Guidelines for Seller Representation

As Realtors, our fiduciary relationship with our clients requires a high level of good faith, loyalty and confidentiality. We have a duty to protect our clients' best interests. Here are some tips to improve the representation of your seller clients. Please note that these are only based on my personal experience as a Realtor, and are not intended to be legal advice. If you have a legal question about your duty to your clients or your clients' disclosures, you should contact an attorney.

Get to Know the Property

It is crucial to take notes while you inspect the property that you will represent. Make sure the sellers understand what will convey with the property under the sales contract. Clarify items that they do not wish to convey. Ask about porch swings, fountains, play structures, mirrors, speakers, pot racks, etc. Understand the property lines, and find out about adjoining properties. Check the ownership of nearby land that the sellers believe is a greenbelt. A thorough inspection and understanding of the property is fundamental to good representation.

Prepare Complete Disclosures

In most cases the sellers are required to fill out a disclosure form, answering questions and disclosing facts about the property. After the sellers have completed the form, take the time to review it and ask questions. The sellers may not have understood a question, or were reluctant to say something negative, or may have forgotten an item that needs work. For example, a seller forgot that, years ago, he had replaced some damaged wood floor with plywood under an area rug. Ask the seller to think carefully about repair items that will not be easily noticed.

Sometimes the sellers have copies of inspection reports or previous sellers' disclosures. These documents are a part of their knowledge of the property, and should be a part of their disclosure. If the property has been rented, the seller may have a log of repairs that have been done.

Disclose Significant Repairs

Sometimes sellers ask if previous repairs need to be disclosed. Of course, it is not necessary to write down every repair that was done during the sellers' ownership. However, it is prudent to disclose repairs related to water, fire, structural integrity, or termites. In addition to these types of repairs, all major construction should be noted. By disclosing these items, the sellers give the buyers an opportunity to investigate them further during the inspection period if they wish.

Put the Sellers' Interests Ahead of Your Own

The disclosure process may require that we make recommendations that sellers do not want to hear. For example, the sellers mentioned that a beautiful tree is diseased, and will die in a few years. Our obligation, as their agent, is to recommend the safest position for the sellers, and that position is to disclose the defect. Ask the sellers to think about what they would want to know if they were the buyer.

Thorough and complete disclosures are a risk reduction measure for sellers. If the sellers knowingly concealed a defect, or appeared to have concealed a defect, they might be vulnerable to a serious claim by the buyer after the closing. If you think that the sellers might have a duty to disclose something to a buyer, advocate for disclosure. This is a part of your obligation to represent the best interests of the seller, both for the short term and long term.

Recommend Inspections

Inspections are a protection measure for both the seller and buyer. Although inspections are normally obtained and paid for by the buyer, the inspection protects the seller as well as the buyer. The inspection will reveal items that the seller was not aware of, or did not think to disclose. (Yes, water runs into the garage, but we never considered it a problem.)

Sellers should consider getting a pre-marketing inspection. This will help them to get prepared for marketing, avoid surprises later, and build buyer confidence in the property.

Avoid Acting as an Inspector

During visits to the house, avoid attempting to assess problems for the seller. (Those cracks are not from settling. Or, all homes in this area have some slope in the floors.) All questions of this nature should be referred to an inspector, engineer, or construction specialist. You are not the interpreter of maladies. Home inspection is a difficult job to do perfectly, even for trained professionals.

Include Service Contracts

I often recommend that the seller and buyer have a service contract included in the contract. These policies provide a one year repair service for the buyer. They can often reduce the potential that a future repair issue will cause them frustration and anger toward the seller.

Do Not Allow Misinformation to Stand

Be alert to potential problems that could result from a misunderstanding of disclosure requirements or of the property itself. For example, the sellers may mention something that they do not consider to be a problem, and have no intention of disclosing. (We fixed all the sheetrock cracks. Or, it flooded once a long time ago.) If you let this pass, your silence may be taken as approval of the non-disclosure. In the event of a problem later, they might feel that you advised them not to disclose the item. A common response by sellers to a lawsuit by the buyers is: My agent told me not to disclose this.

Similarly, speak up if you feel that the buyer is making an erroneous assumption about your client's property. (We love the greenbelt behind the house.) The best representation for seller is proactive.

Open Communication

An open line of communication during transactions is a good defense against misunderstandings. No matter who complains, a quick response is more likely to resolve the problem before it escalates. People need to feel that their concerns are being heard. Many problems can be avoided and anger kept to a minimum by simply being in communication. Emotion often drives the escalation of a problem.

The communication and file storage power of email is a great tool to help you fulfill your duties to your clients. It is a good idea to save the complete file of messages relating to a transaction. If a decision has been made verbally, it is easy to send a quick note by email to place it into the email file.

When new information about the property is delivered to the buyer, an email follow up will document the file. While it is important to provide accurate information, it is also important to document.

Set Standards

Set your own standards, and do not allow other people to run your business. This includes clients, other agents, lenders or any other party. Walk away from deals, rather than get entangled in unethical or imprudent activity. Not all clients are a good fit for your business. Select good clients; walk away from bad ones.

Good business practices include a proactive attitude toward property disclosure, and a system of communication and documentation. They will help you to fulfill your obligation to put the best interests of your seller clients first, as well as to treat other parties fairly and honestly.