Rain City Guide

Lawyers Provide Better Representation - Pt. 3 of 4

General agreement, Tim. I would only note — again — that while agents routinely practice law in a manner that exceeds their legal authority to do so, that does not make it legal, or arguably even acceptable. The law is clear. Agents are not lawyers. Consumers should understand this. If, notwithstanding their understanding, they want to proceed with hiring an agent, then at least they have made an informed decision, and that’s all anyone can expect. Ultimately, everyone gets to decide what’s best for theselves (other than JimN, a commentor on one of the earlier posts, who thinks the government should make that decision).

Lawyers Provide Better Representation - Pt. 3 of 4

FINALLY! A little heat from this fire…

See my reply to Jeffrey for the law here in WA and my explicit recognition of my total ignorance about AZ law. As for title insurance companies, they conduct in-depth searches to identify any flaws on title that they will not insure against. That makes it all the more essential that a buyer understand the contents of a title committment.

Also, Jay, please refresh my recollection: exactly where did I say that every lawyer is competent? Of course I never said that. What I did say was that lawyers are fully trained and licensed to engage in the unlimited practice of law. That is a distinct advantage over the limited practice of law in which agents can engage here in WA. Because they are fully trained and licensed, though, does not guarantee that they are competent. It just makes it more likely and allows them to practice without limitation (which may be rather useful in any transaction).

On a similar note: Where did I say, “Agents suck?” Of course I did not. What I did say — and what was confirmed by Ardell, an agent here in WA — is that agents bill for a root canal but provide only a filling, i.e. they’re overpaid for the service they provide.

To be clear, and speaking generally: Agents can and do provide a valuable service to those clients who a) want a professional deeply involved in the transaction and want to use that professional’s time indiscriminately, b) are willing to accept the lack of systemic safeguards to prevent conflicts of interest, and c) are willing to pay a substantial sum for the service. As for any particular agent: There are some who provide stellar representation, in every sense of the word, and who are worth every nickel. But this post is not and has never been about any particular agent or lawyer. It’s focused on the system.

And now, back to our regularly scheduled late nite programming…

Lawyers Provide Better Representation - Pt. 2 of 4

Jim — good luck crafting such a benevolent and “fair-to-all” governmental intrusion. The right to contract, on terms that you accept, is an important one. It should not be sacrificed in the name of “transparancy.” And the “middlemen” are actually essential to a healthy and functioning markeplace. Or are you saying the government should act as escrow, lender, mortgage broker, title insurer, etc.?

Lawyers Provide Better Representation - Part 1 of 4

It sounds to me, Thorn, like you are very comfortable representing yourself in a transaction. Good for you. Depending on your experience and sophistication, I might even agree that self-representation is appropriate for you.

As for the benefits you get in using the listing agent as your agent, some make sense (agent likely to influence seller in favor of your offer due to double commission incentive) and some do not (not clear on why this “reduces your competition” for the property). These benefits come at a cost, of course — minimal representation, which may not be of much importance to you but should be very concerning to most.

Finally, in this buyer’s market, I am unclear on why you need these advantages anyway. In any event, you’ve balanced your particular need for representation against the benefits gained by you in using a dual agent. As long as you accurately weigh those considerations, then you — and any other buyer — are on the right track.

Lawyers Provide Better Representation - Part 1 of 4

Gene — I’d say you are the ideal candidate for hiring a lawyer rather than an agent. You may even be able to find one who works for a flat fee rather than hourly so that you don’t have any unpleasant surprises. RedFin and 500Realty certainly take you in the right direction, as they encourage clients to take some ownership and responsibility (which is very healthy, I believe — the client is buying/selling the asset worth hundreds of thousands of dollars, not the broker/agent). However, you are still left with representation that falls short of what is provided by a lawyer (you’ll be interested in Part 3 of the post, “Legal Counsel.”

