It seems that we have a considerable number of listing agents out there who are not doing their job. I know this doesn't come as a huge surpise to some of you and you could probably list a dozen different ways that they are shirking their duties to their sellers. But the one I specifically want to address is the not doing anything at the time of taking the listing to give the seller an idea of what their net will be at the closing. And the unfortunate situation is that many of the sellers will have a negative 'net' at the closing and this is causing their transaction to either not close - they need to bring money they don't have - or it closes with no compensation paid to the brokers.
It is unquestionably our job to do our due diligence at the time of taking the listing to bring to the sellers attention the costs of selling their homes. If there is not enough equity at the closing to cover commissions - the listing broker COULD BE HELD RESPONSIBLE for paying commissions he or she did not collect.
Even worse - if the seller is so upside down that there isn't enough to close at all you have now messed up the lives of both the sellers and the buyers.
It's imperative that we take a well written net sheet with us to the seller's home when we take the listing and go through it with them - ask questions to insure that there's enough money to close and question them as to where they're going to come up with any deficit there may be. A short sale can be arranged if they are so upside down they can't close - but that won't happen in time if you're blindsided by the sellers.
Besides the 'usual' expenses involved in the sale - title expenses, commissions, etc., you MUST ask or look at:
1. Current mortgage balance and whether the seller is behind with any payments
2. Equity loans, lines of credit or second mortgages
3. Prepayment penalties - we're seeing sellers who don't even know they have them!
4. Tax prorations - they think they're covered by what they've been escrowing all year
Put a statement on the bottom of your net sheet that says something like:
"all information above is true and accurate to the best of our knowledge"
and require that the seller sign it.
Many companies now are pulling title reports on their listings right away. Talk to the title companies in your area to see what the expense for this would be. A few companies are even subscribing to the on-line foreclosure sites and checking each time they take a listing to see if the address appears in any of their reports. (Caution: They're not always accurate - but it will give you a heads up and an opportunity to further discuss it with your seller)
Bottom line is - we need to get our heads out of the sand and address the problem. We too long ago abdicated our responsibilities regarding financing and many of us are now abdicating our responsibilities regarding our sellers. Shame on us - we put them in those houses they can not now afford and we have an obligation to at least prepare them for what they now have to do to get out of them!
And remember - not doing so could put you as the listing broker in a situation where you'll be digging in your pockets to pay commissions the seller wasn't able to cover.
For more info on that situation - take a look at the Code of Ethics, the latest edition of NAR's Arbitration Manual, or talk to your local Association of your attorney.
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