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CC&R’S WITH NO HOA:  Be careful, if no HOA but there are deed restrictions/CC&R’s, CC&R’s may be selectively enforced by neighbors/individuals even without an HOA.  ESTOPPEL?  Have your client speak with an attorney.

CEASE AND DESIST:  (March 17, 2021 businss card issue): This is in follow up to the voice message I left you a few minutes ago.  You must immediately cease and desist using the business cards from HomeSmart Premier which has been closed since 2017.  Several agents and the current Designated Broker of HomeSmart Lifestyles in Fountain Hills have complained to our corporate offices.  This is misleading to consumers and something ADRE frowns on.  Our Designated Broker Rich LaRue asked me to reach out to you directly regarding this matter.  Please confirm receipt of this email and please call me as per my earlier message.

CHANGES DURING ESCROW:  SEE CURE PERIOD

 

CHANGES DURING ESCROW…...DISCLOSURE NEW ISSUE DURING ESCROW….SEE CASE STUDY PAGES……….4) NEW DISCLOSURE, TITLE/OWNERSHIP DISPUTE DURING ESCROW

 

CHANGE BROKERAGE:  (plus see LISTING agent change)   “Buyer Broker has been changed from ABC Realty to XYZ Realty effective immediately.  ADRE License number xyz.”

CHANGE LENDERS: (We rep seller 3/3/21): Hi X, So the contract section on changes (section 2K) says that the buyer must disclose the change to the Seller one way or another.  The important part is the requirement that the buyer can only change lenders without the Sellers permission if the change is not going to 1) increase Sellers costs, 2) delay the COE date, or 3) affect Buyers ability to obtain approval.  If it is possibly going to affect any of those 3 items then there should be an addendum with the Seller agreeing to the Buyers change in lenders.  If it's NOT going to change any of those things, then the Buyer simply needs to disclose in writing, via email usually, or even the notice/disclosure form to the listing agent that the buyer has changed lenders.  It's not a curable item so you can't send a cure notice for that, but it might be if you are getting close to COE.

CHANGE LENDER: LENDER:  DEADLINE TO CHOOSE WHICH LENDER?  Q: If a buyer is shopping lenders and gets under contract.  What is the deadline for when they need to make a decision?  By the time the first LSU is due?  Does it matter if the pre-qual for the offer was submitted by a different lender?  A:  Hi Kristi, yes that's basically correct.  Whichever document is provided later between the Prequal and the LSU will be the prevailing form.  Usually that means that it's the LSU.  In theory, that would mean that they would have until the LSU is due to choose a lender.  Have a great day, KF

CHANGE LENDERS, NO AGREEMENT:  SELLER DOES NOT HAVE TO AGREE:  “Seller does not agree to Buyer Lender or Loan Program changes, which were agreed to by all parties in the original Purchase Contract dated xx/xx/xxxx.”   (ALWAYS BEST TO GET WRITTEN ACKNOWLEDGEMENT AND AGREEMENT, BUYERS EM WILL BE AT RISK IF SELLER DOES NOT AGREE IN WRITING, AND THE DEALS CANCELS).

 

CHANGE LENDERS:  3 ITEMS AFFECTED…? BACKGROUND PLUS LANGUAGE  Today my client decided to change lenders due to lack of communication from the previous lender.  I have not had a transaction where this has happened.  I know the seller needs to be notified right away.  I believe the standard addendum is necessary but not sure of specific verbiage for action.

Hi Jeff, So the contract section on changes (section 2K) says that you must disclose the change to the Seller one way or another.  The important part is the requirement that you can only change lenders without the Sellers permission if the change is not going to 1) increase Sellers costs, 2) delay the COE date, or 3) affect  your Buyers ability to obtain approval.

