TX 21 06 17 - Powerhouse - Training

Providing
Award-Winning
Real Estate
Education
Since 1983
Champions School of Real Estate Awards Champions School Individual Awards
2014 Best Companies to Work For in Texas 2010 Top 50 Most Influential Women in Houston
2013 Houston Business Journal - #5 Best Places to Work 2008 Texas WCR Business Woman of the Year - Rita Santamaria
2013 BBB Award for Excellence 2008 HAR Hero of the Month for February - Rita Santamaria
2007 National Pinnacle Award, RealtyU 2007 WCR Houston Chapter Business Woman of the Year - Rita Santamaria
2006 National Pinnacle Award, RealtyU 2007 WCR Texas Business Woman of the Year - Rita Santamaria
2005 National Pinnacle Award, RealtyU 2002 & 2004 RealtyU Instructor of the Year - Sue Ikeler
2003 WCR TX Chapter Affiliate of the Year 2003 NAR REBAC Realtor® Hall of Fame - Rita Santamaria
2003 Chairman’s Leadership Award 1994 WCR Chapter President Award
2000 Chairman’s Leadership Award
Power House Training
Champions School of Real Estate® www.ChampionsSchool.com
TX-21-06-17_Power_House_Training
ABOUT THE AUTHOR
Rita Santamaria is the owner and founder of Champions School of Real Estate, founded in 1983.
Visit www.ChampionsSchool.com for more information on real estate, mortgage, appraisal,

inspection, licensing, and continuing education needs, available in the classroom, online, and via
ChampionsLive! broadcast.
Visit www.ChampionsBusinessEtiquette.com for more information on the CSRE Success Through

Business Etiquette course to help improve your interpersonal skills.
TABLE OF CONTENTS
CHAPTER 1 - EFFECTIVE MARKETING FOR SUCCESS IN REAL ESTATE.................................... 9
Introduction to Power House...................................................................................11
Why Market Yourself?........................................................................................... 12
Marketing Materials....................................................................................... 20
The Power Presentation Book............................................................................... 22
Cost Approaches..................................................................................................... 22
The Zero Cost Approach...................................................................................... 22
Minimum Cost Approach.................................................................................... 23
Choosing Your Farm Area...................................................................................... 24
Cold Calling........................................................................................................... 27
Generational Selling............................................................................................... 29
Open Houses........................................................................................................ 34
Talk to Other Agents About Their Marketing Activities..................................... 36 Table of

Contents
The Client-Based Sales Approach........................................................................... 38
The Art of Negotiation........................................................................................... 40
The Successful Sales Agent....................................................................................41
CHAPTER 2: GOAL SETTING AND YOUR BUSINESS PLAN..........................................................45
Setting Your Goals..................................................................................................47
Introduction to Financial Goals...............................................................................55
Setting Financial Goals.........................................................................................55
Financial Goals Exercise.......................................................................................59
Personal Business Planning ................................................................................. 64
What is Prospecting?............................................................................................ 68
CHAPTER 3: WORKING WITH BUYERS............................................................................................. 75
Servicing the Buyer................................................................................................. 77
Prospecting for Buyers.......................................................................................... 77
Qualifying the Buyer............................................................................................ 78 III
Copyright © 2021 Champions School of Real Estate®

Financing.............................................................................................................. 80
Real World Scenario - Income Ratios.................................................................. 81
Understanding Needs........................................................................................... 82
Working with Internet Buyers........................................................................ 83
Essentials of a Buyer’s Representation Agreement.................................................. 84
Agent’s Duties to Customers.......................................................................... 85
Information About Brokerage Services................................................................. 86
Selecting Properties To Be Shown.......................................................................... 99
The Buyer’s Book ................................................................................................. 99
Showing Property............................................................................................... 100
Facts Buyers Want to Know About a Property..............................................101
Buying Signals...............................................................................................101
Exercising Due Diligence for Your Buyers..........................................................109
Table of
Overcoming Objections.........................................................................................110
Contents
13 Ways to Position Your Buyers to Make a Decision...................................111
Real World Scenario - Problem Clients.............................................................112
How Buyers Process Information..................................................................113
Working with a Reluctant Buyer...................................................................113
Signs Of Problem Clients ...................................................................................113
Ways to Release Your Buyer Without Burning Bridges......................................114
Working with Buyers - Sales Agent Safety ........................................................114
Developing a Winning Offer.................................................................................117
Presenting a Buyer’s Offer...................................................................................117
Texas REALTORS® Seller’s Invitation to Buyer to Submit New Offer...............118
CHAPTER 4: WORKING WITH SELLERS..........................................................................................123
The Listing Process............................................................................................... 125
Setting the Appointment.................................................................................... 125

IV The Listing Presentation..................................................................................... 125
The Listing Agreement......................................................................................... 129
Elements of a listing Agreement........................................................................ 129
Types of Listing Agreements.............................................................................. 130
Multiple Listing Services.....................................................................................132
Listing Objections...............................................................................................133
Disclosure Issues..................................................................................................135
Subagency............................................................................................................136
Real World Scenario - The Jones Family ............................................................137
Pricing Strategies...................................................................................................138
Pricing Objections...............................................................................................140
Case Study - CMA.............................................................................................141
Counteroffers (Sellers).........................................................................................166
Your Sellers Accept a Contract............................................................................167
CHAPTER 5: THE PROFESSIONAL CODES OF ETHICS................................................................. 169 Table of

Contents
Distinctions Between Law, Ethics, and Morals.....................................................171
Federal and State Law Relating To Conduct.........................................................172
Canons of Professional Ethics and Conduct........................................................173
Minimum Ethical Standards.................................................................................179
Activity - Real Ethical Dilemmas in Real Estate................................................180
Deceptive Trade Practices Consumer Protection Act............................................184
Professional Codes of Ethics..................................................................................188
Ethics and Business Principles for New REALTORS®......................................190
NAR® Code of Ethics and Standards of Practice..................................................193
CHAPTER 6: THE TRANSACTION PROCESS AND CLOSING......................................................203
The Earnest Money Contract............................................................................... 205
The Offer............................................................................................................ 205
Presenting the Offer........................................................................................... 206
Overcoming Objections and Obtaining Counteroffers....................................... 207 V

Negotiating......................................................................................................... 208
Acceptance......................................................................................................... 209
Closing Techniques............................................................................................ 209
Transaction Process...............................................................................................211
Sample Checklist...................................................................................................214
Following Through to the Closing...................................................................... 226
Closing the Transaction ....................................................................................... 226
Closing Checklist for Buyers and Sellers............................................................ 227
CLOSING CHECKLIST FOR BUYERS AND SELLERS................... 228
Closing Countdown − Protocol...........................................................................231
Closing Disclosure.................................................................................................232
CHAPTER 7: TECHNOLOGY CREATES A POWERFUL OFFICE.....................................................243
Hot Technology Buys For The Successful Agent................................................ 246
Table of
Websites and Apps............................................................................................. 249
Contents
Hot Topics in Real Estate - Home Search Apps................................................ 249
Social Media For Business.....................................................................................251
How To Use Social Media For Business................................................................257
Social Media Don’ts............................................................................................257
Social Media Dos................................................................................................258
Hot Topics in Real Estate - Social Media Marketing and the TREC Rules.259
Creating a Professional Website......................................................................... 262
Data Management Trends.................................................................................. 264
Internet Etiquette................................................................................................. 264
Email Etiquette ................................................................................................. 266
CHAPTER 8: BECOMING “SEASONED” AND STAYING AFLOAT...............................................269
Growing And Moving Forward............................................................................271
Wish You Had A Mentor?...................................................................................272

VI Mentoring Characteristics ............................................................................273
Stay Qualified........................................................................................................275
Stay Safe, Stay Successful......................................................................................277
56 Safety Tips For REALTORS®......................................................................277
Self-Check Business and Personal Life.............................................................. 284
Self-Check Goal Setting.................................................................................... 285
Biggest Challenges............................................................................................. 286
Advice for New and Seasoned Agents.................................................................. 287
ANSWER KEY.........................................................................................................................................297
BIBLIOGRAPHY......................................................................................................................................303
GENERAL TEST INFORMATION.........................................................................................................305
INDEX....................................................................................................................................................... 311
Table of
Contents
VII

Notes
VIII

CHAPTER 1
Effective Marketing
for Success in Real Estate

Chapter 1: Effective Marketing for Success in Real Estate
KEY TERMS AND CONCEPTS
name recognition hot buttons market area
sphere of influence marketing plan geographic farm
economic farm cold calling dead files
open houses referral negotiation
PRE-TEST
Directions: Match the definition with the term that it best describes.
1. _____ Geographic farm a. a plan used to gain name recognition
b. neighborhoods or subdivisions serviced by

2. _____ Marketing plan your firm.
c. words or content top producers are using to be

3. _____ Cold calling successful.
Chapter 1
Effective d. all the properties in a particular price range,
Marketing 4. _____ Economic farm in the area your firm services
for Success
in Real Estate e. contacting expireds and previous clients
5. _____ Hot buttons
1. b 2. a 3. e 4. d 5. c
Answers to Pre-test
10

INTRODUCTION TO POWER HOUSE
Q uite often, new students walk into Champions School of Real Estate and say, “I LOVE houses,
and I want to be a real estate agent! I never get tired of driving around town looking at houses.
I think this is the career for me!”
To be a successful real estate agent, you must love houses (or at least like looking at houses), but what
else must you do?
• Learn contract law
• Learn how to present an offer, an inspection, and bad news
• Learn how to negotiate
• Learn to budget, pay taxes, and pay your bills
• Learn about the foreclosure process, short sales, etc.
• Learn about restricted vs. non-restricted properties
• Learn about selling an estate through the trustee
The learning curve to becoming a great agent is quite steep. There are so many demands that one day
you may find yourself thinking, “Is this still fun?” But the next day, you may get a call from another
prospect, and you will rush out to look at houses again! Yes, that is fun; the cycle of fun starts all over Chapter 1
again, until you encounter another downside to the business or another roadblock in your way. For Effective
example, a loan is not approved or a bad inspection report is returned, and then it is back to square Marketing
one all over again. Now what? Now, commitment kicks in! for Success
in Real Estate
If you think that you are alone in losing that fun feeling from time to time, you are not. Most agents
decide to throw in the towel, about once a week, if not every other day. But, the next day brings a
good buyer, a good inspection report, a good appraisal, and a good closing, and most of all, a good
commission check.
“Wealth creates freedom, and freedom is the ultimate gift of life.” The journey of building wealth
begins when you determine what you want and take responsibility for getting there. This means
commitment. Power House is not just about marketing; it is about empowerment. Power House
is about you and what you are doing for your business. You have to get out there and make things
happen for yourself because no one is just going to come knocking on your door. Power House
will help you become better equipped, giving you the tools you need to stand out so you can
become powerful in your business!
When we think about professionals in any field, we usually have some clear expectations about
the way they will perform. We expect them to be good at what they do. We expect them to per-
form on time. We expect them to know the best way to carry out their responsibilities. We may
even have certain expectations about the way they should look or dress. We expect them to get
the job done right, and on time, and we expect to get what we pay for.
If you have chosen to enter the profession of real estate, then people will expect these things and
more from you! Can you do it?
Of course, you can!
11

THE PROFESSION OF SELLING
The first advantage and the reason I love selling is the freedom of expression.
The second advantage of selling is that you have the freedom to become as successful as you would
like to be. In our profession, no one limits your income but you.
The third advantage of selling is that it is a daily challenge. In sales, you never know what opportuni-
ties or rewards await you on any given day, or what catastrophes may befall you. To the salesperson,
every day is an adventure. Every morning, tell yourself that challenge is exciting, it’s fun, and you
look forward to it.
The fourth advantage of selling is that it offers high potential returns from low capital investment.
The fifth advantage of selling is the opportunity to be self-employed. You set your hours and create
your daily schedule. You are an entrepreneur.
The sixth advantage of the selling profession is that it is satisfying. You feel good when your cus-
tomer walks out with your product. The professional salesperson recognizes no limits to his or her
growth, except those limits that are self-imposed.
The seventh advantage of being a professional salesperson is that it stimulates your personal growth.
WHY MARKET YOURSELF?

People tend to think that the business will come to them, and that is not the case. Your biggest
Chapter 1 competition is yourself. You have to get out there and market yourself to your clients!
Effective
Marketing What marketing tactics are working for you currently?
for Success
in Real Estate
What challenges have you faced?

_
This business may be competitive, but it is not seasonal. While other agents are on vacation, this
could provide an opportune moment for you to promote yourself. You have to let people know
that you are in the business of real estate. Marketing is going out and telling people what you
do. Building name recognition comes from developing a marketing plan that is outside the box,
something that separates you from others.
There are a lot of different agents out there, so what are you going to do that is different? How
are YOU going to differentiate your approach?
Below is a list of tips that could help boost your marketing platform.
• Post something of value on a neighborhood Facebook page.
• Video a listing on your phone and post it on your YouTube channel or social media; it will
be one of the first to show up on Google.
• Donate supplies and backpacks to schools in your market area.
• Sponsor a neighborhood newsletter for each month that hosts a newsworthy column or
notice of a sold listing in which you describe your success in selling the home.
12

• Offer to bring breakfast to the neighborhood Home Owner’s Association (HOA) and
leave your business card.
• Have a series of testimonials either printed in a presentation book or posted on a webpage.
GETTING STARTED
Before you can list properties, you need prospects. Developing a prospect list can be accomplished in
many ways. Your success will depend on your efforts. Not every method will work for every license
holder, but every license holder can make some method work. The following are a few suggestions
to help you develop a clientele.
Some people can sit down and write a list of 100 or more people that they know. The list would
include friends, neighbors, business acquaintances, and relatives. Maybe you belong to a club, a
civic group, a church, or a community organization. Perhaps you have contacts from a previous job.
Beginning a list of people you know can be the beginning of your marketing effort. Use your social
media network to fill out your sphere of influence.
If you are new to the area or do not have the number of acquaintances shown above, there are other
sources that you can tap. Newspapers, including local small-town papers and community journals,
are excellent sources for contacts. Birth announcements, wedding and engagement announcements,
job promotions, transfers, graduations, firm expansions, closings, or takeovers, single-family rent-
als, FSBOs, and lease/purchase by owners are all potential leads. On the less positive side, deaths,
bankruptcies or foreclosure notices, and divorces could also indicate a need for your listing services.
Expired listings, movers, builders, architects, barbers and beauticians, and church leaders can all be
sources. The Human Resources departments of many large companies will often provide a referral Chapter 1
service to employees who are relocating. Door-to-door canvassing could also useful. If you are using Effective
these last two methods, you may want to use them as a follow-up to a mailed letter, flyer, or postcard. Marketing
for Success
Many personality traits can lead to success in sales. Tact, enthusiasm, perseverance, accuracy, the in Real Estate
ability to act objectively, positive attitude, self-confidence, tolerance, and patience are all helpful.
While it is wonderful to possess these traits, you should recognize that what you do with your gifts
is often much more important than the gifts themselves. In other words, it is the effort that you put
into your profession that will dictate your rewards.
BECOME AN EXPERT IN YOUR MARKET AREA!

If you see other REALTOR® signs in the area in which you market, do you tend to run? Or do you
stay? The answer to this should always be RUN TOWARDS! You want to be part of it!
Marketing is about consistency, and while being consistent is key, you must also take the time to
learn everything you can about the area in which you decide to do business. Knowledge will only
boost your confidence in selling to your clients.
Read publications such as REALTOR® magazines or local newspapers to gather knowledge about
price ranges and inventory all leading towards your goal of being knowledgeable for your potential
clients. You want to be able to explain to your client WHY it is a good time to sell.
Wherever you chose to uncover research about your market area, keep in mind the following
questions:
• How many homes are in your market area?
• Are people moving in and out or are they staying?
• What are the schools like in the area? 13

• What amenities are near the location?
• What new developments are in store for the area?
• What is the traffic like in the area?
• What is the tax rate? Transfer fee on HOA?
•
What “hot buttons” (words or content) are top producers using to be successful in that area?
How do you use hot buttons? Think about what it is that you are selling - real estate, yes,
of course, but you are selling more than that. You are selling memories, luxury, and conve-
nience. For example, “beautiful master retreat with spa-like bathroom.”
KNOWLEDGE IS POWER
When you educate yourself, you gain self-confidence. If you do not know an area that a buyer wants,
refer them to an agent who does. Place the buyer’s needs over your own. Any exposure that you can
get will benefit your success, and you are only going to be successful when you continue to remain
updated and knowledgeable about your selected target market. Keep a farm or market area book
for your selected target market and update it consistently. It could house deed restrictions, HOA,
information on the agent who sells the most in that area, information on hospitals or utility com-
panies in the area.
How do you learn about your market area?

• Drive it. You must be familiar with the streets and the types of houses in the neighborhood.
When is traffic the heaviest? Where is the closest grocery store? What are the best restau-
Chapter 1 rants? How long does it take to get to the central business district during rush hour? These are
Effective all questions that potential buyers want to be answered. As an expert, you should not hesitate
Marketing to answer. Drive the area regularly, and at different times of the day, so you know how long
for Success it takes to get somewhere both with and without traffic.
in Real Estate
•
Hold open houses. To prepare for an open house properly, research on the area to help you
understand the market better. Walk the neighborhood, survey the lay of the land, and talk to
the neighbors.
•
Research it. If you want to sell in a particular market, then research it on the MLS. Find out
how long homes sit on the market in the neighborhood. What are the listing prices and what
are the selling prices? What is the difference between the two? What kind of amenities are
people buying in that neighborhood?
You want to know as much as possible about your market area. You should know the price ranges
of the properties, the current inventory on the market, and you should be able to explain why it is a
good time to buy or sell in the area. Read the local newspapers to find out what new businesses are
opening or what new developments are coming. If you are the expert, people will come to you, and
other agents who are unfamiliar with your market area will refer business your way.
What other details should you know about your market area?
14

LOOK THE PART
It is human nature to prejudge others based on appearance, especially in business dealings. Looking
the part of an experienced and capable real estate agent helps you initially “sell” yourself to a client.
You only have one chance to make a first impression, so it’s all about perception.
In 1975, John T. Molloy wrote a best-selling book titled Women’s Dress for Success, and then followed
it up with another version, New Women’s Dress for Success, two years later. These manuals popularized
the idea of “power dressing,” where women could command authority and respect in previously
male-dominated industries through their fashion choices and overall appearance. Over forty years
ago, Molloy recommended that women dress “like a man” to be taken seriously in the workplace.
According to him, the ideal businesswoman wore tailored suits in dark colors with white or pale blue
blouses, paired with conservative pumps and a neck bow.
Obviously, a lot has changed since the late ‘70s.
What is considered “professional” attire for today’s agent? In the real estate realm, the general
consensus of dress code is “business casual,” with an emphasis on “business.” The goal is to keep
things neutral and tasteful, yet polished. For men, a great starting point is simple khakis or dress
slacks with a crisp button-down or a collared polo. Depending on the client and the setting, dress
it up with a tie and/or sport jacket. For women, slacks or a skirt can be paired with a nice blouse or
sweater. Jewelry, if worn, should be kept to the classic staples -- watch, pearl or diamond studs, and
simple necklaces.1
Of course, knowing your market is key in determining your professional style. While a three-piece
designer suit may fit in with the clientele of some big-shot commercial agents in Los Angeles, it
may not be the right look for the small-town REALTOR® who shows rural properties. While Chapter 1
you do want to impress your clients, you also want them to be comfortable with you and not feel Effective
underdressed. Marketing
for Success
Whether servicing a niche market or a large metropolitan area, always look polished and well- in Real Estate
groomed during every client interaction. Remember that the public expects you to to look and
behave professionally. Picture yourself as a success, and then work to achieve the image you see in
that picture. Looking your best will give you self-confidence, which will make others (your clients)
confident in you.
BUILD A RELATIONSHIP WITH THE COMMUNITY

Essential to good communication is the ability to listen. Authentic communication is a give-and-
take exchange. Another way of describing communication is in terms of transmitting and receiving.
A salesperson that spends all the time transmitting (talking) cannot receive (listen). Receiving is the
process by which the real estate agent finds out what potential clients know and what they need.
Their feelings and opinions are vital pieces of information in determining what will motivate them
to choose you.
If people trust you and they know you, then they WILL come to you.
Real Estate agents are like counselors for their clients. Commit to making your clients feel good and
confident about their choices. Call once a week or take them for lunch, working toward building that
trust and nurturing a positive relationship with your clients.
1 https://www.cbsuccess.com/2020/01/08/dressing-for-success-in-realtor-casual/ 15

The following are community service areas that you could network with to help your marketing
exposure and begin to foster that community relationship with your potential target area clients:
• Chamber of Commerce
• Homeowners Association
• Civic clubs
• Athletic leagues
• Service clubs like Rotary Club and Lions Club
Foster the relationships with your clients even after the end of the transactions. Send them a card
for their first anniversary in their new home, and then ask for a testimonial. Fostering relationships
will allow people to brag about you and make your marketing more impactful.
DEFEAT FEAR
No human is entirely fearless. Some fears are tangible, like the fear of snakes or fear of dogs; there
is a perceived danger or threat to survival, triggering a fear response inside of us. Other fears are
abstract; we cannot see them, but they loom in the distance, invisible, causing us to falter or even quit
before we can see the finish line. There is always something that worries, nags, or bothers us whether
it is fear of failure or fear of public speaking, even fear of being caught unawares, without sufficient
knowledge to answer a simple question. Fear is simply the human condition.
Chapter 1 The Six Basic Fears

Effective 1. The fear of poverty
Marketing
for Success 2. The fear of criticism
in Real Estate
3. The fear of ill health
4. The fear of lost love
5. The fear of death
6. The fear of old age
The fear of poverty: To avoid this fear or to deal with this fear, one must have a budget and stick to
the budget.
The fear of criticism: This fear is one we all must accept. People will always criticize us whether
it is constructive or otherwise. Just accept it and go forward. We get good feedback on improving
ourselves through criticism.
The fear of ill health: Preventative measures are the answer to this fear. Eat to live, not live to eat.
You have known the basic food groups since you were a child. When choosing food, eat with that
nutritional chart in mind. Exercise and see your doctor if there is a concern.
The fear of lost love: If you fear the loss of someone’s love, make sure they know today how much you
love them. Tell those special people how much they mean to you.
The fear of death: Everyone is going to die. Accept it. Make the most of the time you have with the
people you love.
16

The fear of old age: What is the alternative to old age? Death? I’ll take getting old any day. You are
only as old as you act, look, and believe.
Many surveys show that public speaking is the #1 fear in the world and that death is #2. Interpreted
as “the majority of people would rather be in the casket than doing the eulogy!”
HOW TO DEAL WITH YOUR FEARS

Remember this turn of phrase: when you operate on fear, you make mistakes. Do not let fear inform
your decision-making process; it can lead to disaster. Different people have different ways of dealing
with fear. For example, someone with a fear of public speaking that goes beyond mere nervousness
might join Toastmasters or some other organization that helps its members improve their com-
munication, public speaking, and leadership skills. The fear might not be completely eradicated,
but through practice and performance, suddenly public speaking becomes easier. Moreover, in the
process, the individual has met other members of the organization and formed an excellent social
network. If that individual happens to be a real estate agent, he has just increased his sphere of
influence by facing his fear.
One of the biggest fears of independent contractors is the fear of the unknown. No independent con-
tractor ever gets over worrying about when the next sale will be, no matter how many years they have
been in the business. How can you defeat this fear? You can defeat it, or at least combat it through
knowledge. You know that you have bills to pay, taxes, rent, and food. Try to put aside a set amount
of money from every commission that will build up over time. If possible, try to have enough money
saved for one year of expenses that will tide you over through the lean times.
CREATE YOUR PERSONAL MARKETING PLAN

Everyone has a sphere of influence (SOI) of at least 150 people. These are friends, family acquain- Chapter 1
tances, and others. Of those 150 people, 80% are either going to buy, sell, or refer a real estate deal Effective
in the next 18 months. Statistics show they do that real estate transaction with the first agent that Marketing
comes to mind, and that is usually the last agent who contacted them. Contact your sphere of influ- for Success
ence at least four times a year, taking no one for granted. in Real Estate
Make a list of everyone you know. Facebook and Instagram have made it easy to identify your sphere
of influence very quickly. If you have 167 friends on Facebook, then that is 167 names in your SOI.
Other SOIs could include your doctors, hairdresser, co-workers, etc.
Your plan should include, but is not limited to:

