COE ADJUSTMENT: “COE may occur sooner with a written, mutual agreement between the parties.” Do not write COE as "on or before xx/xx/xxxx." Too ambiguous. OR “Seller and Buyer acknowledge and agree that COE may occur sooner with written, mutual agreement between the parties.”
COE Delayed: I have a land sale that should have closed Friday Sept 8th, but did not close. The title company sent the closing papers to the buyer on Sept 7th and he lives out of state. He is a truck driver and could not get the papers signed and sent back to close on Friday. They are hoping to get the paperwork back to close Monday Sept. 11th (today). I wasn't notified until Friday afternoon when I asked how closing was coming along. My question is, do I need to do anything? Do I need an addendum sent over with a new COE date?
“No you really don't need to do an extension at this point. If you know it's going to close today then I'd basically just wait and let it close. If it were going to be next week then I would say to do an extension, but for a few days it's not overly critical as long as the parties are all on the same page.”
COMING SOON REQUIRES A SIGNED LISTING AGREEMENT! 1) signed ER, 2) note on page six “this is a non-mls listing until xx/xx/xxxx, 3) seller authorizes coming soon advertising, 4) sign rider “coming soon.”
COMMERCIAL TRANSACTIONS: Also See Referrals. & Expertise; Q: This is XYZ, I have a client who are interested in purchasing a commercial property (small piece of mini market) this client is purchasing just the property, not the business, since it's not profitable at the moment and I would like to know if my license allows me to represent a commercial buyer? if so, HomeSmart has any tutoring or mentor courses to commercial real estate beginners?
A: Commercial transactions are dramatically different from residential transactions. We strongly recommend that you refer it out to someone with commercial experience and expertise. We do not offer any commercial continuing education courses. AAR does offer commercial CE classes, you would have to check their education calendar to see which classes, dates and availability.
Q: My client wants me to help him & his son find a commercial business. Does my license allow me to do that?
A: Yes it does Sam, but if you haven't done commercial before we'd suggest you refer it out. You should have prior, documented experience with the commercial market segment. That part of the business is completely different from residential. If you do move forward with your clients you need to know that our fees are higher (there is an additional 1/2 of 1% of the sales price transaction fee in addition to your regular fee) and you would also need to have your clients acknowledge in writing that they understand that commercial is not your area of expertise.
Q: Am I permitted to list a commercial lease? My Client understands I've never done one and would like to give me a chance anyway. It's a vacant warehouse building.
A: We highly recommend that you refer it out to someone who has experience with commercial. That being said, if you have a written acknowledgement with your client that this is not your field of expertise, and they still insist that you be involved, then you could move forward with it but only with the assistance and support of someone who does have commercial experience and who could guide you through the process.
It's all about risk reduction and minimizing that for both yourself and HomeSmart.
COMMERCIAL, CAN I DO COMMERCIAL? Q: I have a friend who really wants me to find them a commercial property to buy. Is that something I can do? How does that work? A: Hi Toni, So your license is good for all aspects of the real estate business. You'll need to get something signed by your clients with them acknowledging that commercial is not your area of expertise, since that's part of the code of ethics. I will say, that often we strongly suggest that an agent refer out a client that is looking for help in an area that the agent is unfamiliar with. That especially holds true if the client is also not well versed in the details of that type of property. It's like the blind leading the blind which isn't a great situation. We do know that there are times when a client doesn't care about your lack of expertise in a certain area, and only wants to work with you. If that's the case, as long as they know that you're working outside your area of expertise, you should be ok. PLEASE NOTE: The HomeSmart fees are higher in a commercial than a residential transaction. You pay your normal transaction plus E&O fee, and then on top of that there is a 1/2 of 1% of the sales price additional fee (which is capped at $5000 per transaction). That means if you sell a $500k commercial property, you'll pay $2800 ($300 normal fee plus $2500 which is 1/2 of 1% of the sales price). I just want you to be aware of that going in.
COMMISSIONS: Q: Dear Broker, We are in negotiations and close to a contract on a commercial transaction with a non-MLS member. He emailed me that he confirms the commission is 3% to the Buyer Broker (HomeSmart). I don't have a signature, just an email confirmation. Is this sufficient as a "separate agreement between brokers" for payment of co-broke? Do I need it signed by theirs and our broker, too? Thx, Steffy
A: Hi Steffy, an email is better than nothing, but if it were me I would want something signed by the agent just because that's a bit more official. Take Care, KF.
