2019: New Year's Resolutions of a Wisconsin Real Estate Professional


 Debbi Conrad  |    January 14, 2019
New Year's Resolutions

As 2019 rolls around, it is a great opportunity for all Wisconsin real estate professionals to turn over a new leaf and look for ways to improve their real estate practice, their reputation in the community, and yes, their pocketbooks for the coming 12 months.

Everyone has areas where they could improve, and obviously everyone is not the same, but the following are some 2019 resolutions that Wisconsin real estate licensees might consider! Repeat after me!

Bump hours 

‚ÄúI resolve to always fill in the blank lines in the REEB-approved forms, especially for the bump clause! I will always fill in the lines in the Closing of Buyer‚Äôs Property Contingency, setting the time in which the buyer must act to deliver a waiver of the contingency and avoid being bumped out of the buyer‚Äôs offer to purchase!‚Ä̬†

If the bump clause hours line is not filled in, the parties may amend the offer to include a specific amount of time. If the parties cannot agree, they may need a court to determine the amount of time to use. Generally, the courts will apply a reasonable time. The court may look at the market and determine what amount of time is usual or customary, such as 72 hours or 48 hours. If the seller elects to issue a bump notice before an agreement is reached, the seller may attach a Cancellation Agreement and Mutual Release (CAMR) to the bump notice. If the buyer signs and returns the CAMR, then the problem is solved. 

If not, the real estate agents are left looking inept in the eyes of the parties ‚ÄĒ for missing the blank line and for not being able to efficiently fix the situation in a way that favors the respective party. This damages the agents‚Äô reputations and the image of real estate professionals in the community.

Inspection contingency notice or amendment

‚ÄúI resolve to deliver a notice and/or an amendment to the seller after the buyer reviews the inspection report on a case-by-case basis and to not respond with a one-size-fits-all solution! Whether the buyer gives a notice or an amendment or maybe even both, it is up to the buyer!‚ÄĚ

Your mission in these situations is multi-faceted. When the buyer receives an inspection report, explain the timelines and the possibilities to the buyer and let the buyer decide. The date stated on line 421 of the 2011 WB-11 Residential Offer to Purchase is the deadline as far as the buyer’s decision about how the buyer wants to proceed. 

If the seller has the right to cure, the buyer can give a notice of defects and see how the seller responds. The seller can: 

a.     Give notice agreeing to repair the items listed on the notice of defects. 
b.     Give notice declining to perform repairs.
c.     Let the 10 days for the seller’s response lapse.
d.     Propose an amendment removing the right to cure provisions and proposing an alternate solution in terms of repairs, price adjustments or other modifications.

Choices (b) and (c) mean the offer will become null and void, which also is the result if the buyer gives a notice of defects and the seller does not have the right to cure. If the seller proposes an amendment under choice (d), this may provide the opportunity for some back and forth negotiation with the parties proposing various amendments, as long as there is either an accepted amendment or a notice of defects before the deadline.

The buyer can also propose an amendment, removing the right to cure provisions from the offer and proposing an alternate solution that may involve particular materials and contractors to perform certain repairs, credits or price adjustments, and whatever other considerations the buyer wants to include in addressing the items from the inspection report to which the buyer objects. Again, there may be opportunity for back and forth negotiation with different amendments submitted for consideration, as long as there is either an accepted amendment or a notice of defects by the deadline.

The buyer may choose to do nothing, which means the transaction will proceed without any repairs generated from the inspection contingency. The buyer is accepting the property as-is. The inspection contingency is waived if the buyer does nothing while the line 421 deadline passes by. Once the chance to give a timely notice of defects is gone, the buyer can only hope the seller will voluntarily agree to an amendment. 