• Goals and objectives - Be specific and clearly define the details of how you will go about accom-
plishing each objective and goal. (Example: 2 listings and one closed sale by the end of my
second quarter.) Your goals must be measurable. Measurement will help keep you on track
and inspire you.
• Target market - Where will you market and how do you define your target market? How many
people, homes, and contacts will that include?
•
Differentiate yourself - What is it that is going to make you and your services unique? This one
may be more of a process as you grow in your first year and are able to try on a few different
marketing styles. Consider the market you may attract.
• Marketing exposure - Which methods will you use immediately and which ones will take time
to develop? Remember, you must set a budget. Is there any participation on behalf of your
broker? Begin with a smaller number of marketing venues as they will be more manageable
both in a physical and financial sense.
• Action plan and schedule - You should be able to look at any given day of the month and know
exactly what you will be doing, except for an unexpected offer, and even then, you will have 17

offers and closings built into your weekly or monthly time allotment. You must commit and
stick to your marketing plan; remember that it takes consistency and time.
•
Continually refer to your budget - Refrain from overspending in your first months; otherwise,
you could quickly become discouraged as the financial stress compounds. Recall that you can
always add to the plan or adjust it later.
You have to let people know that you are in the business of real estate. How can you accomplish
that?
• Announce on Facebook and other social media outlets that you are in real estate. It will show
up in your friends’ and followers’ newsfeeds.
•
Write cards and letters to friends. People often open handwritten notes because it is out of the
ordinary today to receive something handwritten. Keeping in touch through social media is
fine, but personalization is essential. A personal note is the most potent marketing tool. You
are communicating with and touching people when you send them a personal, handwritten
note.
• Send thank you cards to the service people who make your transactions successful. People
often forget the title company employees and the lenders. Make yourself stand out from the
hundreds of other agents they deal with on a day-to-day basis. You could gain a client from it.
•
Remind people that you are in real estate. You can do this by talking to your friends about
the real estate market in general, what areas of town are hot and what the latest trends are in
home design. When they have questions or are ready to buy or sell, they will remember you
Chapter 1 are in real estate.
Effective
Marketing •
If you have a company shirt, name tag or lapel pin, wear it. Wear your company logo not just
for Success for work or networking events, but when you are out and about. People will naturally ask
in Real Estate questions, which provides you with prime opportunities to hand out business cards.
The marketing plan that you develop is a means of getting your name out there as you begin to
develop name recognition. Remember, you should be able to look at any given day of the month and
know what you will be doing, except for that unexpected offer that comes out of the blue. You must
commit and stick to your marketing plan!
18

THE 12-MONTH MARKETING PLAN
Devising a 12-month marketing plan in advance is a key habit of successful, professional agents.
Planning not only allows you to accurately budget, but also ensures that you do not over-commit to
any buyer or seller.
“I’ll sell your house in 30 days. I promise!” You cannot promise that.
*Remember, it is better to under-promise and over-deliver than to over-promise and under-deliver.
When developing your 12-month marketing plan, consider monthly mailers, special event mailers,
and any holidays you see fit. Consider the start-up format below and input any additional items -
remember your budget! You can always add unexpected events as long as you begin with a strong
and realistic basis.
Monthly:
Advertising
Mailers to Farm area and/or SOI
Open Houses public/broker
Other
Bi-Annually:
Chapter 1
Special Advertising Effective
Marketing
Special Event for Success
in Real Estate
Group home tour
Other
Seasonally:
Spring
Summer
Fall
Winter
19

MARKETING MATERIALS
As a real estate agent, your printed materials often consist of postcards sent through the mail
announcing recently sold properties in the neighborhood, or fliers with your business card attached.
Sadly, many of these end up in the trash. So, how do you build value? First, look at the wording you
are using in these materials. Instead of, “Come to My Open House,” on your flyer, add something
that you can do for people. Write “Free Market Analysis.” Free services will generate interest in your
marketing strategy. People like free things. Tempt them with refreshments and conversation. Then,
make sure you have the available tools and resources to help you achieve marketing success.
You may not realize it, but you most likely have some of the most powerful marketing materials
already at your disposal. Your smartphone has many of the built-in capabilities necessary for you to
start your marketing campaign right away. Current smartphones come equipped with high-quality
cameras that will enable you to post still shots and video on social media as well as upload pictures
to the MLS. Your phone also keeps you connected to your customers, clients, and colleagues. You
can download apps to your phone to schedule and remind you of appointments and help with time
management; you can write and respond to email, and perform any number of other functions just
with your phone. Your laptop or tablet can also be utilized for designing marketing materials and
keeping up with the day-to-day operations of your business.
You may want to prioritize your budget for your marketing materials as follows:
1. Cell Phone - Obtain the best one that you can afford and always make sure it is always
working. In other words, do not let the battery die. You do not want to miss an opportuni-
ty to take a call that might lead to a deal. Make sure you have the right data plan for you.
Some wireless providers have limits on the amount of data that you can send and receive;
make sure that you are not on a data plan that is too strictly limited for your business needs.
Chapter 1
Effective 2. Desktop or Laptop computer - You do not have to have the most expensive computer out
Marketing there, but you do need one with a decent amount of memory and storage. The processing
for Success speed is not as crucial unless you are running powerful software on it. Laptops are typically
in Real Estate more convenient for busy agents on the go. You will want to purchase one that is durable
and light enough to carry with you at all times. If you like using your desktop, then consid-
er purchasing a tablet for when you are out in the field. Tablets are lightweight and fit easily
into purses and briefcases.
3. Printer - You will need a printer for fliers, brochures, contracts, forms, and a variety of
other documents. Many brokers will have a top-of-the-line printer for their agents to use
for marketing materials and documentation. If you are purchasing a printer for your home
office, make sure that it can handle medium-weight card stock for mailouts.
4. Website - Look at local REALTOR® associations’ websites as well as the websites of your
competitors as a guide in building your own website. If your broker offers sponsored agents
webspace, then make sure that you have a page with a current photo, current contact in-
formation, including phone number (one that you will answer), and email address. Include
links to your current listings as well as recent solds. If you have a separate business website
as well, provide a link to it. If you blog, there should be a link to your blog so that consum-
ers can access your content.
5. Good Wi-Fi - A secure and reliable Internet connection can go along way in helping you
keep up with your clients, listings, and research of your market area. You may also opt to
have a hotspot with your mobile provider so that you can connect while you are out and
about, without depending on public Wi-Fi, which can be slow and frustrating and often
dangerous for sensitive information. Your home Wi-Fi password (yes, you MUST have
one) should not be easy to guess. So, do not make the password wifi123. Protect your cli-
ents’ and your personal information from data theft.
20

6. Software - At the bare minimum, you should have Microsoft Office or a comparable desk-
top publishing suite that provides word processing and spreadsheet applications, a PDF
reader and creator, and any other software you might need that pertains to your daily work.
You may also want to invest in some photo editing software beyond the basic package
that comes with your computer. Always be cautious when downloading software from the
Internet. Make sure that you only download from trustworthy sites. For example, if you
are downloading Microsoft Office 365, only do so from safe, trusted websites, in this case,
Microsoft.
Many brokerages offer access to powerful software packages at the office. Some may charge
agents a fee, while others may provide access for free. Check with your broker to find out
what software is available for your use. If you are unsure how to use software like Adobe
Photoshop, for example, subscribe to lynda.com to view some of their informative videos;
your broker may even have an account with lynda.com. Many software packages are repre-
sented on the site, offering hours of training videos.
7. Contact Management System - The right system will keep you focused on the day-to-day
activities and responsibilities that build your client base and move each transaction along.
Most brokerages subscribe to some type of Customer Relationship Management (CRM)
database. There are many out there to choose from, some more powerful than others, offer-
ing more analytics, integration, and customization. There are also online CRM tools that
you can use.
Here is a recap of how to use your existing tools to get started marketing:
• Your professional Facebook page - If you do not have one, get one. Include a current and flattering
picture. Link to interesting and relevant articles about real estate and its related fields. Use Chapter 1
Facebook Live to post short videos promoting open houses and listings. Effective
Marketing
•
Your personal Facebook page - You do not have to post tons of business pics or beg for leads. Just for Success
post a little reminder now and then that you are in real estate. Link to articles that contain in Real Estate
some interesting industry information, or post a quick industry statistic or insight and ask for
comments. You will become known as the industry expert among your friends.
•
Neighborhood Facebook page - Most neighborhoods use them to disseminate information about
crime, safety, and neighborhood events. Post valuable information on the page.
• Your professional TikTok account - Do a dance challenge with your clients when their house
sells. “Toss” the keys to a new homebuyer using the transition feature. Make things fun and
relevant for your followers and use hashtags to make videos easily accessible.
• Your professional Instagram account - Looking to appeal to the Millenial or GenZ population?
Use Instagram to promote your brand and generate leads. Be aware that overediting pictures
of a property could be a violation of REALTOR® ethics.
• Association websites like nar.realtor or your local REALTOR® website - Find articles, research
market trends, and learn out about events that you should attend.
• Your business website. Peruse your competitors’ websites with an eye for what you like and do
not like. Make sure that you have included all of your current contact information on your site.
If you change brokerages, phone numbers, or email addresses, then you need to update your
website and social media. Do not keep outdated information on your website.
Websites should be simple. Information should be easy to find, and your contact information should
be on every page.
21

TRACK YOUR MARKETING
So, you have tried out your plan for some time, but you are not sure whether or not it is working.
There is a relatively easy way to measure this, and it starts with tracking where your marketing bud-
get is going. When you receive a phone call from a potential client, ask, “How did you hear about
me?” Such a simple question can carry a lot of weight. Track the responses that you receive. They
can provide valuable insight into how people locate and choose agents to represent them. If you are
spending too much money on print advertising, but the majority of responses have been that they
found you through Facebook or YouTube, then you will know where to focus your efforts, and you
might just save some money in the process. You have spent the money to grow your business; you
should make sure that you are getting a return on your investment.
Market to your area for a minimum of six months with at least three different marketing strategies
going at the same time. If after six months two of the methods are not working, then drop those
two. Come up with a target income each year that you want to reach. If you did not reach it, evaluate
your plan to figure out why.
Once again, keep track of and up to date with your marketing area. As you are tracking the details
of your market area, you might want to:
• Find out the average turnover rate in your market (how long properties stay on the market
before selling).
• Get on area REALTOR® sites and look at “solds” to see how long the seller lived in the prop-
erty, this might give you an idea of how long people are staying in one area before moving
on to another. Agents do not want to waste their time marketing in neighborhoods in which
Chapter 1 people buy and stay forever.
Effective
Marketing THE POWER PRESENTATION BOOK
for Success Most consultants and businesses have presentation books, and you should have a place to keep track
in Real Estate of your monthly marketing plans. Your presentation book will be a visual map of you and your
business so that your potential clients will have a broader sense of who you are and how you do busi-
ness. Think of your presentation book the way an artist or photographer thinks of his portfolio, as a
showcase of his best pieces that illustrates his ability, versatility, professionalism, and passion. The
artist’s portfolio IS the artist. Your presentation book should aim for that level of importance. If real
estate is your passion, then your presentation book should illustrate your passion. Your presentation
book IS you.
Create a presentation book that will sell all of your services and provide information to your tar-
get market area. Include information that is valuable to people. What is the profile of your target
audience? You should know your market inside and out and tailor your presentation book to your
audience’s needs and how to best reach them.
Invest in a professional looking display binder; you can buy them at any office supply store or online,
then fill it with: flowchart contract to close, buyers-rep agreement, a section for sellers, a section for buyers,
a section for FSBOs (For Sale By Owners), and company information.
COST APPROACHES
THE ZERO COST APPROACH
New agents tend to overgeneralize that the ONLY way to get business is through spending money
- not true. All the advertising in the world is not as effective as the Zero Cost and Minimum Cost
approaches. Consider and choose the top three items below that you could immediately implement
in your marketing plan. Be creative and list more items that come to mind.
22

• Seek and find houses within your community that are in a “target-rich environment” and offer
to hold it open as a means to get the buyer clients.
• Find a builder in your area and ask permission to hold one of their homes open. Employing
someone to sit in the home will cost them $36,000 a year. Pick up the buyer traffic and work
with the builders finding land; this will help you get listings.
• Arrive early and stay late to take call-ins.
• Network and ask for business
• FSBOs and expired listings, no leases-- talk to them face-to-face. Prospecting FSBOs is a
tried-and-true Zero Cost approach that many new agents employ when looking for listings
because the agent already knows that the prospect wants to sell.
Take a listing packet with you that contains all of the necessary disclosures and paperwork
required to sell property in the state and show it to the FSBO prospect. All that paper-
work will most likely overwhelm the FSBO because they did not realize everything that was
involved in selling a property without an agent. Forms are scary for those individuals who
are not familiar with them. Make a compelling case for the agency relationship. Stress the
importance of an agent when dealing with all of the paperwork. They will probably decide to
hire an agent. Hopefully, that agent is you.
• Be visible and remind agents and your broker that you are looking for referrals
• Other ideas: Chapter 1

Effective
Marketing
for Success
in Real Estate
MINIMUM COST APPROACH

If you want to take your marketing plan a step further than the Zero Cost approach, consider the
following ideas, then list some of your own that are minimal cost, yet effective:
•
Make a name in real estate through creative marketing such as neighborhood
publications and regular mailers.
• Promotional marketing items: calendars, grocery lists, pens, and more.
• Create a neighborhood real estate update newsletter with home upkeep tips.
• Information workshops such as a home-buying seminar (for first-time home buyers). Hold it
at the same time every month (e.g., the 3rd Wednesday of the month).
• Hold an informative seminar on how to prepare a property tax protest. People will remember
you if you help them to save money.
• Creative group home tours, prospective clients are typically more relaxed in this setting.
• Other ideas:
23

CHOOSING YOUR FARM AREA
To farm or not to farm? That is a question all agents ask themselves in the beginning. What is the
average turnaround time for response to mailers? It is about 1%, so why do agents invest money and
time sending mailers to their farm areas? For the name and facial recognition, of course. Choosing
the right farm area is a successful marketing strategy for your business as a real estate professional.
HOW DO YOU SELECT YOUR FARM?

A farm is a part of the area, which is serviced by your firm. It may be a geographic farm, including
several neighborhoods or subdivisions. It may be an economic farm, including all the properties in a
particular price range, in the area that your firm services. It may be based on a type of property, such
as income-producing properties, condominiums, townhomes, farm or ranch properties, vacant lots,
or mobile homes. No matter how you define your farm, it is an area in which you plan to become
an expert. Many marketing experts recommend that a reasonable farm should contain between 400
and 500 homes.
When selecting a farm area:

• First, find out where agents in your office are already farming.
• Choose an area near your office first, then near where you live.
• Determine the rate of property turnover and average days on the market.
• Research the average list price and average sales price for the area.
Chapter 1 Keep in mind that geographical farms are easier to work than non-geographical ones. It is easier
Effective to meet and maintain contact with people concentrated in a neighborhood than it is to work with
Marketing a widespread group. If you have decided to use farming techniques to develop your prospect list,
for Success then you should get to know as many people in your farm as possible. Geographical farming works
in Real Estate exceptionally well with the criss-cross directory and door-to-door canvassing.
Learn as much as possible about your farm. You should preview listed properties in the area and
review all recent transactions to become familiar and comfortable with property values and activity
levels in the neighborhood.
Also, you will want to become an expert on the amenities of your farm, such as schools, recreational
facilities, shopping, houses of worship, public facilities, and access to major arteries. When talking
about these amenities, you should be able to give details such as location, services offered, and a key
contact person.
PROSPECTING FOR LISTINGS

Just like the prospectors of the California Gold Rush who went to prospect for gold every day, rain
or shine, real estate agents should be sifting through the information, searching for treasure hidden
in the sand. It is hard work, but it can be extremely profitable if you keep doing it consistently.
At least 1 day a week you should:

1. Carve out enough time to call FSBOs and expireds or hire someone on the cheap to call
them for you.
2. Send a letter or mailer to FSBOs and expireds.
3. Pull a “hot sheet” from the MLS and contact at least 25 status changes.
4. Advertise “Just Solds” in your farm, even if you did not sell them. However, be careful not
24 to say that you sold them. Instead, use the verbiage, “According to the MLS, 1234 Smith
St. sold for $ _____ on June 30, 2017.” Of course, you should get the approval of the agent
who sold the listing. You can also send out “Just Listed” cards.
5. Send open house cards.
You have a listing that earned through your hard work and determination. A seller has committed
to you for the listing period, providing you with an opportunity to earn a commission. What do you
do next?
NK ABOUT IT - CLARA’S FARM AREA

T HI
Directions: Read the following scenario and answer the question that follows.
Clara is a recently licensed real estate sales agent who is searching for the right area to farm.
She finally decides on a hot area in uptown because she has heard other agents at her broker-
age say that the average commission in that area is around $5,000. Clara is just starting out,
and the appeal of high commissions proves to be a considerable temptation.
Clara is unfamiliar with the geography and demographics of the territory. There is also an
agent with a strong marketing campaign already farming 30% of the area market, and several
other agents who have recently launched vigorous campaigns there as well.
Is this the correct farm area for Clara? Why or why not?
Chapter 1
Effective
What advice would you give to Clara when it comes to farming? Marketing
for Success
in Real Estate
POSTING YOUR LISTING TO THE MLS AND REAL ESTATE PORTAL SITES
Research studies tell us that statistically, the majority of home buyers begin their search on the
Internet, using sites like realtor.com and other local-area real estate portal sites. You will want to
get your listings posted as soon as possible so that buyers and other agents can view them and react
to them. However, do not allow the rush to post the listing affect the quality of the posting.
How many times have you read some other agent’s listing only to find that the property descriptions
are full of misspellings, misuse, or even worse, have no description at all?
Example:
• new stainsless steel appliances
• master bedroom with walking closet
• small, quite and well maintained community
• marble entryway greats your guest.
Tiny errors like this are not necessarily deal killers, but they point to a lack of attention to detail.
Other offenders might include fuzzy, sideways, upside-down, or even poorly cropped photos of
sloppy spaces. Do not let this happen to you. Remember, you are selling your services as a profes-
sional. How professional will you appear if your listing is full of errors? The answer is not very. 25

Do not make amateur mistakes. If you are not personally taking pictures or writing descriptions of
the property, you need to review them before someone uploads them to the MLS and portal sites.
Of course, it takes more of your time, but if your name and photo are attached to that listing, then
it should look as professional as you do in your headshot. Buyers searching these sites will click right
past upside-down or sideways pictures, and you just lost a potential sale. The old adage, “An ounce
of prevention is worth a pound of cure” definitely applies here.
If you are not comfortable writing property descriptions or proofreading your assistant’s writing,
ask someone you trust who has a good grasp of language and grammar to review for you. Of course,
not every post has to be a literary masterpiece, but it is the attention to detail that makes you a
professional.
You can use other agents’ mistakes to your advantage. One way to prospect is to pull the MLS daily
for expired listings, looking for errors made by other agents. You can contact expireds and tell them
why their houses did not sell. You can sell them on your professionalism and attention to detail,
assuring them that you will not make the same mistakes.
NO ONE-SHOT WONDERS, KEEP IN TOUCH

Like a farmer who sows and harvests his land, you will plant the seeds of your marketing efforts, nur-
ture and cultivate the relationships that they create, and reap the benefits of their growth. Farmers
must be consistent with their activities. If they stop watering their crops, their crops stop growing,
wither, dry up, and die. You must also be consistent with your marketing activities. If you become
lazy and are not out working your farm regularly, your contacts will dry up, and your business will
die. Nurture the contacts that you make in your farm so that they will grow and blossom.
Chapter 1 Once you have decided on your farm area, researched it, and learned as much as you can about it,
Effective you can begin to plan your marketing strategy.
Marketing
for Success Make a list of the first group of contacts you plan to reach out to. As with all goals, be realistic, but
in Real Estate challenge yourself. Face-to-face visiting is a very successful technique. If you choose to do this, set
aside enough time to visit everyone in your farm area on a rotating basis. Do not be a one-shot won-
der! Your clients need to hear from you. Contact is not a one-time activity; it is an ongoing routine.
Ensure that you have contact with everyone in your farm area at least once a month.
An effective three-step process for farming your area is:

STEP ONE: THE TELEPHONE CALL
1. Call a specified number of residents each day - keep a record of calls and responses.
2. Introduce yourself and your company.
3. Make your purpose for calling clear.
4. Be friendly yet brief.
5. Leave your name and phone number.
6. Advise of future contact.
STEP TWO: MAIL

1. Send a handwritten note to those previously contacted by phone.
2. Thank the owner for the time spent in conversation.
3. Advise of a future visit and/or call.

26

STEP THREE: PERSONAL VISIT
1. Visit those previously contacted by phone and/or mail.
2. Present a friendly attitude of visiting, instead of soliciting.
3. Introduce yourself and your company and offer your business card.
4. Remind the owner of previous contact and/or attempts.
5. Establish that you are the area representative.
6. Discuss market values in the neighborhood. (A range)
7. Do not quote a value for any property without compiling a Competitive Market Analysis.
8. Make an appointment to return with price information if they express an interest in their
property value.
9. Leave a card and a gift (something of utilitarian value that they will use - for example, a
Post-It Note pad with your picture and phone number preprinted on the pad so they will
think of you every time they use it).
10. Advise of future contact.
Sample Marketing Campaign for Your Farm

Choose 300 houses in your farm, and send each one a short pre-letter with a brief bio introducing Chapter 1
yourself. Then, ask three basic questions. Effective
Marketing
1. How do you like this subdivision? for Success
in Real Estate
2. Are there any changes that you would like to take place in this subdivision?
3. If you were to move, where would you move to?
Thank them for their time in filling out your short survey, and let them know the dates that you will
be in their subdivision, going door to door. Include your business card with your picture so that they
will know what you look like when you visit. Hopefully, they will answer.
Give them a small, inexpensive gift for allowing you to take up some of their time. Holiday themes
seem to work best, tiny yard flags for the Fourth of July, pumpkin trashbags for Halloween or
Thanksgiving. Flower seed packets also make useful and inexpensive gifts.
This marketing campaign is simple and inexpensive, providing you with a way to stay in front of
people and to become known as the neighborhood specialist.
COLD CALLING
“Successful cold calling not only develops new business and builds networks, it can yield results and save
money” - Stephan Schiffman
Cold calling for the new agent might consist of contacting people from those dead files you collected
from other agents, following up with previous contacts, and perhaps even soliciting expired listings.
Another tool at your disposal is a criss-cross directory. Today’s criss-cross directories come in the
form of searchable online databases of residences and businesses. These databases contain home-
owners’ names, addresses, cell phone numbers, email addresses, and neighborhood demographics. 27

For example, you may drive by a house that looks uninhabited, as though no one lives in it. You
can use a criss-cross directory to look up the address of the property and find the owner’s name and
contact information. If the owner’s phone number is not on the Do-Not-Call Registry, you can call
him/her to find out if he/she may be thinking about selling or renting the house.
Criss-cross directories are also helpful to real estate sales agents because they list how long owners
have lived in their houses, which can provide you with great turnover information for the neighbor-
hood. Agents prefer neighborhoods with high turnover rates; a good rate of turnover is when the
owners sell every two to four years.
When cold calling, make sure to:

• Have an equal amount of listening time as you do talking with the customer
• Think like a customer. What’s in it for them?
• Ask questions to clarify without confronting
• Don’t interrupt and concentrate on what is being said
• Take notes and listen for ideas, not just words.
• Don’t jump to conclusions and allow them to finish their sentence
• Keep your tone positive and pleasant
Chapter 1 BEST TIME TO MAKE COLD CALLS *

Effective 1. When there is a listing in the area
Marketing
for Success 2. When there has been a sale in the area
in Real Estate
3. When you have a gift to deliver
4. When you have new and exciting information for the residents
5. In the afternoon or early evening
COLD CALL RECORD – EXPLANATION

1. The street name
2. Number: The house address
3. Name: The Owner’s name
4. Telephone: The telephone number
5. Record comments for identification purposes for your second contact.
*Always note someone’s willingness to give you help. Follow up with a note of appreciation.*
Sales agents who make cold calls must comply with the requirements of the National Do-Not-Call
Rules. Specifically, before making a cold call, an agent must verify whether the number is on the
National Do-Not-Call Registry. Agents may not make cold calls to numbers in the registry. The
broker/agent needs to update any download of the Registry at least every 31 days.
28

An agent may call a person whose number is on the Do-Not-Call Registry if the broker has an
established business relationship (EBR) with the person. An EBR exists with someone who was
a party to a transaction with the brokerage firm in the last 18 months or with someone who made
an inquiry with the broker’s firm within the last three months. Additionally, brokers may call if a
consumer grants prior written permission.
The rules require that a brokerage firm that permits agents to make cold calls must maintain an
internal do-not-call list. Requests to be placed on the internal list must be honored indefinitely. The
internal list applies to all agents in the brokerage. The company should maintain a central list onto
which each agent may input names and check before making calls. If a name is on the internal list,
the agent may not call that number even if the number is not on the National Do-Not-Call Registry.
Penalties
The Federal Trade Commission (FTC) fines telemarketing companies over $40,000 for each call to
a member of the Do-Not-Call list.
GENERATIONAL SELLING
Specializing in a specific segment of the population and becoming an expert in that particular niche
market is the wave of the millennium real estate industry. Understanding the housing requirements
and other lifestyle issues of your buyers is essential to fill those needs effectively. The agent gains
respect and recognition as knowledgeable to that specific generational buyer. Some examples include
Sun City communities, and planned communities such as Disney’s Celebration, and Texas’s “Down-
town Frisco.” These communities incorporate many recreational facilities, such as local merchants,
town halls, restaurants, libraries, and cultural centers. All of the facilities are close together, perhaps
even walking distance, for easy convenience. Chapter 1
Effective
Some of these planned communities have the atmosphere of 1950’s small-town America, but with Marketing
metropolitan amenities. It appears the primary market of buyers today is in the 25 to 49-year-old for Success
range. However, many agents are becoming specialists in niche markets catering to other age ranges. in Real Estate
Why is generational selling so important? Simply put, different generations have different criteria
when house hunting. Younger buyers with families want safe neighborhoods and houses with nice
yards where their children can play. Older buyers might want smaller yards with less land for them
to maintain, and they may have very specific housing requests, such as one-story homes over two
stories, because it is getting harder for them to climb stairs.
GENERATIONS DEFINED:
Greatest Generation or GI Generation Before 1925
Silent Generation 1925 - 1945
Older Boomers 1946 - 1954
Younger Boomers 1955 - 1964
Generation X 1965 - 1979
Older Gen Y/Millennials 1980 - 1989
Younger Gen Y/Millennials 1990 - 1998
Generation Z 1999 to the present

