Buying • Selling • June 5, 2024

Why Buyer Representation Matters So Much to Sellers

by Windermere MI

Why Does Buyer Representation Matter to Sellers?

In today’s rapidly changing real estate landscape, understanding the critical role of buyer representation has never been more essential for home sellers. With the pending NAR settlement on the horizon, many sellers may not fully grasp the significant impact these changes will have on their transactions. The urgency to adapt is real, and overlooking the necessity of paying a buyer agent compensation could expose sellers to unforeseen risks.

Currently, home buyers are not allowed to roll their buyer agent compensation into their loan. This means they must bring cash to the table to pay their agent (if the seller is not offering buyer agent compensation).

Unrepresented buyers should be considered more than a minor hiccup—it can lead to a cascade of complications that jeopardize the entire deal. To safeguard your investment and ensure a smooth transaction, it’s crucial to recognize the invaluable support a buyer’s agent provides.

What value does a seller receive if the buyer has professional representation? Let us list the ways:

Lender Connections: Buyer agents connect their buyers with well-vetted (and typically local) lender partners who have proven time and again that they can close a transaction, and on time.

Documentation Management: Buyer agents ensure that buyers have delivered all necessary documentation to the lender to ensure full underwriting.

Market Analysis: Buyer agents provide comparable market analysis reports (CMAs) to help buyers understand the market value of the home and support a reasonable offer price.

Contract Guidance: Buyer agents guide their clients through the purchase and sale agreement, ensuring that they understand the terms and conditions and their ability to fulfill their commitments.

Contingency Explanation: Buyer agents explain all contingencies to buyers, ensuring they understand the risks and rewards, especially when waiving contingencies.

Earnest Money Handling: Buyer agents ensure that earnest money funds are delivered to escrow on time.

Transaction Deadlines: Buyer agents ensure that their client and their lender observe and adhere to all deadlines to keep the transaction flowing smoothly and closing on time.

Inspection Access: Buyer agents provide access to home inspectors and help their buyers understand the reports. This is critical as most MLS associations require an agent to be present whenever a door is opened. If the buyer doesn’t have representation, the listing agent must give access, exposing them to inspection findings and forcing them to disclose on behalf of the seller.

Appraisal Assistance: Buyer agents give access to appraisers and typically provide reports of comparable properties to support the purchase price, ensuring the property appraises at value.

Negotiation Support: If the appraisal report comes in less than the purchase price, the buyer agent will help negotiate and collaborate with the listing agent to ensure a mutual agreement is reached by all parties.

Transaction Coordination: Most importantly, the buyer agent helps keep their client and all parties on track to ensure closing, and crucially, on time.

The value a buyer agent brings to the transaction is indispensable. Their expertise not only facilitates a smoother process but also protects all parties involved from potential pitfalls. By ensuring the buyer has professional representation, sellers can avoid significant risks and secure a successful transaction. In the evolving real estate market, investing in buyer agent compensation is a wise decision that benefits everyone involved.

We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative, and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.

This article originally appeared on the Windermere blog on 5/29/24 & Inman News on 5/21/24.

Buying • Real Estate • Selling • May 10, 2024

What You Need to Know about the Washington State Seller Property Disclosure – Form 17

by Windermere MI

What to Know Before You Buy or Sell: Form 17 Seller Disclosure Statement

Washington State requires sellers of residential real property to thoroughly disclose material facts on a form called the Residential Real Property Disclosure Statement (often referred to as Form 17). Unless the buyer has expressly waived their rights, the seller must deliver this completed disclosure within 5 days after mutual acceptance. The buyer then has a window of time to walk away with their earnest money at their discretion.

While sellers have always been required to disclose material facts, the Form 17 has been required by law (RCW 64.06.020) since January 1, 1995. It has undergone ten revisions since its inception, the last of which went into effect in 2021. In addition to the residential disclosure, the state added an unimproved property (land) disclosure in 2007 (RCW 64.06.015) and a commercial property disclosure in 2012 (RCW 64.06.013). The current form is 6 pages long and includes most of the typical property issues requiring disclosure with a catchall question for anything left out.

Is every seller required to complete this form? Are there exemptions?

The statute allows very limited exceptions RCW (64.06.010) to completing the disclosure statement. They include transfers…

by foreclosure or deed-in-lieu of foreclosure
that are gifts to a parent, spouse, domestic partner, or child
related to marital dissolution or dissolution of a state registered domestic partnership
to buyers who had a prior ownership interest in the property in the last two years
of an interest that is less than fee simple
made by the personal representative of the estate or by a trustee in bankruptcy
in which the buyer has expressly waived the receipt of the seller disclosure statement

However, if the answer to any of the questions in the section entitled “Environmental” would be “yes,” the buyer may not waive the receipt of the “Environmental” section of the seller disclosure statement.

