The 7-31-12 Newsletter of the Tennessee Association of REALTORS
Editor: Pug Scoville


UPCOMING TAR COURSES & EVENTS:
Aug. 2-3: Leadership TAR Retreat #3 – TAR Office, Nashville.
To see a complete calendar of other courses around the state, go to: http://tnrealtors.com/education/realtor-courses/
Aug. 9 – Sept. 12: GRI 403-404, Smart Marketing (16 hrs. CE) – an E-Class distance-learning course.

HOT LINES IN THIS ISSUE:
1. HOT LINE: A Ready and Willing Buyer, But… ?
2. HOT LINE: A Square Footage Dispute?
3. HOT LINE: Dispute Over An Earnest Money Deposit?

IN OTHER NEWS:
4. Home Prices Reflect Recovering Market
5. Managing a Multiple Offer Market
6. Messaging The Right Way
7. Looking for News To Make You Smile?
8. The CE Shop Announces August Special!
9. Rates Fall to 3.49 Percent!
10. To Ask a Hot Line Question…

NOTE: If you are reading a hard-copy of this DIGEST, and want to access some of the links cited, simply go to http://www.tardigest.com to access the current issue with “live” links!


1. HOT LINE: A Ready and Willing Buyer, But… ?

QUESTION: We bring a full price offer with no contingencies to the seller/client on a listing and the seller refuses to accept it. Have we brought the “ready, willing, and able buyer” and earned the commission at this point? While the seller probably can’t be forced to sell, can the listing broker enforce for commission?

ANSWER: This language is contained in the listing agreements in order to provide as much protection as possible for the listing company if they have a seller who refuses to sell. The language contained on lines 61-63 states:

“61. In the event a Buyer is found for said Property during the period above set out, on the terms and at the price specified
62. herein, or for a price and upon terms agreeable to Seller, Seller further agrees to convey said Property by warranty deed
63. to such Buyer, free from all assessments, liens and encumbrances, but subject to all restrictions of record, if any.”

As a result, it states that if the agency provides a seller under the terms and at the price above and upon terms agreeable to the Seller, then the Seller agrees to convey the property at which time a commission is to be paid. Logic dictates that if the offer is a full price one with no contingencies then it would meet the seller’s terms. However, it would ultimately be up to a court to make this determination.

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


2. HOT LINE: A Square Footage Dispute?

QUESTION: I represent a buyer on a transaction. The MLS and tax records show the property to contain X square feet. The appraisal came back with less than X square feet. Can my buyer request a recalculation of the sales prices based on the actual square footage?

ANSWER: The buyer can ask for a recalculation in price. However, if there is already a contract in place, the seller does not have to agree.

Square footage (or gross living area) is difficult to determine and is ripe for a misrepresentation claim. There are several acceptable ways in which to determine square footage. Additionally, if you have 3 different people determine square footage, you are likely to get three different answers. 1f the square footage included in the MLS is incorrect, the Realtor could be liable for negligent misrepresentation depending upon what he or she did to verify the information obtained and when the discrepancy is discovered (i.e. before contract entered into, after closing). We recommend that square footage be listed as an “approximate” amount and that a disclaimer be included noting that the amount of square footage is not guaranteed. We would also recommend either listing the square footage as what is listed on the tax records or as calculated by an appraiser AND indicate the source. In this situation, the advertisement should contain a disclosure that the square footage includes the room containing the heating and air unit in order to be safe if you choose to include it in the square footage. The important thing is that the information concerning square footage is disclosed so as to avoid misrepresentation. We would recommend going with either the tax records or from an appraisal.

UNLESS the contract specifically states that it is contingent on square footage in some way, it may be difficult for the buyers to renegotiate based solely on square footage given these disclaimers and difficulties in calculating it unless it is a major discrepancy.

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


3. HOT LINE ADVISORY: Dispute Over An Earnest Money Deposit?

The TAR Legal and Ethics Hot Line OFTEN receives questions asking who is entitled to an earnest money deposit when the parties in a particular transaction are unable to agree.

The Hot Line cannot interpret an executed contract. If the parties have a dispute over an executed contract and/or who is entitled to the earnest money in a particular matter, they should consult their own attorney. The TAR Hot Line cannot make a determination as to who is entitled to the earnest money as this requires an interpretation of the contract.

A principal broker is required under the Broker’s Act to distribute the funds in the escrow account “within a reasonable time.” Tenn. Code Ann. 62-13-312(b)(5). TREC has just issued a new rule which defines what constitutes a reasonable time. Pursuant to TREC Rule 1260-2-.09(7), “Funds in escrow or trustee accounts shall be disbursed in a proper manner without unreasonable delay. Funds should be disbursed or interplead within twenty-one (21) calendar days from the date of receipt of a written request for disbursement of earnest money.”

If you have a valid contract, you can try to get the parties to agree on the distribution. You may use TAR form F30, the Earnest Money Disbursement and Release Form for this purpose. This option requires the signature of BOTH the buyer and the seller. Bear in mind that this form also states that both sides are giving up their right to sue on the contract. If the parties want to reserve the right to file a lawsuit, then we recommend having an attorney assist you in drafting an agreement for the release of the funds.