COMMISSIONS PAYABLE TO HOMESMART: HomeSmart is to receive your fees prior to you receiving your check. If the check is cut directly to you, please cut HomeSmart a check to cover your fees for the transaction.
COMMISSION ADVANCE: We have a request that came in from an agent. Apparently builders are beginning to offer commission advancements to agent/brokers. I have attached the advancement addendum for your review. This one is from Meritage and I was told Toll Brothers are offering the same. I want it noted that if the transaction fails to close the advanced commissions will be due to the builder within 30 days.
I guess other brokerages are allowing this, what is our policy? JS
“We do not allow agents to get commission or until it closes unless builder will put in writing that it does not have to repaid if it does not close. They can pay us and we hold the commission until closing.” TM
OR (KF) Response to Title company regarding a builder advance to one of our agents: I've spoken with Mark about this, and he understands our policy. I believe that he spoke with the listing side and this was sorted out. We don't allow our agents to receive advance commissions like this so the full amount of the commission will be due at COE
COMMISSION ADVANCE: HOMESMART ONLY PAYS ECOMMISSION ON SALES, NOT LISTINGS.
COMMISSIONS: DEFEND YOUR COMMISSIONS WITH YOUR SELLERS!
Q: Can I offer a rebate to my client?
A: Hi XX. Anytime we see a phrase like buyer rebate, we need to see three things: (Actually, the first thing is to change the word "rebate" to the word "credit". We can "credit" our clients in a transaction, we do not send or give them a "rebate.") The three things we look for are:
1) value of the credit 2) what they have to do to qualify for the credit, and 3) the date(s) the program begins and ends to get the credit. You have the first (value = $1500). Please resubmit to the broker dept when ready. Jeff.
COMMISSION REDUCTION REQUIREMENTS FOR BUYER/SELLER CREDIT PROGRAMS
1) Subject to lenders approval
2) CREDIT not REBATE
3) Dates of program
4) Approx value
5) How Qualify (what performance is required)
6) Waive commission, take $ off sales price, tax free
7) Waive commission, have seller give same dollar amount in concessions instead, tax free (Better, less out of pocket cash required at closing + tax free + not taxed on this income + better than off sales price, amortization schedule = short vs long!)
CRI: Credit Reduction Instructions: CREDIT SELLER OR BUYER AT COE:
I want to credit a portion of my commission to the Buyer’s down payment or closing costs. How do I do that?
There is a form under downloads titled “Commission Reduction Instructions.” Complete that form and forward it to the title company. Brokers will send a copy to the closing department after they sign. Keep in mind, it will be subject to the lender’s approval. Be certain you obtain the lenders approval prior to offering this to your Buyer as there are some loan programs that do not allow contributions to the Buyer, or that have a cap of contributions that the Buyer can receive. You don’t want to be in a situation where you’ve promised to contribute money to your clients costs only to be told by the lender that you won’t be allowed to.
COMMISSIONS, COMMISSION REDUCTION INSTRUCTIONS: I am selling and purchasing a new home for myself. I would like to waive my co-broke on the purchase. Would it be appropriate to include the language in the contract or should it be done separately? Also, are there any savings in the fees owed to Home Smart since it is my own sale and purchase?
Hi Chad. It is never appropriate to include any language in the purchase contract referencing commissions. That should be done outside of the purchase contract. I have attached a form that you might be able to use to address waiving your commission in lieu of a lower sales price. Please call with any questions regarding this.
We do not offer discounted fee's for owner/agent transactions.
COMMISSION, WAIVE COMMISSION: (see ARMLS WAIVER form) LANGUAGE: I have attached a commission waiver form. Remember, you must have at a minimum your HomeSmart transaction fee's. It is against policy to include and verbiage in the contract regarding commissions, so use a form such as the one attached to accomplish that. Also remember it is up to you to ensure that your contract price reflects your commission adjustment.
CRI Hi Patti, I can't sign this one either. You cannot pay or allocate commission dollars to anyone other than your client or another licensed agent. In this case you're saying to pay AZ Fence Company, which we can't allow.
What you'll want to do is simply credit the $1000 toward your clients closing costs, and that will leave the $1000 in their pocket to pay the fence company. Sorry that it needs to be revised again, but unfortunately we can't do it this way.
COMMISSION, BUYER WAIVING COMMISSION: I am personally buying this home and will pay for the $300 transaction fee at closing. Thanks for approving, and please call with any questions.
