Wednesday, November 30, 2016

Technical Talk: Dealing with Offers Contingent on the Sale of Other Property


Oh the thrill of checking your email to find an offer for your listing! Only to find that it has a Contingency for the Sale of Other Property... 

While this isn’t ideal you can help your client (or perhaps yourself!) make good choices by being familiar with how this contingency works and your options going forward. 

First of all, do you accept?

Here are a few items I like to consider:

  1. Is the other property on the market? If it’s not even listed yet I might be hesitant to accept.
  2. If listed, is it priced appropriately to get an offer asap? If not, I might discuss with buyer’s agent to find out if they are open to dropping price on the listing.
  3. Is the other property under contract? Past Option Period? This is ideal and the safest bet when accepting this contingency. 

Once a contingency offer is accepted you should change the MLS listing to ACTIVE-CONTINGENT. This will alert other buyer’s agents that you have accepted a contingency offer and let them know there is still possibility for a back up to be accepted. The drawback is that some agents will not show AC properties because the property is already under contract and they don’t want to mess with submitting a back-up.   I would expect a listing with this designation to show less than an active listing. 

However, let’s say that you DO get another offer on the property. How exactly does this work? This is one of the most frequent questions I get so let’s take a closer look at Sections B & C of the TAR-1908/TREC 10-6 Form ADDENDUM FOR SALE OF OTHER PROPERTY BY BUYER.


SECTION B: If Seller accepts a written offer to sell the Property, Seller shall notify Buyer (1) of such acceptance AND (2) that Seller requires Buyer to waive the Contingency. Buyer must waive the Contingency on or before the _______ day after Seller’s notice to Buyer; otherwise, the contract will terminate automatically and the earnest money will be refunded to Buyer. 

Now, let’s break it down further so we know exactly how to proceed and cover all the necessary contractual items. 

If Seller accepts a written offer to sell the Property If another offer is received and your seller wishes to accept the other offer they must go ahead and accept/execute the other offer including TAR 1909/TREC 11-7 Addendum for “Back Up” Contract. 

Seller shall notify Buyer (1) of such acceptance AND (2) that Seller requires Buyer to waive the Contingency. To accomplish this, as listing agent, you will need to give notice to the buyer of the original offer by delivering TAR-1912 NOTICES REGARDING CONTINGENCY UNDER ADDENDUM FOR SALE OF OTHER PROPERTY BY BUYER. 

Buyer must waive the Contingency on or before the _______ day after Seller’s notice to Buyer. The buyer now has the option to allow the contract to terminate OR they can waive the contingency within the allotted days. As a listing agent, I would encourage you to have made sure this is a few days as possible when accepting the contract initially. You don’t want things to be in limbo for 2 weeks! I would say 2-3 days would be an appropriate time frame. So, if the contract says 3 days and you give the notice on Monday then the buyer has until the end of the day on Thursday to waive the contingency. 

otherwise, the contract will terminate automatically and the earnest money will be refunded to Buyer. If buyer allows the contract to terminate by not waiving the contingency you should prepare a Release of Earnest Money with earnest money being returned to buyer. Listing agent should then prepare an amendment for the Back Up Contract amending the effective date of the contract to reflect the date notice given to the back-up buyer that the first contract terminated. 

Of course, the original buyer also has the option of waiving the contingency and that is addressed in Section C of the Addendum For Sale of Other Property:

SECTION C: Buyer may waive the Contingency only by notifying Seller of the waive and depositing $_______ with escrow agent as additional earnest money. All notices must be in writing and effective when delivered in accordance with the contract. 

As listing agent, when negotiating the original offer, it is recommended to make the additional earnest money an amount significant enough to make it painful if the buyers are not able to perform.  By waiving the contingency, they are remaining under contract and risking their earnest money if they ultimately can’t sell the other property and close on your listing.  You do not want your property tied up under contract with little risk to the buyer for not performing…especially since you had a Back Up ready to go!

If the contract with the contingency stays in place you will need to prepare your seller’s for possible delays in closing since there are now many more moving parts to the transaction…the buyer’s buyer may be getting a loan which could get delayed, delaying your buyer’s ability to close. However, accepting an offer contingent on the sale of another property does allow the seller some flexibility in accepting a back-up offer and may be necessary in softer market. 

If you have any questions, ask your broker! 