If it is possibly going to affect any of those 3 items you definitely need an addendum with the Seller agreeing to the Buyers change in lender.  If it's NOT going to change any of those things, then you simply need to disclose in writing, via email usually, or even the notice/disclosure form to the listing agent that your buyer has changed lenders.  That being said, it's always safest to have an addendum showing the Sellers acknowledgement and consent.  Otherwise, without that, there is always a concern that if you didn't get an addendum signed by all parties  and then the Buyer is denied the loan from this new lender sometime down the road, the Earnest Money would be jeopardy.  Hopefully that makes sense.  DON’T FUCK AROUND, GET THE ADDENDUM SIGNED WHEN WE REP BUYER!  DIAL IT UP, AS PER DISCUSSION WITHLARUAXREYNOSO AUGUST 2021.

On an addendum I would say something like "The Seller  is aware and agrees that the Buyer is changing lenders from XYZ Mortgage Company to ABC Mortgage Company.  A new LSU is attached."  Take Care, KF  NOTE:  It is not mandatory to sign an addendum when you change terms as long as you notify the seller AND satisfy the three variables sect 2k of the pc (doesn't affect buyers ability to qualify, doesn't increase sellers closing costs, does not delay COE).

CHANGE LENDERS:  Buyer changing lenders during escrow.  I think that we tell our agent (buyers side) that while permission or consent isn't mandatory from the Seller, it's always safest to get an addendum stating that the Seller approves the change. 

I just talked to an agent that said she was told that she didn't need an addendum, all she needed to do is disclose the change, which she did.  The problem is that now her Buyers are being denied the loan by lender #2.  Without something showing that the Seller gave consent, the EM may be in jeopardy if the Seller argues that changing lenders affected their ability to obtain approval.  Do we agree on this or any other thoughts??    Agreed.  And supply a new PreQual and LSUs.  TM

CHANGE LENDERS AND DOWN PAYMENT:  My client is changing lenders. This will also change the down payment information form a 3.5% to a 5% loan. I have already informed the listing agent, by way of an addendum, of the buyers lenders information, but I didn't make reference to a change in the down payment. Do I need to make them aware of this? If does it need to be on an addendum? I have already sent a new prequal to the listing agent.

I would say that you don't need to change or update the Seller more that providing them the updated Prequal.  That form should reflect the new 5% down payment.  The concern is obviously with your client having to bring in extra money, that there are consequences if they cannot come up with that money.  The contract says not having the funds necessary for the down payment does not constitute an unfulfilled loan contingency, so anytime you're increasing the down payment, there is chance for it to backfire.  Kyle.

Q: We went under contract May 14 with a set down payment, but the buyer now wants to increase her down payment to lessen the monthly payment. She has already discussed this with the lender, but my question is do i now need to create an addendum to reflect this change? And if so is there any specific wording I need to include?  A: Prepare an Addendum stating that the parties acknowledge and agree that the buyer will be increasing her down payment from X% to Y% (or use whole dollars).  Also, attach an updated LSU from the lender showing this change and make sure both the loan officer and the buyer sign off on that. 

If the seller refuses to sign off on the addendum, I would say that you should update the Seller by providing her/him with the updated LSU/Prequal and informing seller via email of the change.  That form should reflect the new down payment.  The concern is obviously with your client having to bring in extra money, that there are consequences if they cannot come up with that money.  The contract says not having the funds necessary for the down payment does not constitute an unfulfilled loan contingency, so anytime you're increasing the down payment, there is some chance of risk. 

CHANGE IN LSU DENOTES CHANGE IN LOAN TERMS, NEED ADDENDUM:  As per the updated LSU received from the lender on x date, the parties acknowledge the following changes made in the terms of the loan:  1) Loan amount increased/decreased to $X, 2) Down payment increased/decreased to $X, 3) Loan to be in the name of XYZ only, 4) ABC is on this contract for title purposes only.

CHANGE LENDERS, EM NON-REFUNDABLE: Buyer is changing lenders.  An updated LSU is attached.  Buyer’s agree Earnest Money is now nonrefundable.  Buyer’s further agree to waive all loan contingencies and permits title company to immediately release Earnest Money to Sellers.

