On Presenting the Washington State Purchase and Sale Agreement

In every state, laws have been enacted to help the public move through life with a regard for the accepted way of completing certain transactions. Some procedures have been found so damaging to the public interest that they have been made illegal. The real estate industry is guided by many such laws.

Some industries, like real estate, have practitioners who form groups, like the REALTORS®, which have devised stricter guidelines in the form of what we call our Code of Ethics. From the Preamble to the National Association of Realtors® Code of Ethics:

In recognition and appreciation of their obligations to clients, customers, the public, and each other, REALTORS® continuously strive to become and remain informed on issues affecting real estate and, as knowledgeable professionals, they willingly share the fruit of their experience and study with others. They identify and take steps, through enforcement of this Code of Ethics and by assisting appropriate regulatory bodies, to eliminate practices which may damage the public or which might discredit or bring dishonor to the real estate profession

Where this Code of Ethics and state or national law conflict, the obligations of the law must take precedence.

Over the past decade we have moved through a housing bubble and a bust. Strange and unusual practices and techniques have developed. I follow many news groups and blog sites concerning the real estate industry and one particular practice that has arisen before and is here again, is one which is bothersome for me.

Agents sometimes lose sight of the scope of their obligations.
Sellers sometimes give instructions that agents shouldn’t follow.
Buyers sometimes make demands that agents don’t want to follow.

For example: Between 2004 and 2007 many offers were grossly in excess of the asking price, and were often accompanied by other concessions from the buyer and/or buyer’s agent to make the deal more likely to favor that particular buyer. In most cases, this is merely an indication of how much the buyer wanted to buy the property.

But, I’ve been reading lately, where buyers are offering “side deals” to owners selling short, to cover moving expenses, and bonuses to listing agents for stronger consideration of their offer among the many, if there are multiple offers.

This appears to be the same thing as above, but in the case of a short sale, it is a matter of defrauding the bank. If the value of the property to a buyer is the price on the purchase and sale agreement, plus the moving expenses gift, plus the agent bonus, shouldn’t all of that money be applied to the mortgage? I’m not a advocate for the banking industry. But I am an advocate for following state and federal laws and the REALTOR® Code of Ethics.

As an agent, I know that, in Washington, all written offers must be presented to the seller. Failure to do so may be breaking a law. It is not my place, as a listing agent, to tell a buyer’s agent not to write an offer because the seller won’t go that low.

As a seller, (including banks, but they do it all of the time) to demand certain restrictions on offers, or to say that you don’t want to see them unless certain conditions are met, is asking your agent to break a law. Just accept delivery of them and counter them, or not, as you see fit.

As a buyer, you have a right to offer any price you want for a property. And, if you have an agency agreement with a real estate licensee, that agent should forward your wishes. That’s reasonable. Please don’t ask your agent to do anything illegal.

As always, I am not an attorney. I am a REALTOR®. Creative real estate practices by everyone from Main Street to Wall Street got us in trouble over these past few years. Let’s not be too creative once again in our zeal for recovery or personal profit.

Understanding Negotiations Part 3: Email Delivery

In Part I of Understanding Negotiations I discussed viewing negotiations from a rational stance. In Part II I studied the Emotional side of the process.

If one has been a real estate agent for more than ten years, he may recall the days when most offers were presented to the Seller and listing agent by the selling agent, in person. At least it was that way in the Northwest since I started back in 1985. But now, with the ability to transfer documents online, by email, with twitter, or in the cloud, many sellers, listing agents and often, even buyer’s agents, have elected the “no personal contact” style for negotiating offers. Although this is neither a good thing, nor a bad thing, it is a change in the way we do things and, in order to stay current, we should know the subtleties of each.

Back between 2002 and 2007, when multiple offers were the rule of the day, selling agents would line up with letters to the seller from the would-be buyer telling all about their children, their pets, their hopes and their dreams. Eventually it seemed to reach an overload point and listing agents and sellers asked that the offers just be faxed, and eventually emailed. Now that method is almost universal.

Understanding this detached, or asynchronous, process is important for agents to grasp in order to succeed. In face to face meetings, those in the discussion have the opportunity to gage each other with consideration of body language, eye contact and voice inflection. But with email delivery of a contract, all that can be relied on are the factual details in the contract, unless the presenter learns and practices the various methods to enhance such presentations.

Face to face presentation allows for parallel processing of terms where ideas are offered, discussed and decided while everyone is present. In contrast, in an email exchange, principals receive one set of terms, and usually have time to consider and discuss on their own, and then respond, allowing time for the other party the same courtesy. In one instance there is time and opportunity to ask questions of clarification, while in the other, the printed word is taken at face value.

Some things to consider in Internet based negotiation:

1. It is easy to misjudge the opposition and apply to them characteristics they do not have as a reaction to terms they have presented. The concept of manners and socially acceptable behavior are harder to gauge when the negotiators do not physically meet.
2. In email exchanges, more diverse information may be presented, but it is difficult to gauge the relative importance of the various ideas put forth.
3. It is difficult in email exchanges to determine which person, which personality, is dominating the discussion.
4. In email negotiating there may be less cooperation to seek out solutions than there is in face to face meetings.
5. In the hope of not missing any salient points, a party to the negotiation may dilute, in an email, the most important issues of the contract.
6. The issue of trust. Is an email negotiator more likely to lie than when negotiating in person because of the separation of the principals, or less likely, because what is written is retrievable?

There are certain abilities required to be a successful email negotiator.

