by Neil Kearney | Aug 11, 2010 | For Buyers, For Sellers, Real Estate 101 |
A recent advertising campaign had the slogan “Make sure your agent is a REALTOR”. The campaign was paid for and developed by REALTORS who wanted to differentiate themselves from those real estate agents who are not REALTORS. Still, I don’t think the public gets it fully. “Aren’t all real estate agents REALTORS?” the public may think. This is like saying “aren’t all colas Coke” or “isn’t all tissue Kleenex?
Currently there approximately 35,000 people in Colorado with a license to sell real estate. Of those people approximately 23,500 are REALTOR, meaning they are a member of the National Association of Realtors (NAR). So what is the difference and why should you care.
To start the explanation we go back to 1913 when The Code of Ethics (The Code) was first adopted by NAR. The Code is a document to which all REALTORS swear to abide by and be held to. The backdrop of the creation of The Code was an era of the fraudulent subdivision, the fake city addition, the multiple “first” mortgage, the “net” listing, and a myriad of other “get rich quick” schemes involving the sale of land.”1 It was a time before state regulations regarding real estate and the time when “buyer beware” really meant something. The Code was written on the premise that REALTORS should serve the public and being a REALTOR meant that you upheld a higher standard of business practices.
Nearly 100 years later The Code of Ethics is still going strong. It is a living document meaning that it is in a constant state of review and revision. Each year new interpretations and or Standards of Practice are added to The Code. It is as relevant now as it was 97 years ago.
The Code works because it includes both the ideals on which we should base our real estate practice and a mechanism for hearings, education and discipline where needed. The Code gives the public and our real estate peers a way to stand up for principle and make a stand for what is right.
The Code of Ethics is a document which includes 17 Articles organized under three main headings; ‘Duties to Clients and Customers’, ‘Duties to the Public’, and ‘Duties to REALTORS’. Each article is further explained by specific Standards of Practice which give clarification to the intent of the articles. The basis of all articles in The Realtor Code of Ethics is the Golden Rule “Whatsoever ye would that others should do to you, do ye even so to them”.
So what happens when in your opinion a REALTOR acts unethically? The public as well as fellow Realtors can file an ethics complaint with the local REALTOR association in which the offending agent is a member. There is then a pre-defined procedure in which the complaint is processed. The complaint is taken very seriously and is handled confidentially by a panel of peers. The first step is the Grievance Committee which determines if a hearing should take place. The Grievance Committee acts as a grand jury. If the complaint is determined to be valid, the next step is a full hearing which replicates a court of law. The outcome is not criminal but an offending REALTOR can be punished.
So, what does it matter if your agent is a REALTOR or not? Both are licensed and can help you buy and sell real estate but only a REALTOR has pledged to serve the public ethically and consistently, and is willing to be upheld to this standard by a panel of their peers. To me it is more than that. REALTORS have made a commitment to serve the public and to conduct business in a way that the public expects.
I am privileged to have been chosen to be the chairman of the Grievance Committe for the Boulder Area REALTOR Association this year. To me how business is conducted does make a difference.
To read The Code online click here.
1 – Article – “The Realtor’s Code of Ethics – A Gift of Vision, 1978 William D. North.
by neil kearney | Feb 5, 2010 | For Buyers, For Sellers |
I’m in the customer service business. Real estate is not a business of monopolies. I know that if I don’t provide my clients a great experience they can and will use someone else. At last count, there were over 1,200 Realtors in the Boulder area. I don’t take my business for granted and work hard at what I do. I strive to give my clients prompt, honest, intelligent and enthusiastic service.
The story below from Harvey Mackay gives a great example on the difference between poor service and extraordinary experience. 
Harvey Mackay tells a wonderful story about a cab driver that proved this point. He was waiting in line for a ride at the airport. When a cab pulled up, the first thing Harvey noticed was that the taxi was polished to a bright shine. Smartly dressed in a white shirt, black tie, and freshly pressed black slacks, the cab driver jumped out and rounded the car to open the back passenger door for Harvey. He handed my friend a laminated card and said: “I’m Wally, your driver. While I’m loading your bags in the trunk I’d like you to read my mission statement.”
