NEWS FOR TEXAS HOMEOWNERS

Basic service: It’s the least you should expect

Doing the bare minimum might be OK for some, but when it comes to something as complex as a real estate transaction, there must be standards for what is acceptable and what falls short. Though the Texas Real Estate Commission has a rule requiring brokers to negotiate the best possible transaction for those they represent, the rule doesn’t spell out exactly what that entails.

Anyone who has ever bought or sold a house knows that the success of the transaction rests largely on how much work the parties involved – including the buyers, sellers, and their agents – put into the process.

Tremendous growth in the number of real estate licensees in Texas and rapid technological changes in the industry have led to questions about what adequate representation of clients really means. Buyers hop on the Internet to research homes and other information before making purchases. Sellers have access to a wealth of resources, too. So buyers and sellers have more information and are increasingly dependent on their agents to decipher the information and make the best decisions.

The minimum acceptable level
While many buyers and sellers are sophisticated enough and sufficiently motivated to handle many parts of real estate transactions themselves, a consumer who is represented by a real estate agent should be able to rely on certain basic services. That’s why the Texas Association of REALTORS® recommended to the Texas Real Estate Commission a more-detailed definition of the rule requiring a broker to negotiate the best possible transaction. Specifically, the recommendation proposes that the word “negotiate” be defined, at a minimum, as follows:

• Accepting on behalf of and presenting to the client offers and counteroffers;
• Helping the client develop, communicate, and present offers, counteroffers, and related notices;
• Answering the client’s questions relating to offers, counteroffers, and notices.

Obviously, the majority of agents do much more than the steps outlined above. Most sellers who hire an agent trust that person to market the house for sale, find buyers, negotiate the transaction, keep the seller informed throughout the transaction, and answer any questions. After all, they’re the experts. But there have been some instances of brokers who do less than the minimum described above.

Of course, there are laws and rules that regulate real estate agents and brokers beyond just negotiating the best possible transaction for clients. Things like what information must be included in advertisements, how to properly handle funds in a transaction, and how much continuing education agents and brokers must complete.

Brokers and agents who also are REALTORS® (only those who belong to an association of REALTORS® may call themselves REALTORS®) go even further than the minimum standards and regulations by subscribing to a Code of Ethics. This code sets high standards for how REALTORS® should treat clients, the public, and each other. They also have additional educational requirements.

Texas REALTORS® support Texas property owners
Individually, Texas REALTORS® provide clients with the services they need to successfully buy and sell homes as well as commercial and investment properties. As a group, they fight for consumers’ rights, as is the case with asking the Texas Real Estate Commission to define the minimum level of negotiation required. They also bring private-property owners’ concerns to the Legislature, championing legislation such as homeowners insurance reform and regulation of mortgage brokers and bankers.

The bottom line is that standards for minimum service are important, but there’s a lot more to it than meets the eye. REALTORS® work hard for Texas consumers – going way beyond the minimum legal standard.

If an offer seems too good to be true, it probably is By tom morgan
	Have you every seen a shell game? A fast-talking huckster puts three cups on a table, puts a ball under one of the cups, switches them around, and bets that you can’t tell which cup has the ball under it. You may guess right the first time and win your dollar back, but the next time he’ll double the bet, and you lose. Well, some real estate transactions can work that way. If you can’t figure out where the money is going, something is probably wrong. Sellers of real property in Texas and around the United States have been receiving offers that are significantly above the asking price. Some buyers are offering as much as $100,000 above the asking price. While the residential real estate market has been doing well for the past several years, rarely do offers that are significantly above the market value of the property make sense. An occasional wealthy buyer may be willing to pay significantly above market price for a house for a personal reason; for example, she may own the house next door and may simply want to tear down the house for an expansion of her own home. But most of these abnormal offers are probably driven by mortgage fraud. Anyone involved in Texas real estate in the 1980s will remember the savings and loan crisis. For a variety of factors, investors were led to believe that the demand for real estate was virtually unlimited. S&Ls had recently been deregulated by the federal government and were paying above-market interest rates to lure deposits. The S&Ls turned around and loaned that money out to real estate speculators who built more buildings throughout Texas and other parts of the country than could be absorbed. Eventually the pyramid collapsed, causing many financial institutions and individuals to declare bankruptcy. American taxpayers wound up picking up the cost of the crisis to the tune of $500 billion.		Fortunately, lawmakers and regulators have tightened oversight of financial institutions, and it is unlikely that we will see a return of the 1980s crisis. What is happening today is a smaller-scale version where unscrupulous buyers and appraisers are taking advantage of a buoyant residential market to persuade lenders to write loans above the market value of the property securing the loan. They may attach an addendum to the sales contract stipulating that some amount of money will be paid at closing to a third party, supposedly a builder who will remodel the house. What can happen is that the builder is really the buyer who pockets the money, then walks away from the property, forcing the lender to foreclose on the property. The buyer may turn out to have been a fictitious person, perhaps a stolen identity, or a shell corporation. The irony is that the seller probably didn’t get any more money for the property than she would have if it had been sold at market price, and she probably wound up being dragged into a criminal investigation. What should you do if you are presented an offer dramatically above the market value of your property? You should consider having an attorney review the offer for legitimacy. You should probably reject the offer if the buyer doesn’t have a credible reason for being willing to pay far above the asking price. Ask your REALTOR® whether there have been market changes in your neighborhood (new highway, school, or other facility) since you put the house on the market that might justify the dramatic increase. But above all, if it seems too good to be true, it probably is.