Tag Archives: Law

DOJ-"opt-out" and a war with a "discounter"

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A new Broker opens an office and has no listings yet. He goes to area brokers and asks if he can advertise their listings in his “window” to help get him started. Mostly they say yes. They are not trying to force out the competition and they are more than willing to help him.

Now they walk past his office and they see their listings in his window. No problem. Until they see this big sign on top of the houses for sale, which are their listings. “Our Mission: To reinvent the existing residential real estate business — an ANTIQUATED, INEFFICIENT, and COSTLY system of selling homes!!”

That is an actual statement from a website. It used to be pages and pages of “Help us fight the GREEDY brokers! Join our CAUSE!

Well, do you think the local brokers wanted their listings in that “window”? Would you? So the “window” is the internet, same difference isn’t it? That guy was using their listings to show homes on his site because he didn’t have any listings yet, and badmouthing them at the same time. Does that seem right to you?

The brokers didn’t opt out against this company because he was a discounter. They opted out against this guy because he was advertising their listings (VOW site showing other broker’s listings) while at the same time badmouthing them and calling them greedy SOBs! That’s the kind of “mud” that causes the “opt out” provision to be invoked against a “discounter”.

The local brokers said get my #%$## listings off that guy’s site now!

What do you think? Do you think the brokers should be forced to let this guy put their listings on his site, while he badmouths them on the site at the same time? I don’t think so. But I’d like to know what you think.

This is what the DOJ suit is about. The DOJ is trying to remove that right of brokers to say, OK, you can use my listings. But don’t sling mud at me from behind the picture of my listing! If you do that, I’m taking my picture out of your “window”.

Of course we could break his kneecaps, but opting out seems like a better answer 🙂 The brokers “opted out”. The new company didn’t have any homes to show on his site. He cleaned up the site a lot, though the Mission is still as it appears above without the CAPS, and a compromise was reached. Opting out is a negotiation tool to prevent companies from getting started on other broker’s listings while slinging arrows at them. There is another group involved. Same theory. EBAs. But they are “Johnny come lately’s to the suit”, so let’s stop at this example.

Tell me how you feel about all this.

The Legal Description of Property

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(This post is authored by Craig Blackmon, an attorney in Seattle whose practice focuses on residential real estate — see his web page or his blog for more information. Please note that this post is not legal advice. You should consult an attorney for specific legal counsel.)

The legal description — it’s just an address, right? Unfortunately, it’s significantly more complicated than that, and it’s important to know the difference if you’re trying to create a binding contract.

In England more than 300 years ago, Parliament passed the Statute for Prevention of Frauds and Perjuries, which required that certain contracts be written and signed before they would be enforced by the courts. Thus, one was prevented from committing fraud and perjury by falsely convincing a court that there was an enforceable oral contract. In other words, absent a written and signed agreement, there would be no enforceable contract, regardless of whether the parties actually created an oral contract. Today, attorneys and other legal scholars refer to the legal principle first enunciated by that English law as the “statute of frauds.”

Our legal system in this country is largely based on the system in England. Thus, all states have adopted in one form or another laws that reflect the statute of frauds. Here in Washington, certain statutes relate specifically to the conveyance of real property. Per RCW 64.04.010 and RCW 64.04.020, every conveyance of real property must be in writing, and it must be signed and acknowledged by the party to be bound (i.e. the party selling or otherwise conveying the property).

The courts have also adopted the statute of frauds and repeatedly found (over many, many years) that a contract for the conveyance of land must contain a description of the land sufficiently definite to locate it without relying on other evidence. See Tenco, Inc. v. Manning, 59 Wn.2d 479, 485(1962); Green v. Escene, 108 Wn.App. 1045 (2001) (not reported). Indeed, in a case decided nearly 60 years ago, the State Supreme Court specifically rejected the contention that a property’s address was a description sufficiently definite to satisfy the statute of frauds. Martin v. Seigel, 35 Wn.2d 223, 229 (1949). Fifty years later, in 1999, the Court reaffirmed this rule, despite its unusual strictness. Key Design, Inc. v. Moser, 138 Wash.2d 875, 882-83 (1999).

Therefore, when drafting a purchase and sale agreement, it is imperative to include the legal description and not just the property’s address — which, of course, begs the question: what is a legal description? In most instances, the legal description is based on the lot, block and subdivision of the property. Here is a typical legal description for a home in Seattle: “Lot 15, Block 21, Gilman Park Addition, according to the plat thereof recorded in Volume 3 of Plats, Page 40, Records of King County, Washington.” Where the home was not built as part of a subdivision, the legal description may reference a government survey or use “metes and bounds,” a method of describing the property with reference to landmarks, angles, and distances. To obtain a legal description, you can turn to the preliminary title commitment or a previous deed of the property (which is usually available online at the King County Recorder’s Office.

