The Weekly Membership Newsletter of the Tennessee Assn. of REALTORS


CONTENTS
1. Mortgage Delinquencies Slowing Down!
2. HOT LINE: Change of Firms, Change of Agency?
3. HOT LINE: No Representation Agreement
4. HOT LINE ADVISORY: Wearing Two Hats …Again?
5. Last Call for Instructor Workshop – May 7-8!
6. REMINDER: Ethics Course Requirement
7. Rates Change Very Little


1. Mortgage Delinquencies Slowing Down!

Good news (for a change) in last week’s Wall Street Journal:

*** BEGIN QUOTE ***
The subprime-mortgage market still is getting worse each month, but there are some indications that the massive problem of borrowers falling behind on their loans may be moderating.

Data provided recently to holders of securities backed by subprime mortgages showed that the number of borrowers who were delinquent on their home loans rose at a slower pace in April than in March. It was the third month in a row in which mortgages went bad at a slower rate.

…While it is hard to predict when the subprime market will hit bottom, some analysts think the recent data indicate that some sort of stabilization is under way.

“The trajectory is beginning to flatten out, and this could be a turning point for prices” of mortgage securities, said Glenn Schultz, a senior analyst at Wachovia. As many poorly underwritten subprime loans made between mid-2005 and mid-2007 go bad early in their lives, Mr. Schultz expects the remaining loans to perform more normally.
*** END QUOTE ***

[SOURCE: Wall Street Journal]


2. HOT LINE: Change of Firms, Change of Agency?

QUESTION: I had an affiliate broker that had a buyer sign an Exclusive Buyer’s Representation Agreement. Then she moved her license to a new firm, and at that time had the same buyer sign a new Exclusive Buyer’s Representation Agreement. If a transaction occurs and closes with this buyer, shouldn’t my firm receive a commission?

ANSWER: The contracts, listing agreements, and buyer’s representation agreements belong to the firm, NOT to the individual agent. When an agent leaves a firm, these items stay with the firm and do not go with the agent. However, the principal broker MAY allow the departing agent to take these with him/her and can put conditions on their transfer if the principal broker so chooses. HOWEVER, whether to transfer these items is up to the sole discretion of the principal broker. Also, please bear in mind that an agent should NOT attempt to convince the clients to move with him or her unless the agent has the permission of his/her former principal broker (you) to do so.

In this situation, the buyer could be legally obligated to pay 2 commissions due to the actions of this agent! If you want, you can tell this agent that you will be willing to release the buyer from his agreement with you as long as the agent will give you a referral fee. If not, then the agent could be in violation of the Broker’s Act and the NAR Code of Ethics.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


3. HOT LINE: No Representation Agreement

QUESTION: As the buyer’s agent, I prepared a contract last fall for a client at my old real estate company. I did not, however, have a Buyer’s Representation Agreement signed. I thought the Confirmation of Agency on the TAR contract would suffice. This transaction closed last month. My old broker initially denied paying me my commission because I did not have the Buyer’s Representation Agreement. He finally released my commission check, but still insisted that I would be in trouble if I did not get the Buyer’s Representation Agreement signed. Is this true? Getting a Buyer’s Representation Agreement signed, after the transaction has already closed, seems likely to get me in trouble. Do I need to get a Buyer’s Representation Agreement signed?

ANSWER: NO, you should NOT go back after the fact to get a Buyer’s Representation Agreement signed. This will not help the situation. The only thing that you can do now is to leave it as it is and hope that that file does not get audited. Without a signed Buyer’s Representation Agreement, you were NEVER the buyer’s agent.

If you are trying to create an agency relationship with the buyer, a Buyer’s Representation Agreement (or an equivalent contract) must be in place. A confirmation form does not create an agency relationship. HOWEVER, you can act as a facilitator for a buyer without having anything in writing between you and the buyer …and that’s what you actually were in this situation, so that’s the status you should have disclosed in the absence of a true representation agreement.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


4. HOT LINE ADVISORY: Wearing Two Hats …Again?

We continue to hear of confusion in the marketplace about one particular aspect of agency law and practice:

If you have a situation in which you represent the seller, and a buyer comes along who is unrepresented, you may have several options, depending upon your company’s agency office policy …BUT you CANNOT wear two hats at the same time in a transaction!