If you cannot get an agreement by the parties, you, as the holder of the funds, will need to review the contract to determine if you can make a reasonable interpretation. Bear in mind that the party who does not receive the funds could file suit against you and the party receiving the funds. However, there is language in the Purchase and Sale Agreement which gives you some protection in the event this occurs. Lines 150-152 state: “No party shall seek damages from Holder (nor shall Holder be liable for the same) for any matter arising out of or related to the performance of Holder’s duties under this Earnest Money paragraph.”

An interpleader is a safer option than making an interpretation of the contract as the judge will determine who receives the funds. The procedure for interpleader actions differs from county to county and from general sessions court to chancery court. An interpleader action should be filed in general sessions court if the amount of earnest money is less than $25,000. If the amount is $25,000 or greater, the action should be filed in either circuit or chancery court.

If you have to interplead the funds, the buyer and seller will be named as the defendants on the interpleader form. This sometimes upsets the parties to think that they are being sued. However, you should keep in mind that you are not suing them – you are simply turning the funds over to the court and asking the court to decide who is entitled to the funds.

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


4. Home Prices Reflect Recovering Market

Home values rose 0.2 percent during the three months ended in June from the second quarter of 2011 to mark the first annual gain since 2007, Zillow reports. Of 167 metropolitan areas tracked, nearly a third posted price increases compared to a year earlier. Zillow chief economist Stan Humphries believes the country has hit a bottom in residential values. To read more, CLICK HERE.

[SOURCE: Wall Street Journal]


5. Managing a Multiple Offer Market

Yes, multiple offers are coming back …in some areas of the state, and in some price ranges!

Preparing sellers for the possibility of multiple offers begins with the listing presentation, as noted in a new RISmedia article by Kim Marie Mullin (“Manage a Multiple Offer Market”). To read her advice, go to: http://rismedia.com/2012-07-29/manage-a-multiple-offer-market/

[SOURCE: RISMedia]


6. Messaging The Right Way

Is the way you’re communicating “turning off” other agents unnecessarily? That’s the question Tracey Velt asks in a recent blog posting at REAL Trends (“Are You Your Own Worst Enemy?”).

She offers three simple tips to improve your messaging etiquette and effectiveness, all well worth noting. As simple as they are, folks still overlook doing them:

*** BEGIN QUOTE ***
1. If you’re going to text, text; then give the recipient time to text back. If you’re going to leave a voice mail message, leave one. Don’t text then call immediately after. It’s a little rude.
2. If you choose to text, be a little more specific. How about: “Jan from ABC Realty. Would like to show the house at 6454 Casa St. today around 2 p.m. Will that work?” Granted a little long for a text, but I’d get back to you immediately!
3. Identify yourself. In your voicemail, it only takes a few seconds to say, “Hi, this is Jan Junior from ABC Realty. I have a buyer interested in seeing 6454 Casa St. today around 2 p.m. Can you call me back with showing instructions? My number is XXX-XXX-XXXX.”
*** END QUOTE ***

To read her complete comments, go to: http://realtrends.com/blog/are-you-your-own-worst-enemy

[SOURCE: REAL Trends]


7. Looking for News To Make You Smile?

Look no further than a story published in the Wall Street Journal last August: “DIY Guru Gets Broker Help”.

*** BEGIN QUOTE ***
Colby Sambrotto, a founder and former chief operating officer of ForSalebyOwner.com, a large website for owner sales, spent six months trying to sell his condominium himself through online listings and classified ads, before turning over the listing of the 2,000-square-foot apartment to a broker at Bond New York in November.

The broker, Jesse Buckler, said he told Mr. Sambrotto the apartment in the Lion’s Head building on West 19th Street near Sixth Avenue was priced too low and wasn’t drawing the right buyers.

By May, it went into contract, he said, after attracting multiple offers. It closed in the last few days for $150,000 more than the original asking price.
*** END QUOTE ***

More proof of the wisdom in using a professional! To read the entire article, CLICK HERE.

[SOURCE: Wall Street Journal]


8. The CE Shop Announces August Special!

If you’re looking for a bargain in online CE courses, The CE Shop (our online education partner) is offering a 20% discount during the month of August on all of their online CE courses!

To take advantage of this special August promotion, visit: http://tarnet.theceshop.com/

Simply enter the promotional code August12 at checkout to receive your 20% discount. This promotion expires 8/31/2012!


9. Rates Fall to 3.49 Percent!

Last week, average interest on 30-year fixed mortgages according to Freddie Mac set a NEW record low at 3.49 percent (with an average 0.7 point), the lowest level since long-term mortgages began in the 1950s!

And 15-year rates ALSO hit another record low at 2.80 percent!

To see current mortgage rates, go to: http://www.mortgagenewsdaily.com/mortgage_rates/

To see THDA rates and programs, go to: http://tn-tennesseehda.civicplus.com/index.aspx?NID=8


10. To Ask a Hot Line Question…

To ask a TAR Legal and Ethics Hot Line question, go to: http://tnrealtors.com/services-support/legal-ethics-hotline/