And if you don’t include a legal description? The purchase and sale agreement is not a binding contract, and either the buyer or the seller can walk away without any consequences. The MLS form purchase and sale agreement widely used in Seattle includes language indicating that the legal description can be included after creation of the contract by the buyer’s agent, the seller’s agent, or the escrow agent. If your purchase and sale agreement includes such language, then the legal description can be added at a later date to create a binding contract. However, until the legal description is included, there is no contract, and either party can walk away. Therefore, it behooves any serious buyer or seller to include the legal description from the contract’s inception.

ZIP, Zillow and ZAP – Part 1 of ?

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OK, let’s “Get Real” for a minute.

On the one hand we have the consumer who wants what they need, no more; no less, for a price that seems reasonable.

Now, let’s look at the “service providers”, both as you know them, and as I know them as an insider. From an insider’s perspective there are three tiers of “service providers”. The traditional full service model, the “discounted” full service model and the stripped down to “you are mostly on your own” model. None of these are “good” or “bad” in and of themselves. It’s more a matter of what is good or bad for you, depending on your skills. But that’s for another day. Just wanted you to know that each of these is good for someone. Only question is which is right for you.

Technology has added a fourth option that is not a “model” in the “service provider” sense, but one that many consumers at present are opting for, which I will call ZAP.

I have to use analogies because I am somewhat limited by my insider position in discussing commissions and companies. Straight shooter that I am, being a little vague is not my normal modus operandi, so bear with me. Hopefully my descriptions and analogies will be obvious enough for you to follow. If not, you can ask questions in your comments or by email.

Let’s discuss and eliminate the ZAP option first, since it is not a “service provider”, but a place where many consumers get trapped without knowing that they are getting ZAPPED. It is worth mentioning here that ZIP is not a ZAP. Now back to ZAPs. The most obvious ZAPs have a button that says “Find a Realtor”, or something of that nature. When you hit that button to find a Buyer’s Agent or Seller’s Agent you are decreasing your ability to negotiate the commission, without knowing it. The technology whizzes who create these websites take a portion of the commission, without disclosing that to you the consumer. They do not provide a service to you, the consumer. They provide a service , for a fee, to the agent who is a “participant” at a cost. There are many of these and we call them “lead generating” sites, “bottom feeders” or “troll” sites.

Let’s take a specific example of how these work, and there are many of these available to you. Let’s say you are a buyer, rather than a seller, of real estate. You go to look at property on one of these sites, which is how they reel you in. You then hit the “I need a Buyer’s Agent” button and are connected with an agent. Let’s say based on the price of the house you will eventually purchase, that the commission will be $9,000 as pre-set by the seller of that house when he listed it for sale in the mls. When you connect with the agent by hitting that button, you have generally spent in that process of merely hitting a button on the website, the money you could have negotiated toward your closing costs or repairs or against the purchase price.

The agent who “gets you” has paid for you. He pays for you out of the $9,000 on the table in your “transaction”. Sometimes he pays it up front in a monthly cost of say $1,000 a month. So if it took three months for that agent to “get you ” (“the lead”), he has paid $3,000 for you. When you try to negotiate something for you from the $9,000, the agent has already given $3,000 to the 3rd party ZAP company, and so you get zapped, as your ability to negotiate has been diminished or entirely eliminated without your knowledge.

Some other sites are not “pay as you go” for the agent, but “pay as you close”. In that case the agent will owe the ZAP a percentage of the commission, if and when you close escrow. Again, the monies you may have been able to negotiate with your agent have been sucked up in advance without your knowledge.

Some of these sites operate like the one sided mirror glass of an interrogation room that you see on shows like Law and Order and the like. I find these lead generating “Big Brother” website options to be exceptionally creepy, but hey, that’s technology at its “best”, I guess. When you sign up to the site to view and save property, you are assigned to an agent in the queue without regard to whether or not it is a good match. Those who have paid in to “look at you look at property”, get the leads kind of like the way a lottery ball pops up to the top and gets “pulled”. I’m trying to give you the facts without editorializing, but it’s difficult for me as I find these sites intrusive and deceptive.

OK, back to facts. The agent who “wins you in the lottery” of the moment, gets to see everything you are doing from the inside without your knowing he is watching you. He can see what properties you are viewing. He can see which ones you are saving vs. ones you are trashing, he can “get inside your head” a bit. He gets all of the info you have put in to register for the site. You then get an email from him, and maybe a phone call, saying “Would you like to go see X property”? You are dumbfounded and amazed and think he is absolutely clairvoyant! Or maybe you DO want to see that property and don’t think about how he “guessed” you might want to go see that property and you just go see that property without a second thought.