REMEMBER: If you tell a buyer that you are a Facilitator, you’re telling that buyer that you don’t represent ANYBODY in that transaction (including the seller). If you still represent the seller when you tell the buyer that you are a Facilitator, you’ve just LIED to the buyer and committed misrepresentation!

Being a “Facilitator” does not only describe your relationship to one party, it describes your relationship with EVERYBODY in the transaction, and tells everyone that you are NOBODY’s agent in this transaction!

No matter how many times we address this issue, it’s always a little surprising to discover how many folks still think you can wear two hats at the same time in a transaction, leading the seller to think that you’re representing him or her while leading the buyer to think that you’re not representing anyone. That’s clearly a violation of law and ethics.

IF you’re an agent for the seller, then — UNLESS you change your agency status and STOP serving as the seller’s agent (AND let the seller, especially, know that your status has changed and that you no longer represent him or her) — you need to tell BOTH buyer AND seller that you represent the seller. As the seller’s agent, you can still assist an unrepresented buyer, as long as the buyer understands that you represent the seller.

IF, on the other hand, you become a Facilitator, then you need to tell BOTH buyer AND seller that you’re not representing ANYONE in this transaction!

Whatever course of action you take should be dictated by your own company or office policy. We strongly recommend that everyone take steps to prevent any possibility for deception as to anyone’s agency status.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


5. Last Call for Instructor Workshop – May 7-8!

Our popular instructor-training workshop – “THE LEARNING-CENTERED INSTRUCTOR” – will take place this coming Wednesday and Thursday, May 7-8, 2008! If you want to improve as an instructor, trainer, or speaker, this is YOUR opportunity!

This two-day, practice-intensive instructor-training program is sponsored by TAR and TREEF. Recent attendees have included company trainers, local association instructors, pre-licensing instructors and others …ANYONE who wants to polish their teaching and/or speaking skills. For more information, click HERE!

As of Monday (5/5/08), there is still room left. As a bonus for TAR DIGEST and TREEF Center readers — if you will call Sally Cummings at the TAR office (615-321-1477 in Nashville) and mention this notice — she will register you with NO late registration penalty!


6. REMINDER: Ethics Course Requirement

All REALTORS — and this applies to ALL licensed Brokers as well as Affiliate Brokers (in other words, ALL REALTORS) — must take 2 1/2 hours (3 classroom hours) of ethics training in the National Association’s Code of Ethics and Arbitration Manual BY DECEMBER 31, 2008!

This is the ethics training requirement that has to be met at least ONCE EVERY FOUR YEARS, in order to maintain your membership in the National Association of REALTORS! [This has nothing to do with CE requirements , or license renewal in Tennessee.]

You can satisfy this requirement in any way satisfactory to your local association of REALTORS …AND you can take the required course for FREE if you use NAR’s online courses:

NAR offers two user-friendly on-line ethics courses at REALTOR.org that fulfill these obligations: one for new members and one for existing members. The on-line courses are available HERE – 24 hours a day, free of charge!


7. Rates Change Very Little

Long-term mortgage rates saw little change over the past week, according to Freddie Mac. The company said that interest on 30-year fixed loans came in at 6.06 percent compared to 6.03 percent for the previous week. Other rates registered some movement, but not much, with the 15-year fixed mortgage averaging 5.59 percent compared to 5.62 percent a week earlier and the five-year hybrid adjustable rate floating up to 5.73 percent from 5.68 percent over the same period. The one-year ARM, meanwhile, held steady at 5.29 percent.

[SOURCES: Freddie Mac; Information, Inc.]


For information on using the TAR Legal & Ethics Hot Line, look under
“More TAR Services” at the TAR website:
http://tnrealtors.com