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April 14, 2007
Brokers won’t sue clients, they’ll sue you
As I have already found out firsthand, the Utah state test is more difficult than the national test.
In Utah you cannot start off as an agent without having worked under a broker for three years. Brokers provide such invaluable services as instructing agents to go door to door to find clients (whoops let that secret out!)
If your broker is a Realtor, then an agent must also become one. This means Feeeeees! Hooray for monopolies.
Now in theory, a broker can get in trouble for the actions of his agents. I can see how that could be dicey, but after getting a feel for how this industry likes to pass down the blame, I can’t imagine Brokers actually getting in trouble that much.
Our instructor (the broker where this school takes place) warned us against going with 100% commission brokers, claiming that having to pay for your own training and advertising will eat nearly 25% of the commission alone.
Personally, I’d rather decide how my money was spent than have the broker do so, but to each their own I guess. Now uniquely, agents receive their commissions ONLY from their own principal broker. This means that you as an agent can never sue your clients for not paying their commission because, among other things, they are not your clients-they are the brokers. And Brokers will rarely sue clients because of the bad publicity which doing so could bring.
If one’s broker dies, you lose all your listings, and must renew them. This is apparently a bad thing because many agents rely on their listing agreement to keep clients, as they often upset or annoy their clients after getting the agreement signed.
It’s worth noting that all records on real estate transactions must be held for three years AFTER the year in which they occur. Closing documents are the same. Our instructor mentioned at this time that Title companies will routinely attempt to transfer the liability for closings to the agent, by sometimes even insisting the agent do the closing!
Trust funds such as earnest money MUST be placed in a trust account within three business days of receiving it. Interestingly, if you’re managing more than 6 units, you are required to have access to a trust account.
We were warned against commingling (using the trust account money for any purpose). This can get you in serious trouble, and according to our instructor, is not an uncommon thing here.
Trust account money that for whatever reason never gets settled, gets sent to the state unclaimed funds pool after five years. One can NEVER touch trust funds.
It was at this point that the instructor encouraged that we NOT return earnest money without a fight. We were also warned against creating forms.
We were told several times that we are just form filler outters.
I like that. It seems to describe perfectly just what most real estate agents seem to do to earn their commissions:
They fill out forms.
At the time of signing an offer or a purchase contract, one must present copies of the documents to both sides at the TIME of the signing.
Class concluded with the instructor explaining that we must have written permission BEFORE entering into any contracts if we plan on representing both the buyer and the seller. I’d like to take the time to point out that doing this is a TERRIBLE idea. While the agent will certainly make out well, the clients will not have their best interests protected.
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