SALES MEETING TOOL KIT

Broker liability: how to cut your losses

Editor's note:Each month in this space, REALTOR® Magazinebrings you information you can put to work in your weekly sales meetings. You'll find tips, tools, and news you can use to run a successful business, avoid legal pitfalls, and help your staff boost sales. Clip or photocopy this information to share it with your salespeople.

CHICAGO—Nearly 70 percent of all claims against real estate professionals are a result of misrepresentation that could have been prevented by proper disclosure, says NAR. Average cost per claim: $6,500.

No joke.

Teaching your sales associates how to avoid costly mistakes that could run you out of business
doesn’t have to be hard work; in fact, it could be enjoyable. A key NAR training tool, the Dis-Clue-Sure risk management board game, lets you and your associates have fun while learning the value and importance of effective risk management. Designed for six to eight players, the game tests players’ knowledge while encouraging debate.

Your sales staff can earn or lose “commission dollars” from responses to Question and Risk cards based on actual claim scenarios. The winner is the player with the highest earned commission after all the properties have been “sold.”

A Dis-Clue-Sure office tournament can bolster your associates’ competitive spirit while boosting their knowledge.

Not convinced? Try your hand at some sample questions from Dis-Clue-Sure in the “Test your disclosure IQ” quiz on page FM8. Better yet, make some copies of the quiz to pass around to your sales associates, and at your next sales meeting let them test themselves.

Below are three cost-effective products, including Dis-Clue-Sure, you might want to use to educate yourself and your associates on proper disclosure practices.

To order, call Information Central, 800/874-6500, and ask for the products by the order number:

• Dis-Clue-Sure #126-360-RM; members, $39.95.
  
• Property Disclosures: What You Need to Know Training Kit #126-340-RM; members, $150. What you need to know about proper disclosure and practices, and the tools you'll need for training. Learn about misrepresentation, negligence, stigmatized property, nondisclosure penalties, environmental red flags, and more. Teaching aids include 20-minute video, facilitator's guide, sponsor's guide, master participants’ guide, examinations, overheads, and five pocket guides. Designed as three-hour continuing education course.
  
• Pocket Guides (minimum order of five) #126-343-RM; members, five for $19.95 ($3.99 each).
  

What to look for in an assistant? Windermere hiring guide could help
SEATTLE—If your salespeople are looking to employ an assistant, a hiring guide being offered to brokers nationwide by Windermere Real Estate could be a valuable resource.

The guide, Almost Everything You've Ever Wanted to Know About Hiring an Agent Assistant, takes you through a step-by-step process of recruiting and hiring a qualified assistant. It includes comprehensive information on state and federal employment mandates, hiring, compensation and benefits, and accounting responsibilities; it also contains job descriptions for licensed and nonlicensed assistants and key forms.

The guide is available in disk form. You purchase the rights and are then allowed to customize the guide and republish it within your company only.

Cost is $300. To order, call Paula Morris at Windermere, 206/527-3801.

Windermere is a large independent real estate company in the Pacific Northwest and western Canada.

How much do you really know about disclosure? Answer questions from NAR’s Dis-Clue-Sure board game (see “Test your disclosure IQ” on page FM8).


Test your disclosure IQ
How much do you really know about disclosure? Here's a chance to test yourself. The following questions, taken from NAR’s Dis-Clue-Sure board game, are a helpful way to boost your knowledge of proper disclosure. Answers are below.


Editor's note: Laws vary from state to state, so the answers below might not apply in your state. Please check with your state association before acting on any of the information below.

1. Broker purchases a property listed with her company and, without seller's knowledge, immediately resells it at a profit. This is an example of
a. Undisclosed dual agency
b. Breach of loyalty or duty
c. Lack of reasonable care and diligence

2. Suzanne claims she thought she was carrying a first mortgage on the house she sold through your agency. Because of the buyer's default, she now learns she holds a second mortgage. The first mortgage is paid off in the foreclosure, but the house value is insufficient to pay the second mortgage. Under these facts
a. You may be liable to Suzanne for failing to properly advise her of the terms of her seller financing.
b. You should not be liable to Suzanne, because the loss is a result of the buyer's default.
c. You should not be liable to Suzanne for such an obvious mistake.

3. Marion claims that you, as selling agent, failed to disclose that the septic system was undersized for the property she bought for her family of 10. Under these facts
a. You may be liable to Marion for not recommending a septic test, knowing the size of Marion's family.
b. You may be liable to Marion for the seller's failure to disclose the septic system's capacity.
c. You may be liable to Marion for the cost of a larger septic tank.

4. Name the two ways in which an agency relationship may be created.
a. Express or executory
b. Executory or implied contract
c. Express or implied contract

5. When listing a property, you suspected there were defects in the house's heating and air-conditioning unit. However, Maude, the seller, indicated there were no problems with the unit, and when asked, you told the buyers that “everything seems to be working.” If the buyers sue, who should be liable?
a. The seller for not disclosing the defects.
b. You for passing along false information.
c. The seller for her failure to disclose a material defect and you for misrepresentation.

6. Laurie, a minority client, asks you to show her a specific house. You believe the house is substantially more than Laurie can finance. Under these facts you should
a. Advise Laurie she doesn’t qualify for the house and document your file accordingly.
b. Provide a listing of houses in what you believe is Laurie's price range, not show Laurie the house in question, and document your file accordingly.
c. Show Laurie the house, go through the prequalification work sheet with her again, and document your file accordingly.

7. You're getting ready to sell a property to Marcus in an area prone to flooding. The seller advises that the house has never had a problem. Under these facts you should
a. Do nothing, as the house has never flooded, and document your file accordingly.
b. Tell Marcus that there have been some flood problems in the area but that this house hasn't had any, and document your file accordingly.
c. Verify whether the house is in a flood zone and document it. If it is, tell Marcus and document your file accordingly.

8. An acknowledged receipt of notice concerning lead-based paint hazards is required for
a Any structure built prior to 1978
b. Any residence built prior to 1978
c. Any commercial structure or residence built prior to 1978

Answers: 1. b; 2. a; 3. a; 4. c; 5. c; 6. c; 7. c; 8. b.