29

MARKETING TIPS FOR THE GI GENERATION
• Market visually and orally
• Use larger print: at least 12-point type, if not larger
• Use anti-glare paper
• Use direct mail with coupons
• Recall memories and experiences they can identify with
• Concentrate ads on safety, family, and independence
• Perform on your promises to earn their trust
• Include family members as advisors
• Become familiar with multi-generational (also known as Next Gen®) homes
MARKETING TIPS FOR THE SILENT GENERATION

• Present your credentials, awards, and testimonials
• Emphasize expert opinions
• Keep your message short and to the point

Chapter 1
Effective • Make them part of the solution with a win-win conclusion
Marketing
for Success • Emphasize benefits, not features
in Real Estate
SILENT GENERATION: NAR’S 2021 HOME BUYER AND SELLER GENERATIONAL TRENDS
• 5% of recent home buyers
• 31% buy to be closer to family, friends, or relatives
• 27% purchased senior-related housing
• 31% will never move; they are in their forever homes
MARKETING TIPS FOR BABY BOOMERS

• Use words like “now,” “begin,” and “first”
• Show vitality for active people with active lives
• Accentuate built-in security and the safety features of gated communities
• Emphasize tax benefits, interest rates, and equity building since these are major factors for
them
• Emphasize the lifestyle and quality of life
• Point out health clubs and recreational amenities
30

BOOMERS: NAR’S 2021 HOME BUYER AND SELLER GENERATIONAL TRENDS2
Younger Boomers Older Boomers
• Younger Boomers make up 18% of recent • Ten is the median number of weeks spent
home buyers home searching
• 46% bought in a suburb or subdivision • Older Boomers make up 14% of recent home
buyers
• Twenty-two was the median miles between
new and previous home • 33% consider heating and cooling costs to be
very important
• 13% buy due to retirement
• 7% have credit card debt, which delayed saving
for a downpayment
MARKETING TIPS FOR GEN X

What is Gen X looking for in a home?
• High-tech gadgets, including:
• Computers and networking
• Home entertainment systems with surround sound

Chapter 1
• Telecommunication systems Effective
Marketing
• Home offices for Success
in Real Estate
• Product value
• Budget is important because they must balance credit card debt and student loans
You may only get one chance to get your message across, so it should be concise and up to date. Gen
Xers are impatient, so be succinct.
• Make your presentation short, direct, and use technology
• Deliver your message via the Internet, email, text messaging, or smartphone
• Keep in mind that negotiations may get competitive and confrontational
GEN X: NAR’S 2021 HOME BUYER AND SELLER GENERATIONAL TRENDS

• 18% bought a multi-generational home
• 24% of recent home buyers
• 48% looked online for properties as a first step
• 49% bought in a suburb or subdivision
2 https://cdn.nar.realtor/sites/default/files/documents/2021-home-buyers-and-sellers-
generational-trends-03-16-2021.pdf 31

MARKETING TIPS FOR GENERATION Y/MILLENNIALS
No strangers to the significant impact of social media sites like Facebook and Twitter, millennials
will not hesitate to share their opinions about you and your company’s practices on and social media.
You must use technology to appeal to this generation as they use their phones for everything from
making grocery lists and following workout plans to banking and finding places to eat.
MILLENNIALS: NAR’S 2021 HOME BUYER AND SELLER GENERATIONAL TRENDS
Younger Millennials Older Millennials
• 14% of recent home buyers • 23% of recent home buyers
• 43% have student loan debt • 36% consider commuting cost very important
• 82% were first-time home buyers • 63% say convenience to job influenced neigh-
borhood choice
• 87% used a mobile device during home search
• 83% found their home with a mobile app
GENERATION Z
As of 2021, the oldest Gen Z member is twenty-two years old. A valuable way to represent them as
a licensee is as an apartment locator; however, NAR’s 2021 Home Buyer and Seller Generational
Trends reports that 2% of home buyers were Gen Zers. In a few years, more members of this group
will be purchasing their first homes and will consider home-buying seminars about the process of
Chapter 1 purchasing a home to be beneficial.
Effective
Marketing The Gen Z generation is very technical. They have an app for everything. Surprisingly, according
for Success to Forbes magazine, “Generation Z likes to talk face to face. 53% of Generation Z said they prefer
in Real Estate in-person discussions over instant messaging or email.”
ILL BUILDER - GENERATIONAL MARKETING

SK
Respond to the following questions based on your own individual experience.
1. Does your marketing plan address the different generations of buyers?
2. After reading the section on generational selling, do you think that you
might need to implement a different approach for each generation of buyers?
3. Do you see a niche market you would like to reach out to?
*Answers will vary.

32

EXERCISE 1 - TRUE OR FALSE
Directions: Read each statement carefully. Place a T or an F in the column indicating whether
or not the statement is true or false.
Statement T or F
1. One way that agents learn about their market area is to drive it regularly,
always at the same time of day for consistency.
2. “Hot buttons” are words or content that top producers are currently using.
3. New agents should choose a workable farm area containing between 800-
1000 homes.
4. The two main types of farms are geographic and holographic.
5. Ask someone to enter property listing data into the MLS for you because
you do not have time to write or review copy.
6. Brokers and their agents should download the new Do-Not-Call Registry
every six months.
7. As of 2021, the oldest member of Generation Z is 22 years old.
8. Younger Baby Boomers make up 18% of recent homebuyers. Chapter 1

Effective
9. Once you have established relationships in your market area, it is not Marketing
necessary to reach out to contact more than twice a year. for Success
in Real Estate
10. Overwhelmingly, Generation X is purchasing homes in urban
neighborhoods.
*Answers in the Answer Key.
33

OPEN HOUSES
Many agents balk at the idea of holding public open houses, insisting that they are a waste of time.
If open houses are such a waste of time, then why are so many still be held every weekend, all over
town? Productive agents will tell you that they do open houses every weekend. They will even offer
to hold open houses for other agents’ listings. Why?
• Open houses teach you how to speak to people. As a real estate agent, a large part of your job
is talking to people. At an open house, you will have the opportunity to talk to many different
types of buyers and “window shoppers,” all of whom have different questions and needs.
• Open houses allow to understand the market better, and to familiarize yourself with the area.
• You get to meet people and increase your exposure in the market. The more people who have
your business card, the better chance that someone will contact you. If you hold an open house
on a Saturday and you meet 50 people, and just 1 out of 50 contacts you, that is 1 potential
client that you did not have on Friday. Your aim should be to get at least 1 client from each
open house; this will add up over the year.
The important thing is to be consistent. Commit to one open house per month and always hold it
on the same day of the month - for example, the third Sunday of the month. If you do not have a
current listing, volunteer to hold one for another agent in your brokerage. You do not have to limit
your marketing goal to buyers only. Open houses are great opportunities for finding sellers.
HOW TO PREPARE FOR A PUBLIC OPEN HOUSE

If you want to hold a memorable open house, not just be a housesitter for a day, you need to prepare
Chapter 1 at least one week in advance. During that week, you should:
Effective
Marketing • Research the market, especially if you are holding the open house for another agent’s listing
for Success and are unfamiliar with the area. Do you want to be an expert? You must prepare for all ques-
in Real Estate tions that buyers and curious neighbors might throw your way. Your market research should
have informed you of area comparables and other homes open to public tours.
• Print flyers and information sheets about the neighborhood and the community.
• Post open house signs with balloons, where allowed.
• Knock on the neighbor’s doors and invite those that open them over. This activity could lead
to listings. The neighbors might want to drop by to check out the inside of the home or to
see who is viewing the home as they could be potential neighbors. Ask them if they have any
friends or family who would like to live near them; they may know someone who is in the
market. Impress them with your knowledge of their neighborhood, and when they are ready
to sell, they will remember how knowledgeable you were.
BROKER’S OPEN HOUSES

Sales agents and brokers often have hectic schedules. Most markets have one day each week, per area
when new listings are open to all agents for around 2 hours. This time is your opportunity to meet
the agents working in the area, and to introduce yourself and market your listing.
Ask the brokers and agents their opinions about the property, the price, and what they have experi-
enced in the general market area. Pick their brains if you can, but do it without tying them down or
wearing them out. Brokers typically preview properties very quickly, but they do take in a lot about
the house, even though it may not seem like they do. Let your buyers in on this information to pre-
vent any feelings of rejection on their part.
34

Take the time to attend a broker’s open house. This time is your ticket to gaining market knowledge
by seeing as many properties as possible. These houses may be of interest to current or future clients .
While you are viewing a broker’s open house, pay attention to what they do. Is there something that
they have included in the process that you could make your own? Is there some mistake that they are
making? If so, then learn from it.
HOLDING A BROKER’S OPEN HOUSE

Create a comment sheet with 2 or 3 questions for your visitors to answer that you hand out at the
front door. Have pens ready with your brokerage’s name, and your name and contact information
on them. Giving out a blank sheet of paper for visitors to fill out is not enough; some people are not
comfortable writing on their own. Ask simple questions like:
1. Please rate the curb appeal of the property on a scale of 1 to 5, five being the highest.
2. Do you think the price is too high or too low for the neighborhood?
DO “PHONE TIME” AT YOUR BROKERAGE

An excellent way to get “free” referrals is to answer the phone at the brokerage. Many agents do
not want to take the time to do this, but it is an excellent source of referrals. Volunteer to do phone
time. Sellers call brokerage offices all of the time looking for knowledgeable agents to come to their
homes for a listing appointment. Answering the phone does not cost you anything except your time.
Schedule a block of time once or twice a week to do this.
“BRAND” YOURSELF
Make sure that you wear your brand when you are out and about. When you are out volunteering for Chapter 1
little league teams or doing community events like food drives or toys for tots, wear your brokerage’s Effective
branded shirt or baseball cap. If you are at the gym, wear a company tee-shirt while working out. Marketing
Women can wear company lapel pins on their jackets. Wear your name badge while at networking for Success
events. Wearing your brand prompts people to come up to you and start a conversation. You would in Real Estate
be surprised how many people would love to talk about real estate with you; your branded clothing
or accessories let them know that you are in the business.
Have your business cards ready for curious individuals who are attracted by your brand and want to
find out what you know about the real estate market in their area. If you exchange business cards at
an industry or networking event, make a note on the cards you receive from others about where you
received their card and general information about the conversation that you had with them. Later,
you can send them a handwritten card, letting them know how nice it was to meet them. Refer to
your conversation; this will personalize the card a little more. You just added one more person to
your sphere of influence.
Take pictures of yourself at events wearing your brand and post them to social media. That way,
every one of your Facebook friends or Twitter and Instagram followers will see you sporting your
brand, reinforcing the notion that you are in real estate.
35

TALK TO OTHER AGENTS ABOUT THEIR MARKETING ACTIVITIES
Being responsible for your own marketing can be scary, especially when you are in the beginning
stages of your career and have not tried to market yourself before. The idea of reaching a broad audi-
ence can be very daunting.
So, how do you avoid wasting time on marketing activities that do not work? Talk to other agents.
Ask them what they did that worked, and what did not work. For example, an agent at your firm tells
you that holding a home-buying seminar for the public worked better than door hangers. Would you
then go out and spend a lot of money printing door hangers? Maybe not.
Many agents will tell you that newspaper ads did generate business; instead, they started taking their
marketing to social media. This information may motivate you to invest some quality time, reaching
out to your friends and followers on social media.
Chapter 1
Effective
Marketing
for Success
in Real Estate
36

ACTIVITY
Directions: Fill in the following chart with marketing activities that worked for you or did not
work for you. You can also talk to other agents to get their input.
Worked Did Not Work
1. 1.
2. 2.
3. 3.
4. 4.
5. 5.
6. 6.
Chapter 1
7. 7. Effective
Marketing
for Success
8. 8. in Real Estate
10. 10.
11. 11.
12. 12.
13 13
14. 14.
15. 15.
*Answers will vary.
37

THE CLIENT-BASED SALES APPROACH
All real estate agents seek client loyalty and want clients who will come back to them for their next
transaction while also giving them referrals. Agents want clients who view them as valued profes-
sionals and as the “go-tos” for advice and guidance when making an important decision like buying
or selling their home. Clients do not shop around.
The key is to give a level of service that clients expect. Relate your personal experiences; it will help
them. Focus on the benefits they will experience, rather than explaining the features. Say phrases
such as- “What this means to you is...” or “What this will do for you is...”
STEPS TO REMEMBER FOR YOUR APPROACH

• Have depth and breadth
• Ask great questions and provide the answers. Determine what is important to a person based
on their answers to your questions. If you ask the right questions, then they will provide their
own answers. You provide the “expert” answers.
• Develop professional and personal trust. Answer your phone and be accountable!
• Collaborate, do not control. Do not tell them what property to buy. You are there to help, not
to dictate.
• Insight over expertise. Do not brag. Offer advice.
Chapter 1 • Synthesize versus analyze. Work WITH your clients.

Effective
Marketing CULTIVATE CLIENTS FOR LIFE
for Success Step into a new way of thinking! The closing is not solely the completion of a job well done and
in Real Estate the end of a relationship with your clients, it is a step into a new level of that relationship with your
clients - a long-term relationship.
They should always remember you and think of you first. Whenever any real estate question or situ-
ation arises, especially for their friends/referrals that are about to become your new family of clients.
Think of yourself as an exclusive club, and your clients as the exclusive members - now treat them
as such. What service would YOU like to receive from an exclusive membership?
How have you gained your clients’ loyalty, and how will you foster the relationship for life? Take a
minute and write down your response below.
Here are a few ways a professional agent could cultivate their clients for long-term business.
• Follow up with them within the month after closing with a phone call to see how they are and
if there is anything you can do for them.
• Call five people a day from your sphere and rotate alphabetically. That is one call per client
every 30 days. If business is slow, then call 20.
• Mail a personal thank you note for their business and wish them the best in their new home.
38

• Paperwork is always necessary, so take the time to develop a system to keep track of each client
after closing that includes all documents and paperwork. Copies are critical, so a well-de-
signed organizational structure will be greatly appreciated and get you the referrals you need,
especially at tax time! (You could call everyone and offer to help with contesting property tax.)
• Send them an agent services satisfaction survey and ask for testimonials from those happy
clients. Incorporate the survey and the request on the same mailer. These testimonials are
valuable for listing appointments, websites, and more.
• Ask for referral business. Find creative ways to meet their sphere of influence.
• Develop a thorough database about your clients that includes all pertinent personal informa-
tion such as closing date, anniversaries, birthdays, and other important dates to THEM.
• Take the time to establish a tickler system to ensure prompt follow-ups and critical dates to
contact your past clients. Consider services that are beneficial to them individually.
• Be creative with gifts that have meaning to your clients. Keep closing gifts simple as you want
to customize them for your budget.
• Schedule celebratory group events that hold some higher purpose beyond self-promotion like
client appreciation or charity support.
After a long and hard day, you might be the only person who calls up your client and simply asks,
“How are you?” This thoughtful gesture will go along way in maintaining that long-term relation-
ship you desire with your clientele. Chapter 1
Effective
Ask yourself a few questions to track your progress, such as: Marketing
1. Did I actually listen to my clients today? How would I rate my ability to communicate for Success
effectively? Did I spend more time listening, talking, or answering questions? in Real Estate
2. Am I willing to invest my time and money to be a success?
3. If I didn’t like a client’s attitude, was I evasive and rude, or was I professional?
4. What can I do better tomorrow to improve my relationship with my clients?
39

THE ART OF NEGOTIATION
Business and life, in general, tend to work better when we let go of our attachment to the outcome.
Taking life too seriously causes us to force and push the outcomes we want, and no one responds well
when being pushed. When we are more relaxed, we tend to noticeably lighten up and find that we
perform better and enjoy ourselves more.
You will find many things you love about the business, but negotiating will likely become your
favorite part of real estate.
STRIVING TO BE A BETTER NEGOTIATOR

Every aspect of real estate involves some level of negotiation, including commissions, listing
agreements, and Buyer Representation Agreements, to name a few. By continuing to improve your
negotiating skills, you will be able to provide a higher level of service to your clients. Continue to
learn, expand upon, and practice your techniques.
Consider these points when looking to enhance your negotiating skills:
• Prioritize the items your clients want to achieve from the negotiation in order of importance.
(For example, sell in 30 days.)
• Determine a range for each of those items that you can work within and will still meet the
desired outcome.
• Discover possible concessions in advance and what the possible trade-off for each item could
Chapter 1 be. (Example - If we close earlier, we want full price.)
Effective
Marketing • Consider negotiating the demands that the other party is likely to request and prepare several
for Success responses.
in Real Estate
• Create a calm atmosphere and focus on the benefits to all parties.
• Learn as much as you can about the issues leading up to the negotiation and define the par-
ticipants’ needs.
• If the negotiating parties seem too slow or to lose interest, point out what they have to lose if
they do not reach an agreement. (Example - They will have to begin the house search all over
again, or they will lose the buyers, and the house will go back on the market.)
• Be aware of your body language and the words you use when negotiating. If you want to
appear confident and are speaking softly or covering your mouth - you will be perceived as
being unsure or even untrustworthy.
THINGS TO CONSIDER BEFORE YOU NEGOTIATE

• Highest price buyers will pay
• Negotiate points the buyers will concede to and what it may be worth to them
• Know the contingencies buyers feel are necessary
• Consider time constraints for both buyer and seller and the effect on the negotiations
40

THE SUCCESSFUL SALES AGENT
This chapter reviewed some familiar information and, hopefully, presented some new ideas. Remem-
ber that you are a professional representing a buyer or seller in a major financial transaction. To be
successful, you must be the consummate professional. What does being a consummate professional
entail?
The consummate professional:

• always shows up on time. Punctuality is a virtue in real estate. Your time is important, and
your client’s time is important. Do not waste either one.
• is always knowledgeable in his or her chosen field. Do the research, know the facts, statistics,
and the law (both federal and state).
• does not promise things he or she cannot deliver.
• is always groomed and dressed for success when meeting with potential customers and exist-
ing clients.
• is open to new ideas. Brainstorming sessions with others can provide new insights and new
approaches to the market that you may not have considered before.
• is ethical to a fault. No one wants to do business with or refer business to someone they do not
trust or respect. Put your clients’ needs before your own.
• is willing to share with others and give back to the community. Sharing your knowledge and
your wisdom with other agents is an excellent way to give back. Chapter 1
Effective
• is an artful negotiator. Marketing
for Success
• is not just in it for the commission. Be in it for the art of the sale, and because you enjoy it - in Real Estate
you are helping people achieve their dreams.
Remember, it’s not a sprint; it’s a marathon. Your marketing needs to stand out to put you in the
running, but it needs to be consistent to keep you in the game. Consistency means 6 months or more.
YOU have the power to be successful.
41

EXERCISE 2 - FILL IN THE BLANK
Directions: Fill in the blanks with the correct number from the list below.
150 10 1 400
22 87 31 48
500 40,000 5
1. The average turnaround response for mailers is _____%.
2. A brokerage needs to download the updated Do-Not-Call Registry at least every _____
days.
3. Most people have a sphere of influence of at least _____ people.
4. A workable farm should contain between _____ and _____ houses.
5. FTC fines telemarketing companies over $_____ for each call to a member of the Do-
Not-Call registry.
6. As of 2021, the oldest member of Gen Z will be _____ years old.

Chapter 1
Effective 7. _____% of Gen Xers looked for properties online as a first step.
Marketing
for Success 8. You should try to call at least _____ people per day from your sphere of influence and
in Real Estate rotate alphabetically.
9. _____% of Younger Millennial buyers found their houses using a mobile app.
10. Older Baby Boomers spent _____ weeks searching for a house.
42

CHAPTER 1 QUIZ
1. According to the text, which of the following is NOT a method for selecting a farm area?
a. Choose the most expensive homes so your commission will be bigger

b. Choose an area near your office
c. Research the average list and sales prices for an area
d. Find out where your fellow agents are farming
2. The 150 people in your _____ are comprised of friends, family, and acquaintances.
a. Realm of possibility
b. Sphere of influence
c. Dead files
d. Marketing team
3. Which of the following activities could help agents boost their marketing platforms?
a. Posting the testimonials of satisfied clients on their websites

b. Posting a YouTube video of a listing
c. Visiting the HOAs of the neighborhoods they work in
d. All of these could help agents boost their marketing platforms
Chapter 1
Effective
Marketing
for Success
in Real Estate
43

Notes
44

CHAPTER 2
Goal Setting and Your

Business Plan

Chapter 2: Goal Setting and Your Business Plan
goal setting long-term goals short-term goals
competence financial goals mission statement
values statement sources of business prospecting
referral self-awareness production analysis
PRE-TEST
1. _____ Prospecting a. an announcement of a company’s long term

goals
2. _____ Short-term goal b. when clients contact you and seek you out
c. the act of searching for clientele

3. _____ Mission statement
d. a goal that ranges from several months to a
Chapter 2 year
4. _____ Referral
Goal Setting e. a goal that ranges from five to ten years
and Your
Business Plan
5. _____ Long-term goal
1. c 2. d 3. a 4. b 5. e
Answers to Pre-test
46

SETTING YOUR GOALS
W inners are time managers. Every day, real estate agents need to remember that they must Pros-
pect, Show, Sell, and Close. Whether closing on a sale, closing on a listing, or negotiating for
buyers and sellers, agents prospect, show, and close every day. Time management means realizing
that your management plan may change from time to time, based on your necessary activities.
A daily plan must be in place and must consist of:
1. Must-Dos: prospecting, showing a property,

taking a listing T here are 3 things an agent has to do
every day: Prospect, Show, Close
(means Sell).
2. Should-Dos: write advertising for your
listing, make fliers, take pictures, preview If your daily activities are vastly differ-
properties ent than these, at some time in the near
future your business is going to suffer.
3. Could-Dos: update e-mail list, mailing list,
get the car washed
Prepare a Must-Do list the evening before the start of the next day. Start with the Must Do list and
work through it until it is complete. Items that do not get accomplished move up the ladder to the
next level until, eventually, the Could Dos are on the Must Do level.
Criteria for a good time management plan:

• Write down your daily plan. Do not carry it around in your head. Chapter 2
• Be specific. Directives must contain a specific activity. Goal Setting
and Your
Business Plan
• Measure what you have accomplished; a checklist is what works best. It gives you a personal
sense of achievement.
• Be realistic about your plan for the day, week, or month. If you cannot complete it, then it is
useless.
• Prioritize to get it done efficiently. Must do, Should do, Could do.
3 CATEGORIES OF TIME
1. Income-generating activities – listing and selling, prospecting, qualifying, marketing your
listing
2. Support activities – following through on transactions with arranging financing, title com-
pany communications, attending seminars, educational programs to improve your skills and
increase your self-confidence and credibility
3. Personal time – family, hobbies, vacation, resting, reading
Easy steps to create a time management daily program.

1. State your goal for the day.
2. Relate your activities directly to your goal.
3. Prioritize your activities.
4. Schedule the activities you have prioritized. 47

5. Keep focused on your daily list.
6. Review around midday or lunchtime to see where you are with succeeding with your daily
goal plan.
An integral part of your success will be your ability to manage time. One proven method of time
management is goal setting. Goals are tangible, measurable objectives that you genuinely want to
achieve. They motivate you. They help inspire self-discipline and give you the courage to keep trying.
Writing down your goals is the first step to achieving them.
Why is there a whole chapter of this book devoted to goal setting? A study from the Harvard Busi-
ness School tells us that a mere 3% of entrepreneurs have handwritten goals, 13% have goals in mind,
but they do not write them down, and 84% have not even given thought to set goals for themselves.
The study reveals that the 3% category of entrepreneurs - the ones that wrote down their goals - earn
as much as 10 times more than the other 97%.
There are three categories of goals that you should have. Long-term goals typically range from 5 to
10 years or more, intermediate goals from 3 to 5 years, and short-term goals from several months to
a year. All of your goals should have the following characteristics:
• They should be attainable. They should not be too easy, but they should not be impossible to
achieve.
• They should be flexible, to permit for unexpected windfalls and dry spells.
Chapter 2
• They should be measurable. If you aim to list 24 properties in the next 6 months, then that is
Goal Setting a measurable goal.
and Your
Business Plan
Finally, your goals should have a target date for completion, and they should build on one another.
In other words, your short-term goals should lead to your intermediate goals, which should lead to
your long-term goals.
You can set personal, professional, and income goals. All should be written down. Written goals
are important reminders of your commitment to yourself and also provide you with the means to
measure your success.
The following are examples of personal goals.