Taken aback, Harvey read the card. It said: Wally’s Mission Statement: To get my customers to their destination in the quickest, safest and cheapest way possible in a friendly environment. This blew Harvey away. Especially when he noticed that the inside of the cab matched the outside. Spotlessly clean! As he slid behind the wheel, Wally said, “Would you like a cup of coffee? I have a thermos of regular and one of decaf.”
My friend said jokingly, “No, I’d prefer a soft drink.”
Wally smiled and said, “No problem. I have a cooler up front with regular and Diet Coke, water and orange juice.”
Almost stuttering, Harvey said, “I’ll take a Diet Coke.”
Handing him his drink, Wally said, “If you’d like something to read, I have The Wall Street Journal, Time, Sports Illustrated and USA Today.” As they were pulling away, Wally handed my friend another laminated card, “These are the stations I get and the music they play, if you’d like to listen to the radio.”
And as if that weren’t enough, Wally told Harvey that he had the air conditioning on and asked if the temperature was comfortable for him. Then he advised Harvey of the best route to his destination for that time of day. He also let him know that he’d be happy to chat and tell him about some of the sights or, if Harvey preferred, to leave him with his own thoughts.
“Tell me, Wally,” my amazed friend asked the driver, “have you always served customers like this?”
Wally smiled into the rear view mirror. “No, not always. In fact, it’s only been in the last two years. My first five years driving, I spent most of my time complaining like all the rest of the cabbies do. Then I heard on the radio one day that if you get up in the morning expecting to have a bad day, you’ll rarely disappoint yourself. He said, “Stop complaining! Differentiate yourself from your competition. Don’t be a duck. Be an eagle. Ducks quack and complain. Eagles soar above the crowd. That hit me right between the eyes,” said Wally. “That was really talking about me. I was always quacking and complaining, so I decided to change my attitude and become an eagle. I looked around at the other cabs and their drivers. The cabs were dirty, the drivers were unfriendly, and the customers were unhappy. So I decided to make some changes. I put in a few at a time. When my customers responded well, I did more.”
“I take it that has paid off for you,” Harvey said.
“It sure has,” Wally replied. “My first year as an eagle, I doubled my income from the previous year. This year I’ll probably quadruple it. You were lucky to get me today. I don’t sit at cabstands anymore. My customers call me for appointments on my cell phone or leave a message on my answering machine. If I can’t pick them up myself, I get a reliable cabbie friend to do it and I take a piece of the action.”
Wally was phenomenal. He was running a limo service out of a Yellow Cab. I’ve probably told that story to more than fifty cab drivers over the years, and only two took the idea and ran with it. Whenever I go to their cities, I give them a call. The rest of the drivers quacked like ducks and told me all the reasons they couldn’t do any of what I was suggesting. Wally the Cab Driver made a different choice. He decided to stop quacking like ducks and start soaring like eagles.
Just remember…Ducks Quack, Eagles Soar.
Do I quack or soar? hmm
by neil kearney | Dec 15, 2009 | For Buyers |
Tough market conditions call for creative ways to sell a property. More and more I’m hearing about an auction as a sales alternative. Buyers are looking for good deals through foreclosure and short sales but these are not always desirable homes. Auctions by privately owned homes tend to be a viable option for homes in the higher markets and so they tend to attract higher end buyers looking for a good deal. The marketing is slick, it looks like a good place to get a steal of a deal but WHAT IS THE CATCH?
There are many potential surprises when you attend an auction and they include?
- Minimum prices that may or may not be stated clearly before hand. The words “minimum” and “reserve” can be used to make people think that they might just get the deal of the century when there is no chance that the seller is selling for less than X.
- The owners and the auctioneers set the rules. If the rules change it is bad PR and will cause bad feelings but in the end what recourse does a potential buyer have if the seller reserves the right to cancel the auction at any time in the fine print.
- Buying a house at auction may come with strings attached. Like, pay cash within 24 hours or use a certain lender.
- Most auctions are final and binding so if you want to inspect the property do it before the auction.
- Watch out for premiums. Auctioneers get paid a percentage of the sales price. Many times this is in addition to the sales price and paid by the buyer.