Lawyers Provide Better Representation - Part 1 of 4

Jeffrey — Historically lawyers have caused deals to “blow up” in part because lawyers typically were unfamiliar with residential deals. Rather, they often times were “doing a favor” for a client, and they brought their adversarial perspective to the deal. These days, more lawyers are hoping to compete with agents on a large scale. I strongly suspect that these attorneys will be more understanding of the dynamics and culture of a residential deal. That said, they will continue to be concerned with the interests of their clients. If the deal is not in their clients’ interests, expect it to be “blown up.”

As for “market knowledge,” I agree that an understanding of the market is helpful in providing representation. However, again I’m not talking about services outside of representation. Regardless, an attorney who handles these transactions on a regular basis also has an understanding of the market. Besides, the “right” price is the one that is acceptable to the client. After all, market opinions are just that — opinions that may or may not be accurate.

Finally, in terms of “relationships with active agents” — well you lost me. That sounds an awful lot like the ol’ “salesperson” model of agency. Ultimately, the value and condition of the asset — and its desirability to the buyer — should drive the transaction. Any “schmoozing” among agents very likely will lead one agent or the other to sacrifice the best interests of their client to some extent.

A Closing Date without a closing

Sandra — you should consult an attorney in Allentown, PA. Best of luck.

A Closing Date without a closing

Rhonda — SHUSH! What are you, crazy?! You’re going to let the cat out of the bag!!

In all seriousness, I agree 100%. I have argued since I started this practice that agent fees are artificially high based on the commission system, which is supported (propped up, more accurately) by the MLS system. Hey, there’s a reason why agents are such avid bloggers — they spend most of their time working for their next client, and each client pays them handsomely for the work done on the client’s behalf. Agents — and particularly those good at getting the next client — benefit handsomely. At the expense of the consumer, of course…

I’m sure we’ll get a rousing counterargument here. Agents are notorious for breaking down the many hours they invest in each and every transaction and the resulting “fair” fee that they routinely earn.

A Closing Date without a closing

Agreed — the best assurance of quality professional services, regardless of the fee arrangement, is to hire a quality professional.

A Closing Date without a closing

This is a nice illustration of one of the downsides of the agent’s business model. An agent gets paid only if and when the transaction closes. We’re all human and we’ve all got bills, so there is a powerful incentive to rush a transaction to closing. Perhaps that was the agent’s motivation in rushing the closing date to the buyer’s/Janet’s detriment.

When to sue for an undisclosed defect

Great comment, Kary, on the need to consider the ability to collect any award. Even if you win big (total compensation for all repairs, award of all fees and costs incurred), it will not mean anything if the seller does not have other assets that can be seized/sold to satisfy the judgment. For this reason, attorneys are hesitant to take these types of cases on contingency. Unlike a personal injury suit, where there is an insurance company who will pay any judgment, there is some doubt about ever collecting on a judgment against someone without applicable insurance. And yes, that is why agents/brokers are often named — they’ve got money available to satisfy the judgment.

As for discharge of the warranty deed obligations by bankruptcy — are you sure about that? Bankruptcy discharges debts and liabilities — does that extend to every possible liability that has not yet been incurred? It would surprise me if bankruptcy discharged the warranties even where the buyer had yet to assert any claim against them.

Form 17 -- an addendum to the contract?

Kary — I agree that the trial court “stretched the point” (see my comment 8). However, I disagree that, even if the PSA referenced the Form 17, the result would have been the same. As you know, the touchstone for contract interpretation is the intent of the parties. If the parties specifically referenced the Form 17 as an addendum, and presumably signed the Form 17 prior to or at mutual acceptance (which is common when the Form 17 is listed as an addendum), how could you argue that the parties did not intend to include the Form 17? Yes, the boilerplate language indicates otherwise, but I’m pretty confident that a court would disregard that biolerplate language if the parties also intended to do so. We’ll have to wait for another case that squarely addresses the issue (this one does not) in order to resolve the argument.

But even recognizing the merits of your position (even specific inclusion of the Form 17 in the contract by the parties would not actually incorporate the Form 17 into the contract) — why do it? What benefit is there to the seller? None that I can see. So why take the risk? There is no need to so do.

Finally, as for the agent and broker, they were found liable by the trial court. However, you may not have noticed that they were not parties to the appeal. Accordingly, the appellate court had no reason to delve into the basis for that liability.