Roles as listing Agent Flashcards
Let’s start with an overview of listing agent and buyer’s agent responsibilities. There’s lots of overlap!
The listing agent’s main goal is to help the seller get the best price for their property in a way that matches their needs.
What do I mean by that? Well, perhaps a client really needs to sell their home, and quickly. You might succeed in getting them a higher price if you had the property sit on the market for a few months. But one of the seller’s main goals is to sell quickly. Therefore, to meet the client’s needs, you need to make speed a priority, even if it means a lower sales price (and a smaller commission for you).
Besides that, here’s what a good listing agent should do.
Set Expectations
Give the seller a truthful, data-backed estimate for how much the property is likely to sell for. Explain what the seller’s duties will be (such as disclosure) and how compensation to agents and/or cooperating brokers work.
Advertise
A listing agent will want to leverage their MLS and marketing efforts to procure a great buyer for their seller.
So, unless the seller tells you otherwise, give that property maximum exposure. With their written consent, put it on the MLS, hold open houses, and place signage. Play that marketing game!
Negotiate Offers
You want the best deal for your seller, and it will be your job to represent their best interests. This will involve preparing net sheets for the seller so they know how much each offer will net them, making counteroffers, and ensuring that no offer or detail slips through the cracks.
Maintain Confidentiality
You represent the seller, not the buyer (unless you are in a dual agency situation). Don’t tell the buyer that your seller-client is eager to unload their home because they are going through a messy divorce. You’re just hurting yourself and your client that way, not to mention violating confidentiality.
Disclose Property Value
Listing agents are responsible for making several disclosures, but it is especially important for a listing agent to disclose the value of the property to the seller. Why? Because the seller’s evaluation of an appropriate listing price hinges on this information.
Agents will typically provide disclosure of property value with a competitive market analysis (CMA). A CMA is a report that compares the prices of recently sold or listed homes (“comparables”) in order to estimate the market value of a similar property (the “subject property”) located in the same area.
Tip: Look at expired listings for similar homes. You’ll get a sense of the prices at which those homes failed to sell. This can help if you need to temper a seller’s expectations about the price at which their home will sell.
Refer When Needed
Does it look like your seller may need legal advice? Refer them to a lawyer. Or maybe you think they’d benefit from talking to a landscaper about how to best present their outdoor space prior to selling? Give them a referral. You’ll best serve your client by acting within the scope of your expertise. If the client needs an expert, send them to an expert!
Manage Transaction
Keep on top of the paperwork and ensure your client is meeting deadlines. Similarly, keep an eye on the buyer’s deadlines. Have they deposited the earnest money per the schedule in the contract?
Whether you’re a listing agent or a buyer’s agent, it is your statutory duty to ensure that all parties have signed copies of paperwork, and to retain records for the required period.
Prepare for Closing
A listing agent will need to prepare the seller for closing. They’ll need to guide them through the closing process and ensure all the proper documentation has been filled out.
Listing Agent Responsibiolities
The buyer’s agent’s main goal is to help the buyer purchase a property that matches their needs.
A buyer’s agent will need to:
Set Expectations
Let the buyer know that, especially in a hot market, they may be up against some stiff competition when they make an offer. Also, explain what the buyer’s obligations will be (such as the expectation of earnest money) and how compensation to agents and/or cooperating brokers work.
Locate a Property
In the same way listing agents are responsible for finding a buyer, buyer’s agents are responsible for finding a suitable seller whose property fits their buyer’s needs.
And once a property is found, the buyer’s agent should provide the buyer with data that indicates the property’s value. This will help the buyer determine what kind of offer they wish to make.
Explain Due Diligence
The buyer’s agent should educate the buyer regarding their responsibility of due diligence as they consider the purchase. Specific to this activity would be getting a professional inspection done.
Negotiate Offers
Buyer’s agents need to negotiate the best possible offer for their buyer. At the same time, a listing agent has the same responsibility on behalf of the seller. This means that you’ll be negotiating with other savvy agents who also want to fulfill their duties to their client.
As you approach this task, avoid making guarantees regarding the price you’ll be able to get for the buyer. Regardless of your negotiating skills, you cannot predict how the other side will respond.
Maintain Confidentiality
A buyer’s agent needs to take care regarding what they disclose about their client’s financial status. It should be limited to the fact that the buyer has the ability to get the financing needed to make the purchase. Beyond that, little could be shared that wouldn’t serve to weaken the buyer’s leverage in the negotiations.
Refer When Needed
If your buyer needs legal advice, refer them to a lawyer. Remember, while you should review transaction documents with the buyer (explaining all the confusing bits), don’t answer legal questions! That’s outside of the scope of your expertise.
Manage Transaction
Keep on top of the paperwork and ensure your client is meeting deadlines. Similarly, keep an eye on the seller’s obligations. Have they completed and shared the property disclosure?