• Within five years, I will earn my Ph.D. in Business.
• Within two years, I will earn my MBA.
• During the next two years, I will take three graduate courses each semester.
Once you have decided on your goals and written them down, you may want to consider sharing
them with someone supportive and caring. Perhaps it will be with your spouse, a close friend, or
another family member. It could also be with your broker or a mentor, someone who is genuinely
concerned with helping you, in any way possible, to achieve your goals. When you write your goals
down and share them with someone else, your level of motivation to achieve them will be higher.
Secret goals are much easier to postpone or ignore.
For some people, writing their goals seems like an arduous task. Once you start writing, you will be
surprised by how many goals and dreams you have. Remember that these are your goals. They belong
to you and have meaning for you. Do not set your goals to impress someone else or satisfy another.
48

Goals must be meaningful to you, or it is unlikely that you will be motivated to achieve them. You
can set goals in several areas. They can relate to income, education, savings, property ownership,
professional status, and can be either personal or career-oriented.
If your short-term goals lead to your intermediate goals, and those lead to your long-term goals, then
you have the beginning of a plan of action. Your next step is to convert your goals into a working
plan. Remember that professional growth and development should always be part of the plan!
WISH, OUTCOME, OBSTACLE, PLAN

The journey of building wealth begins when you determine what you want and take responsibility
for getting there - commitment. If you commit to something 100%, then it is virtually certain to
happen, unless you change your mind.
What do you want? - Wish
How will you feel with the outcome obtained? - “Feel the wish.”
What is stopping me? Identify the obstacles, and then plan to overcome them.
As already stated, goals should be measurable, attainable, and reviewed often. Successful business
owners will review goals with staff and managers, usually twice a year, sometimes three times if
things change, but if it is a down cycle, like 2009 - 2013, they will review them monthly. This way,
they keep fear out of their business plans. They can work with what they know and have a plan to
get to the outcome.
The number one key to setting attainable goals is to carefully examine your life and define your Chapter 2
annual goals, then break them down to a monthly, weekly, and daily basis. Map out the larger objec-
tives and assignments. Fine-tune your schedule in order to carry out each task. More importantly, Goal Setting
and Your
study your progress and be willing to do a “self-check.” Include personal goals along with your Business Plan
business goals.
You should keep your goals within a visual distance, and visualize with a passion, allowing yourself
to sense the feeling you will have as you complete or attain your goals. Be willing to be flexible; how-
ever, a target date is essential. Create your action plan, making sure that your goals are measurable
with a target date, and then check the necessary resources required to achieve your goals.
Create a visual representation of your goals. For example, if your goal for the month was to list 3
houses in June, then draw a picture of 3 houses on your calendar for the month of June. Cross them
off as you sign listing agreements. You will be motivated when you see that one lonely house left,
waiting for you to cross it off the list. If it is mid-month and you still have one listing to go, you will
do whatever you have to in order to cross off that last house for the month.
FAILING TO ACHIEVE GOALS

Failing in some way, is part of the journey. Learn from the experience and reap the value of that
lesson. How do you deal with obstacles such as a bad inspection report or a bad appraisal?
A Bad Inspection Report - Always allow the inspector to deliver the inspection report to the parties.
Do not try to be the interpreter; this is not your job. The inspector is the subject matter expert deliv-
erer (SMED) of the news; he or she is the licensed, certified SMED.
A Bad Appraisal - Did you do your due diligence by creating the best CMA you could for the buyer or
seller? If the answer is yes, then you can deliver your CMA to the appraiser. It is fine for them to take
delivery of it as additional that was done research done for them. Of course, the appraiser is going
to do his or her appraisal report. If you get an appraisal you know is wrong, then notify the lender
49

who ordered the appraisal, question the outcome, and ask for a reappraisal. Show the lender your
CMA and ask why the appraiser was off by $35,000. Then, ask for it to be done again by a different
appraiser; the buyer may or may not have to pay for it.
When in doubt of a property’s value, begin the listing conversation with the seller by suggesting that
he have it appraised first by a certified or licensed appraiser. That will make the negotiation much
easier for the seller, buyer, and agents. When the appraisal for the lender is ordered, the original
appraisal can be left in the house for additional help.
Can the buyer pay the difference between the appraised value and the sales price? Yes. The buyer will
generally not have the money, but sometimes this could be a viable option.
Can the seller lower the sale price to the appraised value? Yes.
If the appraiser has a reputation for killing deals with bad appraisals, do you have another option?
Yes. You can fill out a report with the Texas Appraisal Licensing Certification Board (TALCB).
Sometimes we do not take action when we could because we are overcome with anxiety. “Knowledge
without action is wasted potential.” Take action and find another plan. Reap the value of the lesson;
this is called gaining experience or on the job training (OJT).
Celebrate successes and work on weaknesses. Do not focus on the negative! Always be a publicist for
the real estate industry, making positive statements about the career that you have chosen. Negativ-
ity will chase away buyers, sellers, and friends.
Chapter 2 A racecar driver does not focus on the crashes going on around him, but the opportunity straight
ahead. So every time you crash into adversity, ask yourself, “what is the opportunity in this for me?”
Goal Setting
and Your
Business Plan
Confidence comes with competence. Technical competence in real estate and construction includes
knowledge and the ability to find answers you do not have. Competence in forming human relation-
ships and listening to others, in addition to daily practice, will enhance your skills and ability to deal
with many different types of people.
You are always going to worry about your business; that is normal. If you are not worried, you start
to take it for granted. Many agents will get busy, and will not have time to write their thank you
notes and revise and set their goals, but all of those things are necessary for success. Devise a system
for getting these tasks accomplished and stick to it. If you are not an organized person or are easily
distracted, enlist a friend, significant other, or colleague to keep you on track. Remember, picture
yourself as a success and work towards that picture.
50

THE MAGIC OF GOAL SETTING
A. THE IMPORTANCE OF GOAL SETTING
1. It is every sales agent’s key to success
2. It reduces stress
3. It strengthens our desires and clarifies our choices
B. KINDS OF GOALS
1. Business
2. Spiritual & Mental
3. Personal
C. CHARACTERISTICS OF SUCCESSFUL GOAL SETTING
1. Goals must be personal
2. Goals must be realistic, but do not be afraid to dream Big Dreams of Success!
A goal is simply a dream with a deadline.
3. Goals must be: Chapter 2

a. Long-term Goal Setting
and Your
Business Plan
b. Short-term
c. Daily. The use of a daily schedule is essential
d. In writing
e. Flexible and subject to change
f. Visualized
D. ESSENTIALS FOR SUCCESSFUL GOAL SETTING AND SUCCESS
1. Patience, persistence, and perseverance.

Do not give up.
2. If success were easy, wouldn’t everyone be successful? It is work! You can do it if you have
enough desire to become successful. It is truly up to YOU.
51

SPECIFIC “HOW TO” OF CAREER GOALS FOR REAL ESTATE SALES AGENT
•
List Goals - Set daily goals by deciding what is essential. Concentrate your efforts on your
goals and avoid irrelevant activities to develop a positive direction.
•
Set Priorities - Identify your most important goals with an A, and invest your time in their
attainment. Items ranked B or C carry a lower priority.
•
Daily To-Do List - Begin each morning by listing tasks and activities which will help you
achieve high-priority goals. Always start with As, not Cs.
•
Do It Now - Procrastination is suicide on the installment plan. Get started and follow through
on tasks you begin before beginning others.
•
Be Flexible - Continually review priorities. As time moves on, and circumstances change,
priorities might need to be revised. When the unexpected occurs, remember that it provides
you with a challenge to which to adjust. Handle the unexpected, and then get back to your
plan.
•
Learn to Say No - Say no to interruptions and requests, which are clearly not related to your
goals and will distract you from what is essential. Keep your activities directed regularly
toward the goals you have set. If you do not, you will live and work for the goals of others.
•
Do It Once - Avoid the temptation to stop and start, stop, and start. Handle each job and each
piece of paper once. Deal with the task and be done with it.
Chapter 2 •
Write It Down - If your time is valuable, allocating it is too important a matter to be left to
haphazard methods and record-keeping - record appointments, scheduled events, timetables,
Goal Setting and deadlines. It does not matter what tool you use to record it; just use a method. Refer to
and Your
Business Plan
your written notes regularly to keep you on track with A, B, and C priorities.
•
Act As If - Each of us should be in a constant state of change, becoming more of what we
want to be and are capable of becoming. When you want to become more like something, act
as if you had already done so; this will help you become what you want to be.
•
Create Personal Time - Set time aside each day to do things that will make you happy. Plan
to do it daily until it becomes a habit. This practice will recharge your batteries and improve
your attitude and personal effectiveness.
*Set your direction for the next year by identifying your prior year’s accomplishments on the following page. *
52

ACCOMPLISHMENTS FOR THE YEAR
ACCOMPLISH: To bring to a conclusion, carry out, perform, finish, complete fulfill.
ACCOMPLISHMENT: Achievement; the act of carrying into effect, an acquired ability, or

knowledge.
Reviewing our accomplishments requires us to take a moment to reflect on the past year. Allow
yourself to recall the small and large goals met, projects completed, contracts signed, the growth
experienced, and knowledge gained. Recognizing our accomplishments will impact our ability to
celebrate, inspire, and be inspired. We can actually experience the accomplishment and create a
“clean slate” for looking to see what is next. By doing so, we can move on to new goals with focused
energy and enthusiasm.
BUSINESS GOALS ACCOMPLISHED:
PERSONAL GOALS ACCOMPLISHED:
Chapter 2
PHYSICAL AND HEALTH GOALS ACCOMPLISHED:
Goal Setting
and Your
Business Plan
RECREATION GOALS ACCOMPLISHED:
CONTRIBUTIONS TO THE COMMUNITY ORGANIZATIONS, THE ARTS, ETC:
THE HIGHLIGHT OF THE YEAR:
WORD OR PHRASE SUMMATION OF THE YEAR FOR YOU:
*Use the following page to set your direction for the current year.*
53

GOALS FOR THE YEAR
GOALS: The end toward which you direct effort; your aims, your intentions.
This is an opportunity to focus on your dreams, goals, and aspirations for the next year. Set your
direction for the year by identifying specific goals for the following categories:
BUSINESS:
FINANCIAL:
FAMILY:
Chapter 2 COMMUNITY SERVICE:

Goal Setting
and Your
Business Plan
RECREATION/TRAVEL:
HEALTH:
PERSONAL & SKILLS DEVELOPMENT:
WORD OR PHRASE THAT BEST REPRESENTS YOUR FOCUS FOR THE YEAR:
54

INTRODUCTION TO FINANCIAL GOALS
The first activity a new commission-based salesperson does is to calculate their hourly value. This
value is based on what the salesperson must bring in at the end of the year to pay their bills.
For example, if you must make $60,000 this year, then divide $60,000 by 52 weeks in the year. This
gives you $1,154 per week that is mandatory for you to bring in. If you plan to work 6 days per week
since this is what most new agents will do, divide $1,154 by 6. This gives you $192 per day. Further
divide that number by 8 for 8 hours in the workday. Your hourly rate would be $24 per hour. If you
can do all the necessary daily tasks in only 5 days per week, then your hourly rate would be $29
($1154 / 5 = $231 / 8 = $29 per hour).
If you want to make $160,000 this year, do the math to get down to what it takes to get there.
$160,000 /52 = $3,077 / 6 days = $513 / 8 = $64 per hour.
You are the boss, so you are in charge of your schedule. When you go to lunch, invite someone who
can help you with education or referrals or who can give you a testimonial. You can invite a lender,
an inspector, a title company representative, a colleague, or a client who is giving you a testimonial
or referral - lunching with someone who can help your business is good time management. Evaluate
throughout the day whether or not you are a good steward of your time. If not, YOU have the power
to change that.
SETTING FINANCIAL GOALS

As stated, the first step in your career should be the preparation of financial goals. You should plan
for short-term and long-term financial goals, which should be realistic and tangible - meaning that
you should be able to reach out and touch them. Chapter 2
Many advisers use the acronym SMART when referring to financial goals: Specific, Measurable, Goal Setting
and Your
Achievable, Relevant, and Timely. Business Plan
How do you plan your SMART goals? Think about what it is that you want to achieve financially.
Your short-term goals may include a once-in-a-lifetime, dream vacation, a state-of-the-art com-
puter, or a home or vacation home. If your dream vacation is renting a Tuscan villa and exploring the
wine-producing regions of Italy, then sit down and figure out how much money you need to achieve
it. For example, if the dream vacation to Italy costs $5,000, and you want to go in two years, you will
need to allocate over $200 per month toward that goal. $5,000 / 24 months = $208 and some change
per month or roughly $104 bi-weekly.
Long-term goals might include:

• Retirement savings - Maybe you would like to retire early, at 55, and travel the world. Maybe
you see yourself working until 65 or older. Either way, you need to set the goal (retirement
age) and establish the dollar amount that you will need to live comfortably for the years to
come. Speak with a financial planner to set realistic goals for your retirement.
•
Emergency fund - As with most sales careers, real estate will have its lean years as well as its
fat ones. Supply and demand and the economy are the most important driving forces of the
real estate market. In order to comfortably ride out the downturns in the economy, it would
be prudent to open an account into which you deposit money you do not touch unless it is an
absolute emergency. Try, if possible, to have at least one year’s worth of expenses, if not more,
saved up to get you through the tough times. When you are back on your financial feet again,
allocate what you can to the fund. Some months you may have more to deposit than others,
but establish a minimum and put at least that much aside.
55

GETTING STARTED
You will need a budget for proper financial planning.
First, calculate your living expenses. These include rent/mortgage payment, car, gas, groceries, utili-
ties, student loans, etc. Figure out what percentage of your income goes toward your necessary living
expenses. Most financial advisers will tell you that your living expenses should not exceed 50% of
your monthly income.
Second, budget for your savings. What percentage of your monthly income will go toward retire-
ment and/or emergency fun?. Do not forget that as an independent contractor, you are responsible
for your taxes; this, too, must be worked into your monthly budget so that you will have enough set
aside for tax time.
Third, budget for your lifestyle and entertainment. This will include money that you will allocate
toward shopping, dining out, concerts, and other entertainment expenses. You can scale back the
entertainment budget more easily if needed.
If possible, set up an amount to be automatically deducted from your account and placed into a
savings account each month. By automating the process, you do not even have to think about it or
second guess yourself; the money will already be in the account.
You should track your financial goals regularly. If you are not achieving them on time, then you need
to figure out what it will take to attain them. There may be something in your entertainment budget
that you can cut back on for a few months; maybe you should go out to eat less, saving that money
and putting it toward your goal.
Chapter 2
You can download software that will help you keep track of your money. There are also apps for your
Goal Setting smartphone or tablet that will help you budget and plan your finances.
and Your
Business Plan
56

THINK ABOUT IT - FINANCIAL GOALS
If I had an extra $100 right now, I would use it for:
Description Cost
a. _____________________________ $ ___________
b. _____________________________ $ ___________
c. _____________________________ $ ___________
If I had an additional $1,000 right now, I would use it for:
d ._____________________________ $ ___________
e. _____________________________ $ ___________
f. _____________________________ $ ___________
g. _____________________________ $ ___________
If I had an additional $5,000 right now, I would use it for:
h .____________________________ $ ___________ Chapter 2

i. _____________________________ $ ___________ Goal Setting
and Your
Business Plan
j. _____________________________ $ ___________
k. ____________________________ $ ___________
l. _____________________________ $ ___________
*Answers will vary.
Many agents just getting started do not know what income to expect for their first year, or how to
go about planning for a successful first year because they do not know how to quantify it. Instead
of setting goals based on other agents’ first-year experiences, set your goals specific to you and your
market area.
Consider the answers to the following questions when setting your financial goals.
What is your market area? _________________________________
How many houses are in your market area? _____________________
What is the average turnover rate of properties in your market area? _____________________
What is the average closing sales price in your broker’s office? ___________________________
Additional influencing factors: _________________________________________________
________________________________________________________________________
57

BE REALISTIC AND BE PREPARED
Approaching your new career in real estate as you would when setting up a new business requires you
to prepare for the costs of necessary items, initial promotional items, and the general costs of doing
business. When agents prepare for entering the entrepreneurial world of real estate, they will stay in
the business of real estate.
Items to consider (some may be provided by your broker):
• E & O Insurance • Broker-incurred costs
• Accountant fees • Signs
• Business cards • Professional headshot
• Equipment • Laptop
• Smartphone and mobile plan • Wi-Fi
• Association dues • Nametag(s)
• Car magnet • Software
Additional items to consider: __________________________________________________
________________________________________________________________________
Chapter 2
________________________________________________________________________
Goal Setting
and Your
Business Plan
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
58

FINANCIAL GOALS EXERCISE
This exercise is based on a real estate agent’s career. Anyone who is in commission sales should
start their financial goals considering the following:
1. Just to pay my bills each year, I must earn... $
2. For those items that I want, I must earn... $
3. So really, during the next 12 months, I have to earn... $
(Line 1 + Line 2)
4. That works out to be monthly earnings of... $
(Line 3 ÷ 12)
5. Of my monthly earnings, 60% should come from listings sold $
(Line 4 × .60)
6. Of my monthly earnings, 40% should come from sales made $
(Line 4 × .40)
What do I have to do to achieve my listing income? Chapter 2

7. In my market area, the average listing commission is... $ Goal Setting
and Your
(Get this figure from your broker) Business Plan
8. So, I must have the following number of monthly listings sold...
9. If only 75% of my listings sell, I have to get _____________ listings.
10. It may take ________________________________ listing appointments to get a listing.

(Historically given)
11. So I have to go on ____________________ listing appointments per year to get a listing.

(Line 9 × Line 10) (÷ 12 months)
12. It may take ________________________________ calls to get each listing appointment.

(Given see Goals -3)
13. So I have to make __________________________ calls to get each month.

(Line 11 × Line 12) (÷ 12)
14. And I have to make ______________________________________ calls each week.

(Line 13 ÷ Line 4)
15. And I have to make ______________________________________ calls each day.

(Line 14 ÷ 5 days)
59

What do I have to do to achieve my sales income?
16. In my market area, the average sales commission is $

(Get this figure from your broker)
17. So, I have got to make _____________ sales each month to make my goal.
(Line 6 ÷ Line 16)
18. So, I have got to make _____________ sales each week to make my goal.
(Line 16 ÷ 4)
19. It takes about _________ property showings to a qualified buyer to make a sale.
20. So, I must show _______________ properties each month.

(Line 19 × 17).
21. So, I must show _______________ properties each week.

(Line 19 ÷ 4)
Chapter 2
Goal Setting
and Your
Business Plan
60

FINANCIAL GOALS EXAMPLE
1. Just to pay my bills each year, I must earn... $60,000
2. For those items that I want, I must earn... $5,000
3. So really, during the next 12 months, I have to earn... $65,000

(Line 1 + Line 2)
4. That works out to be monthly earnings of... $ 5,416.67

(Line 3 ÷ 12)
5. Of my monthly earnings, 60% should come from listings sold $3,250

(Line 4 × .60)
6. Of my monthly earnings, 40% should come from sales made $2,166.67

(Line 4 × .40)
What do I have to do to achieve my listing income?
7. In my market area, the average listing commis- $3,000 $200,000 Sales price
sion is... × .015
$3,000
8. So, I must have the following number of monthly 1 or 13 / year

listings sold... Chapter 2
9. If only 75% of my listings sell, I have to get 17 1/3 listings. 1) 3,250 × 12 Goal Setting
and Your
3,000 Business Plan
2) 39,000 = 13 = 17
3,000 75%
10. It may take 3 listing appointments to get a listing. 52 ÷ 12 = 4.3/month

11. So I have to go on 52 listing appointments per year to get a 52 ÷ 12 = 4.3/month

listing.
(Line 9 × Line 10) (÷ 12 months)
12. It may take 100 calls to get each listing appointment.

(Given see Goals -3)
13. So I have to make 433 calls to get each month. 5200 ÷ 12 = 433
(Line 11 × Line 12) (÷ 12)
14. And I have to make 108 calls each week. 433 ÷ 4 (weeks in a
(Line 13 ÷ Line 4) month)
15. And I have to make 22 calls each day. 108 ÷ 5 = 21.6 = 22

(Line 14 ÷ 5 days)
61

What do I have to do to achieve my sales income?
16. In my market area, the average sales commission is... $3,000

17. So, I have got to make 1 sale each month to make my goal. 2166.67 ÷ 3000 = .72 = 1
(Line 6 ÷ Line 16)
18. So, I have got to make $750 in sales each week to make my $3,000 ÷ 4 weeks
goal.
(Line 16 ÷ 4)
19. It takes about 8 property showings to a qualified buyer to make a sale.

20. So, I must show 8 properties each month.

(Line 19 × 17)
21. So, I must show 2 properties each week.

(Line 19 ÷ 4)
Chapter 2
Goal Setting
and Your
Business Plan
62

DEVELOPING YOUR BUSINESS PLAN
Good starting points for developing a business plan are the mission statement and the values state-
ment. These can serve as reliable compasses to keep the planning team, and later the company, in
general, oriented toward what is important. The mission statement announces to the world what
the company’s long-term goals are, and describes the overall purpose of the organization. Mission
statements tend to be more powerful when they not only describe the work the company does, but
also the company’s reasons for doing it. Well-constructed mission statements help others understand
what the company will do for customers and employees, and help them determine what the owners
want from their business.
Your mission statement should reflect the main thing you want to achieve (customer loyalty), and
it will be an example of your values. Think of how you want others to view you and your business.
What is it that you stand for? For example, “I have a passion for helping people buy and sell houses.”
Your mission statement defines who you are. When people read it, they should feel comfortable and
secure in the belief that they chose the right agent to help them buy or sell a house.
Values statements help define how you will accomplish the work and articulate a set of beliefs and
principles that guide the way the company conducts business. You want to make sure that your goals
align with your mission statement.
An example of a mission statement might be: “To go above and beyond my client’s expectations while
maintaining a continuously growing and top-producing business.” Ensure that your goals are in line with
your mission statement.
Steps to an Agent’s Business Plan Chapter 2

1. Assess the situation. Gather data that is important to your business. You will achieve this
by performing market research. Some questions you might consider for your research prob- Goal Setting
and Your
lem are: Business Plan
• What are the demographics and size of my largest potential market segment?
• How do the largest segments of my market go about finding a property?
• How do the largest segments of my market find and choose a real estate agent?
• How will my market segments change when the new corporation in the area is up and
running?
• How will the new shopping mall currently under construction affect the housing market
in my market area?
Agents can gather data from primary and secondary sources. Primary sources of data will
come directly from your consumers, including closed transactions, questionnaires, and email
surveys. Secondary sources can include NAR or other trade associations, MLS boards, title
companies, and government studies, among others.
2. Define your business focus. Your business focus is your mission and strategic intent.
This step can help prevent you from wasting valuable time, as many agents often do. It is
important to define which questions need to be answered, but it is equally important to
understand why these questions need to be answered.
3. Decide on the results. These are your goals and objectives. Your research may have provid-
ed you with an attainable first-year income based on your proactive commitment to doing
63

whatever it takes. Use the conclusions that you came to when you did your market research
to establish your goals.
4. Determine the “what” and the “how” of attaining the desired results. The “whats” are the
strategies, and the “hows” are the tactics.
PERSONAL BUSINESS PLANNING

The direction of the real estate market and the push and pull of competing business priorities do not
matter. You are in charge of staying on top of your game. In order to go forward, we need to look
back. Where did your business come from in the last 12 months?
STEP 1: PERFORMANCE AND PRODUCTION ANALYSIS
BUYER OR ADDRESS REFERRAL PROPERTY TYPE

SELLER SOURCE
Chapter 2
Goal Setting
and Your
Business Plan
64

SOURCES OF BUSINESS
A real estate agent’s sales come from many sources. It takes all sources to make the entire year a
success. On the checklist below are some possible sources from which business can be derived. Look
for a pattern, indicating which source comprises the majority of your business. Maybe there are some
sources on the list you are not currently tapping.
SOURCE YES NO HOW MANY?
Personal referral from existing client
Personal referral from family or friend
Repeat customers or investors
Farming
Open houses
Relocation referrals
For Sale by Owners
Expired listings
Flyer or mailer you sent out

Chapter 2
Floor duty or property time call
Goal Setting
and Your
Event or Seminar Business Plan
Networking a community group
Networking a real estate industry group
Cold calling
Social media
(Which social media is working best for you?)____________________________________
• Your personal website:
• Other:
65

ACCOUNTABILITY QUESTIONS
Question: What prevented you from reaching your personal production goal last year?
1. ______________________________________________________________
Question: What specific activity had the most production impact on your annual business?
2. ______________________________________________________________
Question: In order of most income realized for last year what methods of lead generation were most
successful for you?
3. ______________________________________________________________
DO THE MATH
There is math behind every successful plan. Do not be afraid to do the math. You will have already
established measurable financial goals for your income.
STEP 1: YOUR AVERAGE SALES PRICE
1. # of closed transactions: _______
2. Total price of all properties sold: $_______
Chapter 2 3. Divide total price of all properties by the total of closed transactions to obtain average sales
price: $____________
Goal Setting
and Your
Business Plan
Your Average Earned Commission
1. Total Commissions earned: $________________
2. # of listings: __________
3. # of sales through buyers: _____________
4. Total # of listings and buyers: _________________
5. Divide total commissions by # of listings and buyer sales to obtain your average commis-
sion per transaction: $_____________
Note: A new agent should obtain the median sales price for the office and the average number of
closings for agents at their brokerage office to use for projections for the coming year.
66

STEP 2: NOW SET YOUR NEW YEAR GOALS
The secret to success for a salesperson is to set goals by creating a realistic plan based on historical
data like we did in Step 1.
Now the most important step is creating an action plan.
My Goals and Plans for the Coming Year:
1. My income goal for this year is: $___________
2. My average commission per transaction last year was: $_____________
3. Number of transactions needed to reach my New Year’s income goal (divide 1 by 2):
____________
4. My % of closed sales that were listings last year: ______# of listings needed this year to
reach my goals: _______
5. (apply the % in #4 to #3)
6. # of buyer closings needed next year to reach my goal:___________

