Monday, March 15, 2010
Wednesday, March 10, 2010
New Blog Post: Should Brokers/Agents disclose commissions in a Dual Agency Transaction? http://ping.fm/ilRrk
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Dual Agency - Should Brokers/Agents Disclose Their Commissions?
North Carolina's real estate commission requires firms conducting dual-agency transactions to reveal the total compensation they receive to the buyer.
Three North Carolina Realtor associations want the state's real estate commission to reconsider its interpretation of this disclosure rule.
Rule A.0109 went into effect on Oct. 1, 2008. It requires the state's real estate licensees to reveal, in writing, any compensation "of more than nominal value" they expect to receive from their client (the buyer, seller or both) and any compensation that the licensee expects to receive from any other party for that transaction.
Written disclosure must happen before the principal makes or accepts an offer to buy or sell.
The letters reveal objections to the rule's requirement that firms reveal the total compensation they receive from a dual-agency transaction to the buyer (the seller would likely already know since he/she would be the one paying compensation for both) and cite obstacles to the rule's application in practice.
"I am writing this letter because I fail to understand the reasoning, the logic or even the consumer benefit, in having the real estate brokers in N.C. disclose the firm's total compensation in a dual-agency transaction to the buyer client," Tony Jarrett, regional vice president at Allen Tate Realtors, who has requested that the commission reconsider its interpretation of the rule as it pertains to dual agency. said in a Dec. 18 letter to the commission.
Critics say reporting the total compensation amount would be misleading when a seller pays for additional marketing of a new development as part of the listing agreement, or if a broker is required to report the amount the seller paid a third party (through the brokerage) as a referral fee.
They also cite questions of timing. The rule requires written disclosure before an offer is made and "made in sufficient time to aid a reasonable person’s decision-making." What happens if the listing agent cannot be reached or is reached after hours and cannot remember the specific compensation amounts?
George Bell, a Realtor who works with Jarrett on the North Carolina Association of Realtors' Forms Committee said, "This isn't about what the buyer should or shouldn't know. It's how it (the rule) should be applied."
The North Carolina Real Estate Commission's legal counsel, Tom Miller said, "If the seller is paying disproportionate amounts of money, I (as the consumer) have a right to know that in order to weigh the advice given with given information," Miller said.
"This is the conundrum that every dual agent has. A dual agent has an inherent conflict of interest."
The challenge for the commission, Miller said, is to figure out which complaints have merit and try to address them without diminishing the benefit to consumers.
I completely understand the nature of a dual agency transaction. It is the desire of every brokerage to have their agents represent the buyer and the seller. It maximizes the infrastructure and operations of the brokerage while providing "consistency of service" for the consumer. However, some brokerages attempt to maintain control of their clients by primarily showing internal listings without primary regard to the needs or wishes of the consumer. Many consumers do not understand this potential conflict of interest activity.
I applaud the North Carolina Real Estate Commission. I believe full commission and fee disclosure in a dual agency transaction should be a requirement in California.
What do you think?
Best to you,
Jim Herrera
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----
I'm passionate about our world. Enter the Conversation!
Three North Carolina Realtor associations want the state's real estate commission to reconsider its interpretation of this disclosure rule.
Rule A.0109 went into effect on Oct. 1, 2008. It requires the state's real estate licensees to reveal, in writing, any compensation "of more than nominal value" they expect to receive from their client (the buyer, seller or both) and any compensation that the licensee expects to receive from any other party for that transaction.
Written disclosure must happen before the principal makes or accepts an offer to buy or sell.The letters reveal objections to the rule's requirement that firms reveal the total compensation they receive from a dual-agency transaction to the buyer (the seller would likely already know since he/she would be the one paying compensation for both) and cite obstacles to the rule's application in practice.
"I am writing this letter because I fail to understand the reasoning, the logic or even the consumer benefit, in having the real estate brokers in N.C. disclose the firm's total compensation in a dual-agency transaction to the buyer client," Tony Jarrett, regional vice president at Allen Tate Realtors, who has requested that the commission reconsider its interpretation of the rule as it pertains to dual agency. said in a Dec. 18 letter to the commission.
Critics say reporting the total compensation amount would be misleading when a seller pays for additional marketing of a new development as part of the listing agreement, or if a broker is required to report the amount the seller paid a third party (through the brokerage) as a referral fee.
They also cite questions of timing. The rule requires written disclosure before an offer is made and "made in sufficient time to aid a reasonable person’s decision-making." What happens if the listing agent cannot be reached or is reached after hours and cannot remember the specific compensation amounts?
George Bell, a Realtor who works with Jarrett on the North Carolina Association of Realtors' Forms Committee said, "This isn't about what the buyer should or shouldn't know. It's how it (the rule) should be applied."
The North Carolina Real Estate Commission's legal counsel, Tom Miller said, "If the seller is paying disproportionate amounts of money, I (as the consumer) have a right to know that in order to weigh the advice given with given information," Miller said.
"This is the conundrum that every dual agent has. A dual agent has an inherent conflict of interest."
The challenge for the commission, Miller said, is to figure out which complaints have merit and try to address them without diminishing the benefit to consumers.
I completely understand the nature of a dual agency transaction. It is the desire of every brokerage to have their agents represent the buyer and the seller. It maximizes the infrastructure and operations of the brokerage while providing "consistency of service" for the consumer. However, some brokerages attempt to maintain control of their clients by primarily showing internal listings without primary regard to the needs or wishes of the consumer. Many consumers do not understand this potential conflict of interest activity.
I applaud the North Carolina Real Estate Commission. I believe full commission and fee disclosure in a dual agency transaction should be a requirement in California.
What do you think?
Best to you,
Jim Herrera
Follow me on
twitter - http://twitter.com/jbherrera
facebook - http://facebook.com/jbherrera
linkedIn - http://linkedin.com/in/jbherrera
plaxo - http://jbherrera.myplaxo.com
About me
google profile - http://www.google.com/profiles/jbherrera
Wednesday, March 3, 2010
Warren Buffett Predicts Housing Price Recovery in 2011
Hello world!If the Oracle of Omaha, Warren Buffet, is correct the residential real estate market will rebound in 2011. Buffet, in his letter to Berkshire Hathaway stockholders, thinks that the demand curve will turn at that state and the residential markets will start to improve. I am sure this news is not what real estate agents are hoping to hear. The housing market still has way too much overhang from foreclosures and short sales for buyers to have confidence investing in homes. Add to that a nervous economy, it would be foolish to think that all will be okay this summer.
"Within a year or so, residential housing problems should largely be behind us," Buffett wrote Saturday in his annual letter to the shareholders of his Berkshire Hathaway. "Prices will remain far below 'bubble' levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits. Indeed, many families that couldn't afford to buy an appropriate home a few years ago now find it well within their means."
Record foreclosures flooded a U.S. real estate market already glutted with unsold property, causing housing starts to fall.
"People thought it was good news a few years back when housing starts — the supply side of the picture — were running about 2 million annually," wrote Buffett, 79, chairman and CEO of Omaha-based Berkshire. "But household formations — the demand side — only amounted to about 1.2 million."
So tighten your belt and continue to build your systems this year so you are ready for 2011. If you're interested in defining, planning or building your systems, let me know.
Best to you,
Jim Herrera
Follow me on
twitter - http://twitter.com/jbherrera
facebook - http://facebook.com/jbherrera
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About me
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Monday, March 1, 2010
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