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All WF Articles & Links for Tag "Fiduciary"

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  • library_books Your Relationship with your Real Estate Agent/Broker
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    Posted by Steve Watts,
    Article Synopsis

    Real Estate Word Cloud Infographic ImageDid you know that your relationship with your real estate broker is fairly similar to your relationship with your attorney? To be sure, there are significant differences - but there are also significant similarities. Of course, we all hope not to have (too) much of a relationship with an attorney - at least when it comes around to legal “troubles.” To judge by current trends in the technology industry, many of us feel the same way about real estate brokers. Is it better to be “cagey” about committing to a real estate broker, or is it better to take the plunge and commit to one?

    Regulated Industry

    Both attorneys AND real estate brokers (and their agents) are tightly regulated by the states (maybe al statesl, but I certainly it’s the case in Texas where I live and believe it applies broadly). They are both expected to be fiduciaries. Attorneys can take upon themselves broad fiduciary responsibilities as defined between themselves and their clients. A real estate broker is generally limited to fiduciary responsibilities in the area of real estate with an extended obligation to only engage in types of real estate in which they are knowledgable. An example would be an agent who has only handled residential suddenly representing themselves as experts of retail or office properties.

    In most areas of your life, you can walk around and conduct business for yourself - buy a hot dog, rent a car, etc., etc. There may be rules those you deal with have to follow and prescribed rules around the transactions, but in most cases you have to look out for yourself - buyer beware and all that. In the real estate industry, buyer (and seller) beware applies as well, but the states I know about have decided that you will in most cases have a real estate professional helping to look out for your interests. Yes, you read that right - in most cases, it is strongly encouraged (not quite required) that a primary party to a real estate transaction employs the services of a real estate professional. If you’re wealthy, there are some ways around it that might save you money, but given the way most real estate regulations are structured, you should really be asking yourself why would I try to do it without a broker in my corner? The transaction fees required for their involvement are generally already built into most real estate transactions.

    Possible Upsides to Using a Broker

    This would be a long list if I were to list them all - I’ll list a few from various sources including the Texas Administrative Code, the rules of the Texas Real Estate Commission (TREC), and other sources for your consideration. A licensee must:

    • Exercise a standard of duty and care…”
    • Behave with “fidelity” by treating all parties to a transaction fairly (yes, the definitions of fairness are defined about as clearly as one could define them)
    • Behave with “integrity” by using “caution to avoid misrepresentation by acts of commission or omission.”
    • Maintain competence - in other words, you have a right to expect that if you utilize a professional, that this professional knows his/her business and can help you competently.

    This list could go on and on, and is highly specific to cases that have been encountered in any given state. If the above list isn’t enough, let me add a kicker that might push you over the edge. If you can prove the broker you hired isn’t what your real estate commission says he/she must be or doesn’t do the things your real estate commissions says he/she must do, that real estate commission has the teeth to enforce the rules they set out by force of law. In TEXAS, TREC maintains a fund collected from licensees to make certain that they can make settlements should they decide there were violations that warrant settlements.

    In layman’s terms, find a qualified broker with good communication skills and work with them exclusively. They will put in the time and effort using their resources to find, or sell/lease the property you want. Let them do the work while you manage your business and personal life.

    Possible Downsides to Using a Broker

    There are probably no real downsides to using the right “qualified” broker to represent you. However, we can touch upon why you want to be careful in your selection. The following is an attempt at a list - which I expect to improve and enhance over time:

    1. Using a broker who does not have adequate knowledge or the property type and area in which you are interested. They can waste your time, likely miss opportunities, and can possibly expose you to legal action. After all, no one wants to jeopardize a real estate transaction and have to pursue or defend a legal action with or because of an incompetent broker!
    2. Good communication skills are not as common as you would think among real estate professionals. Some of the most intelligent brokers are not that polished at communicating. The better brokers know what questions to ask, and how to actively listen so that they understand the client’s needs.

    Quick Summary

    When I was pursuing my license originally here in Texas, I was amazed to see the detail with which TREC describes their expectations for ethical behavior, and for the behaviors they expect in general. Not to brag (well, maybe), but it was not all that difficult for me since the bulk of it was how I strive to do business in any case. Evidently there must be people out there who need a lot of help, guidance, and at least a little enforcement - because the states decided that this industry, along with a few others, requires fairly tight regulation. Please seriously consider willingly letting a broker take you under his/her wing and help you through what tends to be a fairly complex business transaction - sooner rather than later!

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  • link Why "FIND this SPACE?"
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    Synopsis Posted by Steve Watts, on December 6, 2016
    Article Synopsis

    This is THE FIRST post on FIND this SPACE. It seems apt that it should be centered on explaining why this site was created. There are trends in the real estate technology sector moving toward helping a real estate “seeker” find a property that suits him/her on their own. Interestingly, the real estate industry is not really structured to support this approach, and for those who know already or can be convinced, we aim to help potential real estate clients find a practitioner who is anxious to help them find the space that best suits their needs.

    Real Estate law is normally structured so that both parties - the seller/lessor and the buyer/lessee - must have representation by a real estate professional except under very narrow circumstances (e.g. if you are an estate attorney). That said, there is a hole that many buyers/lessees fall through that is important to note. If you are seeking property and do not yet have this representation, any seller/lessor representative will call you a customer unless they can make you into a client. The difference is that a client is entitled to the fiduciary duty of his/her representative, whereas a customer should assume that the representative of the buyer/lessor owes their fiduciary duty to the seller/lessor. They must make their position in the relationship clear to you and treat you honestly, BUT you should NOT share information with this representative that you do not wish to share with the seller/lessor as it can seriously damage your negotiating position. Making sure you understand that you are a customer and not a client is the attempt of regulators to notify you of this actual conflict of interest. Note that if you tell them at your first meeting that you do not have, but would like representation, there are provisions requiring them to eliminate this conflict of interest. You should still be very careful what you say until your representation and representative are established.

    What I hope the above did was convince you to engage buyer’s/lessee’s representation. It generally costs you nothing, and brings you real advantages. This is important to protect your interests and to have someone in your corner. In some cases for a given location, we’ve already made a selection of a credible broker who would be willing to represent you. If we haven’t already made a selection in an area that you are interested, we will likely help you make a selection if you like. If you don’t see your area of the country in the “Localize” section, just request a property search or use “Get Answers” to make your request. I’ve developed, and continue to refine a process for this selection which I expect will be helpful to you.

    In any case, what I hope is that we will provide you with lots of information to support you in your real estate transaction.

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