus tell us how to make it rich quick and we have all heard the seminars of the best ways to increase our business. So what?

I have witnessed good real estate agents find themselves in a malaise; a slump. Every professional goes through that. If you have a 3 out of 10 closing ratio, you might consider another field. If a football quarterback completed 3 out of 10 passes in college, they would be working in the corporate world after college. But if a baseball player got a hit 3 out of 10 times, they would be batting .300 and teams would be clamoring for them. It is all perspective.

I have also witnessed real estate agents go to sales seminars, motivational rallies and the like, get all fired up, claim they are going to turn things around and use what they learned, and they fail to do it. Why? Because they don't think out of the box!

It is simple. I could write a book on sales techniques, but it would be a short book. One page or maybe only half of a page.

Here it is for free. Do you want to have more business in 2013 than you will have in 2012? Call 20 new, different or referral rich people 3 days a week.

That's it. Call them, talk to them, ask how they are doing, how's the family, what about the weather and in turn, tell them why you are calling. Be honest. You are asking for business or referrals. Don't hang up until you tell them why you called.

It is that simple. If you called 20 cold calls today, 20 warm calls tomorrow (follow up from days, weeks, and months ago from someone who asked for that) and 20 calls to referral rich contacts the third day, you would talk to 60 people a week. Simple math; call and talk to 60 people a week, and you will obtain 3-5 good actionable leads. Work those leads the other 4 remaining days of the week. Next week, start all over again.

4 good leads a week are 16 good leads a month. Can you close 4 of them, 5 of them, 6 of them? All of them? Close even 4 of them, and that is 48 closings for the year. Have you ever sold 48 properties a year?

Think outside the box. Ignore all the hype and marketing and sales techniques. Call 20 people a day 3 days a week every week of the working year, and you will vastly increase your business.

Taking a new listing is one of the exciting parts of a real estate career. It is potentially the beginning of a relationship that if cultivated properly could result in subsequent sales and referrals for years to come. Sadly, not every listing provides those benefits. Some are problems from the start and are flat-out un-saleable. The sooner you realize the trouble signs and take action, the better you will be

What is your time worth? Have you ever sat down and determined what your hourly income is? This can be an eye-opening experience, because once you know what you are paid each hour, you will be less inclined to allow someone to waste your time. Once you know that, you will work to lessen or completely  avoid those situations that take up your time and do not provide revenue.

The current market of lender-owned and short sale properties, coupled with many sellers in bankruptcy often creates a situation where the property is un-saleable. Here are the more common reasons why and the reasons why you should think of cancelling the listing and moving on…

1. Uncooperative or uncommunicative seller. In short sales, the sellers are often frustrated and worried, and will be less willing to cooperate. In either case, such as making certain disclosures or not paying some of the buyer's costs might render the property un-saleable. If the seller has dropped out of sight, does not return any calls, e-mails, faxes or any other means of communication, you might need to walk away.
2. Seller turns down reasonable offers. You know what's reasonable. No matter what the list price is, if your seller refuses to accept a reasonable offer, or at least provide a reasonable counter-offer, that might be time to cancel the listing. Give this stronger consideration after the seller does this more than once.
3. Sellers are divorcing, fighting or not agreeing with each other. Certainly sales can occur with a divorce situation, or sellers who are arguing with each other. But, at some point, when the situation becomes untenable, when you are constantly being put in the middle of their fight, you need to think about your options. When one divorcing party clearly defies a court order and does not cooperate, or one sibling has made it clear that they will not agree to sell mom and dad's place, it might be time to throw in the towel.
4. Sellers refuse to be reasonable on pricing or making repairs. Pricing today could be a moving target. If the seller does not agree to price adjustments to reflect the current market, and activity is slow or non-existent, then you might be wasting your time. If the seller refuses, either now before a contract, or in response to a contract, to make even the slightest repair, then it might be quitting time.

We never like to lose a listing. It often feels like failure. But in many cases it is not your failure. It is the seller. If they put you in the boxing ring blindfolded with your hands tied behind your back, how do they expect you to win the fight? Without their cooperation, participation and assistance, you might be wasting your time.

So, measure each listing with the above factors, and if the decision is to cancel the agreement, first confer with your broker to determine how you accomplish that.

If you determine that you are worth hundreds of dollars per hour, this will be an easy decision for you. If you determine that you are worth $8 an hour, you will seek to find buyers and sellers who will be ready to act, thus raising your hourly pay.