CHANGE LOAN,  CONVENTIONAL TO FHA: The buyer is changing from Conventional financing to FHA financing    I would want it to say something like  "The seller agrees and consents to the fact that the Buyer will be changing loan programs from conventional to FHA.  Please see attached LSU."  That shows that they gave the Buyers permission to do so.  Or, if just sending notice without asking for permission:  “Buyers financing has changed from a conventional loan to an FHA loan.”

CHANGE LOAN, CONVENTIONAL TO VA OR FHA CASE STUDY:  (9/14/18, discussed with Laurie, Kyle)  Q: Can buyer switch loan programs AND order a second VA or FHA appraisal after BINSR signed?   A: Yes,  but seller does not need to “agree” to change (see 3 items where agreement is required in changes section of pc).  If new appraisal type calls out conditions (appraisal conditioned on repairs), seller is not obligated to repair AND the buyer couldn’t then use the excuse of an appraisal contingency to cancel since the seller did not agree to the change after contract acceptance.  The contract was accepted with a conventional loan, not FHA or VA.

CHANGING FROM FINANCING TO ALL CASH (BUYER):  “Buyer & Seller acknowledge and agree to the following:  Buyer is switching from financing to an all cash transaction.  Letter of credit/source of funds is attached.  Section 2 Financing Provisions in the Purchase Contract shall not apply.  All other terms and conditions remain the same."

CHANGING FROM ALL CASH TO FINANCING (BUYER):  “Buyer & Seller Acknowledge and Agree that the Buyer is changing from all cash to financing this purchase.  Updated LSU (or prequel) is attached.  Section 2 Financing Provisions in the Purchase Contract shall apply.”  Appraisal to be completed within 14 calendar days of Seller and Buyer executing this Addendum (or by xx/xx/xxxx).

CITIZENSHIP:  Q: IS US CITIZENSHIP REQUIRED TO BUY A HOME…?  A: No. You can assist a buyer whether they are a US citizen or a foreigner as long as they qualify financially to purchase the home. That means having the cash to close the transaction or being pre-qualified through a mortgage company for a loan.  Otherwise, I would suggest that you reach out to an immigration attorney or someone who has experience in that area, or US Citizenship and Immigration Services.  Here is a link to their website:   https://www.uscis.gov/   You should also inform the buyer that a foreign seller may be subject to FIRPTA taxes to the IRS if/when they sell the property.

CLAUSES, LIBRARY OF CLAUSES:     http://internetcrusade.com/articles/Clauses.htm

 

CLEAR COOPERATION POLICY:  Nothing definitive yet from ARMLS regarding implementation of this NAR initiative known as the "Clear Cooperation Policy.'  It's business as usual until then.  I'm sure we will all have a window to bring our listings into compliance once they do roll out the program...

 

CLEAR:  “I THOUGHT I WAS CLEAR BUT LET ME SAY IT ONE MORE TIME” OR “LET ME BE CLEAR” 

 

CLOSE UNDER PROTEST?  DELAY CLOSING?  SIGN AN EXTENSION?  “Buyer is closing under protest, the following repairs have not been completed:  (list_________  __________).   Or, Seller & Buyer Acknowledge & Agree that xxx repairs will not be completed until after COE.  Repairs to be completed within (x time, or reasonable time) to Buyers sole satisfaction.”  

 

CLOSE UNDER PROTEST:  Is the home habitable?  Is a major utility not turned on?  ie, water, gas, electric.  Is it the middle of summer and no air-conditioning?  115 degrees?  Safety issue,  could be life or death!

 

CLOSE/PAID IS GOOD TO GO ONCE FILE IS COMPLETE, NO CHECK HOLD RELEASE

CLOSING COSTS, CAN BUYER PAY ALL CLOSING COSTS PLUS COMMISSIONS….?  SEE CASE STUDIES……….8) CAN BUYER PAY ALL FEES INCLUDING COMMISSIONS?