LOL OK, I can’t stop editorializing, can I? Don’t you find this just absolutely creepy? Maybe it’s me. I’ll stop here for today and will continue after some of you comment on this so far. Maybe it’s just me. What do you think? I’d like to hear from you before I go any further. After 5 comments I will go to Part 2 of ?

As to the Title of this entry, let’s review. We are mostly talking about ZAPs that ZAP you, the buyer consumer. ZIP is NOT a ZAP. While you all sit at the edge of your seats awaiting Zillow and it’s wonders, we’all (the insiders for lack of a better term) are sitting back expecting another exploitative ZAP type. Of course “No one knows, but the Shadow”, but at least know what to look for when it comes. My expectation is that it will not give you what you want. That being “What you need, no more; no less, at a reasonable cost” as noted in the second sentence of this entry above. (Someone let me know if that IS what the consumer wants, please. Thanks.)

But it will WOW you with it’s technology, reel you in, and then sell you off to the highest bidder. No one knows yet, but if you hear anything new about it let me know and I will decipher the code.

Five comments from YOU, the reader, and then we will move to the actual means a buyer has to negotiate their commission, unless they have already “shot themselves in the foot” by being totally or partially ZAPPED without their knowledge, from the ability to negotiate.

Have a good day! Look forward to hearing from you!

Ardell

Take the Money and Run!

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Be gentle. It’s my first time.

While I am waiting for an agent to get back from the Seahawks’ game to look at the offer I just presented, I’ll try giving this a whirl.

I stole the Title line from Steve Miller “Take the Money and Run” to explain something you may (or may not) find to be of interest. That is, how can you get the Real Estate Commission into your pocket. Whether or not you should or should not get it, is not going to be discussed here. Let’s just assume you want it, and that is reason enough for me to describe how you may or may not be able to get it.

Let’s assume that if a real estate commission is involved, that you are either a buyer or a seller of real estate. If you are a seller, well that’s easy. You simply negotiate the fee and you get to keep the money. Trick is to get the best agent for the least money. Most think that they need to take the worst agent to pay the least money by signing up with some cheap service. NOT TRUE! All real estate commissions are negotiable with the seller, always.

I think it’s a crime and a shame that most sellers think they can’t get a top agent, without paying top dollar. I think it’s a crime and a shame that sellers think they have to go to those who advertise low fees, to get low fees. I think it’s a crime and a shame that sellers think they can’t get a really good agent, if they want to save money. Do you really think builders pay top dollar? Do you really think builders get less than superlative agents? They can do it; so can you. There is no set fee. All commissions are negotiable.

That’s the easy part. Now for the hard part.

How does the buyer get to “Take the Money and Run!”. Not quite as simple. Especially if you want the cash in your pocket, rather than an adjustment in the price of the home.

First, the basics. The contract that determines the Buyer Agent’s fee is already signed by the seller before the house ever gets in the mls. The Buyer Agent represents you and doesn’t even know the seller (usually), but the seller is the one who put the Buyer Agent’s fee into the asking price. Technically the Buyer Agent is not paid by the seller or the buyer. The Buyer Agent is paid by the Listing Company, and if the buyer takes the money from the seller, the Listing Company may still have to pay the Buyer Agent, even if that money went directly from the seller to the buyer. The Listing Company may have to pay, what they promised to pay in the mls, simply because they promised to do so. Now if that makes no sense to you whatsoever, I’m not surprised. But it’s the truth and one of the reasons why it is hard for a buyer to go around an agent they have “used” to see property.

That being said, let’s get back to the subject at hand “Take the Money and Run!” Understand that the amount of money you can receive is limited by your lender, not by the real estate agents or the seller. If you get any money, it has to be shown on the closing sheet and your lender can and does “disallow” it at the last second. So just when you thought you were going to put the money in your pocket, the lender says “No you can’t”. Getting money “off the sheet” is illegal. It’s called lender fraud. The person committing the fraud would be you the buyer, not anyone else, so be careful.

Jeez, they don’t make it easy for buyers to negotiate their agent’s fee do they? Well it can be done, and I have done it successfully and legally, but not easily.

But the Seahawks just WON!! and I have to go finish negotiating that offer. I’ll take this up again later.

Thank you for your time…and remember…be gentle…you’re my first.

Apply to refinance online and get 50 calls a day for months

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I called a prospect whose name I purchased from a lead vendor. This is something we do regularly in the mortgage business. Rather than word of mouth, mailing, cold-calling, or some other marketing means, we can purchase the names, phone numbers, and other relevant information from a lead vendor. These leads come in various qualities and prices. You can get thousands of random names and phone numbers for pennies apiece or you can get interested, very specific parameter, live transfer calls directly to your phone for $150 or more each. Of course, there are leads for everywhere in between as well.

One of the most difficult factors in buying leads is the “exclusive