(subtract listings from total transactions needed)
STEP 3: PROSPECTING ACTION PLAN

Chapter 2
1. # of closings needed per year: _______
Goal Setting
and Your
2. # of prospects needed this year: ________ Business Plan
(Prospect to sale ratio is 25 prospects to 1 sale; therefore multiply #1 by 25)*
Industry standard, as stated in 30 Days to Success by Rita Santamaria and The Real Estate Rainmaker
*
by Dan Rickard.
You know that “An inch is a cinch, but a mile is a trial.” You have also heard, “How do you eat an
elephant? One bite at a time.”
Let’s break this down into bite-sized pieces, so it is easy to achieve.
1. Annual prospects needed:__________
2. Total number of prospects needed monthly: ________

(divide #1 by 12 months)
3. Total number of prospects needed daily: __________

(divide #2 by the number of days you work per month – focused prospecting, not casual
meeting and greeting)
67

WHAT IS PROSPECTING?
Prospecting is actively obtaining new sources of business through generating the leads yourself.
You are marketing when you do things that make the leads come to you. Prospecting is you making
contact with people.
When someone makes contact with you, it is called a referral. Salespeople who wait for referrals
to generate their annual income will never make the income they have set for their annual goals. It
takes active daily prospecting for the success of your business, and then your referrals are the icing
on the cake.
WORK WITH YOUR OWN SKILL SET TO ACHIEVE SUCCESS

Long-term success is based on growing and improving your knowledge and skills.
Identifying your strengths and weaknesses is essential to your continued success year after year. Take
an honest look at your best qualities and your weaknesses. This process is known as self-awareness.
1. What words would close friends and family use to describe you: ________
2. What is your most outstanding personal attribute or characteristic: __________
3. What is the characteristic you like least about yourself: ________________
4. What real estate activities do you least enjoy and perhaps avoid: __________
Chapter 2 THE BUSINESS OF COMMUNICATION

Communication frequency should be, at minimum, monthly. Regular communication should be one
Goal Setting of your essential goals. For new leads, communication about your company is excellent. For actively
and Your
Business Plan
searching prospects that reach out to you, the information you provide them must be quality content.
Past clients should receive handwritten thank you notes, e-mails, information about market condi-
tions; they should be your Facebook friends, following you on Twitter, and they should be receiving
holiday cards and invitations to events you are sponsoring and open houses you are hosting.
Research has shown those who take time to plan out their annual business plan and goals have a
vision and, therefore, double their chances for success; this is why you plan your vision for the com-
ing year.
The vision and plan are in place, and now the most important step of all is the implementation of
your business plan. Success is yours and can be yours for the long-term if you follow your written
plan!
Keep track of your production by using a simple chart. Reflect on each transaction - what were your
strengths and what were your weaknesses? We always learn from both.
68

Production Analysis will be your key to increasing your client base and aggressively growing your
business. Below is a chart you could use to reflect on your transactions.
ADDRESS SALES PRICE SOURCE (BUYER WEAKNESSES (I STRENGTHS (I

OR SELLER) WILL LEARN FROM) WILL USE AGAIN)
*On the following page is a chart you can use to analyze which resources you are using to help build and Chapter 2
sustain your business and also give you ideas on what you could do to differentiate your business plan tactics.
Goal Setting
and Your
Business Plan
69

TOOLS AND RESOURCES TO BUILD AND SUSTAIN YOUR BUSINESS
I USE I WILL
NOW USE
Current database to market my business
10 personal handwritten notes per week
Host open houses
Personal brochure ready for distribution
Deliver client package in person vs. mail or e-mail
Attend and participate in a community group
Attend training at least once per month for skill improvement
Contact past clients consistently (at least once per month)
Telemarketing campaigns
Homebuyer seminars
Direct mail to target markets

Chapter 2
Co-marketing with affiliates and associated professionals - who
Goal Setting would those be? _____
and Your
Business Plan
Magazine and newspaper ads
Mail note pads and other specialty items to farm
Financial options perhaps prepared by lenders for listings
Quick response e-mail and text messages
Consistent branding across all platforms
Regular website updates
Buyer pre-approval prior to showings
Contributions to online forums
Blog posts / social media (Facebook, Twitter)
Structured listing presentation (one that can be picked up on short

notice and carry you through a presentation to the seller with only the
specifics on his house that needs to be added)
Video marketing
70

BEGIN YOUR DAY – BEGIN YOUR PLAN– END WITH SUCCESS
A final thought on how to begin each day so that they are rewarding and you are energized.
Get up early. Do not jump out of bed and rush through your morning. Getting up 20 minutes earlier
will help you avoid stress, tardiness, and unnecessary feelings of anxiety.
Wake up to natural light. Leave your blinds or curtains halfway open when you go to bed as the
natural light of the rising sun will send a signal to your brain to slow its production of melatonin and
boost its production of adrenaline.
Stretch. Limbering up muscles can enhance the flow of blood throughout your body, which will
provide extra oxygen to all your tissues.
Exercise. People who exercise in the morning have a better sense of wellness as it produces endor-
phins. Getting it out of the way early allows you to not dwell on needing to do it all day long.
Get motivated. Read a good quote when you start the day.
Take vitamins. Vitamins give you energy and are good for you. By taking them in the morning, you
get into a routine, so you will not forget to take them.
Do not skip breakfast. A heavy meal will slow you down, but fruits, proteins, and grains give you a
stream of energy that will prevent you from crashing mid-morning. Your brain and body are a result
of what you put into your body to sustain it.
Remember your loved ones. A hug or kiss to someone you love relieves stress and provides a positive Chapter 2
start to the morning. If you leave before the loved one wakes up, leave a note for them. If you do not
live with a loved one but have a pet, it has the same result if you talk to, touch, and care for your pet. Goal Setting
and Your
Business Plan
Prepare your attire the night before. It is a real time-saver, and your outfit will always go together
better because you are not in a rush putting it together if you do it the night before.
Drink water. Drinking water in the morning and throughout the day can keep your skin clear, your
cells renewed, your body tissue and muscles hydrated, and boost your metabolism while helping your
body absorb nutrients easier.
Write in a journal. Organize your day by going over the previous day’s to-do list. Journaling helps
your organization skills, and you will avoid the stressful effects of forgetting something important.
Give yourself a break. Take time during the day to stretch, check your to-do list, drink water, and
congratulate yourself on the tasks you accomplished. Breathe deep and let your breath out slowly five
times to refresh your body and mind.
71

Statement Tor F
1. Goals should be attainable and flexible with some way to measure whether
or not you have achieved them.
2. The agent should always present the buyer with a bad inspection report
and try to interpret it for them.
3. In Texas, a seller is not allowed to lower the sale price to the appraised
value of a property.
4. Financial planners often use the acronym SMILE when referring to finan-
cial goals.
5. When budgeting, you should include living expenses, savings, and lifestyle
and entertainment.
6. Living expenses like rent should account for over 70% of your total
monthly income.
Chapter 2 7. Some of the general expenses a real estate agent can expect to incur are
E&O insurance, mobile plan and Internet and any broker-incurred costs.
Goal Setting
and Your
Business Plan
8. Primary sources of data used to develop your business plan often come
from trade associations and the Internet.
9. Mission statements tend to be more powerful when they describe the work
the company does and the reason the company is doing it.
10. Prospecting is defined as waiting for leads to come to you as referrals.
72

64 3 52 20
10 5 25 10
13 3 100
1. To find out how much you make per week, divide the amount you want to make in a
year by _____.
2. The average prospect to sales ratio is _____ prospects to 1 sale.
3. Getting up _____ minutes earlier will help you avoid stress, tardiness, and unnecessary
feelings of anxiety.
4. There are _____ things an agent has to do every day.
5. A study from Harvard Business School found that entrepreneurs that write down their
goals earn as much _____ times more than the entrepreneurs that do not.
6. Long-term goals range from _____ to _____ years or more. Chapter 2

7. According to Harvard Business School, _____% have goals in mind, but they do not Goal Setting
and Your
write them down. Business Plan
8. If you commit to something _____%, then it is virtually certain to happen, unless you
change your mind.
9. If you want to make $160,000 in a year and you work 6 days a week, you would make
$_____ per hour.
10. Only _____% of entrepreneurs write down their goals.
73

CHAPTER 2 QUIZ
1. Which of the following statements is TRUE?
a. M
ission statements are best developed after you’ve been in business for at least 5 to 10
years
b. Mission statements are powerful when they describe what the company does and why
c. Value statements are unnecessary for the majority of businesses
d. Mission statements are separate from what the company does for customers
2. Besides personal referrals, _____can be a good source of business for your real estate sales.
a. Farming
b. Networking groups
c. Open houses
d. All of these can be good sources for business
3. Goals should be attainable, flexible, and _____.
a. Measurable
b. Rigid
c. Difficult to reach
d. Constantly changing
Chapter 2
Goal Setting
and Your
Business Plan
74

CHAPTER 3
Working With Buyers

Chapter 3: Working With Buyers
counseling negotiating managing the transaction
qualifying substantive discussion buyer’s book
multiple listing service showing due diligence
PRE-TEST
1. ______ Negotiating a. the reasonable effort agents put forth to

provide accurate and complete informa-
tion to customers and clients
2. ______ Qualifying
b. helping buyers arrive at a realistic offer
that will be accepted
3. ______ Due diligence
c. guiding buyers through paperwork and
ensuring that the closing stays on track
4. ______ Substantive discussion
Chapter 3 d. sum of monthly principal, interest, taxes,
Working With and insurance
Buyers 5. ______ Managing the transaction
e. triggers the requirement for delivery of
the IABS
1. b 2. d 3. a 4. e 5. c
Answers to Pre-test
76

SERVICING THE BUYER
T hree ways that you add value to the buying process:
1. Counseling - You assist the buyer in acquiring and interpreting information about prop-
erties and their conditions. Your experience in the world of real estate can prove to be
invaluable to buyers, especially first-time buyers who may need a little more “hand-holding”
during the process.
2. Negotiating - You can help buyers arrive at a realistic offer for a property and assist them
in planning a negotiating strategy. You know what the market is like, and which properties
are overpriced or underpriced. You know how to help buyers prepare an offer that will get
accepted.
3. Managing the transaction - You will guide buyers through the complex paperwork re-
quired for a real estate transaction, and make sure that the closing stays on track by check-
ing in regularly with the parties (lenders, title company agents, etc.) that work behind the
scenes to close the deal.
Real estate sales agents offer so much more to their clients than just these three services. What are
some other ways that YOU add value to your buyers?
PROSPECTING FOR BUYERS

In servicing your listing, you will be prospecting for buyers. Also, ongoing farming efforts will be
bringing in buyers. Whether the buyers you work with buy your listing or another listed property,
your efforts will be rewarded.
Chapter 3
Tips for Prospecting For Buyers Working With
• Work open houses. Buyers
• Develop contacts with the human resources departments of any major employers.
• Have a buyers’ section on your website that provides area information and links.
• Post “buyer-oriented” articles on your website.
• Obtain bridal registry lists from department stores.
• Target renters in higher-end properties.
• FSBOs looking for a new home – remind them sellers are paying the fee.
• Solicit your current sellers.
• Conduct homebuying or other real estate-related seminars for your target buyer groups.
• Give a home-buying-related course through an adult-learning venue.
• Send out mailers to renters. You can use an apartment complex if the leasing manager allows
you. (Some people like to rent, not own, so you might not be seen as a threat.)
If your initial contact with a prospective buyer is by phone, then remember that your main goal is to
secure an appointment with this person. You would like the buyer to come into the office and discuss
his or her needs with you. If the buyer has called to ask about a particular advertisement he or she has
77

seen, be sure to have information ready to discuss. For every bit of information you give, you should
get some back. The following dialogue is an example of this:
Buyer: How many bedrooms does this property have?
Agent: It has three bedrooms. Is that enough for your family, or would you
prefer four bedrooms?
Buyer: I would prefer four, but this is the neighborhood I really want to live in.
Agent: I have several four-bedroom listings in this neighborhood. Would you
like to come in and discuss how they might meet your needs?
Setting an appointment with a prospective buyer is, of course, the first step to working with them.
Remember to give them the Information About Brokerage Services (IABS) form at the first face-
to-face meeting, and explain their options regarding agency, representation, and the intermediary
process. Once you cover this groundwork, it is time to qualify the buyer.
Most buyers do not recognize the amount of time it takes a real estate professional to find a home
for them because much of the work goes on behind the scenes. Develop lists of the tasks you will
perform for buyers and realistic estimates of the time and money each will take.
QUALIFYING THE BUYER

There are actually two types of qualifying going on at the same time in the process of getting to
know buyers. First, and most obvious, is learning the financial qualifications of the buyer. Equally
important, but less apparent, is the emotional qualification process. Are these prospects genuinely
interested in buying, or are they just engaging in “wishful looking?” Both of these questions should
be answered before you commit time and effort to work with these prospects. If the buyers are will-
ing to sign a Buyer Representation Agreement with you, it is a good indication that they are serious
in their intention to buy a property.
Chapter 3
Working With Many new agents are reluctant to ask personal questions of relative strangers, and that is exactly
Buyers what the qualifying interview requires. Remember, you are a professional, an expert, and the buyers
have contacted you for help. Just as a doctor will gather a medical history, you will gather back-
ground information to help you meet the buyer’s needs and desires. Also, remember your promise to
your sellers. All buyers viewing the listed property will be qualified. The sellers will not be incon-
venienced by individuals who are not able to purchase their property. It is a good idea to begin your
qualifying interview with a request for permission to ask the buyers some personal questions. You
may even have a script or questionnaire that you can follow to gain the information you need.
It is often easier, to begin with the personal background questions than the financial ones. Remem-
ber that part of the purpose of this interview is to get to know the buyers. You should be listening
carefully to gather all the subtle information that is conveyed by body language and tone of voice.
Which spouse is the dominant party? Do they both want to move, or is one humoring the other? (In
this case, it may be impossible to find a property they can agree on.) Do they have any urgency to
buy, such as a job transfer, or an expiring lease, or a sold home? Are some of their likes and dislikes
apparent, and can you use this information to help you choose which properties to show? Why do
they want to move? Some of the basic things your interview should cover include:
•
Name(s)
•
Current address
• Number of people in the family (children, ages, names, pets)
• How long have they been looking?
• Do they own or rent their current residence?

78

• If they own, is the property listed? (If not, are they planning to list it, and when?)
• If they own, will it be necessary to sell their current home before they can buy another?
• What are their places of employment?
• How long have they been there?
• How soon do they want to move?
• Have they seen anything they really like?
• How much do they expect to realize from the sale of their home? How much of a downpayment
do they have?
At this point, you have an option. If the appointment was set up by phone, you could contact a mort-
gage representative and ask him/her to meet with your buyers to pre-qualify them. Pre-qualification
of buyers is a service that many mortgage representatives are more than happy to provide.
The mortgage professionals ask the financial questions, analyze them, and let the buyers know how
much financing they will qualify for. The buyer is not obligated to the mortgage rep for this service,
and it can save everyone a lot of wasted time and effort. Besides, many buyers are more comfortable
being frank and open about their income and debt service with a mortgage representative than they
are with you.
Now, both you and the buyer are aware of the price range to shop. Some mortgage representatives
will pre-qualify over the phone if they cannot come to your office. They will do a preliminary Chapter 3
pre-qualifying interview and set up an appointment for a more formal meeting at a later date. Working With
Buyers
If you cannot arrange a meeting with a mortgage representative, then you should do the qualifying
interview. Again, it is a good idea to have a script or form that you fill in as you ask questions. This
way, you will all the information you need, and you will have it available if you need to check some-
thing at a later time. Your questions should include:
• What amount do you have for a downpayment?
• What is your current monthly combined income?
• What is your current monthly debt, other than mortgage payments?
Remember that, in most cases, lenders will not allow borrowers to spend more than 28% of their
monthly income (front ratio) on PITI, the sum of monthly principal, interest, taxes, and insurance,
(the house note) so be realistic. It will work for the best in the long run. Do not forget about the
back ratio.
The back ratio is the ratio of the borrower’s total recurring monthly debts, including such obligations
as the house payment, payments on all installment debts, monthly payments on all junior liens,
alimony, car lease payments, and other recurring payment obligations. In conventional lending, it is
usually 36%. Both ratios must be satisfied. The income of the borrower is also critical, and the lender
will verify all sources of income and evaluate both their reliability and longevity.
If you show buyers their dream home before qualifying them, and the lender says no way, it will be
tough to find anything in their price range that will satisfy them. You have made a serious tactical
error if you find yourself in this position. Instead, by qualifying the buyers, you can guide them to
79

the correct price range with courtesy and tact and probably find them the “perfect” house for their
needs.
Many buyers will come to you today already pre-qualified, which eliminates many of these extra
steps. Most have started their home search online and have found a mortgage lender through a site
like lendingtree.com. If they are already pre-qualified, they know what their budget is, and after
they sign a Buyer’s Representation Agreement with you, you can begin to show them properties that
will work within their budget and their wish list. Keep in mind that they may have an inflated idea
of the amenities they believe they should be able to have in their “dream home.” You may have to
bring them back down to earth a bit, without completely dashing their dreams to the ground. You
will be able to show them properties that may involve a little compromise on their part, but that will
work for them in the long run.
FINANCING
Many of today’s sophisticated buyers have already researched their financing options; they come
to you prepared to move ahead full steam. Others may come to your office utterly uninformed
regarding their choices and the requirements to obtain any financing. You must understand different
financing options and be ready to share your knowledge with the buyers. The following informa-
tion on mortgages and financing will give you a solid foundation of information on which to build.
Things like current interest rates and costs of loan origination will always be changing, and it will be
necessary for you to keep up with those changes.
TYPES OF LOANS
There are three basic types of loans used to finance the sale/purchase of real property:
FHA - The Federal Housing Administration insures FHA loans. These loans require a low down-
Chapter 3 payment and are obtained through approved lenders. By providing insurance to the lender, the
Working With FHA attracts lenders to loans that they would not otherwise be interested in making. In order
Buyers to qualify for FHA insurance, some conditions must be met. The FHA requires that the bor-
rower be able to pay a mortgage insurance premium in monthly installments as a part of the
regular loan payment. The FHA requires that the property be appraised before it will commit
to insuring any loan. The maximum loan amount is set by the appraised value or the sale price,
whichever is lower, and the buyer must pay the difference in cash. No secondary financing of any
kind is allowed. Most FHA loans are made for thirty-year periods, and the interest rates are set
by the market conditions.
VA - The Department of Veterans Affairs guarantees VA loans. These loans are often available
with no downpayment. The guarantee is free to the Veteran. The Veteran must receive a Cer-
tificate of Eligibility from the VA before applying for the loan. The property must be appraised
by the Department of Veterans Affairs. A Veteran who is applying for a VA loan must sign a
document stating that he or she will occupy the property. As with FHA loans, most loans are
for thirty-year terms, and the interest rates are set by the market conditions. The maximum loan
amounts for FHA and VA are changed periodically to accommodate changing values of real
estate over time.
Conventional loans - Conventional loans are neither insured nor guaranteed by the federal gov-
ernment. These loans often have requirements for a higher downpayment of 20% of the market
value or more, unless private mortgage insurance is to be paid by the borrower. On these loans,
interest rates, loan-to-value ratio, and amortization periods are usually negotiable. A good rule
of thumb is that the lower the downpayment and the longer the amortization period, the higher
the interest rate.
80

RLD SCENARIO - INCOME RATIOS
WO
L
RE A
Directions: Read the scenario and answer the questions that follow.
Sarah is applying for a conventional loan and has a gross annual income of $158,250.
1. What maximum house payment does she qualify for using the front ratio?
a. $3,682.50
b. $3,692.50
c. $3,671.50
d. $3,782.50
2. What is the maximum she can qualify for using the back ratio?
a. $4,747.50
b. $3,160.50
c. $3,692.50
d. $3,524.50
3. Assuming that she has total fixed monthly obligation of $1,760, what is the maximum
house payment that she can qualify for?
a. $3,160.50
b. $4,747.50
c. $2,987.50
d. $1,968.50
Chapter 3
Working With
Buyers
81

UNDERSTANDING NEEDS
During the qualifying process, you should have determined quite a bit about your buyers. You have
learned in what price range they have been financially qualified to purchase. You should also have
determined their motivation, including their urgency to purchase, or at least their planned time
frame. You will present yourself to buyers in much the same way that you present yourself to sellers.
That is, you will introduce yourself and give the buyers information about you and your company. If
you have earned the ABR®* designation through the NAR, you should let the buyers know. You (as
required by law) will give the buyers the Information about Brokerage Services and determine their
choice as to representation.
At this time, if the buyer has indicated a preference for a buyers’ agent, it is appropriate for you to
ask the buyer to sign a Buyer Representation Agreement. This agreement, in effect, “lists” the buyer
as your client. It also obligates you to act as an agent for the buyer. As buyers’ agency becomes more
popular across the nation, more and more buyers are asking for this level of service. If your buyers
seem unsure about their choice, you may want to point out some of the advantages of buyer agency
to them. These include, but are not limited to, the following:
• In judging the buyers’ needs, your duty of confidentiality enables the buyers to confide in you
without fear of jeopardizing their negotiating position.
• Your loyalty to the buyers allows you to suggest alternative solutions to the buyers’ needs,
thereby increasing choices.
• As a buyer’s agent, you can concentrate on finding the best property for the buyer rather than
finding the best buyer for the seller.
Chapter 3 • You can suggest protective clauses for the purchase agreement.
Working With
Buyers • You can provide price counseling and suggest procedures to strengthen the buyers’ negotiating
position.
• You can suggest financing alternatives, which may be in the buyers’ best interests, rather than
those that best serve the seller.
Your goal is to discover what they are hoping to find in your area. Asking open-ended questions
will produce useful information. For example, if you ask if schools are a concern, buyers will simply
answer, yes or no. However, if you ask if they have school-age children, and follow up with a ques-
tion about their interests, you will most likely receive a lot of information. Once you know about
the children’s activities, it seems natural to discuss how the parents spend their free time and the
recreational activities that are important to them.
If you are working with buyers who are relocating, you will want to show them several areas before
looking at any specific homes. During the drive, you should continuously verify your assumptions
and make adjustments to your planned showings if some of your impressions seem incorrect.
If you are working with local buyers, they may have already indicated their preferred neighborhood,
and that simplifies your job.
*Accredited Buyer Representative (ABR) is a designation earned through the Real Estate Buyer’s Agent Council (REBAC), a
wholly-owned subsidiary of the National Association of REALTORS® (NAR®).
82

WORKING WITH INTERNET BUYERS
The use of online real estate sites and services has proven to be more than a passing fad; it has
emerged as the new paradigm for homebuying. Every year, NAR publishes statistics reporting on
home buying and generational trends that illustrate the vital role that the Internet has taken on in
terms of home buying. According to NAR’s research, the majority of buyers under the age of 71 take
their first step toward home buying by looking online for properties.
Sales agents that have been in the business for years have adapted to this shifting trend in the process
and understand that today’s buyers may not rely on an agent as their sole source of information.
However, buyers need an agent for showings, and data interpretation, to answer questions and draw
up offers and contracts, and for many other “behind the scenes” aspects of the business with which
the average buyer may not be familiar.
Buyers today are more informed, anonymous, and in P eople who investigate properties
online generally use email as their
control due to the power of the Internet. Agents should initial means of contacting a sales-
not push the Internet buyer to move faster or to reveal person and usually prefer a response
their identity sooner than they are ready to. Allow them via the same medium. Answer emails
to maintain some sense of control. promptly - within 2 hours if possible.
Definitely no later than 24 hours.
What does this mean for you? Internet buyers perceive
that they are doing some of the work for you, so you
need to be prepared to identify the value-added services
you offer that will give them the most benefit. You must also be willing to tailor your services to fit
their needs.
Appeal to their desire to utilize the Internet as a tool to inform by offering them some helpful and
informative sites that they can use like: Chapter 3
Working With
housefax.com - Housefax offers comprehensive property history reports that list any remediation Buyers
or report of toxic substances, any building permits that have been pulled, any incident reports, or
inspection alerts that apply to the property. Buyers can search the address of the property that they
are interested in buying, and view the history to make an informed decision before purchasing.
rooomy.com - Rooomy is a 3-D design tool that offers virtual staging so that buyers visually con-
figure furniture in a room, making it easier for them to decide whether or not a particular home will
work for them.
hud.gov - The U.S. Department of Housing and Urban Development (HUD) offers buyers, espe-
cially first-time homebuyers, several helpful links that answer questions about home buying programs
in different states, borrower’s rights and predatory lending, as well as Shopping for a Home FAQs.
Make a list of other sites to which you can refer buyers: ________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
83

