3 Risky Situations and How to Handle Them Safely
March 1, 2007
1. Beware of side deals.
The offering of a car or six months’ worth of home owner association dues to entice a buyer happens more often these days, but if you make a side deal, be sure it’s documented in the contract. Avoid getting tangled in the buyer’s attempt to defraud the lender, says Oliver Frascona, an attorney with Frascona, Joiner, Goodman and Greenstein P.C. in Boulder, Colo. Document the real terms of the transaction in the contract, he says. Include any concessions paid to the buyer before or after closing, such as loans that are to be forgiven, cars to be purchased, or any other incentives given to the buyer to seal the deal. Don’t let those concessions be part of oral side agreements or buried in addenda. Then make sure that the detailed contract is delivered to the lender and that all concessions are properly documented on the HUD1 closing statement.
2. Caught in the middle over home repairs.
More and more salespeople are getting caught in the middle over sellers’ failure to disclose home repairs, says Frascona. For example, the sellers had water in their basement but claim they had the problem fixed and don’t want to tell the buyers the problem ever existed. You can get squeezed when you know there were problems but don’t disclose there were repairs. “The smart money today is that if it’s anything significant that was broken and fixed, disclose that it’s been fixed,” says Frascona.
3. Small mistakes can turn into big fair housing problems.
“Salespeople can get sucked into another agent’s discriminatory practices just by not paying attention,” Frascona says. He gives an example: You’re the listing agent, but the flu bug has bitten you. You ask another associate to cover your open house, but you forget to tell the associate that there’s been a price reduction and that buyers will have access to a communal swimming pool. In addition, the agent finds some black-and-white flyers on your desk, not noticing the pile of color flyers nearby.
An African American couple come to the open house but aren’t told about the price reduction or access to the pool, and they walk away with a black and white flyer. At next weekend’s open house, you’re healthy again, and a white tester who goes through gets a color brochure and learns about the price reduction and access to the pool. “What would you think if you were African American?” asks Frascona. “Neither salesperson intended to discriminate, but our job is to make sure everybody gets the same representation.” The lesson: Make sure you pay attention to every detail so that nothing you do can be construed as discriminatory.