How do you get to both an amendment and a notice of defects? A buyer who is concerned about a fast-approaching inspection contingency deadline may supply both the amendment and notice at the same time if the buyer includes specific language withdrawing the notice if the amendment is accepted; for instance, ‚ÄúThis Notice of Defects is effective only if the seller does not accept the buyer‚Äôs amendment dated ______ on or before ______.‚ÄĚ Another approach would be language in the amendment stating that the parties agree by accepting the amendment that the notice of defects is withdrawn. If the seller rejects the amendment, the seller must still address the buyer‚Äôs notice of defects or the offer will become null and void.¬†

If the buyer just wants out, the best the buyer can do is give a notice of defects ‚ÄĒ the seller can choose how to respond if the seller has the right to cure. It is not within the buyer‚Äôs power to kill the deal unless the seller does not have the right to cure.

Review ‚ÄúThe Best of the Legal Hotline: Tangled,‚ÄĚ and the flowcharts provided therein in the March 2018 Wisconsin Real Estate Magazine at www.wra.org/WREM/Mar18/Hotline as well as your office policy and make sure you have a clear understanding of each party‚Äôs options.

Lawful advertising

I resolve all my advertising shall follow the four commandments of real estate advertising in Wisconsin!‚ÄĚ

Wis. Stat. §452.136 provides real estate professionals:

  • Shall not advertise in a manner that is false, deceptive or misleading.
  • Shall disclose the firm‚Äôs name in a clear and conspicuous manner.
  • Shall have the listing when advertising a property unless they have consent from the listing firm.
  • Shall advertise only at a price agreed to by the owner.

Avoid wire fraud

‚ÄúI resolve to reduce the risk of wire transfer fraud by requiring parties to independently verify any wiring instructions by phone or in person with the title company, financial institution or entity directing the transfer! I shall not allow myself or others at my firm to become responsible for the transmission or forwarding of any wiring or money transfer instructions!‚ÄĚ

The risks are real. Wire transfer hackers are increasingly sophisticated, patient, clever and successful and are constantly evolving. 

The precautions you and your firm should be taking have been discussed at length many times, most recently in the February 2017 Legal Update, ‚ÄúCombating Cybercrime Concerns,‚ÄĚ at www.wra.org/LU1702 as well as ‚ÄúThe Risks of Sending Wire Transfer Instructions,‚ÄĚ in the October 2017 Wisconsin Real Estate Magazine at www.wra.org/WREM/Oct17/WireTransferFraud. Follow this advice! Make sure your firm has cybercrime insurance and strict policies and procedures in place for the protection of all agents and parties.

Prompt and courteous communications

‚ÄúI resolve to behave professionally in my communications with clients, customers, other real estate professionals and other service providers! I shall respond promptly, concisely and courteously, follow through on my promises, and be honest and forthright.‚Ä̬†

Review ‚ÄúIt‚Äôs Not You; It‚Äôs Me. Or Is it Both of Us?‚ÄĚ in the April 2018 Wisconsin Real Estate Magazine at www.wra.org/WREM/Apr18/Professionalism and pick out a list of at least 10 rules from the Pathways to Professionalism to focus on as your professional goals for 2019. Strive to be the professional the REALTOR¬ģ brand stands for!

Use the new RECR forms

‚ÄúI resolve to always use the current forms for the Real Estate Condition Report and the Vacant Land Disclosure Report and all other condition reports!‚Ä̬†

Really now, this one is a gimme! But we hear there are licensees among you who have not conquered this simple step toward license law compliance.

Let‚Äôs go one step further: ‚ÄúI resolve to always use the current version of all REEB-approved forms, all forms with mandatory language in the statutes (like the condition reports and disclosure to customers) and all WRA forms too!‚ÄĚ Wis. Admin. Code ¬ß REEB 16.06(7) provides, ‚ÄúA licensee shall use the latest approved version of a board-approved form.‚ÄĚ

Focus on clients, not commissions

‚ÄúI resolve to loyally represent my clients and always put their interests first! This means placing the client‚Äôs interests ahead of the interests of the firm and the interests of other parties in the transaction.‚Ä̬†