ESSENTIALS OF A BUYER’S REPRESENTATION
AGREEMENT
Buyer agency agreements may be created orally or in writing, but by far the best method is to do so
in writing. A written buyer agency agreement is clear as to the duties and responsibilities of both
the buyer and the broker. Note also that intermediary consent must be obtained in writing, which
is obviously a problem when representing a buyer under an oral Buyer Representation Agreement.
The agreement that buyers sign, allowing a broker to represent them, is called a Buyer/Tenant Rep-
resentation Agreement. Like the listing agreement with a seller, this should be in writing. Elements
of a buyer representation file should include the following:
• The Information About Brokerage Services • General characteristics of the property search
(IABS) form, signed and dated (market area)
• Purpose • Exclusivity
• Buyer’s and broker’s obligations • Term of the agreement (Duration)
• Broker’s duties to clients and customers • Services
• Compensation agreement • Intermediary consent
•
Consent the for broker to represent other • Fair-Housing language
buyers
Chapter 3
Working With • Signatures of the parties
Buyers
ESTABLISHING FEES
•
Contingency fee - The buyer’s representative is paid only if the client buys a home. Buyers are
accustomed to this because it works similarly to a listing agreement.
•
Non-contingency fee - This fee is the responsibility of the buyer, even if they do not buy a home,
which means that the buyer pays for your valuable time and expertise. Ensure that your clients
are clear on this fact before they sign.
• Consultant fee - Buyer’s agents can negotiate a flat fee or an hourly rate by performing certain
services specific to the purchase.
The buyer or the seller may compensate a buyer’s agent. The payment of compensation does not
create an agency relationship. A buyer’s agent owes fiduciary duties to the buyer, no matter who is
paying the compensation.
STEPS TO THE BUYER CONSULTATION

• The warm-up - Establish rapport between you and the buyer.
•
Give the Information About Brokerage Services (IABS) form to the buyer. Have the buyer
sign and date it.
Possible script for IABS: “This is the form that explains the different roles an agent can play based on rep-
resentation and the situation. The State of Texas requires that I give you this form for you to review. Would
you please sign here acknowledging that I gave the form to you? Thank you.”
84

•
Present the Buyer’s Representation Agreement (BRA) - This form allows you to represent
the buyer, giving him/her advice and opinion, including positives and negatives about the
properties that you are going to show them. Present it as such to the buyer. You can make a
Buyer Client vs. Buyer Customer Checklist to discuss with buyers so that they are aware of
the benefits that a buyer agency relationship can afford them. Once the Buyer’s Representa-
tion Agreement is signed, give a copy of it to the buyers.
Possible script for Buyer’s Representation Agreement: “This is the form that establishes agency rep-
resentation. By signing this form, you agree that I am your exclusive agent, which will allow me to share
information with you that might otherwise not be allowed. If I were representing the seller, I would not be
allowed to give you advice and opinions. When I work with the buyer, I always work for the buyer. Your
signature allows me to do this. By signing here, we are now on the same team.”
• When making appointments to view properties, make sure to say that you are a Buyer’s agent.
• Show the property - now you may give appropriate advice and opinion.
If you are showing the buyer one of your brokerage’s listings, make sure that the buyer understands
the IABS and the Intermediary process.
Possible script for Intermediary with Appointments: “If I show you one of our company listings in
which another agent in our brokerage is representing the seller, this is known as Intermediary. I am still
your advocate, looking out for your best interests. I can give you the benefit of my advice and opinion on the
property and offer and negotiation. The listing agent is representing the seller, but I am representing YOU.”
Possible script for Intermediary without Appointments: “If I show you one of my listings, and you
decide to buy it, this is known as Intermediary without Appointments. I must treat you and the seller the Chapter 3
same, never giving one party an advantage over the other. I will give you the same market data I gave to Working With
the seller, and this will help you decide what price you want to offer on the property. I cannot give advice or Buyers
opinion to either you or the seller. I will write the offer for you, present the offer, but if you were to ask me
how low the seller will go, I would not be able to tell you. If the seller were to ask me how high you would go
on your offering price, I would not be able to give them that information.”
AGENT’S DUTIES TO CUSTOMERS

Honest Dealing - An agent may not deceive, defraud, or otherwise deal dishonestly with a customer.
Reasonable Care and Skill in Performance This means that an agent will be held to the standards of
knowledge, expertise, and ethics that are spelled out in the Texas Real Estate License Act.
Disclosure of all Material Facts The license holder must disclose all facts that he or she knows of or
should reasonably be expected to know that materially affect the value of or desirability of the prop-
erty. This includes disclosure of agency, property condition, and environmental hazards.
85

INFORMATION ABOUT BROKERAGE SERVICES
When an agent and potential party enter into a “substantive” discussion of a real estate transaction,
the party must be provided with a TREC-prescribed agency information form. The license holder is
responsible for determining when a discussion becomes substantive, as the discussion “triggers” the
requirement for the delivery of the form.
A substantive discussion does not always occur at the first face-to-face meeting. A discussion can
become substantive during discussions via phone, e-mail, or any other means of communication.
The agency statement is found in the Texas Real Estate License Act as a part of the required Repre-
sentation Disclosure.
The IABS should be provided to a seller prior to a listing presentation and should be provided to a
buyer prior to a discussion of a possible purchase.
Most implementations of the agency statement have a provision for the potential party to sign
acknowledging receipt of the form. There is not a statutory requirement that they sign the statement.
If you have presented the statement to an individual who declines to sign, note in the signature block
“declined to sign,” initial it and date the form. Provide a copy to the prospect and keep a copy for
your files as evidence that you presented the form.
While the Texas Real Estate License Act requires that the form be simply given to the prospect, the
best practice is to explain the form in detail. The license holder may substitute “buyer” for “tenant”
and “seller” for “landlord” as appropriate in the IABS.
Chapter 3
Working With
Buyers
86

11-2-2015
Information About Brokerage Services
Texas law requires all real estate license holders to give the following information about
brokerage services to prospective buyers, tenants, sellers and landlords.
TYPES OF REAL ESTATE LICENSE HOLDERS:

.
 A BROKER is responsible for all brokerage activities, including acts performed by sales agents sponsored by the broker.
 A SALES AGENT must be sponsored by a broker and works with clients on behalf of the broker.
A BROKER’S MINIMUM DUTIES REQUIRED BY LAW (A client is the person or party that the broker represents):
 Put the interests of the client above all others, including the broker’s own interests;
 Inform the client of any material information about the property or transaction received by the broker;
 Answer the client’s questions and present any offer to or counter-offer from the client; and
 Treat all parties to a real estate transaction honestly and fairly.
A LICENSE HOLDER CAN REPRESENT A PARTY IN A REAL ESTATE TRANSACTION:
AS AGENT FOR OWNER (SELLER/LANDLORD): The broker becomes the property owner's agent through an agreement with the
owner, usually in a written listing to sell or property management agreement. An owner's agent must perform the broker’s minimum
duties above and must inform the owner of any material information about the property or transaction known by the agent, including
information disclosed to the agent or subagent by the buyer or buyer’s agent.
AS AGENT FOR BUYER/TENANT: The broker becomes the buyer/tenant's agent by agreeing to represent the buyer, usually through a
written representation agreement. A buyer's agent must perform the broker’s minimum duties above and must inform the buyer of any
material information about the property or transaction known by the agent, including information disclosed to the agent by the seller or
seller’s agent.
AS AGENT FOR BOTH - INTERMEDIARY: To act as an intermediary between the parties the broker must first obtain the written
agreement of each party to the transaction. The written agreement must state who will pay the broker and, in conspicuous bold or
underlined print, set forth the broker's obligations as an intermediary. A broker who acts as an intermediary:
 Must treat all parties to the transaction impartially and fairly;
 May, with the parties' written consent, appoint a different license holder associated with the broker to each party (owner and
buyer) to communicate with, provide opinions and advice to, and carry out the instructions of each party to the transaction.
 Must not, unless specifically authorized in writing to do so by the party, disclose: Chapter 3
ᴑ that the owner will accept a price less than the written asking price;
Working With
ᴑ that the buyer/tenant will pay a price greater than the price submitted in a written offer; and
ᴑ any confidential information or any other information that a party specifically instructs the broker in writing not to Buyers
disclose, unless required to do so by law.
AS SUBAGENT: A license holder acts as a subagent when aiding a buyer in a transaction without an agreement to represent the
buyer. A subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first.
TO AVOID DISPUTES, ALL AGREEMENTS BETWEEN YOU AND A BROKER SHOULD BE IN WRITING AND CLEARLY ESTABLISH:
 The broker’s duties and responsibilities to you, and your obligations under the representation agreement.
 Who will pay the broker for services provided to you, when payment will be made and how the payment will be calculated.
LICENSE HOLDER CONTACT INFORMATION: This notice is being provided for information purposes. It does not create an obligation for
you to use the broker’s services. Please acknowledge receipt of this notice below and retain a copy for your records.
Licensed Broker /Broker Firm Name or License No. Email Phone

Primary Assumed Business Name
Designated Broker of Firm License No. Email Phone
Licensed Supervisor of Sales Agent/ License No. Email Phone

Associate
Sales Agent/Associate’s Name License No. Email Phone
Buyer/Tenant/Seller/Landlord Initials Date
Regulated by the Texas Real Estate Commission Information available at www.trec.texas.gov

IABS 1-0 87

TEXAS REALTORS® RESIDENTIAL BUYER/TENANT
REPRESENTATION AGREEMENT
Paragraph 1. Simply addresses the parties to the agreement.
Paragraph 2. The ‘appointment’ statement affords the agent the same benefits as relayed in the
listing agreement, loyalty to the broker, but one should note that the BRA is unique in the sense
that a buyer can actually enter into the same type of agreement with multiple brokers, so long as the
‘market areas’ do not overlap.
Chapter 3
Working With Paragraphs 3.A and 3.B. Clarify two definitions.
Buyers
Paragraph 3.C. ‘Defining the Market Area,’ requires the agent and buyer to be clear on the market
area or areas in which this agreement applies, especially if the client is also being represented by
another broker in another market area.
Paragraph 4. There must be a definite termination date, and the term could be as short as one day or
for only one or specifically selected properties. At least that party is being represented as a client for
that one day. Some buyers are more likely to sign a BRA for a shorter period and consider a longer
commitment when they feel more comfortable with the agent.
If one were looking at the listing agreement and BRA side by side, one would determine that in
essence, paragraphs 11, 12, and 13 in the listing agreement are more or less congruent with para-
graphs 5, 6, and 7 in the BRA; these paragraphs are just not as long in the BRA, though just as
important and deserving of explanation. By explaining these three paragraphs adequately, the agent
fulfills both compliance requirements and practical buyer/broker mutual benefits.
88

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89

Paragraph 8.A. Intermediary: The BRA complies with the requirement to gain written consent to
enter into an intermediary status.
This language is required under the Texas Real Estate License Act when the client gives Intermediary
consent.
Chapter 3
Working With
Buyers Paragraph 8.B. No Intermediary Status: This is very specific and looks further at certain limita-
tions that would exist without intermediary authorization.
Paragraph 9. Competing Clients: The broker is working with multiple clients. In this paragraph,
the buyer is giving the broker permission to show properties that the buyer is interested in to other
potential buyers. In other words, properties are not “placed on hold” for the client.
Paragraph 10. Confidential Information: As with the seller in the listing agreement, confidential
information remains confidential forever, subject to the limitations in this paragraph.
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Chapter 3
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91

Paragraph 11.A. Commission: Explains the buyer broker’s fees, if any. All parties to a real estate
transaction are entitled to know not only who is representing whom, but also how the parties will
be paid and the source of any commission. Enter the fee that the broker anticipates receiving in a
cooperative sale.
Paragraph 11.B. Source of Commission Payment: The broker anticipates payment of the commis-
sion by the seller. If the seller does not pay the commission, or, if the commission is less than what
is entered in 11.A, then the buyer must pay the difference. This situation is a source of concern for
some buyers who are unaccustomed to paying commissions.
On the other hand, if the broker is truly representing the interests of the buyer, the buyer should
anticipate the possibility of paying for this service. For example, if the agent located a suitable prop-
erty for a buyer, and the seller were unwilling to pay a commission, it would be appropriate for the
buyer to pay for the services provided by the agent.
Chapter 3
Working With
Buyers
Paragraph 11.E. Acquisition of Broker’s Listing: If the buyer purchases one of the broker’s listings,
the seller will pay the entire fee, and the buyer will have no liability for the payment of a commission.
Paragraph 11.G. Protection Period: The protection period is a period, during which the agreement
expires that the buyer may owe the broker a fee if a property is purchased.
92

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93

Paragraph 12. Mediation: Any disputes arising under the contract that the parties cannot resolve
through informal means will be submitted to mediation prior to resorting to arbitration or litigation.
Paragraph 14. Attorney’s Fees: The prevailing party in any legal proceeding may collect reasonable
attorney fees and court costs.
Chapter 3 Paragraph 16. Addenda: Notice that the agency statement, Information About Brokerage Services,
Working With is mandatory and pre-checked in the agreement.
Buyers
94

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95

Paragraph 18. D. Fulfills the requirement to advise the client that the client should have an abstract
covering the property examined by an attorney of the client’s selection, or the client should be fur-
nished with or obtain a title insurance policy.
Chapter 3
Working With
Buyers
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SELECTING PROPERTIES TO BE SHOWN
All the qualifying interview questions should be geared to help you analyze the buyer’s tastes and
determine what kind of property is most likely to appeal to this buyer, as well as what he can afford.
Based on this information, you will plan your selection of properties to be seen and the sequence of
showing them. Buyers can usually give you a list of the amenities that are “MUSTS” versus those
they would like to have. Based on the musts, their price range, location preference, and available or
listed properties, you will make a decision about which properties to show. If buyers call you about a
particular advertised property, or as a result of a For Sale sign, this property should also be included
in your sequence, unless it is out of their price range.
THE BUYER’S BOOK

An excellent tool that you can use when showing property is a “Buyer’s Book.”
The book is digitally created, using software specifically designed for real estate agents. If you do not
have this type of software, you can create the book using the multiple listing service (MLS) and an
information sheet. In the book, you should include:
• A map of the area you plan to show - Highlight all the streets on the map where you will show
properties.
• Information about the community, including tax structure, HOAs and fees, schools, libraries,
recreational facilities, transportation, and access to major highways - You can also include
copies of deed restrictions for the subdivisions, which are readily available from the local title
companies.
• An MLS printout for each property you will show - These should be in the order that you will Chapter 3
show them so that buyers can make notes on each as they view the properties. Working With
Buyers
• A sheet showing the monthly PITI payment for the property assuming full price with 5%,
10%, 15%, and 20% downpayment and a 30-year amortized loan at current rates - Include
mortgage and taxes and homeowners or hazard insurance in this number. These numbers give
the buyer an excellent tool to help in the evaluation process.
• A blank sheet of paper or a buyer evaluation sheet for the buyer to take notes about the most
appealing features- Include statements such as “I would like to own this home” or “I would be
interested in owning this home if it were priced at $ ” for the buyer’s responses.
• The Seller’s Disclosure Notice - As you show properties, be sure the buyer picks up the Seller’s
Disclosure Notice on each property. Later, if the buyer decides to make an offer, it will provide
valuable information.
Once you have your buyer’s book assembled, call the listing agents to make appointments to show
the selected properties. Try to be as flexible as possible in setting up times for viewing.
99

SHOWING PROPERTY
As you begin viewing properties with your buyers, it is essential to ask for feedback and listen to
their comments continuously.
Do not be afraid to change the itinerary if their reactions are not what you expected. Flexibility is an
integral part of successful sales. As you approach properties, whenever possible, travel a route that
is attractive and informative. Drive past nearby schools if these are important to your buyers. A golf
course, tennis courts, baseball field, or park may be on the way. Take advantage of these community
amenities. Remember, of course, that negative features must be disclosed, but an attractive route can
be an excellent marketing tool. Your goal is to present the property as attractively, yet as honestly as
possible.
If the property has terrific curb appeal, then park across the street to give the buyers a panoramic
view of the property for a great first impression. Tell the buyers why you parked there and invite
them to share the lovely view.
As you tour a particular property, listen to the buyers’ comments about it. Point out features that
meet your buyers’ requirements and end such statements with phrases like “Don’t you think so?”
or “Wouldn’t you?” Phrases that lead to a “yes” response will remind the buyers of their goals and
intentions.
Make positive statements about each room. Do not simply enter a room and say, “This is the living
room.” Instead, as you enter, comment on the room’s spaciousness, exposure, view, or some attractive
built-in feature. Once you have commented, listen to the buyers’ responses. If your buyers are unusu-
ally quiet, ask questions to draw them out and help you understand their preferences.
Chapter 3 Also, before showing a property, do your homework. Be prepared to answer the buyers’ questions
Working With regarding features of the property and its availability. Do not be critical of the property as you are
Buyers viewing it. Instead, listen to the buyers. If they spot a feature they cannot stand, then do not try to
convince them it is good. For example, a buyer says, “I really can’t stand this purple countertop in the
master bath.” Your response should be along the lines of, “I agree. Is this a problem you are willing
to deal with? Would you consider redecorating to draw attention away from that?” If the buyer says,
“No,” then it is a good idea to move to the next property.
It is not a good idea to argue or defend the property against the buyer’s complaint. The buyer has
given you information about himself. Use it positively to help find the right property, not in a way
that will turn the buyer against you.
You must keep the buyer involved in the showing process. Continue to ask pertinent questions of
the buyers. Continually point out the features and benefits of each property shown. Ask the buyer to
compare the amenities of one to another. Comparing feature by feature is often better than trying
to compare property to property, which can be overwhelming. Focus on the features that are of key
importance to your buyers. For example, if your buyers love cooking or are chefs by trade, then you
could ask, “ How does this kitchen compare to the others we have seen?” “Which would you most
enjoy cooking in?” Remember to take each feature individually, ask for comparisons, and stick to the
features that are important to your buyers.
100

FACTS BUYERS WANT TO KNOW ABOUT A PROPERTY
Buyers have many questions for their agents. Do your research ahead of time to be prepared to
answer questions about:
• Location of transportation, schools, churches, shopping, and recreation
•
Asking price, mortgage terms, downpayment information, interest rates, and monthly
payments
• Age of house, roofing, plumbing system, and wiring
• Number and size of rooms
• Size of lot
• Average cost of utilities - water, sewer, gas, electricity
• Taxes, assessments, liens
• Special features - pool, landscaping, lake or river rights
• Why the sellers are selling
• Zoning and nonconforming uses
• Easements and deed restrictions

Chapter 3
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Find out as many facts about a property as possible and realize that emotions are more important
than facts in a buyer’s decision-making process. Never contradict a buyer’s opinion on a property,
even if it is counter to the preferences he/she stated in the beginning.’
BUYING SIGNALS
A buying signal is something a prospect says or does that indicates a favorable buying decision may
occur.
Examples include situations in which the prospect:

• Wants to reexamine the property - “Can we go back to...”
• Assumes mental ownership - “Bobby can have the small bedroom. The sofa would fit right
here.”
• Requests specific details - “What is the monthly payment on this one?”
• Starts negotiating for a concession - “Do you think the drapes will stay?”
• Seeks reassurance - “This is a really nice area, isn’t it?”
• Closely examines the contract - “What does this section mean?”
• Starts to sell the other party - “Alice, you will love this design.”
• Asks about the next step - “What do we have to do next?”

101

GENERAL INFORMATION AND NOTICE TO A BUYER
If you are a member of the Texas REALTORS®, you may present your buyer with the General
Information and Notice to a Buyer (TXR-1506). This document can empower your buyer by providing
them with information on topics that can sometimes confuse the buyer during the process. TXR-
1506 defines concepts like annexation and appraisal and lists some of the common environmental
concerns that buyers may encounter when receiving information connected to a certain property. The
document goes on to describe the inspection process and explains mandatory owners’ associations
and what that can mean for buyers who choose a property that requires membership in owners’
associations.
Chapter 3
Working With
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107

Directions: Read each statement carefully. Place a checkmark in the correct column indicating
whether or not the statement is true or false.
Statement T or F
1. The three ways that an agent adds value to the buying process are:
monetary, friendship, and legal representation.
2. Agents should gather personal background information on a client, like

number of people in the family, and where they work, in order to figure out
how to best help them find the right property.
3. Lenders will not allow borrowers to spend more than 18% of their
monthly income on PITI.
4. FHA loans are often available with no downpayment.
5. Conventional loans usually have a requirement of 20% downpayment.
6. According to NAR, the majority of buyers 71 and older take their first
step toward home buying by looking online for properties.
7. Agents have duties to customers including honest dealing, reasonable care,

Chapter 3 and disclosure of all material facts.
Working With
Buyers 8. Per TRELA, agents should present a potential party with the Buyer’s Rep-
resentation Agreement (BRA) at the first substantive discussion.
9. The license holder is responsible for determining when a discussion be-

comes substantive.
10. It is ok to contradict a buyer’s opinion on a property because your input

matters.
108

EXERCISING DUE DILIGENCE FOR YOUR BUYERS
Due diligence is the reasonable effort you put forth to provide accurate and complete information
about a property to your customers and clients. Exercising “reasonable care” on behalf of the buyer
to secure accurate information means taking all actions that an informed professional must take and
is a minimum level of service required by the Texas Real Estate Commission.
It is a reasonable assumption that a trained real estate professional would know that properties built
before the early 1980s might have asbestos insulation or that homes built in the 1970s may have been
painted with lead-based paint. In either case, advising the buyers to have an environmental inspec-
tion in addition to the regular home inspection would be an example of exercising reasonable care.
Keep careful records of each transaction that you are involved in, including information on the prop-
erty, any offers or counteroffers submitted, and any instructions given to you by your clients. Retain
them for at least four years from the date of closing, termination of the contract ,or the end of a real
estate transaction as required by TREC.
The 5 Common Hidden Defects in Real Property

1. Bad foundation
2. Worn roof
3. Poor water drainage
4. Termite infestation
5. Inadequate plumbing or electric wiring

Chapter 3
Additional Items Not to be Overlooked Working With
• Future surrounding land use and potential development Buyers
• Insect infestation
• Mineral rights and ownership
• Easements and land leases
• Beach erosion
• Water quality
• Parking availability
• Special condominium assessments if applicable
• Percolation tests, especially if not connected to sewers
109

OVERCOMING OBJECTIONS
Often, just when you think you made the sale, your buyers will object to buying. It is beneficial for
you to practice overcoming these objections. The first step is to understand why people object.
1. A mild sort of panic that the process is moving too quickly. If you sense this reaction from
your buyers, then you should try to make the buyers more comfortable. Adjust your pace
to a more relaxed and friendly one to encourage a spirit of cooperation and make your task
simpler.
2. To exert control. Perhaps the buyers feel pressured or somewhat uncertain. Objecting to
any further action gives them the upper hand in the situation. Buyers benefit from some
guidance in making a decision, but that is very different from aggressive sales techniques.
Project the image that you are helpful, not domineering. Being accommodating will allow
your buyers to have confidence in you and trust you to act in their best interests. It reassures
them to know that your goal is to find the best possible property for them.
3. The buyers may not understand an aspect of the purchase process, especially first-time
buyers. Remember, the buyers are probably questioning themselves. They must be confident
about their decision, and may sometimes need more information or options. A few care-
fully worded questions in response to objections will usually reveal the key to the missing
information. At that point, you can do all in your power to help.
4. They have a valid reason for rejecting the choices given. Overcoming a valid reason is the
most challenging situation. Sometimes it is simply impossible to overcome the problem;
some problems have no solution. If there is a valid problem, deal with it openly. Sometimes
Chapter 3 through cooperation, a solution can be found. When that happens, you will usually have
Working With not only a successful transaction but also a glowing recommendation for your personal file.
Buyers
There are some effective ways to deal with or overcome objections. First, establish what the objection
is. What people say and what they mean are often very different. When a buyer says, “The price
seems too high to me,” you must decide what that buyer is really saying. Only when you understand
the motivation behind the remark can you respond correctly. Therefore, one of the best responses
to an objection is a question. With careful questioning, you can determine the buyer’s real concern.
The buyer could be worrying about their ability to pay, the merits of the investment, resale price,
or maybe the price is too high. Only when you understand the objection can you respond correctly.
Whatever objection a buyer raises, you must listen to and respect the buyer’s opinion. Often, it will
be possible for you to provide a solution to the objection. If your solution comes as a result of insult-
ing the buyer, or the buyer’s opinion, you will have created a problem. Do not alienate your buyers.
When trying to find solutions to objections, remember that no home is perfect. Work with your
buyers to create a list of their needs and desires. When you locate a property that meets or exceeds
the items on the list, remind the buyers, line by line, how it suits their needs. This process will help
to minimize the disadvantages and encourage compromise.
When you have overcome objections, through compromise, advice, and information, then it is time
to attempt to close the sale. It is a rare buyer who says to you, “I want to make an offer on that prop-
erty. Let’s go back to the office so you can write it up for me.” In almost every case, you will have
to initiate closing the sale. During this process, ask the buyers to make an offer. There are many
different techniques for closing, but the key to all of them is timing. If your timing is off, and you
ask before the buyers are ready, then try again later.
As a preliminary step to closing, you have discussed the buyers’ objections and offered solutions. If
110 the buyers are satisfied with this phase of the process, it is time to ask for an offer. If this produces a
new objection, re-viewing the property is a good next step. Now it is much more critical for you to
listen than to talk. Answer questions, and let them absorb the atmosphere of the property. They are
making an important decision that requires concentration and do not want to feel pressured.
On the way back to the office, you can offer to draw up a buyer’s net sheet so that they can see exactly
what this property will cost them. You can also offer to contact the listing agent and get any possible
input on the sellers’ position regarding acceptable terms and closing dates. Acceptance of this offer
of service is often the first step in agreeing to write an offer.
The following is a list of some possible closing lines:

• “Let’s go into the office and see if we can work this out.”
• “The owners have indicated that you could take occupancy on March 1. Is that good for you,
or would April 1, be better?”
• “If both properties were the same price, which would you prefer?”
• “I feel that you both like this house, and it seems that you are ready to make an offer. Let’s talk
about that now.”
• “It’ll be terrific when you are all moved in and living here. I know you will love it. I sure do.”
• “Won’t it be wonderful to have this decision out of the way?”
When your buyers are ready to write up an offer, provide them with as much market information as
possible to ensure that you serve their best interests. A CMA of the property can help them to deter-
mine market value and make a realistic offer. Just as you worked with the seller to price realistically, Chapter 3
it is important, as a buyer’s agent, to work with the buyers. If they want your input regarding terms Working With
and conditions, be sure to do all you can to make the offer advantageous to them. Buyers
Per Texas law, be sure to go over the Seller’s Disclosure Notice with the buyers before they sign an
Earnest Money Contract.
13 WAYS TO POSITION YOUR BUYERS TO MAKE A DECISION

1. Respect what your buyers can afford.
2. Preview the houses before you show them. D evelop a simple checklist of
the buyers’ most important
criteria and use it to qualify each
3. Don’t show too many houses. property and to make notes about
special features or problems you
4. Plan the route you use to approach each house. encounter.
5. Remind buyers that every house is a compromise in some way.
6. Tell buyers about negatives they will see to defuse the problem early.
7. Help buyers see the possibilities.
8. Don’t overwhelm buyers with too much information too quickly.
9. Point out areas/ways that existing furniture could fit or well a particular feature of the
house would fit with the buyers’ lifestyles.
10. Allow your buyers enough time to really explore a property.