 

CLOSING COSTS:  How much can sellers contribute?     http://mortgageporter.com/2011/05/how-much-can-sellers-pay-towards-closing-cost.html

CLOSING COSTS:  (NON-RECURRING AND PREPAIDS)     http://www.reedmc.com/closing%20costs.htm

 

CLOSING COSTS:  WHAT ARE CLOSING COSTS? https://www.google.com/search?q=what+are+pre+paids%3F&oq=what+are+pre+paids%3F&aqs=chrome..69i57j0l5.4711j0j8&sourceid=chrome&ie=UTF-8              http://usmortgagecalculator.org/understanding-price-closing-costs/

 

CLOSING COSTS, SELLER TO BUYER CREDIT LANGUAGE + overrides language in contract that limits WHAT items can be credited).  “Seller agrees to credit buyer $x at COE which may be applied to any and all borrower closing costs including loan costs, title fees, escrow fees, pre-paids, appraisal, HOA fees, capital improvement fees, home warranty or any other closing cost approved by lender at buyers sole discretion.”     However should the total buyer closing costs be less than the agreed amount of $4,500 both parties agree to a principle price reduction by the amount of the remaining balance.”

 

 OR   Seller agrees to contribute $x towards buyers closing costs which may be used for any closing cost approved by lender at buyers sole discretion.  OR   Here's the verbiage we just discussed. I use this when a seller is offering money in lieu of a repair or repairs. Lenders have approved this language as it doesn't throw up red flags for the underwriters.  “Contrary to line #100 or 101 (concessions) of the purchase contract dated xx/xx/xxxx, seller to contribute $x towards buyers closing costs.”

CLOSING HURDLES, NAR:  http://realtormag.realtor.org/sales-and-marketing/article/2010/08/clearing-closing-hurdles

 

CLOSING PROTECTION LETTER: Q: What is a closing protection letter?  A: 2005 Arizona Revised Statutes - Revised Statutes §6-841.02  Liability of title insurer; closing protection letter; definition: 

A. A real property escrow agent that is a title insurance agent shall disclose to the buyer and seller of a residential dwelling that the title insurer may offer a closing protection letter that provides protection for the loss of escrow monies due to fraud or dishonesty of the escrow agent. This disclosure requirement applies only to transactions involving a buyer and seller of a residential dwelling and shall be made when the buyer or seller employs the escrow agent.

B. If an escrow agent does not make the disclosure prescribed by this section, the title insurer shall reimburse the buyer or seller, as applicable, for any escrow monies that are lost and that are not recovered from the Arizona escrow recovery fund established by section 6-847.01. The title insurer's obligation pursuant to this subsection shall be to the extent of that title insurer's standard closing protection letter for a buyer or seller, as applicable.

C. For purposes of this section, "residential dwelling" means an owner occupied structure or an investment property that is designed for residential use by four or fewer families.

 

CLOUD ON TITLE:  “Due to the cloud on title, all parties acknowledge and agree that the buyers are willing to wait until at least xx/xx/xxxx for this cloud to be removed from title.  If the cloud is not removed by that date or sooner, the buyers have the option of cancelling the contract at any time prior to that date and will receive a full refund of their earnest money prior to a clear title report being sent to all parties.  Buyers and sellers further agree that the inspection period will begin only after all parties have received a clear title report from the Title Company.”

 

CLUE REPORT (Now called Insuranc Claims History):  How do I order an actual clue report?  “You don't the seller can go on line and order one or simply call their insurance carrier and ask for a 5 year claim history.”  The seller in this case has only been with current company for one year and they are and older couple and don't even have internet access. “They can either call their previous carrier or write a statement regarding any past claims. Read that section of the contract, either way I just mentioned will work.”  Good luck.

CLUE REPORT:  SEE INSURANCE CLAIMS HISTORY     http://www.lexisnexis.com/risk/insurance/home-insurance.aspx

CO-BROKE:  CAN WE ASK FOR MORE THAN IS BEING OFFEREN IN MLS…? 12/10/19: Q: Hi Jeff: Do you have any great advice for asking the listing agent why the commission is only 2.5%. I have to give my buyers a 1% reduction because they are selling and buying with me and I'm pissed now!!!!! It's not a variable either! Thanks. A: Hi Colleen, I just usually recommend asking the listing agent to ask the seller's if they will consider increasing their co-broke compensation for a good offer from 10+ rock solid buyer...really play it up that this buyer is good to go and a well qualified buyer.  Sometimes they will go for it, but it really depends on whether or not the seller has much equity in the home.  If they are squeezed, it is hard to get them to come up on the co-broke.  Take Care, JT.

