Event Coverage

Real Estate Lawyers Advise Brokers and Managers to be Careful as Market Cools

As the housing market cools from the heated frenzy of the previous years, more real estate agents will be competing and it is likely that there will be more transactions that will not be up to standards, attorneys Kent Westerberg and Dave Hamerslough told SILVAR brokers and managers at a meeting held at Trader Vic’s in Palo Alto on Friday, October 27.

Westerberg is an attorney with Atwood, Haiman & Westerberg of Saratoga; Hamerslough is an attorney with Rossi, Hamerslough, Reischl & Chuck of San Jose. Their presentation focused on a broker’s fiduciary duty with regard to important issues such as short sales, the Home Equity Sales Act and compensation, the Mortgage Foreclosure Act, the buyer’s inspection waiver form and the indemnity clause in the listing contract, which they noted, “is so powerful it can control how a litigation goes and whether or not you can sell out or not.”

“We’re now dealing with a cooling market, but the number of new agents does not appear to be slowing down. It’s important for brokers to talk to new agents about the changing market place,” said Westerberg.

And as times get more challenging, said Hamerslough, “More people are going to find fault in these areas.”

Westerberg and Hamerslough also recommended that brokers and managers should keep up to date on new legislation. They noted the most significant law which will go into effect January 1, 2007 is the License Revocation for Advertising False Credentials. This piece of legislation states the real estate commissioner may revoke, suspend or deny the license of anyone who falsely advertises his or her credentials, such as a certification of special education or membership in a trade organization. This law aims to protect consumers from unscrupulous and fraudulent lending practices, according to its author Assemblymember Leland Yee. Source: Assembly Bill No. 790.

Here is some advice from both lawyers:

1. As the number of foreclosures rise, follow the rules when you deal with foreclosures.

2. If an agent has no experience in negotiations and short sales, they need to say so, and you need to identify these agents. Don’t sign a short sale until you see a full release from the lender.

3. Regarding disclosure, scrutinize the statement made by a listing agent to promote an offer. Don’t oversell anyone’s interests. Make sure the agent is not overstating what the actual situation is in order to produce an offer.

4. Be careful about lender fraud and overlisting purchase offers with kickbacks to buyers.

5. Just because a mortgage broker tells you it’s okay, it’s not. Beware of red flags and separate addendums. You do not want to get involved in transactions with so many red flags.

6. It’s the agent’s responsibility to read the inspection reports.

7. Realtors are liable for what they place on the MLS.

Most important of all, Westerberg and Hamerslough stressed, you can never be too careful, so make sure everything is in writing.

“Document discussions with your clients. It’s a function of the time,” they noted.

The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

For further information, please contact Rose Meily at SILVAR Public Affairs, e-mail , or phone (408) 200-0109.

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