111

11. Never get caught in the middle of a disagreement between buyers.
12. Don’t jump in to respond to every objection.
13. Don’t waste time on the wrong house.
W ORLD SCENARIO - PROBLEM CLIENTS

AL
RE
Directions: Read the following scenario and answer the question that follows.
Karen has been a real estate agent for two years. She has been working with a buyer, Henry,
for several months now. They have been through listing after listing, but Henry always has at
least one objection about each property that she shows him.
Finally, after showing Henry dozens of properties, Karen locates the perfect property that
meets ALL of Henry’s criteria. After the showing, Henry admits that it is his “dream house,”
but again voices objections over price. He tells Karen that he feels as though she is pressuring
him to make the most important decision at this point in his life and that he just might not
be ready to take on that much debt. He also fears that he might not be able to sell the house
if he needs to.
1. Which statement most accurately describes Henry?
a. Henry is a problem client with a less-than-favorable credit history.

Chapter 3 b. Henry is simply not being honest with Karen.
Working With c. Henry is probably a first-time buyer who is just nervous about purchasing a
Buyers home.
d. Henry is wishy-washy and isn’t emotionally mature enough to buy a house.
2. What strategy could Karen employ when dealing with Henry’s objections?
a. S he could respond to his objections with questions in order to determine his real
concerns.
b. She could refer him to a sales agent she doesn’t like so that she can free up time
to work with real clients who know what they want.
c. She could lie by telling him that there is another couple who wants his “dream
home” in hopes that will spur him to action.
d. She could suggest that he move in with her while he makes his final decision.
3. Karen works successfully through Henry’s objections, and he agrees to take the plunge by
making an offer on the property. What should Karen do next?
a. Karen should provide Henry with as much market information as possible.

b. Karen should do a CMA on the property to help Henry come up with a realistic
offer.
c. Karen should address Henry’s questions and concerns to the best of her ability.
d. These are all things that Karen should do to ensure that she serves Henry’s best
interests.
112

HOW BUYERS PROCESS INFORMATION
Giving buyers information is only part of the process. Most important to the process is how you
present the information so they can process it in their preferred style, allowing them the time to take
in as much as they need. This approach requires patience, but understanding your buyer is the key
to your relationship.
There are three primary ways buyers take in and process information:
• Visual - Buyers who are more visually oriented sort information primarily through pictures or
relate to the visual aspects of something more than the written details. They may use visual
terms when speaking, such as “See what I mean?” or “Get the picture?”
• Auditory - Buyers who are more auditory process information by sound clues. They may use
phrases like, “How does that sound?” or “Does that ring a bell?”
• Kinesthetic - Kinesthetic buyers process information through feelings and the environment
around them. They like to be “hands-on” when viewing a home. Key phrases that you may
hear from kinesthetic buyers might include, “This feels like” or “Get a grasp of.”
WORKING WITH A RELUCTANT BUYER

It has happened to every real estate agent who works with buyers at some point in their career - they
lose a buyer because that buyer either cannot make up their mind or feels apprehensive about some
part of the process. How can you work with a reluctant buyer?
Do not be too quick to dump a reluctant buyer. Find out if his/her apprehension is something that
you can work through. Perhaps you can tweak his/her motivation by:
• Find out the underlying cause of the unease. Then, allow the buyer ample room to voice con- Chapter 3
cerns. This may make him/her feel better because someone is listening and taking concerns Working With
seriously. Buyers
• Reinforce the benefits of homeownership if you can impress that the benefits outweigh the
disadvantages.
• Continue to remain in contact; you do not want your laziness to cause the buyer to second
guess his/her decision to buy.
SIGNS OF PROBLEM CLIENTS

Below is a list of potential signs that your buyer may be trouble in the future:
• They tell you that they just want to “see what’s out there.”
• They are always looking for a “good deal.”
• They have a less than favorable credit history.
• They refuse to be pre-qualified by a lender.
• They refuse to sign an exclusive buyer’s agency agreement.
• They are hypercritical and/or too demanding.
• They make a habit of missing appointments or showing up late.
• They simply are not being honest with you.

113

WAYS TO RELEASE YOUR BUYER WITHOUT BURNING BRIDGES
What can you say to a buyer when you know that the agent/buyer-client relationship is just not
working out, but you do not want to offend your client? Not every real estate sales agent is com-
patible with every client. Personalities may clash or differ, but agents should do what they can to
maintain good standing with their clients; it is their job to look out for their clients’ interests. Here
are some examples of things to say that can help you release your buyer without burning any bridges:
• “It seems as though you need more time to think through your decision. Let’s put things on
hold for a while.”
• “I don’t specialize in the type of properties/area you’re looking for, but I can refer you to an
agent who does.”
• “I have to say that it appears that I am unable to meet your needs, and for that, I am sorry. It’s
probably best that you work with another agent. Would you like me to refer you to someone
that I think would be well suited to meet your needs?”
• “A signed agreement protects us both, and I value my client relationships too much to operate
without one.”
Of course, you should wish them well on their house hunt.
WORKING WITH BUYERS - SALES AGENT SAFETY

One of the most exciting and interesting parts of an agent’s job is meeting new people. Agents are
continually coming into contact with new people all of the time. Unfortunately, this part of an
agent’s job can also be dangerous. Agents should always be on guard when letting a stranger into
Chapter 3 someone else’s home and should also be aware of their own safety. Some warning signs that there
Working With may be problems include when your client:
Buyers
• Is preoccupied with art, electronics, medicine cabinets (drugs), or other contents of the house;
examines doors, windows, locks, or alarm systems
• Spends time scouting out avenues of escape
• Expresses personal interest in you or something about you
• Initiates conversation unrelated to the home or engages in a lengthy conversation
• Exhibits body language that suggests something is wrong (e.g., dilated eyes, labored breath-
ing, nervous movement, inappropriate laughter)
You should always trust your instincts, even if you cannot articulate what’s wrong.
114

6 SAFETY PRECAUTIONS TO IMPLEMENT ON THE SPOT
1. Allow your client to continue viewing the property, but don’t let him/her come between
you and the exit.
2. Stay near the front door.
3. Get on your cell phone and call someone, anyone. Let the caller know that if you don’t call
back in 20 minutes, you need help, or stay on the phone until the client leaves.
4. Call the office and use the agreed-upon office distress code, a secret word or phrase that
can be naturally worked into a conversation.
5. Have “an out” prepared to use in a threatening situation (e.g., you’ve left some paperwork in
the car and need to go get it, you need to step out to take an important call, etc.).
6. Call 911.
Luckily technology has made it a little easier for agents to stay safe today.
• Noonlight (formerly SafeTrek) is a personal safety app that can be downloaded to a smart-
phone. If you find yourself in a dangerous situation, the app can pinpoint you based upon your
device’s GPS. The app will notify the local police of your emergency and location.
• Glympse is an app that allows you to share your location in real-time. You decide who sees
your location, and for how long. If you are feeling uneasy about meeting with a particular
customer, you can share your location with a colleague so that he/she will know where you are
until you are ready to turn off their access. Chapter 3
Working With
• Homesnap Pro is a mobile app used by agents to grow their businesses. Homesnap Pro offers Buyers
a safety timer feature that allows you to set a time for the length of time that a meeting will
take place at a particular location. If the time expires and you do not respond, the app will
send a text message to your selected emergency contacts, telling them that you are in distress.
• Silent Beacon is a wearable panic button that works with a free app to alert multiple emergency
contacts of your current GPS location. The app allows users to contact and/or forward their
Emergency Map View with contacts or emergency personnel.
There are many other mobile apps available to individuals who are concerned with their safety.
Several of these apps have subscription fees, but there may be special pricing and discounts available
for brokers.
115

Statement T or F
1. One of the five most common defects in real property is foundation prob-
lems.
2. Giving a buyer a CMA can help him/her decide on a certain property.
3. The first step in overcoming an objection is to find out exactly what the
objection is.
4. The best way to get your buyers to make a decision is to present them with
all of the information at the same time.
5. The three ways that buyers process information is visually, auditorily, and
kinesthetically.
6. Reluctant buyers are the worst, and you should unload them as quickly as
possible.
7. When showing a property to a stranger, you should walk in before him,

Chapter 3 allowing him easy access to the exit.
Working With
Buyers 8. Body language like dilated eyes and inappropriate laughter could be warn-
ing signs that a client is dangerous.
9. If something seems off about a buyer to whom you are showing a property,
you should trust your gut instinct.
10. If a buyer is a threat to your safety, stay inside the home.
116

DEVELOPING A WINNING OFFER
A good salesperson understands that a successful negotiation is a win-win situation whether he/she
is representing the buyer or the seller. Remember - that your first duty is to promote the interest of
the client (Article 1 Code of Ethics).
Before setting the offer price, consider the listing price, and do a CMA to determine a reasonable
market value for the property. Then, research the recent trends in the sales price vs. listing price of
the properties in the market area to determine the market’s strengths. Next, what is the condition of
the property? Many homeowners neglect much-needed upkeep on their homes. What is the cost of
this deferred maintenance? These costs may be deducted from the sales price if the seller is not going
to remedy the items prior to closing.
WRITE AN OFFER THAT WILL BE ACCEPTED

To make sure that your offers have a higher rate of acceptance, follow these tips:
• Limit the number of addenda and discourage “one more thing.”
• Present the strengths of your buyers.
• After analyzing the comparables, be prepared to explain the differences between the homes.
• Strengthen your negotiating position by knowing the surrounding market and buyer’s other
options, for example, active or slow areas, or overbuilt areas.
• Meet with the seller’s representative to find out the seller’s expectations to tailor your offer
accordingly. Chapter 3
Working With
• Consider requesting to present the offer to the seller in person, with the seller’s agent. Many Buyers
people find it harder to reject a face-to-face offer, and personal meetings allow you to work out
differences or areas of contention more quickly.
• Determine what is included in the price, such as repairs, closing costs, commissions, etc.
• Organize all the necessary paperwork in order. You may want to include a cover letter that
humanizes the buyers and their offer.
PRESENTING A BUYER’S OFFER

You want to begin the negotiations positively by presenting your client’s offer effectively.
Try to present the buyer’s purchase offer in person, to the sellers with the listing agent. When
doing so, present a positive picture of your buyer and then leave after you have presented his/her side.
• Anticipate the sellers’ objections in advance; gather the information necessary to respond to
reasonable objections. For example - an updated CMA.
•
Use phrases that show the sellers that you are both working toward the same goal and simul-
taneously position your buyers successfully. For example- refer to buyers as “our buyers.”
117

• Beyond price, other essential factors include:
a. flexibility in closing time
b. number of contingencies
c. buyer qualification
•
If the sellers are not accepting of the terms of an offer, you can always present the same offer
at a later date - day(s), a week.
If you have submitted an offer and have received no response from the listing agent, talk to your
broker. If nothing else, your broker can talk to the other agent’s broker to find out why you have not
heard anything regarding your buyer’s offer.
Do not approach another agent until all other avenues have been exhausted.
TEXAS REALTORS® SELLER’S INVITATION TO BUYER TO

SUBMIT NEW OFFER
Listing agents who are members of the Texas REALTORS® may use the Seller’s Invitation to Buyer
to Submit New Offer. You may receive one of these on behalf of your buyer’s offer. Many agents like
to use this form because it is a clear written communication that the seller does not accept the buyer’s
offer as it was submitted, but instead invites the buyer to try again, without submitting a counterof-
fer. The listing agent and the seller are then able to offer criteria that the seller would look on more
Chapter 3 favorably in an offer so that you and your buyer may draft a new one.
Working With
Buyers This form is NOT a counteroffer and is in no way binding on the seller. While you and your buyer
are drafting a more favorable offer, the property remains on the market and may even be sold to
another buyer. If the seller receives an offer that he/she likes better, even after you and your buyer
have written a new offer according to the seller’s “more favorable criteria,” the seller may accept the
better offer.
118

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Working With
Buyers
120

CHAPTER 3 QUIZ
1. Joel makes $96,500 gross yearly salary. He has no other sources of income. He is applying for a
conventional loan. Using the front ratio, what is his maximum monthly house payment?
a. $2,702
b. $2,252
c. $8,042
d. $3,500
2. A Veteran must receive a(n) _____ from the VA prior to applying for the loan.
a. Letter of Intent
b. Certificate of Eligibility
c. Government subsidy
d. All of these are required for a VA loan
3. Buyers feel that they can confide in their agents because of the agent’s _____.
a. Legal advice
b. Money-back guarantee
c. Duties of confidentiality and loyalty
d. Financial support
Chapter 3
Working With
Buyers
121

Notes
122

CHAPTER 4
Working With Sellers

Chapter 4: Working With Sellers
listing presentation prelisting packet listing agreement
open listing exclusive agency exclusive right to sell
net listing comparative market analysis subagency
Senate Bill 489
PRE-TEST
1. ______ Net listing a. gives the seller the right to list the property
with multiple brokers and to sell the property
personally without paying a commission
2. ______ Open listing
b. subagency disclosures are more stringent due
to this law
3. ______ Senate Bill 489
c. under such listings, the seller establishes a
Chapter 4 minimum, acceptable net price
Working With 4. ______ Subagency
Sellers d. a contract employing a real estate broker to
find a buyer for a seller’s property
5. ______ Listing agreement
e. when a license holder not associated with the
seller’s broker represents the seller through a
cooperative agreement with the seller’s broker
1. c 2. a 3. b 4. e 5. d
Answers to Pre-Test
124

THE LISTING PROCESS
L istings are the key to success in real estate. The logic behind this statement is that listings are
selling while you are out looking for more listings.
At this point, you have spent a lot of time and expense prospecting for clients, and you finally receive
the phone call or email that a potential seller wants to talk to you about selling his home! Fantastic!
Now what?
Although many sellers will attempt to get some questions answered over the phone, most sellers
understand the benefit of meeting in person to discuss their need to place their home on the market.
Generally, sellers invite several real estate professionals to an interview process before selecting an
agent to list their property. The interview is when the real competition begins, and it definitely can
be tough; however, being prepared is your step to getting the listing. It is now your time to educate
the seller on the selling process, and what you and your company can do for him.
Typically, sellers focus on the list price, commission rates, marketing, and the real estate sales agent’s
experience. You can shine by exuding true professionalism and giving a well-prepared presentation.
It comes down to whether or not there is a personality match. In other words, do they like you or
not?
SETTING THE APPOINTMENT

The critical thing to remember in setting your appointment is to allow yourself enough time to be
thoroughly prepared. Drive the neighborhood and check
the For Sale By Owners that may have sold and any other
F
new sold or sale-pending signs. If there are any, be sure to or your first listing appoint- Chapter 4
call and try to find out the selling price. Anticipate that ment, schedule a time when Working With
your sellers will want to know, and your professionalism no one is in a hurry. Sellers
and credibility as the “neighborhood expert” will be signifi-
cantly enhanced when you can answer their questions.
After you drive through and prepare your Listing Presentation Kit, you are ready. A useful phone
technique when setting the appointment is to offer the seller a choice of two times:
“I can come at 6 p.m. this evening, or would 8 p.m. work better or you?”
It is more difficult for the seller to reject this option than if you were to ask in the following way:
“Can I meet with the two of you this evening?”
THE LISTING PRESENTATION

If you have mainly worked with buyers up to this point, you may not have had the experience of
listing a property. If you have the opportunity, go along with an experienced listing agent in your
office for at least one listing appointment to observe. You can even offer to help them with the prepa-
ration. Real estate is a “hands-on” learning industry, and by being in the appropriate environment
and situation, you will boost your confidence. Many offices have a standard procedure for preparing
a listing appointment and may even have printed items that you can incorporate into the CMA and
presentation.
Your listing presentation should cover your qualifications, the brokerage you work for, information
about the local housing market, how the seller’s home fits into that landscape, and what you will
do to market the seller’s property if you were to get the listing. Do not take it for granted that the
listing is yours when you first meet with an interested seller. Keep in mind that the seller may be
125

interviewing several agents, hoping to find the “best fit” to sell the property while providing support
for the seller.
Practicing listing presentations is an excellent way to ensure you are comfortable when meeting with
a seller. Find a friend to whom you can provide a presentation just as you would if you were on a real
listing appointment. Today, most agents perform the listing presentation solely on their laptops or
tablets. However, some sellers still prefer a printed presentation.
THE PRELISTING PACKET

An effective prelisting packet will cut the time of an average listing appointment in half. The prelis-
ting packet should contain:
• a cover letter (remind prospects when you will arrive and how to contact you)
• a short bio and an outline of your skills
• a personal marketing brochure
• brief bios of your team members
• testimonials of your past clients if you have them. If not, you could include a letter from your
broker stating the year’s success
• a Seller’s Disclosure Notice for the sellers to complete and all required disclosure information
THE CMA AND LISTING PACKET

Chapter 4 You want to present a compelling presentation supported by facts, statistics, and visuals. Be con-
Working With cise and allow the sellers time to ask you questions and participate in the presentation. Your listing
Sellers packet should consist of:
• a comparable market analysis (CMA) along with your analysis of the property
• your bio, emphasizing your competency
• a detailed marketing plan for the home
• a detailed list of services that you will provide for your commission
• agency disclosure form
• a listing agreement prepared and ready to be signed once the price and the terms are agreed
upon
You may also want to add information about the community and area of town, your company web-
site, and all the services your company provides that set you apart from other competitors.
THE PRESENTATION
Practice is the best way to build confidence in your listing presentation. These tips will help you
make a good first impression on your sellers.
• Break the ice with light social conversation. Steer clear of inflammatory discussions about
politics or other topics on which people have strong opinions.
• Mirror the sellers’ style and demeanor - if they are formal, follow suit.
126

• Ask to tour the house first and take photos. The tour will help you gain the information you
will need to suggest a list price and give you more time to build rapport with the sellers.
• Ask open-ended questions and listen carefully for clues as to what issues in the sale are the
most important to the sellers. Then, adjust your presentation accordingly.
• Present the listing agreement and ask for the listing.
• Present the comparative market analysis and settle on a price for the home.
TIPS FOR MAKING THE LISTING PRESENTATION

Meeting with Sellers
Arrive on time. You are making an important presentation to important people (sellers) about an
important property (theirs). If you have never viewed the property before and have gained entry
during door-to-door canvassing, you will probably have to visit twice. At any rate, your presentation
will be a two-step process.
Inspect the Property

Take your notepad, pen, and a tape measure, and begin a thorough inspection. Perhaps the sellers
want to help you measure; this will involve them in the process and foster an attitude of cooperation.
While you are viewing the property, ask the owners to tell you about their home. Ask what features
they like most and what attracted them to the property in the first place. Inquire about improve-
ments they have made, and make notes about the positives and the negatives that you see. It is a good
idea to suggest minor repairs, as you notice the need for them. For example, you might recommend
that a leaky faucet could easily be fixed. Although you should note any problems, you may not want
to discuss it at this time. Once you have the listing, you should talk to your sellers about marketing
their house. Chapter 4
Working With
Once you have completed a careful inspection, it is time to sit down with the sellers and discuss busi- Sellers
ness. The kitchen or dining room table is an excellent place to spread out your Listing Presentation
Kit and face both owners at once. As you talk with the sellers, be sure to take notes.
QUESTIONS TO ASK THE SELLER

Design a questionnaire like the one on the following page with enough room left for responses. You
can refer to this when you are posing questions to the seller to determine their needs and pre-qualify
them as viable clients. Take notes on the questionnaire during a phone call, and save it in the client’s
file.
127

SAMPLE QUESTIONNAIRE
1. Why are you selling? _______________________________________________________
________________________________________________________________________
(Find out how serious they are about selling. If a new baby is on the way and they only have one bedroom,
you know they need to sell. If they’re just “thinking about moving,” ask more open-ended questions. Answers
to this question may also be a way to learn about problems with the house or the neighborhood that may make
for a hard sell. Again, listen and ask sympathetic follow-up questions)
2. When do you plan to move? _________________________________________________
________________________________________________________________________
(Is the move urgent? If it’s a job transfer in two months, emphasize your ability to establish effective market
price and sell properties quickly.)
3. What is most important to you in this sale? _____________________________________
________________________________________________________________________
(They may tell you it’s the net they want to receive, or the speed of the sale, or other aspects. Design your pre-
sentation to meet the level of their motivation. Sometimes stated motives aren’t the real ones. Let the person
ask you questions and state their concerns. Many times the real reasons come out a bit later.)
Chapter 4 4. Have you ever sold a home? If so, how was that experience? _________________________
Working With
Sellers _________________________________________________________________________
(This question will help you determine their level of sophistication and if they are harboring any negative
feelings about the previous transaction.)
5. How much of the proceeds from this home will you need to purchase your next home?
_________________________________________________________________________
(This will help you draw a clear picture of their situation and willingness to reasonably price their home. You
will also find out if they have been doing their homework.)
6. What did you like least/most about the other real estate practitioners you’ve worked with
in the past? _______________________________________________________________
________________________________________________________________________
(This question goes hand in hand with #4, but it gives you the opportunity to find out if it has gone unmen-
tioned. Most importantly, you will discover their expectations of you.)
7. What have your home buying and selling experiences been like? _____________________
________________________________________________________________________
(This is particularly important if they are coming from a different area. What do they know about the current
market and what are their opinions or views of real estate professionals in general?)
128

8. What is your preferred method of communication? _______________________________
_________________________________________________________________________
(Some sellers may prefer texting to email or phone calls. Work with their preference and comfort zone.)
9. Would Wednesday at 4 p.m. be a good time for me to come to your home to meet with you
both, or is Thursday better for you? ____________________________________________
________________________________________________________________________
(You are running a business and need to come across as a professional. This will be conveyed simply by the
manner in which you ask to meet with them, and you will find out if they are serious enough to have a face-
to-face meeting with a real estate agent. If possible, set the first home visit during daylight hours so that you
can assess the physical condition of the house more easily.)
During this conversation, you should be developing a profile

on the owners that will enable you to best meet their needs.
Try not to interrupt them as they speak. Listen carefully, but
at the same time, try to keep focused on the issues at hand.
R emember that the informa-
tion you learn is confidential
(as defined by state law), even if
you do not have an agency rela-
At the end of your call, do not forget to ask how the prospect tionship with the sellers.
heard about you and record the answer so that you can track
your marketing efforts.
You have a duty not to disclose information considered confidential under the scope of the agency
or non-agency relationship in your state. However, you cannot conceal pertinent facts relating to the Chapter 4
property. Working With
Sellers
Although you should keep your eyes open for potential problems that might affect the sale, you are
only obligated to discover and disclose problems that would be reasonably apparent to a real estate
professional.
THE LISTING AGREEMENT

The listing agreement is an employment contract used by sellers to employ a real estate broker, or
brokerage firm, to find a buyer for their property. Brokers agree to use their best efforts and abilities
to find a purchaser. While some states, including Texas, allow oral listings, good business practice
would require that listings should be in writing. A listing is a contract and must conform to all of the
requirements of contract law. To avoid misunderstanding, listing agreements have provisions that
describe the rights and duties of the agent and the principal.
The parties to the listing agreement are the seller and the broker. A sponsored license holder of the
broker may sign the agreement but does so on behalf of the broker.
ELEMENTS OF A LISTING AGREEMENT

A complete listing package helps to avoid misunderstanding between buyer, seller, and agents
regarding critical elements of a transaction. A listing package should, at a minimum, include:
•
The Information About Brokerage Services (IABS) form, filled out and dated
• An explanation of duties to clients and customers
• A legal description of the property, including a street address