CO-BROKE:  WHAT IS MINIMUM CO-BROKE THAT CAN BE OFFERED IN ARMLS?  Long Nguyen:  Q: Can I offer $1 co-broke?  MLS already approved.  A: Long, obviously this does not violate MLS rules, but it can be a "tough" way to do business.  Although the Code of Ethics tell us we should ignore the amount offered, other agents may not respond in a very positive way when they see the $1 co broke.  So be prepared for that.  Please do not anything about seeking compensation from the buyer via the buyer broker agreement.  You could verbally have that discussion with someone if they challenge you on the $1 co-broke, but we should refrain from saying anything about compensation in the MLS other than what is being offered.

CO-BORROWER VS CO SIGNER     http://finance.zacks.com/coborrower-vs-cosigner-1932.html

CO-LIST:  Q: My wife is going to Co-list a property with me.  Does she need a separate Agency Disclosure?  Also, this would be the first sale of the year for both.  Do we each pay the “first transaction” of the year fee?               A: Most agents who co-list squeeze another signature on just one agency form, however, you could execute a second form if you want to.  On a sale, there is only one transaction fee due to HomeSmart (per side) but both agents will be due the first of year transaction fee of $295.

CODE OF ETHICS, NAR     http://www.realtor.org/about-nar/governing-documents/the-code-of-ethics  Also see case study, code of ethics.   CODE OF ETHICS:  ADRE Reminder:  The Code of Ethics certificate is not a requirement of the Arizona Department of Real Estate (ADRE).  A Code of Ethics certificate is required by the National Association of Realtors (NAR) to maintain membership in the local Board of Realtors, the Arizona Association of Realtors (AAR) and the National Association of Realtors (NAR).  The requirement for REALTORS to complete Code of Ethics training is a two year requirement with the first biennial cycle beginning January 1, 2017 and ending December 31, 2018.  Please contact your local association with questions regarding your Code of Ethics training.

COE ADJUSTMENT:  “COE may occur sooner with a written, mutual agreement between the parties.”  Do not write COE as "on or before xx/xx/xxxx."  Too ambiguous.  OR  “Seller and Buyer acknowledge and agree that COE may occur sooner with written, mutual agreement between the parties.”

COE Delayed:  I have a land sale that should have closed Friday Sept 8th, but did not close. The title company sent the closing papers to the buyer on Sept 7th and he lives out of state. He is a truck driver and could not get the papers signed and sent back to close on Friday. They are hoping to get the paperwork back to close Monday Sept. 11th (today). I wasn't notified until Friday afternoon when I asked how closing was coming along.  My question is, do I need to do anything? Do I need an addendum sent over with a new COE date?  “No you really don't need to do an extension at this point.  If you know it's going to close today then I'd basically just wait and let it close.  If it were going to be next week then I would say to do an extension, but for a few days it's not overly critical as long as the parties are all on the same page.”

COMING SOON REQUIRES A SIGNED LISTING AGREEMENT!  1) signed ER, 2) note on page six “this is a non-mls listing until xx/xx/xxxx, 3) also note on page six “seller authorizes coming soon advertising,” 4) attaché a sign rider “coming soon” so your yard sign, 5) You will need to create your HomeSmart Listing File within 5 days of having the ER signed by the seller, this is a broker requirement.  Some agents submit all listing documents at once, some not as quickly, but we do need a listing file and the ER Listing agreement submitted to the file within 5 days of execution.  Also, this is known as an off –market, exclusive or pocket listing.  There is no offer of compensation as the property is not listed in the MLS.  A “Broker to Broker” compensation will be required if an offer is made while off market.

COMING SOON: Q: Hi! I just received a verbal offer with paper to follow on a coming soon listing. Do I need to make it active before accepting or can it go straight to pending?  A: Good question.  The answer is yes, you need to change it from coming soon status to active, then change it to pending or UCB.