Tuesday, November 1, 2016

Technical Talk: Listing Agent & Unrepresented Buyers

One of the advantages of being an investor with a real estate license is the ability to list our own properties. This give us the opportunity for significant savings on the listing side but what about when a buyer is unrepresented… the savings can get even more substantial! But, in these cases, even more diligence is required due to the increased risks. It’s important in these cases that we follow certain procedures to protect yourself!

First, as a reminder, even when there is a buyer’s agent you must do the following to ensure that the transaction will be covered under your Errors & Omissions insurance when you are listing a property you own:


1.  Seller/Agent must disclose, in writing, their status as a licensed real estate agent. You should put this disclosure on the MLS listing in agent remarks AND in Section 4 of the TREC 1-4 Resale Contract.

2.  Seller/Agent must suggest a home inspection be done or have inspection waived. I require the use of HUD Form 92564 “For Your Protection: Get a Home Inspection” when a buyer waives their inspection.  Have the buyer sign the form and upload to the MojoVest file.  

3.  State or local-board approved sales contracts should be used.  Always use promulgated forms! If you are unable to find a form for a particular use, please reach out to your broker for advice.  

4.  A Seller’s Disclosure is provided to the buyer PRIOR to closing.  Even if you never lived in the house you need to provide the disclosure and get it signed by buyer!

Now that we’ve reviewed what you should ALWAYS do when listing a property that you own let’s take it a step further and discuss how to handle an unrepresented buyer that approaches you about your listing.

Let’s assume Bob Buyer calls you from your For Sale sign and asks you to see the property. When asked if he is working with an agent he says no. Here is a sample of how to respond:

“Thank you so much, Bob, for reaching out to me about this property. You should know that as well as being the listing agent for this property I am also the owner.  As such, I cannot represent you on the purchase of this home but you do have some choices. You can choose to work with a Realtor to represent your interest as your buyer’s agent. I’d be happy to make a referral if you would like to work with an agent. You can also choose to be unrepresented. In this case, I can assist you in making an offer. You should understand that in that case it is my duty to treat you honestly and fairly but I cannot advise you or negotiate for you on your behalf. I am going to send you a document, Information About Brokerage Services, that explains how agency works in Texas. Please read it over, initial and sign your acknowledgement and return to me.”
           
Bob can respond in several ways:

1)    He can find an outside agent to represent him.

2)    He can ask for a referral to another agent. You may refer him to a fellow StepStone agent but you should both understand that the StepStone agent owes their fiduciary duty to the buyer now and you should expect them to give the buyer their highest level of fiduciary duty.  In this scenario, you will need to have an Intermediary Notice completed and kept in the files.

You may negotiate the buyer’s agent commission agreement with the agent you are referring the buyer to if you would like. Theoretically it would be a pretty easy transaction since you brought them a warm buyer with a property already picked out. Furthermore, you can request a referral fee or request that the buyer be referred back to you should they decide not to offer on your listing.

3)    He indicates he would rather go unrepresented. In this case, you will want to make sure you do the following:
a.    Make sure you have a signed IABS in your file
b.    Keep a copy of your correspondence that shows you explained to Bob his right to have an agent and your disclosure that you are the owner of the property (if you have this discussion via phone call I would follow up with an email so you have a paper trail).
c.     In special provisions on the sale’s contract include the following verbiage, “Listing agent is the owner of the property and does not represent buyer. Buyer has been advised of his right to representation and has elected not to be represented by a buyer’s agent”.

Now, let’s get even a little stickier….

Bob Buyer says, “That’s great, Angie. Thanks for the info. If I decide not to get a buyer’s agent can I get a better price since you don’t have to pay a buyer’s agent commission?”

Why is this so sticky? You don’t want to give the impression that you are encouraging or offering special benefits to a buyer in exchange for going unrepresented. Here is a sample of how you can respond:

Angie responds, “Well, Bob, I certainly wouldn’t want to do or say anything to discourage you from getting a buyer’s agent if you feel that is the right choice for you. I am prepared to pay a commission to a buyer’s agent so if you want to be represented you certainly should work with an agent. That said, as the seller, it is true that I would take into consideration all terms and closing costs associated with all offers received.”

Anytime you are acting as both the listing agent and the seller you should take extra care to make any and all disclosures and keep a paper trail of the disclosures.  We can do all the risk reduction we want but ultimately if a buyer is unhappy they can decide to attempt a suit against us. If this happens, having good disclosure and record keeping habits will make it a lot less painful!

StepStone is a home of Investor Agents that uphold a high level of honesty and integrity in their dealings with other agents, customers, clients, investors and sellers. We must always practice extra care that our actions and our paperwork reflects this value.