What happens after delivery of the disclosure statement?

The buyer has three business days from receipt of the disclosure statement to cancel the agreement for the purchase of the property (unless they waived their rights to do so in writing).

This right to rescind is statutory, and the decision to revoke the offer may be made by the buyer at the buyer’s sole discretion. If the buyer elects to rescind the agreement, the buyer must deliver written notice of rescission to the seller within the three-business-day period.

Upon delivery of the written rescission notice the buyer is entitled to immediate return of all earnest money deposits and the agreement for purchase becomes void.

If the buyer does not deliver notice the disclosure statement is deemed approved and accepted by the buyer. The full provisions of this right are found in RCW (64.06.030).

What happens if the seller doesn’t deliver a completed disclosure?

If the seller fails or refuses to provide a disclosure statement to buyer within 5 days, the prospective buyer’s right of rescission extends until the earlier of three business days after receipt of the disclosure statement or the date the transfer has closed (unless the buyer has otherwise waived the right of rescission in writing). After closing, per RCW 64.06.040 (3) the seller’s obligation to deliver the disclosure statement and the buyer’s rights and remedies related to it terminate.

Some sellers are more forthcoming than others…

When sellers claim there are no issues to explain, you should be wary…very wary. In my years of practice, I have yet to see a perfect house. Whether a 10-million-dollar estate, a newly constructed home, or a $300,000 starter home, every house has a story and every buyer has a right to know about it so they can knowledgeably complete their due diligence.

Making full disclosure actually benefits the seller, too. By disclosing a condition, the seller shifts the burden of investigation to the buyer under Washington law. By remaining silent, a seller risks the appearance of concealment and a lawsuit. Think of it this way: disclose an issue and if the buyer accepts it you move forward with no worries since they are barred from seeking compensation later; fail to disclose it and you could be looking over your shoulder for years.

I like to see issues disclosed on a disclosure statement. It makes me feel like the seller has been honest and transparent. When I see a “perfect” disclosure, I know the seller is either in total denial or has decided not to disclosure the little (or big) issues they know about. Most buyers expect far more disclosure from the seller than the law requires. While sellers don’t have a duty to inspect their home or look for defects, they do have a duty to disclose defects that affect the value, physical condition, or title to the property. Sellers should consider disclosure to be a form of insurance.

Instead of minimizing disclosures, a prudent seller will try to consider the property from the perspective of a buyer and then disclose what a buyer would want to know. Many of the conditions that lead to lawsuits would have been acceptable to the buyer if they had been disclosed in advance. Other conditions simply are not important enough to the buyer to fully investigate before purchasing a property. To maximize the benefit of disclosure law, sellers may want to make full disclosure of the property and neighborhood even if they have no legal duty to do so. It is usually better to be over-insured than not insured at all.

Buyers have duties, too…

In addition to a thorough inspection, investigating issues raised in the seller disclosure statement is one of the most important parts of due diligence in a real estate transaction. Buyers have a duty of thoroughness and inspection that should not be taken lightly.

The buyer should evaluate each disclosed item, and (especially) those items not disclosed, but easily discovered during a walk-through and inspection. If there are many items identified and not disclosed, a buyer should be concerned about other unseen issues that might also not be disclosed. A savvy buyer will investigate a home with limited disclosure more thoroughly and/or make the decision not to purchase form a seller who is seemingly not transparent with the truth.

It is also important to note that sellers typically have no duty to disclose neighborhood conditions or past events at the property, even though these may be issues of concern to the buyer. For instance, sellers usually have no legal duty to disclose the following conditions either at the property or in the neighborhood:

Death, murders, suicides, rapes or other crimes
Ongoing criminal or gang activity in the neighborhood
Registered sex offenders in the neighborhood (RCW 64.06.021)
Future development in the area
Political or religious activities in the area

If these or similar matters are of concern, buyer should conduct their due diligence prior to submitting an offer or include an inspection and “Neighborhood Review” contingency in the offer to allow them time to complete it as part of their purchase agreement.

What is the seller’s responsibility after delivery of disclosure statement?

The disclosure statute (64.06.040) states that if after delivering a completed disclosure statement, the seller learns from a source other than the buyer or others acting on the buyer’s behalf such as an inspector of additional information or an adverse change which makes any of the disclosures made inaccurate, the seller shall amend the real property transfer disclosure statement, and deliver the amendment to the buyer. The buyer then has the right to rescind the purchase agreement within three business days after receiving the amended disclosure statement.

No amendment is required if the seller takes whatever corrective action is necessary so that the accuracy of the disclosure is restored, or the adverse change is corrected, at least three business days prior to the closing date.