COMMERCIAL: LANGUAGE FOR AGENT INEXPERIENCE:  (ATTACH TO AGENCY FORM ALONG WITH BUYER BROKER COMPENSATION AGREEMENT): (MaRianeKooistraExample, 11/19/2019):  Buyer:___Agent:____  I, (NAME) elect to have (NAME) a Licensed Arizona Real Estate Agent with HomeSmart, represent and assist me with the purchase of (the commercial property or land) located at 123 Main Street, Tempe, AZ.  I/We are aware that this is not his/her primary field of expertise, however we are comfortable with (NAME) professional real estate background, knowledge and experience.  I/WE choose to move forward with (NAME) as our real estate representative in this transaction.  Attorneys will be drafting and reviewing the contracts and other legal documents on behalf of both the seller and buyer.

COMMERCIAL:  CAN I DO COMMERCIAL…?  WTF? 1/14/2020:  Commercial Transactions, Many Variables:   If you don’t have experience with commercial, we’re always going to require that you refer it out to someone who does have commercial experience.  With commercial transactions there is a need for additional knowledge and expertise with consideration in many complex areas. In addition to be being more complicated, commercial sales and leases are often structured with attorneys or large commercial firms drafting the documents, so the client will need legal, tax or other professional advice when reviewing the terms and conditions of a commercial contract. Our policy is that you should have prior, documented experience (or certifications and designations) in the commercial market segment prior to asking for permission or engaging in commercial transactions.  The commercial market is completely separate from residential and there is a good chance you will be denied E&O Coverage if you are found to be operating outside your field of expertise.  There are also additional commercial transaction fees as per the ICA.  It's all about risk reduction and minimizing that for both you and HomeSmart.  Please let us know if you have any questions.        NOTE:  The agent that we talked about on the phone is Ken Clark.  His # 602-803-0933, and his email is Ken@kenclarkproperties.com.                                                                                                                                                                                               

COMMERCIAL FORMS:  1) Commercial Real Estate Purchase Contract, (zipForms), 2) Commercial Lease Agreement (Custom, Drafted by Attorney or Commercial Brokerage), 3) Commercial Seller’s Property Disclosure Statement (Commercial SPDS), 4) Commercial Buyer’s Inspection Notice and Seller’s Response (Commercial BINSR), 5) letters of intent, 6) estoppel certificates, 7) seller/commercial/industrial financing instruments         Proceed with caution!  The clients attorney or commercial broker should draft and review the agreement.

 

 

 

 

 

 

 

COMMERCIAL CE CLASSES:  HERE     Good Commercial File For Review:  #201727175

COMMERCIAL, LEASE AGREEMENT:  Q: OLGAxGRIFFIN: 12/7/2020: REQUEST: Please email me a commercial lease agreement, there is not one available on zipForms or TransactionDesk.                    RESPONSE: Good morning OlgaX, Rich is traveling this morning and asked me to follow up with you regarding a commercial lease agreement.  We do not have a blanket commercial lease agreement, the commercial docs available for agents use are the same ones that are available on both zipForms and TransactionDesk.  Our recommendation for a commercial lease is to have your client reach out to either a commercial real estate attorney or a commercial brokerage, they can custom draft or may have  general commercial leases available for your clients use and reviw...(see #2 below).  We have requested that AAR consider making a commercial lease available for agents use but as of today they have not.  Take care, Jeff.

COMMERCIAL, LEASE AGREEMENT, COMMERCIAL FORMS:  1) Commercial Real Estate Purchase Contract, (zipForms), 2) Commercial Lease Agreement (Custom, Drafted by Attorney or Commercial Brokerage), 3) Commercial Seller’s Property Disclosure Statement (Commercial SPDS), 4) Commercial Buyer’s Inspection Notice and Seller’s Response (Commercial BINSR), 5) letters of intent, 6) estoppel certificates, 7) seller/commercial/industrial financing instruments   Proceed with caution!  The clients attorney or commercial broker should draft and review the agreement.  

