Understanding the language of real estate – what did that Realtor just say to me?

Real estate agents (we call them licensees, for reasons that will become clear later on) licensed in the State of Vermont are required to take 24 hours of Continuing Education courses every two years in order to maintain their license. The Vermont Real Estate Commission, which is made up of 3 real estate brokers, 1 salesperson, an attorney and 2 members of the general public, have established that this is a reasonable amount of training to keep Licensees and Brokers up to speed with the ever changing rules and regulations of our industry. The truth is, this is a bare minimum to someone just starting in the business.

Like most rookie licensees in the beginning, I had just passed my real estate licensing exam when I started working in the business and I was exempt from any required  course work for two years (this is no longer the case). I did, however, take a Code of Ethics class right away, which the National Association of Realtors requires of its membership upon entering into their fraternity. It was a four hour course that could have been taught in greek for all I understood about the language they were speaking. So it occurred to me that if Realtors speak a different language, it’s possible that the consumers they serve could be as confused as I was, and perhaps it would make sense to provide a bit of translation. So from time to time I will do so, most notably as the questions arise in my day-to-day activities working as a broker in the Mad River Valley real estate industry.

Understanding the language of real estate | Doug Mosle Real Estate | LiveMadRiver.com

Photo creds: National Association of Realtors

What exactly is a Realtor? A real estate agent (licensee/salesperson/broker) is not necessarily a Realtor, although generally Realtors ARE real estate agents (licensees/salespeople/brokers). This is one of the most commonly misunderstood definitions in real estate and there is an important distinction. The National Association of Realtors (NAR) is a trade organization. A club. A body that members pay an annual fee to be a part of. It’s members are called Realtors. Real estate agents need only a License from the Real Estate Commission – and a brokerage firm to hang their license in – in order to practice real estate in Vermont. When you join the National Association of Realtors, you pledge adherence to a Code of Ethics and agree to abide by certain standards of practice, and only 55% of real estate licensees in North America are Realtors. Still, the word Realtor has become synonymous with the practice of selling real estate, which could not be further from the truth. The National Association of Realtors is the bellwether for the real estate industry, and to say it’s members are proud of that affiliation would be an understatement. NAR dues comprise the single greatest personal business expense that most Realtors incur over the course of the annum, yet membership stands at 1.1 million, making it the largest trade organization in North America. Membership means something, so when a real estate agent says they are a Realtor, they are not just telling you what they do for a living. They are telling you that they hold themselves to the highest standard of practice in an industry that can sometimes seem murky.

Client & Customer – I have written significantly on this subject before, but while we are talking about confusing definitions, these two rank among the least understood by consumers. To clarify, a client is a consumer in the real estate market (buyer or seller) who has a signed Contract for Representation or a Brokerage Agreement with a real estate licensee. Once contracted, that licensee owes a full host of duties and responsibilities to their client, which guarantee the client’s confidentiality and ensures that the clients needs, rights and best interests are placed above all else in the relationship – particularly above the needs, rights and best interests of the Licensee.  They require obedience to the clients requests, as long as they violate no law; loyalty to the client above all others; disclosure of all material facts that the licensee has access to or has obtained pertinent to their relationship or transaction; confidentiality that begins once they have each signed the Contract and survives closing and expiration of the Contract; accountability for all funds held or distributed during the course of the transaction or relationship; and reasonable care to assure that the client has negotiated the best price and/or the most favorable terms for the client that the licensee can reasonably procure.

A customer is an unrepresented consumer (buyer or seller) in the real estate market. The real estate licensee owes this consumer only disclosure of material facts, honesty and professionalism. There is nothing confidential in a customer’s relationship with the licensee, and everything disclosed by the customer to the licensee may be conveyed to the subject client. If you are looking at homes with a real estate licensee with whom you do not have a contract, you are a customer and nothing you say to that licensee is confidential, even if the property you are visiting is not that agent’s listing. And they are required by law to disclose this to you.

 

Consumer Information Disclosure – So, whats that form you made me sign?  The Consumer Information Disclosure (CID) is a disclosure that all real estate licensee’s in the state of Vermont are required to make to any consumer that they have made contact with or been contacted by (buyer or seller) at the beginning of their relationship. The rules about when this disclosure must be made have changed from time to time, further complicating matters. If you think of a relationship “beginning” at your first introduction, it may seem more clear. Many real estate licensees believe that it should be made at their first substantial contact, but even that leaves the term “substantial” up for grabs. In a nutshell, because of the issue of confidentiality mentioned above when discussing Clients and Customers in the marketplace, it is critical that said consumers are duly notified that anything they say may be disclosed to another before they have an opportunity to disclose anything confidential to you – and here’s the sticky part – whether they have been introduced to a property or not.

So how is that possible?

Understanding the language of real estate | Doug Mosle Real Estate | LiveMadRiver.com

Photo creds: Steve Snodgrass, Flickr 2/26/2011

Because the real estate rules in the State of Vermont require all real estate licensees to work for someone in a transaction at all times, it assumes that the transaction has begun as soon as they are introduced to a consumer. Before the transaction begins, real estate licensees must have an agency relationship (work for someone) prior to an opportunity for a consumer to disclose anything confidential to them – in other words, when the consumer walks in the door, or even receives an email response from the licensee. So in earnest, it should be at your first communication with them, which is why the disclosure lies within the signature line of most Realtors email. If it doesn’t, you should be on the lookout.

Since all sellers in the marketplace have a signed Contract once they “list” their property for sale, the State of Vermont assumes that all licensees automatically work for the Seller, even if the property is listed by another agency, thus satisfying the requirement for all agents to work for someone in the transaction. ALL LICENSEES WORK FOR THE SELLER IN A TRANSACTION AUTOMATICALLY, EVEN IF IT’S NOT THEIR LISTING, UNTIL SUCH A TIME AS THEY SIGN AN AGREEMENT WITH A PROSPECTIVE BUYER.

Confusing, but it doesn’t need to be. In a nutshell – if you have not signed a contract, they don’t work for you. If they don’t work for you, nothing you say is confidential.

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