Here you go Debbie, please make sure that you instruct the Escrow Officer to put the $300 as commission on the Settlement Statement as a Buyer cost. I made that change on the form. That way it's going thru the title company. Kyle.
XXX, this is not allowed. Commission instructions cannot be zero. Please contact title and have them add $595 as a cost to you at closing to satisfy your HomeSmart transaction fees.
COMMISSION: BUYER WANTS TO WAIVE COMMISSION: CASE STUDY:
Q: I am the Buyers agent for the purchase of my spouses home and taking -0- commission. Can you please sign and email this form back to me. Quick question, so will the $595.00 come as an invoice? Or will it be added to closing costs? Thanks again, Jenn A: You should instruct the title co to create a line item on the settlement statement and charge the buyer. We prefer that you add it back to the sales price. We just can't sign anything that says zero dollars coming to HomeSmart.
Q: As predicted the Listing agent is saying her Broker will not sign a commission addendum saying they will pay Homesmart $595 even though I told her it would be charged to either myself or buyer on settlement statement A: OK, Write this language at the bottom of the commission waiver form: Yes, do the asterisk that you will be responsible to pay the $595 at COE.
Q: Title told me that it can only appear on the buyer or seller side of the settlement. She suggested I pay it prior to COE and you could sign that it was paid? Those were her instructions is that ok? A: Yes we could have had her pay in advance as long as we have commission instructions from title reflecting that.
COMPENSATION FROM BOTH BUYER AND SELLER LANGUAGE
“All parties acknowledge that buyers agent is being compensated by both seller and buyer in this transaction.”
Q: I have a question in regards to one of the review items…Receiving compensation from both Buyer and Seller. I am not. YES YOU ARE!
A: It does appear that you will receive compensation from both buyer and seller. The MLS co-broke offering is 2.5%. Your buyer broker agreement is for 3%. That means the buyer will make up the half point difference (see line #29 of Buyer Broker Agreement). Let us know if this is not the case.
COMPENSATION & COMMISSIONS: FYI, Any commission agreement other than what is offered in the MLS is between the listing and selling broker and 1) should be by separate written agreement and 2) signed by the agents and their brokers outside of the purchase contract. (see sect 8f of the purchase contract, Compensation.) Please contact a broker if you have any questions. Thank you.
FYI (NO ACTION REQUIRED) - Per lines 398-403 of the purchase contract, "Seller and Buyer acknowledge that Broker(s) shall be compensated for services rendered as previously agreed by separate written agreement(s)" That separate written agreement is typically the MLS offering of the co-broke fee. If either agent is altering the commission that they have previously agreed to, or that has been offered to, then it needs to be by a separate written agreement between the agents - and NOT part of the purchase contract. In addition, the Designated Brokers should also sign agreeing to the changes. (Please reference Addendum 1)
COMPENSATION ADJUSTMENT: “Contrary to any offer of compensation offered through the Arizona Regional Multiple Listing Service (ARMLS), the total compensation due to the Selling Broker upon successful close of escrow for the above transaction shall be X% or X$.”
COMPENSATION: “OTHER COMPENSATON”
Q: I plan to create and sell online video tutorial courses directly to U.S. home buyers and sellers. Is this something I can do while with HomesSmart?
A: I emailed Trudy and she responded that this would be acceptable and that "the money doesn't need to flow through HomeSmart." Obviously this would be a separate business venture from your HomeSmart real estate business and there would be no connection or mention of HomeSmart, this would be completely separate. Give me a call with any questions. Jeff.
COMPENSATION: WHO GETS PAID? You must be licensed at the time the compensation is earned (defined as the point in time that the contract is/was entered into, ie, signed and delivered). Also, the employing broker at that time (also true for earning a referral fee).
CONCESSIONS: WHAT ARE SELLER CONCESSIONS? http://www.quickenloans.com/blog/what-are-seller-concessions-or-contributions-5096
CONCESSIONS: CLOSING COSTS, SELLER TO BUYER CREDIT LANGUAGE + overrides language in contract that limits WHAT items can be credited).
1) “Seller agrees to credit buyer $x at COE which may be applied to any and all borrower closing costs including loan costs, title fees, escrow fees, pre-paids, appraisal, HOA fees, capital improvement fees, home warranty or any other closing cost approved by lender at buyers sole discretion.” However should the total buyer closing costs be less than the agreed amount of $4,500 both parties agree to a principle price reduction by the amount of the remaining balance.”
