Article Courtesy of: Inman News
By: John Giffen
Knowing when you need to take an issue to the next level
The role of the principal broker (or managing broker, broker-in-charge, etc.) is significant to the success of your real estate career. He or she must be able to provide advice and counsel on a wide array of topics including regulatory compliance, growing and operating your business, professional standards, and continuing education.
The broker is the one who told the state’s licensing authority they would be responsible for all the activities in your real estate practice. You should be able to turn to the broker at any time, especially if there is an issue or problem you cannot resolve. Rely on their education, experience, and expertise to assist you when you face a challenging issue with a client, cooperating agent, or any other party involved in your transaction. They will always have a duty to protect your reputation as well as the reputation of the firm.
I became a principal broker many years ago at a firm affiliated with a national real estate franchise in Brentwood, Tennessee. I never saw myself as a managing broker. Through a series of different events that occurred at our firm with a change of ownership and personnel, I was asked to step into a leadership role and oversee the operations of one of our branch offices. I accepted the job as a managing broker and ever since then, I have enjoyed helping hundreds of agents and their clients.
When I was selling full-time as an agent, I felt called to guide and direct my clients through the process of listing and selling their home or purchasing their next one. I took this same mindset as a managing broker, except I viewed my role as shepherding agents as they managed their clients and transactions. I always told my agents they could call me with a problem or an idea anytime. As I am now in a corporate management position with our company, I still receive calls, and I always want to help wherever I can.
Many of the conversations I had with my group of folks were questions about something to which they already knew the answer — they just needed my affirmation.
However, on several occasions, an agent was either backed into a corner by another agent or client or faced a roadblock to keep their transaction on track. I was always there to help them find a solution to a problem or intervene in a matter that only a managing broker could address.
I would recommend you consult with your principal broker when you are faced with the following:
1. Contract issues
Today’s real estate contracts have become very lengthy and complicated. The language used in most Purchase and Sale Agreements are designed to provide specific terms and conditions for the buyer and the seller to follow. Your broker can help you navigate through the contract and supplemental documentation.
2. Agency issues
A real estate license is all about representation. Representation in real estate is created through an agency relationship. Agency can be a complex subject for an agent if they are not well-versed in the various agency categories. Your principal broker can assist you in deciding whether or not you should establish a designated agency relationship, change your agency status to a neutral facilitator/transaction broker or terminate an established agency relationship with a buyer or seller.
Assisting an agent through an agency status change was something I did on a regular basis. More times than not, it involved moving from being a designated agent to becoming a facilitator. Agents need to know the advantages and disadvantages of facilitation. The broker can provide them with the proper guidance.
Terminating an agency relationship is one you will face at least once in your career. There are different reasons why clients and agents want to (or need to) stop working with each other. No matter what the issue might be, the broker needs to be involved in this process. He or she can assist you in handling the termination professionally and with minimal stress.
Remember, only the principal broker can release the client from an agency agreement as the broker is the “owner” of his or her firm’s listing agreements and buyer representation agreements.
3. Client issues
You may need to get a principal broker involved if you’re having problems with your client. For example, you may have different opinions over the amount of time you are spending marketing the seller’s home. Or, your buyer client is upset at you because they feel that you haven’t been attentive enough.
Whatever the matter might be, ask your principal broker to work with you in resolving your client’s concerns or complaints. A good managing broker can function as a mediator who can “mend fences” in the agent/client relationship so the client’s goals and objectives can continue to be met.
4. Earnest money issues
There will be times when your client’s contract falls apart. Maybe an inspection revealed a structural defect with a house, or the bank denies a buyer a loan.
When a contract is terminated for a valid reason, sellers must return earnest money back to the buyer. But if they’re not willing to terminate the contract, you may need to ask your broker to get involved.
Quite often, I’ve been called upon to help when one of my agents needed to get the buyer’s earnest money returned, but the seller would not sign the earnest money disbursement form. If discussions between the agents and I, and/or the cooperating managing broker didn’t resolve the issue, we’d have to go to the local court with an interpleader action, where the court decides who will receive the money.
5. Disclosure issues
I receive numerous calls from agents asking me whether or not a potential adverse fact discovered by a home inspector, the client, the agent or a third party should be disclosed. Non-disclosure is the number one reason sellers and listing agents are sued by “injured” buyers.
If you find yourself with a question on whether or not something should be disclosed, call your broker as soon as possible. He or she will be able to provide you with what you should and should not do concerning disclosure. Don’t make any decisions about disclosure if it is not crystal clear. Call your broker.
6. Cooperating agent issues
Not everyone in this business plays by the rules or acts civil toward one another, including cooperating agents on the other side of our transactions.
I wish I had a penny for every time one of my agents called me to complain about the “other” agent involved in their deal. Sometimes the complaints are merited; other times they are not. Either way, if you are unable to resolve a problem with a cooperating agent, you need to contact your broker. He or she can tell you what you need to do to address the matter.
If another agent is not communicating with you concerning an offer or a contract issue, you should contact their principal broker first. If you don’t get anywhere with them, call your broker so he or she can get in touch with the other broker to work things out.
7. Potential legal matters
Our work as real estate agents requires us to handle multiple legal documents on a daily basis. However, our real estate license does not allow us to practice law.
If you feel you or your client are facing an issue that may require the opinion or counsel of an attorney, call your principal broker to discuss the matter. He or she will be able to work with you and an attorney in addressing anything that is outside of our scope of licensing.
Most title attorneys are well-versed in real estate contract law and are an excellent source for help when legal questions arise for you or your client.
8. Regulatory compliance/licensing issues
Lawmakers created real estate commissions/state licensing boards to protect consumers. Your principal broker is the one the state has designated as responsible for all of your activities. Do not hesitate to contact your broker if you face an issue that may jeopardize your real estate license. Trust me, the last thing you and your broker want to do is to find yourselves in front of your state real estate commission at a disciplinary hearing.
9. Disputes adjudicated through your Realtor association
As Realtors, we agree to resolve any potential disputes with our industry peers through our local Realtor associations. If you feel that you need to file a complaint against another Realtor, you should contact your principal broker about filing a grievance or request for arbitration through your association’s Professional Standards Committee.
Many times, your broker must participate in the process with you. Do not file any complaint with your association without your principal broker knowing about it. The last thing you want to do is catch your broker off guard by going around him or her with a grievance filing.
10. Intracompany issues
Sibling rivalry in families is a real thing, and it is not any different in the real estate industry involving two agents licensed under the same principal broker. There may be an occasion when you and another agent in your company will be the two agents involved in a transaction. Most of the time, this is a good thing because you and the other agent received the same training from your broker and will know how to manage each respective side of the transaction correctly.
However, it’s possible that the two of you may not see eye-to-eye on an issue. If this happens, immediately contact your principal broker to mediate the conflict. He or she will know how to find a resolution that will allow you, the other agent, and the clients to move forward in the transaction.
The bottom line: Lean on the knowledge and experience of your principal broker when a need arises. They’re an excellent resource to get you through tough situations with your transactions.
John Giffen is Director of Broker Operations for Benchmark Realty, LLC in Franklin, Tennessee. He is the author of “Do You Have a Minute? An Award-Winning Real Estate Managing Broker Reveals Keys for Industry Success.”