Saturday, October 1, 2016

Survey Results – Key Findings

I want to thank all of our agents who participated in our agent survey in August.  This was extremely helpful as we look at various programs and avenues for expansion that will best serve you!  We have worked hard to instill a culture of honesty and integrity with all of our agents.  I believe that includes being transparent as a company.  Therefore, this month we want to share with all of you the results of the survey.

However, I also recognize that a full report of the survey results may be a little boring and tedious.  Therefore, I’ve uploaded into MojoDocs a full report that you can read here: Full Survey Report

I definitely encourage everyone to read it as it will give you some insight into where we are and where we can go.  But for this blog, I want to hit the highlights.

What we are most proud of

We have a lot to be proud of as a brokerage and that is evident in the survey results.  We are very proud of our agent/investors overall impression with StepStone where 95.8% of our investor/agents answered that their overall impression was Excellent or Good.  Similarly, they felt their transition into StepStone was also Excellent or Good 95.8% of the time.

As a testament to the leadership team we have put together, myself and Angie, but to a larger extent, Cameron, our agents rated our responsiveness extremely high with Very Responsive receiving 88.7%!

The Masterminds and Sheepinars are also a source of pride and the survey results reflect that.  Among those who have attended the Mastermind, 55.1% find it extremely helpful and 42.9% find it somewhat helpful.  However, almost a third of our agent/investors have never attended a mastermind.

Similar results emerged for the Sheepinars with 57.8% of those have attended saying they are extremely helpful and 40% saying they are somewhat helpful.  But again, about a third of our agents have never attended or watched a Sheepinar.

Where we can improve

While we got high ratings on overall impression and the transition into StepStone, There was a 2-1 split between Excellent and Good in each of those.  We strive to be Excellent, so we definitely want to improve both of these numbers.

The same is true for both the MasterMinds and the Sheepinars.  Both were about evenly split between extremely helpful and somewhat helpful.  There were some great suggestions we have already started to implement with the Masterminds.  Now you will see monthly market updates as well as a monthly deal anatomy to give a bit more structure and more ability to foster good discussions.

The strongest suggestion about the Sheepinars is the organization of the existing recordings in a manner that's easier to find the topics you want to watch.  We will look to improve the organization of the Sheepinars.

Agent/Investors of StepStone would also like to see more training.  Born out of this is our new mentoring program for new agents and those looking for more partnership opportunities.  But we are also looking for more and better ways to provide training without interfering with our highest-rated core value, Freedom (more on this later).

What Surprised Us

We have always believed, and still believe, that our community of investor/agents is our strongest feature.  And we believed that that would be the #1 favorite aspect of StepStone among our investor/agents.  We were surprised to find that the #1 favorite aspect was actually Freedom.  When we asked you to rank five different aspects, Freedom emerged on top followed by Support, Community, Fee Structure and Education.

We are proud of our three core values... Freedom, Support and Community, and it seems our investor/agents concur with those three aspects coming up as the top three aspects of StepStone.  But allowing you to practice real estate YOUR way without quotas or interference from us is important to you, therefore it will be important to us.

That is not to say Support and Community were not also important to you.  In fact, The Community was the #1 mentioned aspect when the question was left open-ended.  When we asked "What is your favorite aspect of being a StepStone Agent, Community was mentioned more times than any other answer.

Where Do We Go From Here?

If we could help our agent/investors out the most, it would be in helping them get leads.  We don't shy away from or hide the fact that we have, so far, been unsuccessful in our efforts to do just that.  The co-ops we attempted wouldn't hold together and everyone still struggles at getting leads... by far the most common answers to questions about your activity.  When asked to rank the reasons you don't do more investing, lack of leads was ranked #1 or #2 by 78.6% of our agent/investors.  The next highest ranked answer, lack of funds, trailed it significantly at only 49.3%.

In 2017, we need to explore new and more options to helping our agents beat the competition and get more leads.  Never hesitate to speak up, come to us with ideas and/or suggestions as to how we can take advantage of our size, our strong community and our smart talented agent/investors to corner the market and get more leads.

When asked to give suggestions in open-ended questions, more training was the most requested feature of StepStone.  We want to do more to provide good quality training to everyone.  We also want to do that in a way that doesn't necessitate changes in our fee structure or interfere with the Freedom our agent/investors love.  The mentorship/ambassador program is one step in that direction.

