AZ Dept of Financial Institutions

AZ Mortgage Loan Originators License

MORTGAGE LOAN ORIGINATORS:  Can Realtors originate Mortgage Loans?

AZ ADM CODE:  Promotional Activities, R4-28-503  Az Adm Code  Article 5, Advertising

R4-28-502. Advertising by a Licensee     R4-28-503. Promotional Activities


ABSORPTION RATE:  The absorption rate is the rate at which available homes are sold in a specific real estate market during a given time period. It is calculated by dividing the average number of sales per month by the total number of available homes. 


How to calculate:   

1. First, determine the number of homes closed in your market over a specific period — say, 12 months. You can get this data from the MLS.

2. Next, divide the number of homes by the number of months in the period — in this case, 12. ...

3. Last, divide the rate into the number of current listings.




ADDENDUM:  Don't use an Addendum as a continuation!  My concern is that the seller wont sign the addendum, but agreed to all the terms of the Addendum and addressed/acknowledged the Addendum in their BINSR response.

ADDENDUM:  Can any party draft an addendum if seller agrees to credit buyer X amount of dollars at COE?    Sure, either party can draft an addendum. Typically though, the party who is proposing or asking for something would take the initiative and create the addendum.  Either way works.

ADDENDUM, USE TO CHANGE/CLARIFY:  “This Addendum is for clarification purposes only:  Contrary to page 10 of the Purchase Contract, there was not a Counter-Offer from the Seller.”  OR   “Line #181 of the Purchase Contract was initialed in error.  The parties acknowledge and agree that the Buyers initials on line #182 is the correct choice as the home was built in xxxx.”

ADDENDUM:  How to use properly in a contract:

ADDENDUM, UNKNOWN, SEND (ANY) ADDENDUM WITH COUNTER OFFER LANGUAGE                                                                                      Buyer agrees to execute the attached (BLANK) Addendum simultaneously along with this Counter Offer.”  FOR EXAMPLE:  “Buyer agrees to execute the attached BACK-UP OFFER Addendum simultaneously along with this Counter Offer.”

I just wrote an offer on a property I'm buying myself.  The seller signed the contract without a counter but sent an "as is" addendum to be signed with it.  Do I need to sign it to have a contract?

No.  If the AS-IS Addendum (or any other addendum) is not referenced in the purchase contract, then it is simply unenforceable.  JT

ADDENDUM:  “This Addendum #1 Replaces the previous Addendum #1 dated xx/xx/xxxx which was rejected by the buyer and is hereby considered NULL and VOID.”   or, write “VOID” on the unused/unsigned Addendum or Counter Offer or write “Addendum1 is unsigned by the seller/buyer as they did not agree to the terms and is hereby considered null and void.  OR  Addendum #3 replaces addendum #2 which seller would not sign and was not in agreement with.

ADDENDUM:  If an addendum is not agreed to, write that This addendum is hereby considered null and void (or on next addendum or missing pw form). 

ADDITIONAL TERMS AND CONDITIONS:  This page left intentionally blank.

ADVERSE POSSESSION:  ALSO SEE ENCROACHMENT:  Write a Letter To Stop Adverse Possession  By Christopher Combs | June 22, 2013



ADVERTISING:   AAR is getting many complaints about advertising for teams and groups. The Broker name must be "prominent" in the ad. In other words it should be as large or larger than the team/group name. Please revise and resend for approval- Thank you!

ADVERTISING, GENERAL MAILING, GENERAL TELEPHONE CANVASS:  Bulk mailing is allowed, Article 16, SOP 16-2, solicitation disclaimer recommended but not required.


ADVERTISING:  Q: When agents are advertising "recently sold" properties, are we asking them to put in a disclaimer stating they weren't all necessarily sold by that agent?    A: I'd ask Laurie about her take on that. We always have asked for the disclaimer that they were not involved in the transactions if they are advertising SOME recent sales versus ALL of the recent sales (meaning they cherry picked the nicer ones).  A: she said yes, we need a disclaimer. Something like, "properties sold by various MLS participants,"

ADVERTISING:  “Blind Ads”: A licensee must not advertise property in a manner that implies that no salesperson or broker is taking part in the offer for sale, lease, or exchange. A.A.C. R4-28-502(A). In other words, “blind ads”, including advertising a property for sale or lease without the (broker and agent’s names), in newspapers, on Craigslist, Zillow, Trulia, or otherwise is prohibited.