You have a fiduciary duty of loyalty to clients. Under Wis. Stat. ¬ß 452.133(2), you must place the client‚Äôs interests ahead of your interests and the interests of the other parties in the transaction and cannot disclose information or give advice to the other parties if contrary to the client‚Äôs interests, unless otherwise required by law. A classic example of a breach of the duty of loyalty is a broker who purchases property listed with his firm and then immediately resells it at a profit. Such conduct ordinarily is perfectly appropriate and lawful by persons acting ‚Äúat arm‚Äôs length,‚ÄĚ but a broker likely will be viewed as having taken a profit opportunity rightfully belonging to the client and thus to have breached the duty of loyalty.¬†

A subagent also owes the client of the principal firm ‚ÄĒ often the seller, certain duties under Wis. Stat. ¬ß 452.133(4). A subagent may not give advice or opinions to the parties contrary to the interests of the seller ‚ÄĒ as the client of the principal firm, unless otherwise required by law. A subagent cannot put his or her interests ahead of the interests of the principal firm‚Äôs client, which is the seller in this example.

Establish solid dates and deadlines 

‚ÄúI resolve to set realistic dates and deadlines in parties‚Äô contracts!‚ÄĚ

Lines 24-25 of the 2011 WB-11 Residential Offer to Purchase caution licensees and the parties to provide adequate time for deadlines running from acceptance. These words of wisdom apply with respect to time frames such as the inspection contingency deadline. What is not fully appreciated by too many licensees is that this is not simply the deadline for conducting the inspection, reviewing the inspection report and deciding whether to give a notice of defects. In truth, the deadline is the end of a negotiation process that begins when the buyer receives the inspection report if the buyer negotiates via amendments with the seller to resolve the buyer’s concerns about defects described in the inspection report. The number of days allotted ideally should allow two or three proposed amendments to be exchanged between the parties. Many licensees use 10 days as a standard inspection contingency period, but 10 days can prove to be too short. 

Dates and deadlines should be reasonable, recognize a logical sequence of events and give sufficient time for the performance of preliminary or related tasks. If the contract fails to state a deadline, the court will assume that performance is to occur within a reasonable time considering the circumstances. It is far preferable to make sure the time frames agreed upon by the parties are accurately stated in the contract.

For more information about dates and deadlines, see ‚ÄúDeadlines: More than Suggestions,‚ÄĚ in the May 2015 Wisconsin Real Estate Magazine at www.wra.org/WREM/May15/Deadlines, and ‚ÄúTick Tock: Calculating Deadlines in the Offer to Purchase,‚ÄĚ in the May 2012 Wisconsin Real Estate Magazine at www.wra.org/WREM/May12/TickTock.¬†

Counter-offers 

‚ÄúI resolve to use WB-44 Counter-Offers properly in my transactions and shall follow the principles outlined below.‚ÄĚ

  • Counter-offers cannot be used when there is an accepted offer, only before acceptance.
  • The legal effect of writing and delivering a counter-offer is the same as the rejection of the previous offer and the presentation of a new offer with one of more changes to the terms and conditions.¬†
  • Only the terms that vary from the original offer are written out and all other terms remain the same and are incorporated by reference.¬†
  • The only important acceptance deadline becomes the acceptance deadline stated in the counter-offer itself; the acceptance deadline in the offer is irrelevant because the offer will never be accepted.¬†
  • Once an offer has been countered, it cannot be accepted.
  • A buyer can counter his or her own offer.

Personal property inclusions/exclusions

‚ÄúI resolve to check the personal property included and not included in the purchase price with the parties before the offer is accepted to avoid closing time skirmishes!‚Ä̬†

The offer determines the agreement between the buyer and seller about which items are included. The listing contract expresses what the seller is willing to have included in the offer and still have it meet acceptable terms. Similarly, an MLS or office data sheet only reflects what property is available. 

It is the responsibility of both the listing and cooperating agents to make sure the offer reflects the intended agreement of the parties regarding fixtures and personal property items that may be questionable in the minds of the parties. Take a moment and review the offer with your respective party. When in doubt, it is best to write it in as included or not included, as the case may be. 

Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA. 

Copyright 1998 - 2019 Wisconsin REALTORS¬ģ Association. All rights reserved.

Privacy Policy   |   Terms of Use   |   Accessibility   |   Real Estate Continuing Education