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Wednesday, August 16, 2017

Real Estate Transactions Can and Should Be a Win for Both Buyer and Seller

As a member of my local Rotary Club, I recite Rotary’s “Four-Way Test” at the beginning of each weekly meeting. This test of the things we think, say or do was introduced in 1932 as a guiding principle for all Rotarians:

First, is it the TRUTH?

Second, is it FAIR to all concerned?

Third, will it build GOODWILL and BETTER FRIENDSHIPS?

Fourth, will it be BENEFICIAL to all concerned?

Isn’t that how all real estate transactions should unfold? We believe this at Golden Real Estate and we work diligently to make certain that every transaction results in a win/win, in which both parties are satisfied with the final outcome. You can also think of it in terms of ethics. When both parties and their agents have acted in accordance with the Four-Way Test, you can rest comfortably in the knowledge that ethics have been served.

Telling the truth is not just a nice concept for real estate professionals — it is a legal obligation. We stand to lose our real estate license if we fail to disclose a known material fact about our listing or if we deceive the other party in any way. If we are engaged by a seller who wishes to conceal a defect or other material fact that is known to us, we are obligated to decline that listing.
Even when a buyer of a listing is a “customer” instead of our client, we are legally bound to treat them fairly and honestly. It’s embodied in the Realtor Code of Ethics. Article 1 of the Code reads as follows: “When representing a buyer, seller, landlord, tenant, or other client as an agent, Realtors pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve Realtors of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, Realtors remain obligated to treat all parties honestly.”

Regarding “fairness to all concerned,” we enter the domain of personal integrity rather than of legal requirement. This comes to the forefront when  multiple offers are received, giving a listing agent the opportunity to “double-end” a transaction — that is, to accept an offer from an unrepresented buyer versus one from a buyer who is represented by another agent.  The result of a double-ended transaction is a higher commission for the Seller’s agent, who now doesn’t have to split it with another (buyer’s) agent.

Our legal and ethical responsibility is always to put the client’s interests ahead of our own, which means we are to counsel the Seller to accept the offer that most benefits them, irrespective of how that decision might impact our commission. I think it’s only fair for agents to reduce their commission rate when they don’t have to share their commission. That way, sellers can share in the listing agent’s good fortune — the agent makes more total commission, and the seller nets more in the sale of their home. The result is what all would consider a win/win situation.

But fairness also enters the picture when we are negotiating multiple offers from multiple agents. I feel it’s only fair to let every agent know exactly where their offer stands so that no one is blindsided in our efforts to obtain the best offer for our sellers. That means letting each buyer’s agent know what our current highest offer is, so their buyer has the opportunity to increase their offer. This is standard operating procedure at Golden Real Estate, and I am frequently thanked by agents for managing multiple offers in this manner. (This practice also addresses the Rotarian tenet of “building goodwill and better friendships.”  Even losing bidders appreciate it.)

When a real estate transaction is conducted following the principles and practices I’ve outlined here, the end result is a sale which was beneficial to all parties. 

 The agents of Golden Real Estate may not all be Rotarians, but I can say with confidence that we all practice the Four-Way Test in the way we deal with the public and our colleagues. To me, it’s the only way to be.  Reach the agent of your choice at 303-302-3636.

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