Per department rules, HomeSmart and the logo need to be prominent, at least as large or larger than your info.  Please revise and resend for approval.

ADVERTISING OTHER AGENTS & BROKERS LISTINGS:  You can only market other brokers listings with their express, written permission and authorization (both listing agent and designated broker or managing broker).  You may advertise HomeSmart listings, but if the listing agent requests that you stop, you must comply immediately and cease and desist the advertising.  That being said, you can do all of these items in your email, however, please remember that we must approve of the final product.  Please forward any videos or print adverting to this email address for broker approval prior to publication.

ADVERTISING: HomeSmart Logo: Must have HomeSmart too. The HS on logo doesn't prominently identify the employing broker. Thank you!

Hi Beth, While you and I certainly know what the Diamond stands for, many consumers do not.  Therefore, when we use the Diamond we must also include the word HomeSmart.  Please make that change and resubmit...Also, please feel free to call with questions.  NOTE:  You can use the Words Without the Diamond.

AFFILIATED BUSINESS DISCLOSURE:   I've been seeing Affiliated Business disclosures from other brokerages a lot lately.  I'm not entirely sure we need to present these to our clients because, in part, our clients aren't their clients.  What is HomeSmart's position on this?  Should I recommend to my client that he sign their ABD?

Hi Larry, My thought on this is that there's really no harm in your client signing it if the other side is asking for it.  You're right, our clients are not their clients so it's pretty much an exercise in futility, but just to be helpful I'd at least present it to my clients.  If your clients read it and don't want to sign it though, then I'd let the other agent know that.  KF.

AFFIDAVIT OF DISCLOSURE:  DUE WITHIN 5 DAYS OF CONTRACT ACCEPTANCE (PC, SECTION 4e)  Affidavit of Disclosure, un-subdivided lands or unincorporated area of county.

Hi, I have a listing in Rio Verde.  Address is 28511 N. 148th St. Scottsdale AZ 85262  MLS #5536236

My seller says his property is in an unincorporated area. The SPDS states that an affidavit of disclosure is required if five or fewer parcels, other than subdivided land are being transferred.  Would this come in to affect? I feel like this is subdivided land but I could be interpreting the statement wrong.  Your help and insight would be great.  Thank you!

Is it in a subdivision?  What does the legal description say?  

Legal description is:  W2 NW4 SW4 SE4 SEC 29 EX S 414.97F TH/OF (Local jurisdiction shows no city/town, + County Services),

28511 N 148th St, Scottsdale, AZ, 219-39-097C, this is a metes and bounds property description, plus I checked the county assessor website, no city or town is listed, so it appears the Affidavit of Disclosure will be required here.  Jeff.

 Maricopa County Tax Assessor "UNINCORPORATED AREA" Sample    Another Sample?  503-02-029-B?

AGREEMENT FOR SALE:  EQUITABLE INTEREST, PURCHASE MONEY MORTGAGE:  (AGREEMENT FOR SALE:  Does not trigger the due on sale clause.  Keeps deed in the owners name).  Review agreement for conveyance language, possible restrictions or penalities, ie, pre-payment penalty if being held at a high interest rate).

AGENT, AGENT AS LOAN OFFICER:  Q: Does HomeSmart have a policy that allows or disallows a HomeSmart agent to also be the loan officer in the same transaction?  A: No, we don't allow an agent to also act as an LO on the same transaction. They may do both independently from one another in separate transactions, but not in the same transaction.  Creates E&O Issues as well.   Laurie/Kyle




All transactions must be run through HomeSmart.  They can not put on and take off their HomeSmart hat.  ADRE requires a broker to review all transactions that a licensee is involved in.  It being in the MLS or where he advertises it - has nothing to do with our policy.  If he doesn't want to run his transactions through us - we probably are not the company for him.   TM


AGENT DECIDES TO PURCHASE LISTING:  4/3/17, Andy McDonald Tucson (Plus talked with Kyle) Avoid conflict of interest!

