October 6, 2018
Students attending our real estate licensing course in New Jersey often cite the adage: “The three most important rules in real estate are location, location, location.”
That may or may not be true for home buyers, but for real estate agents, I beg to differ.
We teach our students, “If you want a successful real estate career, you need to know that the three most important rules for us is, “Disclose, disclose, disclose.”
If we are a listing agent, it is our duty to disclose any defects in our listings of which we are aware. For example, we walk through a home that we are about to list and notice staining in the bedroom ceiling. When we bring that to the seller’s attention, she tells us that when it rains for long periods of time, there is a tiny leak from the roof. “But don’t worry,” she tells us, “I’m painting the ceiling today, so it won’t show when buyers come through.”
In another situation, we discover the home once had oil heat, and the underground oil tank is still in the ground. Or perhaps as a real estate licensee, you are part-owner of an LLC that purchased the house that you are now listing for sale after renovating it. Or your seller has already accepted an offer from a buyer you met at your open house. You are on the last day of Attorney Review when an offer comes in from another agent for $500 more than your buyer is paying. You figure that your seller is already happy with the contract he has in place with your buyer, so you don’t present the new offer to him.
In all these scenarios, you have the obligation to disclose to the buyer and buyer’s agent the defects noted, the fact that a licensed real estate agent has an interest in the transaction, and all offers that come in, no matter how strong or weak you think they are.
On the buyer’s side, let’s assume you discover—just three weeks before settlement—that your buyer lost her job. She begs you not to tell anybody, because she needed the income to qualify for the mortgage. On the one hand, you owe the duty of confidentiality to your buyer client. But you also owe the duty of honesty to the seller’s side because such a discovery could jeopardize the entire sale and closing.
In Garden State’s real estate licensing classes, we tell students at our real estate school, “The easy way to wade through all the regulations is to simply apply The Golden Rule.” If you were buying a home, would you not want to have any latent defects disclosed to you? If you were the seller and were relying on the qualifications represented to you by the buyer, would you not want to know if the settlement you were counting on was now at risk?
It seems so elementary. But if it is that obvious, why are “disclosure issues” always in the top five ethical complaints lodged against real estate licensees at their Board of Realtors and their state real estate commission?
If you are interested in becoming a New Jersey real estate agent—or in earning your NJ broker’s license—check out Garden State Real Estate Academy’s courses at https://gsreacademy.com/ or call us at 609.923.0590