The idea of an annual conference, where we can have live training sessions and have more interaction with our agent/investors received significant support with 85.9% stating they would be extremely or somewhat likely to attend.  We are in early discussions about putting on this event and would like more feedback from you on it.

Conclusion

Thank you again for your participation and your feedback.  I hope you see that we are taking it all to heart and want to make StepStone even better for you.  What we define as better is our agent/investors being more successful in their own businesses.  We have a lot to be proud of and we are honored that you rated us highly, but let us know we still have plenty of room for improvement.  It is our task to take this feedback and improve, expand and add to what we are doing so that you can be a more successful investor and a more successful agent!


Wednesday, August 31, 2016

StepStone Mentoring




Mark Zuckerberg had Steve Jobs. Oprah Winfrey had Maya Angelou. Woodie Guthrie had Bob Dylan. Luke Skywalker had Yoda. In all walks of life and all industries from high tech to the arts, the value of mentorship relationships have long been recognized as a key component to success. Real estate is no different. 

Last night we had dinner with some old friends and business partners to celebrate the recent closing on a project we collaborated on. We had a good time recalling all the projects and properties over the years, the horror stories and the home runs. The reminiscing reminded Dan of where we started and he told them how, when we met them early in our investing career, we were literally buying stuff at garage sales and selling it on Ebay to make ends meet.  Our friends, people who spent time mentoring us, raised their glasses and toasted our success. It was a nice moment for us all. 


We have had many mentors in our career. I still rely on many of them. However, now, more often, we find ourselves on the other side of the coin providing mentorship to those around us. And we have plenty of folks to mentor. Last week we officially added our 100th agent to the StepStone team. I find mentoring my agents to be an extremely satisfying experience.  Their questions keep me on my toes, helping them with skills keeps mine sharp, guiding them in their business helps me see where I need to refine my own. There is a Buddhist proverb that rings very true for me: "If you light a lamp for someone else it will also brighten your own path". 


As much as Dan and I enjoy mentoring our agents and business partners we recognize that sometimes we can't be everything to everyone, particularly with a quickly growing brokerage and a demanding schedule. So, over the last few months, we have been working on a mentorship plan for StepStone Realty to ensure that each agent has the opportunity to work with a mentor, someone they can call upon when they need help navigating their agent and investor duties.  We are proud to have recruited some agents, folks who's level of integrity is high, who have proven that they can close deals, handle difficult situations and who have an interest in helping others, to provide mentorship to our new agents. 


Beginning today, every inexperienced new agent that joins StepStone (inexperienced is defined as having closed less than three agency transactions) will be assigned a mentor to work with through their first 3 agency transactions and who they can call upon for investing consulting/partnering opportunities. In return for their time and attention, the mentored agents will pay their mentors $500 on their first three closings. Of course, Dan and I will still consider ourselves a mentor to all our agents and partners and will actively work with our mentors to guide and assist our agents. But, we hope that this program will offer an extra layer of support and connection. If you are an inexperienced new agent and would like to participate in the program please reach out to Angie and ask to be assigned a mentor. 


We are confident that, by creating these mentor relationships, our community will grow stronger as we lean on and learn from each other, our new agents will be more successful on their initial endeavors and have a firmer sense of confidence when navigating new experiences, and our mentoring agents will enjoy the satisfaction and success that comes with mentoring others. 

Tuesday, August 2, 2016

The Black Sheep Open: Turning Kids into Entrepreneurs



I grew up a Girl Scout.  From my first patch as a Brownie to my awkward teen years (made even more awkward when I had to wear the whole Senior scout uniform), I was a Girl Scout through and through. I’m pretty sure my mom was still signing me up as a Girl Scout even well into my 20’s.

And while some of the photos of me are cringe worthy and I probably earned a healthy nerd reputation (I was also a formidable high school debater!). I look back now and know that my time as a Girl Scout shaped my future and played a huge part in my success today.

I grew up thinking I would be a doctor. However, the fact that year after year I achieved top cookie sales in my council should have been my first clue that I was actually destined to be a salesperson! And while I learned some great sales skills (although I don’t know that pigtails and a beanie would work for me as well now) and knowledge about finances, supply, and customer service, the one lesson that I learned in Girl Scouts that stuck with me was this golden rule: Always leave a place better than you found it.