• Writing skills come to mind. One must be able to clearly state their desired position. Spelling, and grammar do count as an indication of the likelihood that the negotiator has the ability to follow through.
• One must be patient, and have the ability to wait for an answer. Because the negotiations are not face to face, waiting for a response takes some discipline and self-control.
• To respond too quickly can also be a mistake, for the other party may think that you have not give due consideration to the proposal. 
• Building rapport in face to face meetings has a more natural process that we have learned over time. With texting and especially twitter (140 characters per message) electronic presentation of ideas may not include the “shaking of hands, how is it going” stage that sets the tone for a negotiation. Be careful not to forget that rapport is important.
• Demonstrating in responses that you understand the other position validates that position and the other person. Call it E-empathy. Learn it. Practice it.

One day, I expect that some negotiations will be carried out “in the cloud” with principals and agents gathered around the virtual table discussing various terms and conditions. I expect that there will be a mute or privacy button which allows seller and agent or buyer and agent to discuss items privately.

Wherever it goes, a continuous studying of negotiating, reading about negotiating, and practicing negotiating will serve the realtor well throughout his career.

Selling When No One Is Buying by sales trainer Stephan Schiffman didn't offer anything new or innovative but I'm glad I read it. It's full of reminders, procedures, warnings and tactic that will get your focused and restarted in forwarding a sales strategy for 2011.

In the first 100 pages Schiffman concentrates on you, the individual and ways to adjust your process and your habits. He insists that knowing your ratios of contacts to clients to sales is important and I agree. First start with your attitude. Make it positive. If you don't believe in yourself or in your product, no one you talk to is going to believe either. Then educate yourself in the means of communication as we know it today. The second part of the book deals a lot with marketing to large companies and while this is not so revalent to real estate agents, the methods of getting to the right people and what to say may well prove valuable.

Each chapter ends with a Take Action demand that should set your mind and feet in motion. If you are reading the book it is because you have goals to reach and are not interested letting a little thing like a bad economy get you down.

In summary the book offers this:

1. The economy is cyclical
2. There's no magic formula for selling in a bad economy
3. Selling in an economic downturn means looking at things in a different way
4. Hard times are a chance to transform your relationship with your accounts
5. Sales is always about attitude

My copy, like almost all of the books I review is available for free. If you'd like it, just send me an email and one day soon it will arrive at your door in the US mail. This book has now been sent to someone.

Click on the book to join the
ActiveRain Book Club Group

On the question of steering, Wikipedia has an excellent definition that does away with worrying about semantics and also does away with the myriad of "what if"questions agents endlessly ask in continuing education classes. Substitue any protected class for the word race in the definition and you will be good to go.

Racial steering refers to the practice in which real estate brokers guide prospective home buyers towards or away from certain neighborhoods based on their race. Racial steering is often divided into two broad classes of conduct;

1. Advising customers to purchase homes in particular neighborhoods on the basis of race
2. Failing, on the basis of race, to show, or to inform buyers of homes that meet their specifications^[

Steering is an action by the real estate broker and does not involve the client. The client can ask the broker to make certain choices for the buyer or the seller that would be considered steering and get the broker in trouble. I know it is difficult for most brokers to say "I don't know..." to any question asked by a client, but in Fair Housing issues, the correct answer is, "I don't know where you mean. What neighborhoods do you like?"

It's easy enough to avoid Fair Housing issues by providing lists for clients that include several neighborhoods and as they tell you that they do or do not want a particluar areas, they are making choices, not you the broker for them.

All that said, I'm not an attorney, never dressed up like one on Halloween either. Do what your designated broker tells you to do, if you can't figure it out otherwise.

UPDATE NOV 7, 2010 Realtor­ magazine has a good article with 8 examples if you think steering doesn't happen these day.

I left Rain Camp: Portland bursting with ideas about how to get my name out there. How to make sure that everyone who wants to buy or sell a home in my neck of the woods realizes that one very good option is to call me.

But my wife Marjie had other ideas. We honeymooned in Oregon in 1992 and one of the towns we spent a night in was Corvallis. Since we were so close it only made sense and we spent a pleasant night in a riverside motel. Breakfast had us on a patio overlooking the Willamette River. "I like this place. It's so private," she said. Later we had a second cup of coffee at The Beanery, a coffee shop we'd stopped at back in '92.

The 6 hour drive back to Seattle can be pretty boring and I couldn't stop thinking about PRIVACY. One day last week on Active Rain Karen Fiddler wrote Active Rain Ethics? Are Comments On Blogs Now The Property Of the Blog Poster? Hmmmm, which dealt with the reposting an article by someone else with accompanying comments on a personal website. Some objections were raised, some didn't care and some liked it. So thought that if it was a "members only" post a commenter's privacy might have been compromised.

Social Media - Facebook and others, have seemingly addressed this with "privacy settings" that you supposedly you can limit who can see certain posts of yours. But, let's face it. Once you put it out there, it's out there.

In 1972, about the time The Beanery opened, I started my first business. Passing out my business card, my name and number, what I was doing where and when got to be a daily routine. Now, almost 40 years later, I'm learning more sophisticated ways than ever to get what I'm doing, how I do it, and how to reach me, to as many people as possible. I'm not a private person. I can't afford to be. I don't do anything criminal, evil, nasty or mean. I'm not a Russina spy. So why should I worry if my privacy is invaded.

This is what I know. I realize the importance of keeping bank account numbers and certain online access codes private. I lock my doors. I don't broadcast on Social Media when I'm away on vacation. That's about it for my privacy concerns. How about you?