COMMERCIAL LICENSE:  Q:  Is there such a thing as a commercial license?  What are the requirements?  A:  No.  The difference between commercial and residential is that commercial agents typically have designations, certifications or other continuing education or industry specific training and/or experience with the commercial and/or industrial market segment transactions.  Residential agents have certifications, designations, and other continuing education  and training that is focused on the residential market segment of the real estate industry.  NOTE:  You could check with AAR or any of the local associations to see when commercial classes are available.  HomeSmart does not offer commercial CE classes as we are primarily a residential real estate firm.

COMMERCIAL TRANSACTIONS:  Also See Referrals. & Expertise;   Q: This is XYZ, I have a client who are interested in purchasing a commercial property (small piece of mini market) this client is purchasing just the property, not the business, since it's not profitable at the moment and I would like to know if my license allows me to represent a commercial buyer? if so, HomeSmart has any tutoring or mentor courses to commercial real estate beginners? A: Commercial transactions are dramatically different from residential transactions.  We strongly recommend that you refer it out to someone with commercial experience and expertise.  We do not offer any commercial continuing education courses.  AAR does offer commercial CE classes, you would have to check their education calendar to see which classes, dates and availability.

Q: My client wants me to help him & his son find a commercial business.  Does my license allow me to do that?  A: Yes it does Sam, but if you haven't done commercial before we'd suggest you refer it out.  You should have prior, documented experience with the commercial market segment.  That part of the business is completely different from residential.  If you do move forward with your clients  you need to know that our fees are higher (there is an additional 1/2 of 1% of the sales price transaction fee in addition to your regular fee) and you would also need to have your clients acknowledge in writing that they understand that commercial is not your area of expertise.

Q: Am I permitted to list a commercial lease? My Client understands I've never done one and would like to give me a chance anyway. It's a vacant warehouse building.  A: We highly recommend that you refer it out to someone who has experience with commercial. That being said, if you have a written acknowledgement with your client that this is not your field of expertise, and they still insist that you be involved, then you could move forward with it but only with the assistance and support of someone who does have commercial experience and who could guide you through the process.  It's all about risk reduction and minimizing that for both yourself and HomeSmart.

COMMERCIAL, CAN I DO COMMERCIAL?  Q: I have a friend who really wants me to find them a commercial property to buy. Is that something I can do? How does that work?   A: Hi Toni, So your license is good for all aspects of the real estate business.  You'll need to get something signed by your clients with them acknowledging that commercial is not your area of expertise, since that's part of the code of ethics.  I will say, that often we strongly suggest that an agent refer out a client that is looking for help in an area that the agent is unfamiliar with.  That especially holds true if the client is also not well versed in the details of that type of property.  It's like the blind leading the blind which isn't a great situation.  We do know that there are times when a client doesn't care about your lack of expertise in a certain area, and only wants to work with you.  If that's the case, as long as they know that you're working outside your area of expertise, you should be ok.  NOTE: HomeSmart fees are higher in a commercial than a residential transaction.  You pay your normal transaction plus E&O fee, and then on top of that there is a commercial fee which is capped at $5000 per transaction. 

Q: I'd like to schedule some time with a broker to review the commercial purchase offer I drafted and uploaded to File Number S2018105026.  This is my first commercial opportunity so I have tons of questions.  I'm available all day today to meet with a broker over the phone.  My cell number is 602-410-1434.  Below are the questions and some notes that I have.  A: Our policy is that if an agent hasn't any experience with commercial transactions, they should be referring them to a commercial agent because of the complexity of this type of transaction vs residential.  E&O coverage is also an issue when you are acting outside of your field of expertise. Possibly, a commercial agent would let you shadow through the transaction and you'll have the satisfaction of knowing that your buyer is in expert hands.  Here are a few commercial agents you might call:  ______________

COMMISSION:  BUYER WANTS TO PAY COMMISSIONS FOR SELLER:  SEE CONCESSIONS

COMMISSION INFORMATION MISSING IN YOUR TRANSACTION FILE:  Q: Why is it still showing "Commission Instructions have not been sent  Closing Pack not received " ?  A: Commission instructions will be sent by our closing dept.  The closing packet is sent from title to HomeSmart once the transaction is closed.  You are missing the commission amounts. To enter this into the file you will click on the property address and then click on the edit button on the upper right hand corner of the screen. Once you are editing the sale you will go to the commission tab. You'll be able to enter either commission by percentage or by gross dollar amount in the boxes labeled "Side Gross Commission". If there are any adjustments that need to be made to the HomeSmart fees due, please make a note in the notes field. When completed hit save all changes. Once this is done we can send the OTPC.    