2) “Seller agrees to contribute a total of $x towards buyer closing costs which include but are not limited to pre-paids, appraisal fees, loan costs, title and escrow fees, home warranty and any other closing cost approved by lender at buyers sole discretion. Any unused portion or amount disallowed by lender shall remain with the seller.”
3) “Concessions shall include any of buyer’s acquisition costs, including but not limited to items listed in section 2j of the purchase contract along with any other cost approved by lender at buyer’s sole discretion.”
4) “Should funds remain from section 2j of the Residential Purchase Contract, the Lender, at buyers and lenders sole discretion, may use those funds to pay for additional HOA fees, Home Inspection, Home Warranty, or any other fees that the lender deems reasonable and acceptable.”
CONCESSIONS, TOTAL: “Seller to credit buyer an additional $X at close of escrow, bringing total seller concessions to $Y.” OR “Seller to credit the buyer and additional $X. Total concessions to be $X. This is exclusive of any other mutually agreed amounts in the Additional Terms of this contract.”
CONCESSIONS, REMOVE CONCESSIONS DUE TO LOW APPRAISEL (or any reason). “Seller & Buyer acknowledge and agree that contrary to line #x of the PC, seller concessions shall be a total of $0 (or, shall read $0).” OR
“New Sales Price shall be Appraised Value of $x.” “New Sales Price is $x” or “Sales Price is hereby Reduced to $x.” “Seller concessions are hereby reduced to $x (or x% of new or existing sales price).”
CONCESSIONS, BACKGROUND--Pre Qual or LSU says buyer relying on concessions but concessions removed, REVISE LSU
CONCESSIONS REMOVED, COUNTER OFFER LANGUAGE: "Buyer to provide an updated pre qual or LSU within 48 hours of contract acceptance with seller concessions removed as a requirement."
CONCESSIONS: Q: Prequalification says no but buyer is asking for concessions in purchase contract. A: They don’t need the concessions. Probably submit a counter offer removing concessions.
CONCESSIONS: RAISE PRICE SO CAN ASK SELLER FOR CONCESSIONS? Q: I am representing the buyer and we are within the 10-day home inspection period. We offered full price and didn't ask for closing costs as my buyer thought she would roll her closing costs into her loan. She now doesn't want to do that because her interest rate will go from 4% to 4.5 or 4.625.
The home was priced on the low end of the comps so I asked the listing agent if we could raise the price 5k and sellers give 5k for CC's. The listing agent is worried about that flagging the appraiser. My questions are. If seller is willing to do this could we just give them a new pg one with the new price and a new pg 3 with the 5k CC's or would we have to cancel this contract and write a new one?
A: You cannot just replace pages within a contract - the buyer and seller can formally cancel the contract and escrow and re enter into a new agreement. Jenny
con·cil·i·a·to·ry, kənˈsilēəˌtôrē/Submit adjective intended or likely to placate or pacify. "a conciliatory approach"...
Once the buyer owns the property, any problems with the property condition are the buyers responsibility (unless fraud, misrepresentation by seller).
CONDITION: SEE “PREMISES IN SUBSTANTIALLY THE SAME CONDITION”
When selling a home where the buyer is represented by another HomeSmart Agent, is the Buyer or Seller Agent responsible for initiating the Dual Agency Agreement?
A: The buyers agent should prepare the consent to limited representation form at the same time they write the offer. They will present that to the listing agent along with the purchase contract. The listing agent should present that first to the sellers, explaining that HomeSmart will be representing both sides in the transaction.
CONTINGENCY, ADD CONTINGENCY: This contract is contingent upon Sellers Receipt and Approval of acceptable engineering report on Replacemen Property Seller is purchasing out of state. If this contingency is not removed by xx/xx/xxxx, this contract shall be immediately cancelled and all Earnest Money shall be immediately returned to the Buyer. Inspection period shall begin when Seller gives notice that this contingency has been Satisified/Removed.”
CONTINGENCY CLAUSE: A contingency clause defines a condition or action that must be met for a real estate contract to become binding. A contingency becomes part of a binding sales contract when both parties (i.e., the seller and the buyer) agree to the terms and sign the contract.
CONTRACT: NOUN: A written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law. synonyms: agreement, commitment, arrangement, settlement, understanding, compact, covenant, bond;
Enter into a formal and legally binding agreement. synonyms: undertake, pledge, promise, covenant, commit oneself, engage, agree, enter an agreement, make a deal"the company contracted to rebuild the stadium"