Ten Good Ways to Lose in Court.
This is a judge. Most sensible real estate agents would rather any meetings with a judge happen at a cocktail party with mutual friends. It is best to avoid visiting his or her courtroom but if you must, at least know the best ways you can pay more than necessary.
So, in David Letterman order:
#10. Pretend you are an attorney. After all, you've been selling real estate for 10 years and you probably know more than some attorney just out of law school, right? Along with helping your clients lose their case, you may find yourself without a real estate license. Leave attorney matters to attorneys.
#9: Forget who your client is. As an agent for your Buyer or Seller, their interests come first, not yours. If you have a listing and a buyer walks into your open house, a good way to give back your commission is to become a Dual Agent. Your Seller hired you, not the buyer you've never met. But now you decide to "represent" them equally? See Judge's scowling face above.
#8 Play the Blame Game. One of the best ways to find yourself in court is to deny you made an error and point the blame finger in every direction but the face you see in the mirror. More often than not, clients are more likely to forgive a mistake than be told it wasn't your fault. Sometimes, it is less expensive to write out a small check to fix the problem than a big one after your court date.
#7. Leave blanks in contracts. After all, how can you be sure when the Buyer or Seller is actually going to sign the contract? Could be today, maybe tomorrow. Leaving it blank helps you avoid re-writing it when you figure it out.
Leaving blanks in contracts is a great way to make a contract unenforceable, unclear, or both. Not to worry, though, the Judge will sort it out for you and explain how much his clarification will cost you.
#6. When you have a question, ask your buddy who has been in the business for three months. Don't bother your broker. He or she is really busy. Besides, you don't want them to wonder how in the world you passed the licensing exam.
Part of your Broker's job -- according to LAW -- is the supervision of its agents. Period. Relying on your office neighbor may cost you a lot of money .. and a friendship.
#5. Assume the Purchase Agreement is black-and-white. Look at it really closely, as in, under a microscope. It's really more grey, isn't it? The rock-solid clauses you thought your client agreed to are, well, not so rock-solid in the hands of a good attorney. Does your Broker have prepared clauses for your use which contain vital elements of contract law -- like consideration and consequences for breach of contract, for example? Have those clauses been reviewed and approved by your Broker's attorney? If not, ask your Broker to provide them.
Or, if you are really in a hurry, you can just make some stuff up. It will never become an issue anyway, right? See Judge above.
#4. Don't bother reading all the fine print in the latest versions of EVERY form you use -- listing contracts, purchase agreements, etc.
News flash: Laws change. Forms change, too. Read them. Understand every word. If you don't, call your broker.
#3. Assume the hot tub stays. Sure, it's on a specially-constructed concrete pad, hard-wired and plumbed, so it's a fixture, right? No need to write in the Purchase Agreement, right? Wrong. The Purchase Agreement supersedes the listing contract and unless it is clearly understood -- in writing -- that an appliance or other personal property is going to stay with the house, write it into the Purchase Agreement. Better safe than sorry.
#2. Keep the Earnest Money Deposit on your desk until the inspections clear. By then, the Buyer will have had the opportunity to stop payment on the check and walk from the deal unscathed. You, on the other hand, will be left holding a fairly large bag with no reasonable defense.
#1. Be there in the first place. If you are standing in front of a judge, you've already lost. Court costs, attorney fees, damages or fines, they are all good reasons to do everything in your power to resolve the matter outside of court. Sometimes, that means hiring an attorney to negotiate on your behalf.
Or, you can assume you are going to win and roll the dice. Let me know how much money you saved doing that, will you?
For Brokers and Associations who want to minimize these issues, call or e-mail me to schedule the Michigan-approved Continuing Education Course, "Questions on the Purchase Agreement and Suggestions to Avoid Legal Disputes."
616.648.0800 or [email protected]
Don Phelan is a State of Michigan-approved Continuing Education instructor. Don is also the agent-support liaison for Five Star Real Estate's 300+ agents. He has been inducted into the Master Sales Society and the RE/MAX International Hall of Fame. He is the author of 'You Gonna' Sell Real Estate or What? The Guerrilla Guide to Real Estate Today."