- Watch out for bidders attached to the seller. The seller may advertise a no minimum, no reserve auction but have a bidder placed in the crowd who will bid the property up to at least the amount they want to sell for. If their placed bidder “wins” the bid the deal will mysteriously fall apart. We have had this happen recently in our market and the bids were inflated by a real buyer bidding against a relative. A week or so after the auction the real buyer was contacted by the seller asking if they still wanted to buy the property. The seller did not go through the registered agent who was helping the “real buyer”. Luckily the buyer smelled a rat and did not bite.
by neil kearney | Nov 18, 2009 | For Buyers, Real Estate 101 |
One of the greatest sources of letdown and conflict in a real estate transaction is the condition of the house after the Sellers 
move out. Provisions in the purchase contract allow for the buyer to do a walk through inspection prior to closing. I advise my buyers to do this walkthrough as late as possible so as to see the true condition of the property as it will be left. What to look for in a walkthrough could be its own topic but in summary; we are checking to make sure that the inspection items were completed as agreed upon, the inclusions are still at the house, that there has not been any recent damage to the house and finally to check the cleanliness of the house. The first three items are fairly “cut and dry”, either the refrigerator is in the kitchen or it’s not. I have found that cleanliness is very subjective. What may be very clean to one hurried, harried seller may be “filthy” to the buyer. I try to mitigate this by talking about this subjective divide as we write the agreement and make the language in the contract as plain and literal as possible. Instead of saying carpet cleaning (sellers picture the Bissell in their closet, buyers picture the $500 top of the line pro), I would make it clear that the carpets are to be cleaned by a professional with the receipt provided.
No matter what you try to plan for it is an issue. Sometimes it becomes an outlet for buyer frustration after a particularly tough set of negotiations. Sometimes it is a seller with good intentions but not enough time. Sometimes it is a professional hired who does a less than professional job. All I know is that I have hired cleaners, pitched in with the sellers as we did a last minute shine or have cleaned cupboards and closets myself. Small important details in making the closing day go smoothly and making my clients happy.
So some parting advice:
To Sellers:
- Plan in advance. Closing and moving is a very hectic time and it is not always easy to complete all of those little last minute tasks.
- Bring in help. Hire a cleaning company or better yet family. It is always very hard to go back to the old house to clean while all of your stuff is at the new house.
To Buyers:
- Get it in writing. If you are worried about the condition of the house, set forth your expectations in writing.
- Be realistic. Maybe you have to tidy up a bit when you move in to bring it up to “your” standards. Don’t let it ruin your day.
by neil kearney | Nov 17, 2009 | For Buyers |
Purchasing a home is a huge undertaking and is most likely your 
largest investment. It is therefore wise to do everything in your power to minimize your risks. The first step is to hire a competent Realtor, that is where I come in. Your Realtor can then lead you through the process of intelligent due diligence. Some common items to consider: Is the asking price justified for comparable sales? How does the homes condition compare to others on the market? Are there any obvious flaws? What is the potential resale potential of the home? If the property is part of an HOA, can I live with the rules and the assessments? Can I live with the neighbors? etc…
Once these basic questions are answered a buyer usually then looks at the home more in depth. In our area a general home inspector is hired to look at plumbing, roof, electrical, appliances, foundation, drainage, furnace, etc. If there are any “red flags” he recommends that the buyer bring in a specialist to assess the situation and possibly bring in a bid. Another usual inspection in our area is a radon test. Usually the inspector administers the test for an added fee and provides the results of a 48 hour test.
Another inspection that is seldom used but very useful in older homes especially, is the video sewer line inspection. Some plumbers have a special camera that video tapes the sewer line as it exits the house, runs under the yard and enters the city line. The cost for the test runs around $300, but if it is an older home or one with a bunch of trees in the front yard, it can be well worth the cost. At the conclusion of the test the buyer ends up with a video of their sewer line with any breaks in the line marked in the yard. Costs to re-do a sewer line are usually above $4,000 so this is something that is best found out before closing.
The image above actually shows roots growing into a sewer line.
by neil kearney | Nov 10, 2009 | For Buyers, General Real Estate Advice, Real Estate 101 |
In Part 1 of this article I outlined the initial steps a buyer needs to take in the home buying process. In this post I will explain what happens once a buyer finds “the” right home.