Being an entrepreneur didn’t exactly come naturally to me.  Dan, on the other hand, set out for it with an eagerness and drive that surprised me.  I can remember talking to him on the phone while at work (maybe I was complaining), and he said, “Angie, you need to start your own business. You need to quit and work for yourself”. I thought, “He’s crazy. What do I have to offer? I don’t know the first thing about running a business.”

Now, here we are, over 10 years later and life looks very differently. I am the very humbled owner of a growing and successful real estate brokerage with nearly 100 agents and I have business network of hundreds of more buyers, sellers, investors and fellow entrepreneurs. I wake up every morning grateful that I am the source of and beneficiary of my success. Nothing feels better.

I didn’t get here alone. Dan, of course, has been my driving force and main motivator. My Dad, who before he died loved nothing more than to talk real estate with me, made me believe that my knowledge was valuable. Both my parents and Dan’s parents gave us small business loans to get us started. And yes, Girl Scouts, who first taught me both sales and business skills as well as values that I still hold dear these many years later.

Having the guts, the drive and the motivation to be an entrepreneur is a gift.  And I am grateful for the people and the organizations that instilled that gift into me. So, in the spirit of the lesson I learned in Girl Scouts, to leave a place better than you found it, StepStone Realty and Pryme Home Solutions are partnering to support VentureLab, an organization dedicated to providing entrepreneur education for kids. We, as real estate investors and entrepreneur’s, can certainly appreciate the value of what this organization provides to the next generation of innovators, thinkers and business owners. 
On Friday, October 7th, StepStone and Pryme are hosting the first Black Sheep Open, a golf benefit tournament for VentureLab. Whether you join us as a player, a sponsor, a volunteer or a spectator, your participation will have an impact on the future of some child who, through the entrepreneur education they receive from VentureLab, has the opportunity to shape their own future and maybe even be one of the next great thinkers of our time. 


Sign up at www.BlackSheepOpen.com or email hello@BlackSheepOpen.com. Invite your friends, your colleagues, your network. This is an event for the entire Real Estate Investing Community! 

Tuesday, June 28, 2016

What the Black Sheep Means to Me

I realize it was just a short time ago, Angie wrote a blog about the Black Sheep as we introduced our new mascot.

Since then, we've gotten a lot of comments on the drawing that we call our own (Thanks again, Liz!).

"He looks angry", we've heard.  "Why is he so smug?"

The look of the black sheep was important as we went through many iterations of the drawing.  From the way the hair flips up, the lifted foot over the stepping stone and yes, the smirk upon his face.

So why did we choose this look?

As you know, Angie and I recently returned from vacation and have been working on improving our systems to get ready for more agents.  We've spent some time away reflecting and some time in the office analyzing our brokerage.  Its through this retrospective time that I've realized why, subconsciously, we were drawn to this version of the mascot.

To explain, I want to back up.  I started in the creative real estate business twelve years ago.  Back then, there were very few clubs, seminars and online tools to learn how to do the business.  The business was unheard of by most, pushed by few, and understood by even fewer.  It is definitely what I would call an "underground" business.

Even though I was an independent entrepreneur, with Angie joining me a couple of years later, and even though we were making enough money to avoid the J-O-B, it still always seemed like an "underground business".  My friends couldn't quite grasp what I was doing, and my family worried I was involved in a scam.

Since then, the number of seminars and gurus has grown and so has awareness.  And television shows about house flipping have legitimized at least one aspect of the gig.  But owner-financed wraps, wholesaling and other strategies have still remained largely misunderstood, questioned and thought of as "hokey."

That has left our business in a perpetual state of infancy; where the tools we use are adapted from other businesses rather than being built for us.  There is no greater evidence of that than with our continual struggle with title, where branches that give us service do not understand our creative deals and fee attorneys that don't live up to the service of traditional title companies.  But it extends to lenders, lead management tools and even accounting software which all either has to be adapted to fit our business or created from scratch.  Brokerages that accept creative real estate investors really just tolerate them, they aren't made for them.

We, as investors, remain an underground business that is misunderstood, looked down upon and feared.

That more than anything is what we, StepStone Realty, want to change.  It's time it changed.  It's time to bring creative real estate investing into 2016.  It's time we had modern services and modern tools made specifically for us.  It's time we hold our heads high and realize we provide a great service to our communities and can do so much more.  Its time we rid this industry of the scammers and sharks that give it such a bad name.  It's time to bring the business of creative real estate investing into the mainstream.

Our future at StepStone is to bring those tools, to bring a sense of community responsibility, and to bring a drive to serve sellers and each other with a high level of honesty and integrity.