Prepare for Closing
Buyer’s agents will need to prepare their buyer for closing, making sure all the necessary steps have been taken to facilitate the transaction.
Buyer’s Agent Responsibilities
Next, we will go over a few special topics that agents should keep in mind. First up: technology!
Surveillance and Home Security Systems
Get this – 15% of people selling their homes spy on prospective buyers with their home security systems. The seller can get all kinds of information this way – the price the buyer is thinking of offering, how hot or cold the buyer is on the house, and the buyer’s general opinions on everything from wallpaper to fixtures to paint jobs. However, the potential buyer doesn’t know they are being taped.
Every state has its own take on if it’s legal or not to snoop. If you are a listing agent, you can advise your sellers about if it is legal or not for them to watch their prospective buyers in this way.
If you are a buyer’s agent, tell your buyer clients that they may be under surveillance and that they should save all meaty discussions with you until privacy is guaranteed.
Drones
Drones can be used to photograph a house. In fact, over one-third of initial commercial drone-use applications received by the FAA in 2014 came from real estate professionals.
There are various state and local laws that govern drone usage. Generally, a best ethical practice is to never include a neighbor’s property in your listing photos.
Digitally Enhanced Photos
Thanks to Instagram and similar sites, many people these days have at least a casual understanding of photo editing. Filters! Cropping! Exciting times, Anthony. However, this opens up a whole new set of issues when it comes to ethical marketing. Here are some things to think about:
Virtual staging. This is one of the most common uses for photo editing in real estate. Instead of actually staging a house, a listing agent virtually stages it. This is much cheaper than a physical staging process, which includes design consultation and then monthly charges with home stagers. However, virtual staging services are much cheaper. With a click of a button, you can digitally insert furniture that you pick out into a room. Virtual staging is an accepted practice by real estate agents.
Cosmetic editing. A tech-savvy listing agent can edit out clutter from a home. This agent can also add filters such as “blue sky” (which converts cloudy skies to blue skies) and “green grass” (which fluffs up patchy grass to make it seem more even and fuller.) Cosmetic editing is generally accepted, as well.
Heavy alterations. Here is where we get into unethical territory. If the listing agent is making the house look like a totally different house, that’s a problem. The ethical agent will not make any changes in an image that would affect the value of a home. The ethical agent will also disclose image alterations (i.e. by disclosing that a house has been virtually staged or that assets have been edited).
Special Topics: Technology and Real Estate
Let’s talk about social media. That’s your Facebook, your Instagram, your Twitter, your LinkedIn, and what have you.
The below are guidelines provided by the National Association of REALTORS® (NAR) Code of Ethics.
Don’t vent about another agent.
Don’t air your negative feelings about another agent online. So, don’t write a Facebook post about Joe, the agent you work with, who always talks too loudly on the phone.
Also, don’t encourage someone to drop their agent and go to you. If you’re scrolling through your feed and see someone griping about Silver Realty, don’t post, “Unhappy with Elle over at Silver Realty? Come see me!” in reply.
Don’t share another agent’s listing without permission.
You should not share or retweet an agent’s posting without their permission.
For instance, let’s say you go to an open house and then tweet about it. That’s cool if you got the representing agent’s permission, but not cool otherwise, as you might be improperly advertising their listing.
Don’t share detailed information about commissions.
Let’s say you are in a Facebook group of real estate agents. Someone posts about a stingy commission that they got, and you start thinking about your own less-than-stellar commissions. Well, write about it in your journal, Anthony! Don’t post about it online. If you talk too specifically about a commission, you could be leaking your client’s private financial details.
Don’t engage in price-fixing.
Along similar lines as the above, avoid conversations that grouse about commission rates and then turn into, “Man, we should just not work with that company!” or “Gosh, what if we all asked for a standard 4% commission?” This could violate anti-trust laws.
Do be transparent about brokerage name.
Your full brokerage name should be in advertising, or else only one click away. A post containing a team name or a franchise name should also contain the full brokerage’s name.
Special Topics: Social Media and Real Estate
Work for the seller, not other potential clients.
Some unethical listing agents use open houses as a way to get more clients. Picture this sad scene – there’s the seller, all hopeful about selling their beloved home, fondly thinking that the agent schmoozing with the crowd is finding potential buyers. In fact, the agent is trying to pick up buyers for other listings, whispering, “This house isn’t what you’re looking for? Well, I have some other houses that might fit the bill!”
Now, wouldn’t that tick you off, Anthony? If someone you hired to sell your house used your open house to drum up other business?
If you and your seller decide to do an open house (and keep in mind that some agents don’t, as they find that open houses aren’t always a very effective tool to market a house), you need to be working for the seller at that open house. Period.
Disclose representation.
You’re at an open house, and a prospective buyer has all kinds of questions. “When was it built? What are the schools like? Why is the seller leaving?” How do you respond to these questions?
Well, first things first: Make sure the potential buyer knows that you represent the seller, and that your duties are to them. You want to avoid undisclosed dual representation, so you need to speak up and say, “I represent the seller.”