The seller disclosure statement is not a warranty

RCW 64.06.050 says the seller shall not be liable for any error, inaccuracy, or omission in the disclosure statement if the seller had no actual knowledge of the error, inaccuracy, or omission. This includes disclosures based on information provided by public agencies, or by other persons providing information within the scope of their professional license or expertise, including, but not limited to, a report or opinion delivered by a land surveyor, title company, title insurance company, structural inspector, pest inspector, licensed engineer, or contractor. This applies to the seller’s real estate broker as well.

This should give a conscientious seller the assurance that the statute provides for property disclosure only and is not a warranty of current or ongoing condition. Provided a seller discloses everything they know, or that a reasonable seller should have known, about their property, a seller should feel good in knowing they are not held liable for its condition.

Here are a few great online resources to add to your knowledge base:

Current local Form 17 Real Property Transfer Disclosure Statement: https://windermeremi.com/files/2024/05/17_SellerDiscl.pdf

The complete text of the Washington State Real Property Transfer Act: https://app.leg.wa.gov/RCW/default.aspx?cite=64.06&full=true

NOLO Article: https://www.nolo.com/legal-encyclopedia/residential-home-sellers-washington-what-the-law-requires-you-disclose.html

Of course, nothing tops having an experienced pro to guide you through the process. We’ve seen hundreds upon hundreds of homes and can help you identify the solid finds from the duds with gorgeous looking veneer.

Choosing the right broker can save you thousands on your home purchase. Whether through local market knowledge and pricing analysis allowing you to make a smarter offer, recommendations and resources to thoroughly conduct your due diligence and avoid costly mistakes, or savvy contract negotiation to help you get the terms you need, having a Windermere broker on your side is an advantage you can’t afford to sacrifice.

Buying • December 5, 2023

2024 Buyer Agency Law Changes: What Every Buyer Should Know

by Windermere MI

The Law Change Every Home Buyer Should Know About

Maybe you’ve heard about the class action lawsuits in other states, or maybe you’ve clicked a link discussing how REALTORs^® conspired to artificially inflate home prices through price fixing of commissions. What you probably haven’t seen is that in Washington our REALTORs^® and our NWMLS have been actively working to make the real estate marketplace more transparent and consumer friendly since 2019. Through our requests of the legislature Real Estate Agency Law is changing on January 1, 2024. It will significantly affect how you, the consumer, engage a real estate broker among other things. If you’re thinking about buying a home in the Seattle area ever again, read this.

Washington was among the first states in the country to adopt buyer agency in the late 90’s. Before this ground-breaking consumer protection, all agents were considered agents of the seller; if a buyer was working with a real estate professional, that person wasn’t a “buyer’s broker” but rather a “sub-agent” for the seller. Under current law, all agents are agents for the buyer unless there’s an agreement to the contrary. An agency relationship is created the moment you ask, “how is the market?” or an agent hands you a business card. That means that almost immediately as a home buyer you have protections afforded to you by the law of our state. An agent only becomes an agent for the seller through written agreement.

Somewhere along the way (and there are lots of possible explanations for this, practical rather than nefarious), written agreements between buyers and their brokers were deemed unimportant. Very few practitioners have these agreements signed by their clients, even though they are encouraged to do so. The law automatically protects both parties and the seller sets the compensation, so it was a pretty natural path: focus on the other 1,000 things you need to educate the consumer on instead of discussing such gauche topics as how we generate revenue as business people. AKA: how we feed our families. AKA: what does buying a home truly cost.

The law is being updated to become even more consumer friendly and that means an important change: If you are a home buyer shopping for a home you must sign a “brokerage services agreement” with your broker after January 1, 2024. This agreement must discuss the fee that your broker will charge and where that money will come from. It’s a wonderfully positive change that we as Washington REALTORs^® lobbied for in Olympia in January 2023 (our owner, Rachel Mehmedagic, was there!). REALTORs^® asked for more regulation on themselves. This will take us to a higher level of professionalism, bring it on! If your broker doesn’t ask you to sign an agreement, they are not up to date on what is going on in their industry. Start shopping for a new broker.

The NWMLS has created a form for all members to use, but that is not the only form that you may be presented with. Be careful to read what you’re signing. Ask questions. Be a diligent consumer. Demand professionalism from your broker. We will rise to the occasion, we’re confident of this.

For more on what the NWMLS has done to stay ahead of the national conversation: https://www.nwmls.com/northwest-mlss-members-provide-buyers-and-sellers-with-choices-control-and-complete-transparency/. This is not the only change to Agency Law, just the one piece of what we wanted to discuss today. To read the new law: https://app.leg.wa.gov/rcw/default.aspx?cite=18.86 or see the line-item changes here.