This is a business you can be proud of!

And you deserve to be proud of it and be successful at it, and you deserve to have the tools and services at your disposal that were made specifically for you.  Tools that are modern, useful and make you look like the professional you are to your clients.  StepStone is here to legitimize the practice of finding solutions for sellers; including the creative solutions.

So the black sheep is not angry.  The black sheep is proud.  And you should be too!

Friday, April 29, 2016

Introducing Deal "Coaching"

The success of StepStone Agent/Investors is our #1 goal.  Everything we add, build, offer and talk about is with sincere hopes that it will give more of our agents more opportunities to find more success in this business.

When recruiting agent/investors onto the team, we are careful to let them all know, we are not coaches.  The Facebook page and the masterminds are great opportunities to throw out general questions about investing, but Angie and I have to protect our time by not becoming coaches.

It used to be, when someone would call and start seeking advice about an investment deal, our response was to ask, "So are we partners on this deal?"  I hope that never offends anyone, we just have to be careful to not get bogged down in coaching, but instead make sure our time is free to continue to build opportunities and the brokerage and to make sure Angie is always available to answer licensing questions.  In other words, we have to keep up with our broker-duties!

But many of our investor-agents wanted some help, but weren't necessarily eager to give up 50% of a deal in order to get it.

To solve that problem, we are introducing Deal Coaching!

We still love to partner and offer that for those that need complete hands-on help with a deal.  But if you are looking for some help but don't want to split the entire deal, we now will coach you through your deals for 25%!

If you want our advise, counsel, phone calls, emails and eagerness to make it a success, you can call and me and Angie to coach you through the deal.  We won't see the property or take a completely active role, but instead be there to guide you through from the sidelines.

This is especially great for our growing Houston and Dallas markets.  While IFlyRise.com has given us more mobility to those markets, deal coaching can be done remotely and will help you close more deals!

Your success is our business.  Call on us when you need a hand.  Now instead of asking "are we partners?" we can give you a new and often-times more appropriate option and keep the deals moving and closing!

Friday, April 1, 2016

The Story of the Black Sheep


Back in 2007 when StepStone Realty was first incorporated we were one agent strong. Me. Over the years we have had one or two other agents come and go that were friends or partners but it was more out of convenience than anything else. We continued like that until the end of 2014 and that’s when StepStone Realty made a major shift and became the brokerage we are today.

So what happened in 2014?

After many years of practicing real estate together, Dan and I began to perfect our methods and strategies for working with distressed sellers.  We decided we wanted to branch out from the Austin market. We started to build relationships and partners with other investors… in San Antonio, in Houston, in D/FW… even a few in California. When we partnered with someone we always made sure they had an agent on their team.  Not just to call for comps or submit an offer but an agent ON THEIR TEAM. We recognized that by having a licensee on your team the opportunity to monetize leads was higher and we wanted to monetize all our leads!

Our partners began to use our methods and practice what we now call Solutions Based Real Estate and they had similar success.  However, if we were going to advocate that investors get their real estate license they would need a home to hang their license.

So, we spent some time working on the nuts and bolts of our brokerage.  I spent many hours creating a policy and procedure manual. Dan created accounting systems. Cameron created paperwork and forms. We got ready. And then, in April of 2014, we went to Houston, bought lunch for a handful of investors and asked them to join our brokerage. One handed us a sponsorship form that day and it began.

Over the last two years we have talked to hundreds of real estate agents, investors and agent/investors.  I’ve shaken 1000’s of hands, fed over 200 at our information luncheons, attended network events nearly every week and bought so many coffees that I now have the gold Starbucks card.

From all those conversations a common theme arose… we were different. There was not a brokerage that was built specifically for the Agent/Investor. Before StepStone, Agent/Investors were forced to either choose a flat-fee, no support brokerage or a traditional brokerage that expected their agents to practice traditional real estate. While talking with agents in these other brokerages, over and over we would hear phrases like:

·        “No one understands me.” 
·        “My fellow agents are more concerned about their property tours and open houses than building wealth for themselves.”
·        “My broker only cares about how many listings and buyers I’m working and they don’t let me pursue creative strategies.”
·        “I’m the black sheep in my office.” 

Out of these stories of frustration, lack of support, and investment strategies being squashed by traditional brokers, The Black Sheep was born. We are proud to be different from the crowd. We are the brokerage to choose if you are tired of being a Lone Wolf investor at the mercy of unscrupulous wholesalers, if you are an Agent who understands that you have a right to build wealth outside of commissions alone, if you think the best way to help a homeowner in distress is to have all options available to you, or if you want to continue to be an entrepreneur rather than just an income producer for a broker.