The Offer
After viewing a few homes or many homes, eventually you will narrow your choices down to one “best” house. It’s time to make an offer. Your Realtor’s expertise will now be most helpful. Together you will evaluate not only the other homes on the market (the relative value of the other choices), you will research the value of the home in question. A seller can ask anything they want from a home so it is important that your offer is based in reality, not a seller’s fantasy. After checking the comparable sales it is a good idea to evaluate the position of the seller. How much do they owe? How long has the house been on the market? Have they reduced the price? What other clues do we know about motivation? With all of this knowledge you can with your Realtor formulate an offer strategy.
Once the strategy is in place your Realtor will then prepare a written offer. In Colorado we use a standardized form approved by the real estate commission. Most of the contract is pre-written and we have just to fill in some blanks. Your Realtor will advise you on reasonable contingency dates, contingencies, inclusions, financing and any additional provisions that are unique to this particular property. Once the offer is written, the buyers sign and date the agreement. The offer is then delivered to the listing agent and/or the sellers for review.
Earnest Money
So you will not be placed in an uncomfortable position when you purchase a property, an understanding of the earnest money deposit is important. At the time a written offer is initiated, you will be required to include a personal check or cashiers check as a good faith deposit. The check is deposited into the listing broker’s escrow account upon contract acceptance and will remain in escrow until the time of closing. This amount is credited towards your closing costs and down payment at closing. If the offer is not accepted, the deposit is returned to you. The amount depends upon the sales price of the property. The amount is negotiable, but a good rule of thumb is 1% or more of the offer price. You can only loose your earnest money if you change your mind or if you do not perform to the dates or the provisions of the contract. Your deposit will be returned to you if your loan is disapproved or an inspection resolution cannot be reached. So long as these are done in a timely manner.
The Contract Gets Accepted – Now What?
After the buyer and seller reach agreement on the details of the contract and both have signed either the original offer or a subsequent counterproposal, the focus turns to fulfilling the various contingencies set forth in the contract. The major contingencies are loan approval, inspection and title documentation.
The first order of business is to alert your lender and provide to them a copy of the contract. At this point you will have the opportunity to lock-in an interest rate and firm-up the details of the loan program in which you will pursue. As the lender prepares your file for submission to their underwriters you will be asked to provide documentation of assets, income and anything else they feel that they will need. They will also be asking for money to pay for your credit report and appraisal.
Inspection
The inspection of your home is most important and setting up a general home inspection should be done as soon as possible after contract acceptance. During the typical 10 day inspection period a buyer has the right to inspect the house, check on crime reports, check with the city regarding future development and any other inspections that any particular house may need. After the inspections are complete the buyer has three options: terminate the contract, move forward with the house in as-is condition or provide the seller a list of unsatisfactory conditions. The most common is the later. Once a list is provided a negotiation ensues between seller and buyer to find an acceptable solution. If an agreement is not met the buyer has two options: to let the contract expire or to waive all inspection objections and move forward as-is. To learn more about the inspection process click here.
In Colorado the seller is required to provide to the buyer title insurance which insures clean and merchantable title. Basically, the house must be transferred without any title disputes. The title company will do a title search and disclose to the buyer any recorded documentation that will transfer with the house. Common examples of the exceptions to title insurance are homeowners association covenants, development documentation and utility easements.
Appraisal
Your lender will order an appraisal on the property. Having a third party asses the value, helps the mortgage company evaluate their risk in their investment. If the appraisal comes in less than the purchase price (this is happening quite a bit), the buyer has three options: re-negotiate with the seller, put additional money down to keep the loan-to-value ratios in line, or to terminate the contract.
Final Walk-Through
Just before closing it is a contractual right for the buyer to do a final walk-through. This is the time to check that all inspection items have been completed as well as check on the overall condition of the house. If something were to happen to the house between inspection and closing the seller is obligated to fix it.
Closing
Once all of the contingencies have been met you are ready for closing. The closing day is set forth in the original offer but the closing time is usually worked out by the Realtors about two weeks in advance. The closing takes place at the title company and it usually takes a little more than an hour. A day or so before closing the title company will provide to the buyer a settlement statement that will show exactly how much the buyer will need to bring to closing in the form of good funds. Good funds can be a cashiers check or a bank to bank wire. At the closing the title officer will guide the parties through the various documents which need to be signed. After all of the signing is complete and all of the money is accounted for the place is yours! It’s time to move in.
