Get it in Writing
Verbal offers, verbal counteroffers, verbal acceptances, verbal agreementsare not worth the paper they are written on! You’ve probably heard some version of this statement before. It encompasses a very basic rule, which is sometimes forgotten. And, forgetting this rule can result in a very expensive education. Failure to get agreements in writing can result in lost properties, lost sales, lost commissions, lawsuits and complaints to CABR.
The statute of frauds requires that all real estate contracts be in writing. When working with offers and counter-offers, a contract can be lost when verbal agreements are made regarding the details of a proposed contract and another offer comes in (in writing) that is more desirable to the seller or the buyer finds another property. Conversations where offers and counteroffers are discussed are just that – conversations. Until all sellers and all buyers actually sign and initial the offer (counter), either party can change their mind.
It is also important to have compensation agreements in writing. In order to protect your entitlement to a commission, the agreement for compensation must be in writing. This applies to an agreement between yourself and your broker (independent contractor agreement, company policy, etc.), your broker and a seller (compensation or listing agreement, etc.), as well as, other agents/brokers (think teams, referrals, non-MLS listings, etc.).
If you want to show unlisted real estate to your buyer or real estate that is listed, but not in an MLS to which your broker subscribes, and no agreement has been arranged with the seller/listing broker for compensation prior to the showing, you may not be able to collect a commission. After the showing, an unrepresented seller might contact the buyer directly or visa versa and they work out a deal without including you. Or, a seller verbally agrees to pay you a commission, but after the purchase contract is signed, refuses to pay. If the property is listed, but there has been no unilateral offer of compensation made to your broker, you could find yourself in a similar situation. Your claim is much more difficult to prove without a signed commission agreement. CABR has commission agreements available on the Board website.
It is also important to have a written agreement when setting up a referral, partnership or team. Often, agents who choose to work together “think” they are on the same page when it comes to the circumstances that will result in a shared commission or referral fee. They only find out that they had different ideas when a dispute arises. The parameters of the relationship must be documented to protect the parties and provide a source to reference in the event of a dispute.
To avoid confusion and possible liability, remember… verbal offers, verbal counteroffers, verbal acceptances, verbal agreementsare not worth the paper they are written on! It is prudent to explain this to your clients (and heed the advice yourself). When the buyers, sellers, agents and brokers you are working with agree in writing to all terms, you will face fewer problems. And, is some cases, such as the purchase agreement, the written agreement is mandatory.