The Black Sheep now number more than 70 agents in 7 Texas regions and we continue to grow.  As we add more to our team we build strength in numbers.  We can be the standard bearers for how real estate investing should be practiced, with integrity and honesty, but also with an eye to personal success and the success of our fellow agents.


Be a Black Sheep!

Monday, February 29, 2016

Rule #1: DISCLOSE

So, you've decided to add a real estate license to your investor tool belt! Good for you! But now, as they say, with great power comes great responsibility! And the foremost responsibility is Disclosure of your status as a real estate agent!

There is a lot of confusion about what kind of disclosures are required, when and in what circumstances so let's clear some of that murky water.  


First and foremost, who makes the disclosure requirements?
 The Texas Real Estate Commission addresses it in the Texas Real Estate Act and it is further addressed in the National Association of Realtors Code of Ethics and Standards of Practice.  I've included the full transcript of both rules at the end of this blog should you want to read further.  

But, to be sure, the goal of both of these organizations addressing disclosure requirements is to ensure that a license holder acting on his or her own behalf or in a similar capacity should not use the license holder's expertise to the disadvantage of a person with whom the license holder deals.  By making sure that the person you are dealing with knows you are a licensed agent and you are not acting on their behalf ensures that they have a fair understanding of their position. 

So then... when do you disclose and how do you do it?

Advertising:

Are you marketing yourself as an investor who wants to buy houses? As long as that marketing is as a buyer/investor/principle you DO NOT HAVE TO disclose that you are an agent or your brokerage affiliation on your marketing.  However, if that marketing is as a Realtor offering licensed services you need to disclosure your license and brokerage information.  That being said, you may choose to include information about your license status on investor marketing if you choose to but it is not a requirement.

On the Phone: 

While you are not required to make the disclosure on the phone I often do it anyway.  I often say, "I'm a real estate investor as well as a real estate broker.  However, in this case, I am acting as a potential buyer for your property, not as a real estate agent" 

When Buying Property

Ok, here is where you need to perk up! 

From the Texas Real Estate Act:
A license holder engaging in a real estate transaction on his or her own behalf or in a capacity described by subsection (a), is obligated to disclose in writing that he or she is a licensed real estate broker or sales agent acting on his or her own behalf or in a capacity described by subsection (a) in any contract of sale or rental agreement


From NAR Code of Ethics:
REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative

So to follow disclosure requirements you must disclose, in writing, your licensee status. The most effective way is to disclose this in Section 4 of the newest version of the TREC Resale contract:

4. LICENSE HOLDER DISCLOSURE: Texas law requires a real estate license holder who is a party to a transaction or acting on behalf of a spouse, parent, child, business entity in which the license holder owns more than 10%, or a trust for which the license holder acts as a trustee or of which the license holder or the license holder’s spouse, parent or child is a beneficiary, to notify the other party in writing before entering into a contract of sale. Disclose if applicable:_____

But what if my unlicensed partner writes up the contract in the name of our LLC... do I still need to disclose? Yes! Instruct your partner, your spouse or anyone else who is in a position to make offers in the name of any entity you are a part of that they must make the disclosure.  As an example, here is what I write on my offers:
One or more members of Riveter Realty, LLC is a licensed real estate agent in the state of Texas and does not represent the seller. 

When Selling:

You finished a flip and you are ready to list! Congrats! Don't forget to disclosure your status as a licensed seller.  You will need to disclose that you are the owner/listing agent on the MLS listing, any other advertisements and again on the sales contract as outlined above. 

It's easy to stay in compliance if you consistently disclose your status on your contracts and make sure your investor partners do the same.  Disclosing our status as real estate agents will keep you out of trouble and serves to alert the people that we work with that we are knowledgeable, vetted and practicing our profession with honesty and integrity. In my opinion, this is the best way to practice real estate!