Answer questions carefully.
Let’s go through some sample questions that potential buyers might ask, and discuss how you, as the listing agent, should respond.
How many offers are there on the house? You don’t have to answer this, and, in fact, should only answer this if your client has said you can. It’s okay to say, “I’m sorry, I’m not allowed to disclose that.”
Why does the seller want to move? Respect the privacy of your client. Talk it over with them beforehand so you know what’s okay to share. Some clients might be okay with you answering, “They just became empty-nesters and want to downsize!” but a vaguer answer is also fine. Try to phrase your answer so that it puts the house in the best light, and don’t alienate any buyers by talking about the seller’s newer, fancier house or neighborhood!
Has the price changed at all? If the price has been reduced, you can say so.
Why has the house been on the market for so many months? If the market in general hasn’t been great, you can say that. If the market is good, there’s probably an acceptable reason for a house staying on the market. Maybe a previous contract fell through. Still, check in with the seller about how to address this.
Is there anything wrong with the house? Give ‘em the seller’s disclosure! If they ask about flood zones, direct them to FEMA’s website.
Are the utilities expensive? It’s fine to provide some typical costs, but let them know that this can vary greatly, depending on usage.
When does the seller want to move out? What’s their general timeline? Let the buyer know that once you have an offer, you can discuss that.
Are the neighbors nice? Any question like this (“What are the neighbors like? Does this community have good values?”) can be loaded, and even coded for racism or other unpleasant -isms. You can tell the potential buyer that they can find demographic information online. If they keep asking, let them know that because of fair housing laws, you aren’t allowed to discuss specifics. Here is your golden fair housing rule: Talk about the property, not the people.
Do any sex offenders live nearby? Tell them they can find this information online on sex offender registries. You are not obligated to disclose this information.
These situations can be hard, Anthony, especially for new agents who don’t want to come across as close-lipped or unfriendly at open houses. It can be a tricky line to walk, but you need to respect your primary obligation to your seller client.
Special Topics: Open Houses
Next up, let’s talk about the buyer “love letter.” This is when a prospective buyer writes up a personalized offer letter to the seller telling them why they love the house or property. 💌
These “love letters” are especially common in multiple offer situations, where the potential buyers know they have competition, and therefore want to set themselves apart from the crowd. By writing, “My family and I can’t wait to spend Christmas morning opening presents up in front of the beautiful fireplace,” the buyer personalizes the offer and appeals to the seller’s emotions. Sounds harmless, right?
As you might have guessed, it’s more complicated than that.
Potential Fair Housing Violation
The federal Fair Housing Act prohibits discriminatory behavior in housing transactions. A person cannot be denied housing opportunities based on their membership in one of the protected classes: race, religion, color, national origin, familial status, disability, or sex. (Don’t worry, you’ll get a whole level on fair housing later!)
Picture this scenario. A family encloses a photo of themselves in their personalized offer letter. They are a Middle Eastern family, and the women are wearing hijabs. The buyer rejects their offer and accepts a lower offer from a white family. Has the seller discriminated on the basis of the first family’s national origin? I mean, it seems like a real possibility, right?
Some real estate boards have banned the use of buyer love letters because they can risk violating fair housing laws. Consider these phrases:
“My husband and I would love to raise our family here.” This implies the protected class of familial status.
“We want to send our children to St. Agnes down the street.” This implies the protected classes of familial status and religion.
“Our daughter will have her quinceañera soon, and the huge backyard will be a perfect setting for the celebration.” This implies the protected classes of familial status and national origin.
If the seller decides to accept an offer based on a “good feeling” but it’s really because of some other characteristic that falls into protected membership, the seller may be violating fair housing laws.
Potential Weakening of Position
In addition to possibly violating fair housing laws, a buyer who sends a personalized offer letter can have their gushing held against them. If the seller accepts their offer, there’s gonna be some further negotiations down the road.
Let’s say the seller gets the impression from the personalized offer letter that the buyer wants the house no matter what. How likely is it that the seller is then going to make a bunch of concessions to the buyer?
So What Can You Do?
Make the offer letter as strong as possible. Attach a loan pre-approval letter. Don’t include contingencies. Make only minimal requests of the seller. Do all of the things you know make an offer letter strong, and you won’t need to bring in the iffy business of buyer love letters.
As a buyer’s agent, discourage your clients from writing them. Describe the possible fair housing implications, and show them how it could weaken their position later in negotiations.
As a listing agent, discourage your clients from accepting them. You, as the listing agent, can decide not to accept these letters, and to return them to the buyers’ agents. You can also tell your sellers about how acting on these letters could get them into hot water.
If your buyer insists on including a personal letter, they should stick to the property’s features. They can talk about their financial strength or how much the wood floors appeal to them, as long as they don’t mention their religion, family status, race, etc.
Special Topics: Buyer Offer Letters