1)  Resign Listing (Mutual Cancellation)  When you are a principal in a transaction, you can’t represent the other principal.  That would be a conflict of interest and would not be an arm’s length transaction.  It would also create a conflict of your fiduciary duties to your client (OLD CAR)

2)  Advise seller to get their own representation and to seek out a professional BPO. 

“Seller acknowledges that Listing Agent has resigned the listing for Sellers property located at 123 Main Street, dated xx/xx/xxxx.  Seller further acknowledges that Listing Agent intends to enter into a contract to purchase Sellers property and will represent himself/herself exclusively in this transaction.  Seller acknowledges and Agrees that he/she has been strongly advised to seek out their own exclusive representation along with a Brokers Price Opinion (BPO) and any legal, tax or other professional advice regarding this transaction.”

3)  Seller can then be represented or unrepresented (Declination of Representation).


AGENT MUST DISCLOSE FINANCIAL INTEREST (SELL AT A PROFIT)  (Used by Kahuna invesements, Jaime Starks/Judy Van Essen)  “Buyer(Agent) intends to acquire legal, equitable title in order to Sell at a Profit.”  “Seller agrees to allow xyz LLC to advertise the property and enter into a resale agreement during the escrow period.  Seller acknowledges that a member of xyz LLC is licensed in the state of Arizona.  Buyer waives SPDS and CLUE Report.  Buyer agrees to pay all Seller’s escrow closing costs except any cost incurred to provide marketable title.  Seller shall be responsible tor all unpaid taxes, utilities, liens, judgements or fines attached to the property.  Close of Escrow shall be on the date stated on line #x, or earlier with written mutual agreement between the parties.  Seller agrees to release Earnest Money back to the Buyer at any time that the contract is cancelled within the inspection period or if the Title Report reflects undisclosed clouds on title that inhibit the transfer of good title.”


AGENT HOLDS AN EQUITY POSITION IN THE LISTING:  Q: I have an upcoming listing that I do not own the property but do have a financial interest in the sale. My question is I understand that when an agent owns the property they have to display agent owned on the yard sign and such but how do I have to describe my interest in the home?  A: Michael, if you are not on the title but do have a financial interest in the property, you will need to disclose that on 1) page six of the ER listing agreement and 2) in the private remarks section of the MLS and 3) in the purchase contract once you receive that.  Something like "Listing Agent holds a financial interest in the property being conveyed" or "Listing Agent holds a financial interest in the property being sold" or something along those lines.


AGENCY relationships, consumer guide

AGENCY, AGENCY TERMINATION:  After the termination of an agency relationship, the fiduciary duties are no longer owed with the execption of confidential information.

AGENCY:  This is a policy change for HomeSmart.  We now require that agents review the Real Estate Agency Disclosure and Election Form with the client and have them sign that prior to signing the Consent to Limited Representation Form (Dual Agency, if applicable).  The reason for this is the opening paragraph of the READE form.  In that section it states that the party being represented will understand the type of agency or relationship that they will have with the broker BEFORE they enter into discussions with a licensee.  For that reason the client should sign the agency form up front.  This will ensure that the client has a thorough understanding of the Broker's fiduciary responsibilities which include loyalty, obedience, disclosure, confidentiality, accounting and reasonable skill and care in the transaction.  

Once the Consent to Limited Representation Form is executed, the Duties and Limitations of the Broker will change as the Broker now represents both Buyer and Seller and neither Broker nor the Broker's Licensees can represent the interests of one party to the exclusion or detriment of the other party in the transaction.

Hopefully that helps to clarify the policy going forward.  Please let us know if you have any questions.

AGENCY, DUAL:  Do not disclose confidential information, emphasize disclosure by seller, cannot act for the benefit of one to the detriment of the other, facilitate the transaction, ASK, “What do you want me to tell them?  What do you want me to ask them?

DUAL AGENCY:  Do not act for the benefit of one to the exclusion of the other.  Be more neutral, a facilitator, ask them "what would you like me to do"....

DUAL AGENCY:  Also see agency:  The dual agent cannot advise on purchase price, the terms of the offer or negotiate on behalf of either party. 