_______________________________________________________________________
APPLICABLE TEXT FROM TEXAS REAL ESTATE ACT and NAR CODE OF ETHICS:


The Texas Real Estate Act states:§535.144 When Acquiring or Disposing of Own Property or Property of Spouse, Parent or Child (a) For purposes of §1101.652(a-1)(1) of the Act "license holder" includes a license holder acting on behalf of: (1) the license holder's spouse, parent or child; (2) a business entity in which the license holder is more than a 10% owner; or (3) a trust for which the license holder acts as trustee or of which the license holder or the license holder's spouse, parent or child is a beneficiary. (b) A license holder engaging in a real estate transaction on his or her own behalf or in a capacity described by subsection (a), is obligated to disclose in writing that he or she is a licensed real estate broker or sales agent acting on his or her own behalf or in a capacity described by subsection (a) in any contract of sale or rental agreement or in any other writing given before entering into any contract of sale or rental agreement. (c) A license holder acting on his or her own behalf or in a capacity described by subsection (a) shall not use the license holder's expertise to the disadvantage of a person with whom the license holder deals.

The National Association of Realtor Code of Ethics states: Article 4 REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. 
  • Standard of Practice 4-1
For the protection of all parties, the disclosures required by Article 4 shall be in writing and provided by REALTORS® prior to the signing of any contract.(Adopted 2/86)


Friday, February 5, 2016

The Millennials Are Coming!

FREE LUNCHEON

San Antonio:  The Impending Millennial Squeeze: How to Survive the Changing Real Estate Landscape

REAL ESTATE PROFESSIONALS,

Join us for a Free luncheon  – Friday, February 12 from 11:00 am to 1:00 pm

Holiday Inn & Suites
5535 University Heights Blvd.
San Antonio, TX  78249

The Millennial Generation is already having an impact on the way agents work with buyers. 

Currently the largest group of buyers, Millennials -- the do-it-yourself generation -- are already squeezing agents with demands for fee-for-services.

Investors and Agents need to be ready for the next phase of the Millennials impact... when the biggest group of buyers becomes the biggest group of sellers.

Millennials are skeptical, tech-savvy, and used to instant gratification services.  Investors and Real Estate Agents need to position themselves to be at the forefront of this ever changing market or risk being left behind.
Come learn how taking a new, cutting-edge approach to real estate will allow you to continue to work with sellers as we witness this generational shift.... and do so while making more not less!

This talk is appropriate for Realtors and for Investors looking to stay on the forefront of this new Real Estate market.

Make more today and continue to grow your business despite these changes!


You will also learn why StepStone Realty is a brokerage tailored for investor-agents. No sales job, just information. 

And worst case, you get a free lunch, some great nuggets for how to deal with sellers, and some good networking with like-minded professionals. 

We hope to see you there. 

Spots are limited. To claim yours, and so we have an accurate head-count for food, please RSVP by 

-- emailing dan@stepstonetexas.com 
-- Texting Dan : 512-731-4541 
-- Filling out our form online: http://stepstonetexas.com/events.php 

To see more what we are about, visit StepStoneTexas.com 

We hope to see you Friday! 

Monday, February 1, 2016

Ch Ch Ch Changes.. to the TREC Forms!

Beginning January 1st, some important changes were made to the contracts we use every day.  It’s important to stay abreast of these changes so I will go over a few of the major ones here.

If you have written a 1-4 Family Resale lately you have noticed a big change on the first page.  A new paragraph in Section 4 lays out the disclosure laws so that sales agents now have a promulgated spot to put their notice of agency. There are no excuses for forgetting to disclosure your agency status on your contracts! There is much talk of what prompted this change and the decision to put the disclosure on Page 1 of the contract.  I’d love to hear what you all think spurred the change!

Second, on Page 4, Section 7, additional verbiage was added making written authorization from the seller a requirement for performing a hydrostatic test on the property.  Hydrostatic tests often require the removal of a commode so it’s important to get the seller’s permission to perform this test.

Many agents everywhere are relieved that Paragraph 23 on Page 8 was amended to reflect that Option Periods now expire at 5:00PM rather than midnight on the last day of Option. No more negotiating at 11:00 at night!

Significant changes have been made to the Third Party Financing Addendum.  Please read through the addendum before use to make sure that you are familiar with the new verbiage.  Most importantly, it clarifies Buyer Approval vs. Property Approval.  This was an important clarification as I expect with the market continuing to look good for 2016 we will continue facing appraisal challenges. 

Finally, the Information About Brokerage Services has been changed to include the Broker and Sales Agent information including license number, email and phone numbers. (StepStone Agents:  If you would like an IABS with our information already filled in please reach out to Cameron). 

You can find updates on all form and rule changes by visiting your TAR website at www.TexasRealEstate.com or TREC at www.trec.state.tx.us/.  And as always, if you have questions about any forms or their usage you should call your broker!