COMMISSIONS LOCKED DOWN IN FILE:  Q: Hello -  The file under commission is locked yet we just signed an addendum to change the price so commission needs to be updated.  A: You will need to follow up with our commission dept directly to have them make the change for you.  The file is "locked" approx 5 days prior to COE and only they can update the commission information at this time.  I sent the earlier email to them and asked them to reach out to you.  You can contact them directly at 602-889-2125.  I have also copied the closing dept on this email.

COMMISSIONS:   Q: Dear Broker, We are in negotiations and close to a contract on a commercial transaction with a non-MLS member.  He emailed me that he confirms the commission is 3% to the Buyer Broker (HomeSmart). I don't have a signature, just an email confirmation.  Is this sufficient as a "separate agreement between brokers" for payment of co-broke?  Do I need it signed by theirs and our broker, too?  Thx, Steffy    A: Hi Steffy, an email is better than nothing, but if it were me I would want something signed by the agent just because that's a bit more official.   Take Care, KF.

COMMISSIONS PAYABLE TO HOMESMART:  HomeSmart is to receive your fees prior to you receiving your check. If the check is cut directly to you, please cut HomeSmart a check to cover your fees for the transaction. 

COMMISSION ADVANCE FROM BUILDER:  APRIL 2019, STILL DO NOW ALLOW, PER LAURIE M, IE:  RITZ CARLTON OFFERING 1/2 NOW 1/2 AT COE (UNLESS THEY INDEMNIFY HOMESMART):  Q: We have a request that came in from an agent. Apparently builders are beginning to offer commission advancements to agent/brokers. I have attached the advancement addendum for your review. This one is from Meritage and I was told Toll Brothers are offering the same. I want it noted that if the transaction fails to close the advanced commissions will be due to the builder within 30 days.  I guess other brokerages are allowing this, what is our policy?  JS  A: “We do not allow agents to get commission or until it closes unless builder will put in writing that it does not have to repaid if it does not close. They can pay us and we hold the commission until closing.”  TM    OR  (KF) Response to Title company regarding a builder advance to one of our agents:  I've spoken with Mark about this, and he understands our policy.  I believe that he spoke with the listing side and this was sorted out.  We don't allow our agents to receive advance commissions like this so the full amount of the commission will be due at COE

COMMISSION ADVANCE:  HOMESMART ONLY PAYS ECOMMISSION ON SALES, NOT LISTINGS.

COMMISSIONS:  DEFEND YOUR COMMISSIONS WITH YOUR SELLERS!      http://realtormag.realtor.org/sales-and-marketing/relationship-management/article/2017/11/defend-your-commission-scrappy-sellers

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COMMERCIAL CLAUSES (NOLO) and COMMERCIAL TERMS (bdc)

Parties               Premises Clause            Rent                                  Use Clause and Exclusive Clause        Term Clause                       Security Deposits                      Improvements and Alterations           Attorney Fees

Utilities             Maintenance                  Signs/Entry/Security       Code Compliance                                  Parking/Insurance             Option to Renew or Sublet      Breaking the Lease                              Foreclosures

Disputes            Condemnations             Guarantors                      Common area maintenance                 Incidental expenses            Modified gross lease                Trade fixtures

Net lease           Gross rent lease            Double net lease (NN)    Percentage rent lease                           Tenant inducements          Triple net lease (NNN)

Turnkey improvements (aka turnkey build-outs)                      Leasehold improvements (aka tenant improvements)                     Tenant improvement allowance 

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