AGENCY WHEN YOU ARE A PRINCIPAL IN THE TRANSACTION:  So we are all aware you cannot represent yourself and the other party. Q: What are your thoughts when representing someone you are related to and another party (dual).. Thoughts (When you are a principal in the transaction, you cannot represent the other principal).  A: Same theory, and also not allowed because the same argument applies.  It's too easy to claim that there's no way you can adequately represent this poor Buyers interests when you are representing your Brother, Sister, Parents, Cousin, etc. on the other side of the deal.


Buyer’s Broker: A broker other than the Seller’s broker can agree with the Buyer to act as the broker for the Buyer. In these situations, the Buyer’s broker is not representing the Seller, even if the Buyer’s broker is receiving compensation for services rendered, either in full or in part, from the Seller or through the Seller’s broker:

A Buyer’s broker has the fiduciary duties of loyalty, obedience, disclosure, confidentiality, and accounting in dealings with the Buyer.                                 Other potential Buyers represented by broker may consider, make offers on, or acquire an interest in the same or similar properties as Buyer is seeking. (OLD CAR)

Seller’s Broker: A broker under a listing agreement with the Seller acts as the broker for the Seller only:

A Seller’s broker has the fiduciary duties of loyalty, obedience, disclosure, confidentiality, and accounting in dealings with the Seller.              Other potential Sellers represented by broker may list properties that are similar to the property that Seller is selling.

Regardless of who the Broker represents in the transaction, the Broker shall exercise reasonable skill and care in the performance of the Broker’s duties and shall be truthful and honest to both the Buyer and Seller and shall disclose all known facts which materially and adversely affect the consideration to be paid by any party. Pursuant to A.R.S. §32‐2156, Sellers, Lessors and Brokers are not obligated to disclose that a property is or has been: (1) the site of a natural death, suicide, homicide, or any crime classified as a felony; (2) owned or occupied by a person exposed to HIV, or diagnosed as having AIDS or any other disease not known to be transmitted through common occupancy of real estate; or (3) located in the vicinity of a sex offender. Sellers or Sellers’ representatives may not treat the existence, terms, or conditions of offers as confidential unless there is a confidentiality agreement between the parties.

AGENCY, REQUIRED DISCLOSURES:  UPDATED MARCH 2019:  Q: Whats the difference between the READE form and Consent To Limited Representation forms? What circumstances is each one used for in dual agency?  A: The basics are that the READE should be signed when you first meet with a client.  If you look at the first paragraph of that document, it says that the client should be aware of the agency before entering into real estate discussions.  So that form you'll need on every transaction, signed by your client.  It lays out the fiduciary duties to the client.  The Consent to Limited Representation form is used when you are representing both parties in a deal yourself, OR when you're representing one party and the other party is also represented by a HomeSmart agent.  Those are both considered Dual Agency transactions, and the Consent form is needed.  It should be signed by the parties prior to entering into the purchase contract.  Hope that helps, have a great day! 

AGENT, BUYERS AGENT BEING REPLACED:  “Both Sellers and Buyers acknowledge and agree that Buyers original agent of record, XYZ, hereby relinquishes her agency relationship with the Buyers.  The parties further agree that the new Buyers agent of record shall be ABC, from the same brokerage.

AGENT, BUYER WANTS TO REPLACE AGENT:  Q: I think both our agent and the buyer are frustrated with each other and now I'm concerned about protecting the clients EM due to their difficulty in communicating with each other.  Your thoughts?  Should we consider replacing or adding someone to the transaction to assist?  Not sure how that would work...A: If the agent isn’t goingto take the high road to work through the transaction, perhaps a TC or co-agent can be added.  But our agent needs to understand that a TC and/or co-agent needs to be compensated through the commission as well.


Q: I also have a question regarding one of the Required Documents…Agreement Notice – what is that?

A: As for the Agreement Notice, the short sale agreement notice is used by the seller to notify the buyer that the seller and lender have or have not reached an agreement on the short sale terms.  Take a look at the form, Short Sale Agreement Notice on zipForms.  Also, please review line #'s 22-28 of the Short Sale Addendum to the purchase contract where the Agreement Notice is mentioned prominently several times...the Agreement Notice will determine whether or not escrow is opened, earnest money is deposited and whether or not inspections will be ordered.  JT