129

• The names of the parties to the contract with appropriate signatures
• A beginning date and a termination date
• The agreement to pay a stated commission, usually a percentage of the sales price
• A description of the fixtures to be included in the sale, such as carpets, the television antenna,
draperies, fireplace screens, etc.
• Written permission to advertise and place a yard sign and other documents granting permis-
sion, e.g., permission to put a lockbox on the door
• Fair Housing language and Fair Housing logo
• Intermediary consent
• Signed and dated listing agreement
When you are discussing a contract or a listing agreement with a client over the phone, tell the client
that you will follow up via email, so that it is documented.
TYPES OF LISTING AGREEMENTS

The four major types of listing agreements are:
1. Open listing
2. Exclusive agency
Chapter 4
Working With 3. Exclusive right to sell
Sellers
4. Net listing
OPEN LISTING
The open listing gives the seller the right to list the property with multiple competing brokers and to
sell the property personally without liability for payment of a commission. Some sellers believe that
an open listing best serves their interests - that listing with several brokers produces more prospects
than does a single-listing company.
Real estate brokers recommend against open listings for several reasons. First, the owner may be subject to
commission claims by more than one broker. It is not always possible to easily determine who was responsible
for the sale, and controversy over this point may lead to expensive litigation. Secondly, brokers are concerned
that because the commission is paid to the broker who first finds the buyer, an open listing does not protect
the broker who diligently advertises the property. In fact, who was the procuring cause of the sale? The open
listing has resulted in many lawsuits between brokers, each claiming commission. These actions are known
as procuring cause lawsuits.
Because of the possibility the property may be sold without notice by others, brokers are unwilling
to spend time and effort on a property for which they have no commission protection. Lastly, some
argue that under an open listing, brokers have an incentive to close the sale quickly and at a lower
than market price. If this occurs, a broker could be accused of failing to protect the client’s (seller’s)
best interests. Therefore, agent loyalty is a significant issue when listing property using an open
listing.
EXCLUSIVE AGENCY
In an exclusive agency listing, the seller agrees to list the property with only one broker during
130 the listing term, with the provision that the seller can sell the property himself or herself, without
payment of a commission. Perhaps the biggest risk to the broker in an exclusive agency listing is that
the seller will not fully cooperate with the efforts of the broker if the seller thinks that he or she has
a prospect to sell to and avoid paying a fee.
Texas REALTORS® does not have an exclusive agency listing agreement in full, and most brokers
do not prefer such an agreement. Instead, Texas REALTORS® makes an addendum available that,
when completed and attached to an exclusive right to sell agreement, makes that agreement exclusive
agency, allowing the seller to sell the property himself or herself and avoid paying any sales com-
mission to the broker.
Exclusive agency agreements are often used with builders who list their properties with a broker,
primarily to expose their properties through the multiple listing service. Builders still maintain the
right to sell the property themselves without paying the broker a fee. The broker is only entitled to a
fee if the buyer comes from the efforts of the broker or cooperating broker.
EXCLUSIVE RIGHT TO SELL

Real estate brokers recommend this listing, which grants an exclusive right to sell the property
during the listing term. A commission is paid even if the property is sold by the owner.
It is worth noting that the listing agreement most brokers prefer is the exclusive right to sell listing
agreement, as it affords the broker the greatest degree of protection in earning a commission during
the listing term, and provided the broker performs as promised, from executing a sales contract
through to closing and funding.
Under an exclusive right to sell, brokers are more willing to spend advertising dollars and their sales
efforts to secure a buyer. If the property is listed at market value, this type of listing probably serves
the interest of both parties. Under this plan, the broker has sufficient time to test the market, design Chapter 4
an advertising sales campaign, and market the property under the best possible terms. Working With
Sellers
Another benefit of the exclusive right to sell listing agreement is that it helps to avoid the problem of
procuring cause lawsuits because the listing broker is the only one with the right to sell the property.
NET LISTINGS
Under such listings, the seller establishes a minimum, acceptable net price. The real estate broker’s
commission is the difference between the minimum net established by the seller and the price that
the buyer is willing to pay. Because of potential ethical and legal issues, net listings are outlawed in
many states. While net listings are legal in Texas, TREC has recognized the potential for abuse in
net listings and has passed two specific rules regarding this type of listing:
1. A broker should take net listings only when the principal insists upon a net listing and
when the principal appears to be familiar with the current market values of real property.
When a broker accepts a listing, the broker enters into a fiduciary relationship with the
broker’s principal, whereby the broker is obligated to make diligent efforts to obtain the
best price possible for the principal. The use of a net listing places an upper limit on the
principal’s expectancy and places the broker’s interest above the principal’s interest with
reference to obtaining the best possible price. Net listings should be qualified to assure
the principal of not less than his or her desired price and to limit the broker to a specified
maximum commission.
2. A real estate license holder is obligated to advise a property owner as to the license holder’s
opinion of the market value of a property when negotiating a listing or offering to purchase
the property for the license holder’s own account as a result of contact made while acting as
a real estate agent.
131

MULTIPLE LISTING SERVICES
The exclusive right to sell and exclusive agency listing agreements usually call for the broker to place
the listing into one or more multiple listing services (MLS). In the multiple listing service, member
firms share their listings to increase the inventory of properties for sale.
The shared information is also used by agents to prepare a Comparative Market Analysis (CMA).
The agent uses sales information from the MLS data to show a seller the market value of the prop-
erty. The agent bases this analysis on properties that have recently sold that are most similar to the
seller’s property. If possible, the agent should use data from sales that have closed within the last six
months - the more recent the sales data, the better. The agent will also show on the CMA, prop-
erties currently listed that are similar to the subject property. The listing agent will show expired
properties like the subject property on the CMA as well if that data is available. A rule of thumb
is three (3) each of, recently sold, recently listed, and recently expired properties that are similar to
the subject property the agent desires to list. Appraisers also have access to MLS for their use in
preparing appraisal reports.
Most MLS systems have rules limiting the number of days an agent has to enter the listing into
the MLS. Entering the listing into the MLS will expose the listing to thousands of members of
the service. However, you will make a much more significant impact if you can encourage some of
those agents to tour the property. Holding an “Open House for brokers and agents” can be the most
effective way to get broad market exposure. To encourage a good turnout, provide a luncheon buffet,
wine and cheese, coffee and pastries, or other incentives. A door prize is also a good incentive. The
key is maximum exposure! The more people who see the listing, the better the chance of a quick sale.
Most MLS systems require the listing broker to offer a cooperating broker a specific percentage of
the sale; the listing broker will enter this percentage into the MLS. Legally, the listing broker cannot
Chapter 4 modify that compensation once the cooperating broker has produced a buyer with a signed offer. As
Working With a buyer’s agent, you cannot ask for any compensation not advertised on the MLS. It is considered
Sellers unethical. If the listing broker advertised 2.5% compensation to cooperative brokers, you could not
ask for 3%.
BENEFITS OF SELLER AGENCY

•
Marketing is the most obvious benefit of seller agency. Buyers know that licensed real estate
brokers offer the vast majority of real estate for sale. Modern MLS systems have given local
real estate markets a truly global reach. Property owners can list a property with a good agent
and know that it is getting far better exposure than if the owner attempted to sell without the
assistance of a broker.
•
Negotiations are easier when a property is listed with an agent. Many buyers are reluctant
to contact and negotiate a purchase with a seller. Likewise, sellers benefit because the agent
stands between the potential buyer and seller. The seller can consider a negotiating strategy
with input from his/her agent, without the pressure that comes from direct negotiation with
a buyer.
•
A trained real estate professional facilitates the legal and financial details of the transaction.
Sellers are generally not well versed in the ins and outs of mortgage qualification and com-
pleting contracts. The seller’s agent ensures that (as much as possible) the buyer has the intent
and the financial means to complete the purchase.
•
Time is a valuable commodity. Sellers must deal with “lookers” who are not qualified and who
waste the seller’s time. Many sellers have listed their property after dealing with no-shows at
appointments and buyers who are not qualified to purchase.
132

LISTING OBJECTIONS
Many sellers remain unconvinced that using a sales agent is in their best interest. They look at the
dollar amount of the commission that you will charge them, and they are unsure of your worth.
Overcoming their objections will net you the listing. You must practice answering the most com-
mon questions. Also, be prepared for the unexpected. When that happens, always take your time to
answer. Rephrase their question to be sure you understand the purpose behind it and to give yourself
a little time to think. Then, answer as carefully and positively as possible. Reassure them that their
question is valid and that you appreciate their need for answers and information. Whenever possible,
use sales statistics to “prove” that your responses are valid.
The four reasons why a house does not sell:
• Price • Location • Condition • Marketing plan
Elaborate on your ability to help in each of these areas. Discuss the importance of a third party to
ease and facilitate the negotiations involved in this complicated transaction. For sellers who believe
that they can do your job by themselves, the following list of questions may make them think twice!4
• Do you really know what your property is worth in today’s market? Will you price it too high
and discourage potential buyers or too low and lose part of your equity?
• Do you know what A-I-D-A means? (The four psychological steps of a sale-- attention,
interest, desire, and action.) Can you write the type of ads that will attract a qualified buyer?
• Do you have a list of prospects and access to numerous buyers? Can you separate the lookers
from the buyers?
Chapter 4
• Can you show other houses as comparables? Working With
Sellers
• Are you familiar with the techniques of selling real estate? Do you have the ability and skill
necessary to make a sale?
• Can you show your property as effectively as a broker? Are you prepared to expose your family
to any stranger who knocks at the door to see your house?
• Are you available to prospects on a full-time basis until the house sells?
• Can you answer objections and criticism without losing your temper?
• Do you have the ability to call back on prospects without placing yourself in a weak bargain-
ing position to negotiate an offer?
• Can you draw a legally correct contract and include all the changes and conditions customary
in this area?
• Do you understand the disclosures required by law?
• Are you familiar with today’s financing? Do you have several sources of financing?
• Do you have the time to handle all these details in light of your other responsibilities?
Remember to be sensitive to the seller’s feelings about the property. Also, be aware that the seller
may have some preconceived ideas about values in the neighborhood. Rumors are all too often con-
sidered as fact, and the seller may have heard what other houses have sold for. Misinformation can
make your presentation difficult. If you have a laptop computer and can pull up MLS figures right in 133

front of your sellers, you will probably be able to convince even the most stubborn sellers of current
market conditions. If you are bringing a prepared CMA, be sure that it is accurate and that you have
plenty of comparables to help defend your suggested price range.
Finally, if you have a seller who insists on listing above fair market value, you should point out that in
the unlikely event that the seller could find a buyer, the property might not appraise, and financing
would be difficult to obtain, leaving a prospective buyer unwilling to continue with the sale. More-
over, overpriced houses help sell the competition. Agents bring buyers to the overpriced property.
They point out all the amenities and special features of the property. Then, they take buyers to prop-
erly priced homes and point out what a bargain they are in comparison to the one viewed first. It is
because of this that many sellers wonder why their overpriced properties did not sell. After all, there
were dozens of lookers. Yes, there were - they all bought other homes.
It is not in your best interest or the seller’s best interest to list a property at a price that is not com-
petitive. The property will hang on the market, and some agents will not show it based on the length
of time it has been on the market. They will feel that there must be something wrong with it and do
not want to waste their buyers’ time. Reducing the price at a later date only reinforces this type of
negative thinking about a listing.
Therefore, if an owner insists on a price that is too high, and refuses to consider lowering it, you
might consider refusing the listing. Ask your broker the recommended policy for such situations.
Occasionally, a seller will interview several potential agents. If this is the case, give your presenta-
tion, and thank the sellers for their time and the opportunity for their business. Be sure to tell them
that you look forward to listing their properties. Most importantly, always leave your card and follow
up with a call.
Chapter 4
Working With In your listing presentation kit, you should have a copy of an exclusive right to sell listing agreement.
Sellers This is the agreement that you will sign with your sellers. It is important that you are comfortable
with its presentation. Also, be sure to include in your presentation a discussion of all the items
included in the sale. If the seller wants to exclude any items from the sale, discuss removing them
before showing the property.
Finally, you may want or need to discuss property condition and marketing with your seller.
Reassure the seller that you can take care of all of the details. This is also an excellent time to discuss
why some buyers are reluctant to look at FSBOs.
Basically, there are four types of buyers in any given area.

1. First-time buyers usually fear FSBOs because they know they lack experience and want a
professional to guide them through the process. They also worry that an experienced seller
might take advantage of them.
2. Buyers changing homes in a particular area or “moving-up” to their dream home have plen-
ty of time and often enjoy shopping. They will only buy an FSBO if they feel they can get
a “steal of a deal.” They know an FSBO is not paying an agent’s commission and will try to
deduct what they feel would be the commission from your asking price. If these buyers did
not want to avoid paying a commission themselves, they would be using a broker.
3. Some buyers are investors. They want to buy low and sell high. They will only look at prop-
erty that is a good income producer, or that has a desperate seller. If they are very knowl-
edgeable, they will work on their own, but most use professionals to guide them to good
opportunities.
4. The last group is buyers relocating to the area. Relocators are often pressed for time, and
134 since they are unfamiliar with the area, they will almost always work exclusively through
real estate agents. They depend on their agents to inform them about property values in
the area, and to take care of the details required to get from contract to closing, while they
return to their current home to settle matters.
If your seller understands your presentation, then he or she will realize that the only buyers likely
to even look at the property are the toughest sells in the business. Here is your opportunity to ask for
the listing. Assure the seller that by listing with you, his property will be exposed to the most likely
buyers, the first-time buyers and the relocation buyers. These categories of buyers want to buy, and
are most likely to offer a fair price. They do not have the time or inclination to submit low offers in
the hope of getting a sweet deal.
Finally, work through the Seller’s Net sheet with the seller. If the seller is still upset with the commis-
sion amount, remind him or her that in trying to sell the property without your services, would-be
buyers will deduct that amount from their offers anyway. This is because most buyers feel that they
pay the commission.
Throughout your presentation, in trying to convince the seller to list the property, be sure that you
are also convincing him or her that you are the right person to list with. If you have not done so
already, this is the time to stress the advantages you have to offer. A brochure about your firm, its
policies, and its reputation can be very effective. Remember, in promoting your own firm, never
criticize the competition! It is against the Code of Ethics and it gives the profession a bad name.
Finally, before you sign the listing agreement with the sellers, be sure that you want the listing. Are
the sellers motivated? Is the property marketable? Are they willing to price it competitively? Basi-
cally, is this a good listing for you and your firm?
DISCLOSURE ISSUES Chapter 4

During the listing presentation, before signing a listing agreement, advise the sellers of the following: Working With
Sellers
• Information About Brokerage Service
• The license holder’s opinion of the market value of the property
• The firm’s policy on advertising
• Fees that the seller will pay at closing
• A net sheet that approximates the net proceeds of the sale
• If appropriate, discuss the possibility of the buyer entering into a Buyer Representation
Agreement with the broker. Written consent to practice intermediary must be obtained from
the buyer and seller
• Intermediary consent, and the broker’s policy relating to appointments
• The seller should be kept updated on pricing trends that may affect the final sales price
When the seller’s agent is working with potential buyers, the agent must:
• Provide the IABS unless the buyer is represented by another agent
• Ensure that the buyer understands that the agent is representing the interests of the seller and
that the agent owes no more than a duty of honesty and fairness to the buyer
• The firm’s policy on subagency

135

SUBAGENCY
Subagency occurs “when a license holder is not associated with the seller’s broker but is representing
the seller through a cooperative agreement with the seller’s broker.” While this is undoubtedly a
concise definition, the definition of subagency is best represented by practical examples.
In conclusion, some agents have come to believe that since the passage of Senate Bill 489, subagency
is unlawful, but in fact, that is not the case. Subagency is lawful; however, because of the passage
of Senate Bill 489, the disclosures are more stringent. Before Senate Bill 489, most buyers did not
even know that they were not being represented. However, under Senate Bill 489, such disclosure
is required by law.
Subagency tends to show up more often in rural communities and the trend away from subagency is
evident in the metropolitan markets. This trend should continue as brokers, agents, and consumers
become better educated on all facets of agency law in the state of Texas.
Many brokers currently, as a part of their policy, will not allow their sponsored agents to work in
subagency relationships. Such agency relationships are legal, like intermediary without appoint-
ments, but come with a higher degree of exposure for the broker, and consumer. Such exposure can
often lead to unwanted litigation.
Chapter 4
Working With
Sellers
136

A L WORLD SCENARIO - THE JONES FAMILY
RE
Directions: Read the scenario and answer the questions that follow.
Assume that ABC Realty has listed the Jones’ house for sale, and the listing agent is Sally
Brown. Jim Williams works for XYZ Realty and is working with a buyer named Harriet
Green who has decided she would like to purchase the Jones’ home. Harriet Green is not
being represented by XYZ Realty.
Now, let’s plug in the players to gain the clarification we need to understand this definition
of subagency from a compliance and practical perspective.
Jim Williams is a “license holder not associated with the seller’s broker.” Jim Williams is
associated with XYZ Realty, and the seller’s broker is ABC Realty. Jim Williams and XYZ
are representing the Jones family, and so is ABC Realty.
1. Who is the buyer in the Jones Family scenario?
a. Jim Williams
b. Harriet Green
c. Sally Brown
d. No one is the buyer
2. Based on the information given, the seller is whose client?
a. ABC Realty’s
b. XYZ Realty’s
c. Both ABC’s and XYZ’s
d. The Jones family’s Chapter 4
Working With
3. Who is representing the buyer? Sellers
a. ABC Realty
b. XYZ Realty
c. Harriet Green
d. No one is representing the buyer
137

PRICING STRATEGIES
You want the listing and the sellers want you. Everything is great - right? Maybe. The next step
can be a difficult one, in some cases. It is time to turn the discussion to the matter of price. This can
be a touchy area, but if your CMA is accurate, you will be able to handle it. Below are 7 points for
pricing the listing for a timely sale.
1. Have a price range in mind when you go to the listing presentation. The sellers will often
look to you for direction. Look at active listings. What is the highest-priced listing? What
is the lowest priced listing? Look at solds. In a strong market, pay more attention to actives.
In a down market, pay more attention to solds. Look beyond the comparables. What is the
state of the current market? Is it a buyer’s or seller’s market? Is there a demand for your
listings market area or style of house?
2. Take the seller’s situation into consideration. How soon do they really need to sell? Some
situations will require more aggressive pricing.
3. The condition of the home and its readiness for

a sale will dictate its marketability. This is where
your sellers have an obligation to assist in keep-
B uild in a price reduction option
during the listing presentation.
Have the sellers sign an agreement
ing the house up and show ready. to lower the price by pre-approved
percentages if the property has not
4. Show your sellers MLS data on houses that are/ sold in 30, 60, or 90 days. Do this
were overpriced and the correlated time on the in percentages per timeframe (3%
market. You may also want to compile some list in 30 days, etc.)
price to sales price stats for review - especially
Chapter 4 for a number-crunching client. (expired and
Working With terminated)
Sellers
5. The first 30 days is crucial (the most critical time of a listing), so encourage your sellers
not to price too high, or people might not look at it. Too low of a price might bring in mul-
tiple offers.
6. Always prepare sellers for a change in the market and the need to act accordingly. Act
accordingly could mean a change in price and/or the conditions of the sale. Ensure that
they understand and agree to lower the asking price tomorrow even if today’s comparables
support the current price. Let them know that quick action will bring the best buyers. For
example, if there are no offers in 21 days, we will lower the price. Prepare your client by
discussing this possibility at the listing presentation.
7. Be willing to turn down the job. If the sellers are difficult and unreasonable during the
listing presentation, they will become even more challenging throughout the process. Be
on the lookout for these potentially difficult sellers who will only hurt your career. Make
sure you and your sellers are well-matched; you have a choice. For example, it is not good
advertising to have a home with a yard sign for two years. It appears as if you do not know
how to sell a house.
138

Five steps every seller should take to improve their chances of selling quickly and profitably:
1. De-clutter - Straighten up closets and other cluttered areas to give the illusion of space and
adequate storage. Clear off the countertops and neaten shelves. Throw away any unwanted
items that crowd the space. The sellers probably do not want to move these things to a new
home, so now is the ideal moment to get rid of them.
2. Clean - Scrub and clean the entire house, and keep it as neat as possible. Buyers like the
idea that they could move right in. A clean house is very inviting.
3. Repair - Doing small repairs to leaky faucets, cracked windowpanes, and broken electrical
outlets can make a huge difference. Well-maintained properties show pride of ownership
and give the buyer the impression that the house is a home.
4. Neutralize - Take down posters, paint over unusual colors, and pull down outdated wall-
papers. Neutral colors sell better for the simple reason that they blend in with the things
buyers already have, rather than clashing.
5. Dynamize - Make the house stand out. Add plants, attractive table settings in the dining
room, a fire in the fireplace, soft background music, pleasant aromas, and a welcoming atti-
tude to make the buyers feel at home.
Pay special attention to the following:

• Curb appeal
• Entry
• Kitchen Chapter 4
Working With
• Bathrooms Sellers
In addition to helping your sellers prepare for a showing, go over your firm’s method of dealing
with prospective buyers. Inform the sellers that your office will always call them before showing the
property. Advise them to remove pets if possible, and to try to have as few people as possible at home
when buyers arrive to walk through it.
Talk to the seller about people who knock on the door and ask to look at the property without a sales
agent. Sellers should not let this type of buyer in the house. Instead, leave a supply of your business
cards and have the seller refer all inquiries to you. Remind the sellers that one of the reasons for
listing with an agent is security, and another is a pre-qualified buyer.
139

PRICING OBJECTIONS
Here are some suggestions of things you might say when dealing with pricing objections from your
sellers:
• A higher price is not likely to be supported by an appraisal, so buyers will not be able to obtain
financing.
• If your property does not offer a feature or amenity that current buyers want - an open
kitchen/living space or a spa-like master bath - the price must reflect it.
• Real estate agents do not control the market or dictate price; the market does.
• The monthly payments required on a higher-priced house will eliminate a large number of
buyers. Calculate the income buyers would need to carry an 80% mortgage with payments
equal to one-third (1/3) of their monthly income.
• The beauty and sentimental value of your home will

help it sell, but they are not indicators of price.
• The amount of money you need in order to move and

L et sellers know that you are on
the same team. Remind sellers
that you also benefit if the property
buy your new home is a viable indicator of market sells for a higher price since your
price. commission is a percentage of the
sales price, but that an overpriced
Overpricing immediately eliminates buyers who know the house does not equate to higher
market and know the area. Agents only pull MLS searches commission for agents.
within the known range of “actives” and “solds” per each
Chapter 4 area. Moreover, many buyers have representation, so they
Working With are well educated.
Sellers
140

DY - CMA
STU
E
CAS
Directions: Read the short scenario and answer the questions below, based on the
CMA data on the following pages.
Owner Scenario: Mr. and Mrs. Carlisle are interested in selling their home located at 508
St. Cloud Rd. The house was built in 2007 and they bought it new from the builder’s sales
representative. The couple has been happy in the house, but now has to move to another
area of town due to employment changes.
Their neighborhood location is primarily occupied by people employed by international

companies that relocate employees often. It is a quiet, single-family neighborhood that is
close to schools and shopping, and has easy access to all major freeways in the area.
The specifications on the Carlisle’s house are as follows:
Address BR Bths #Gar Lot Sq Ft Bldg Sq Ft Yr
508 St. Cloud Rd. 4 2.5 2 6,582 2600 2007
Step 1. Review the current actives for the neighborhood.
1. How many properties are on the market right now?
a. 2
b. 3
c. 4 Chapter 4
d. 1 Working With
Sellers
2. What is the average number of Days on Market for the active status listings?
a. 105
b. 27
c. 46
d. 120
3. Which property has been on the market the longest?
a. 705 Hauser St.

b. 508 St Cloud Rd.
c. 724 Evergreen Terrace
d. 342 Gravelpit Terrace
Step 2. Review the solds that have occurred in the last 6 months and begin to look at
comparable properties.
4. What was the average DOM for the sold properties?
a. 62
b. 79
c. 26
d. 62
141

S T U DY - CMA CONT’D
E
CAS 5. Compare the list price to the sales price for 812 Hauser St.. What is the sale-to-list %?
a. 100%
b. 93%
c. 89%
d. 1%
6. What is the average sale-to-list % for the homes that sold in the last 6 months?
a. 96%
b. 100%
c. 93%
d. 1%
Step 3. Review the pending sales under contract.
7. What is the average DOM for pending sales under contract?
a. 45
b. 105
c. 90
d. 5
Chapter 4 Step 4. Review the expired listings.

Working With
Sellers 8. How many homes had price reductions?
a. 1
b. 2
c. 0
d. 3
Pricing your listing.
9. Based on your CMA research and what other buyers and sellers have recently agreed
to as current market value for properties like the Carlisle’s, which price range would
most likely create an offer minimizing days on market with maximum price?
a. $449,900-$499,900
b. $340,000 - $420,000
c. $399,900 - $475,000
d. $457,900 - $515,000
142

CASE STUDY - CMA CONT’D
Property Type: Single Family Status: Active
Lot Sq Bldg Sq
Address BR Bth Gar DOM Ft Ft Yr List Price
705 Hauser St. 4 2.5 2 105 6,000 2,134 2002 $350,000*
342 Gravelpit Terrace 3 3 2 5 7,250 2,427 2005 $399,500
777 Holiday Rd. 3 2.5 2 27 6,255 2,727 2007 $421,500
Average 3 3 2 - 6,502 2,429 - $390,333
(Average List Price / Average Sq Ft) : ($336,267 / 2,429) = $138.44
Property Type: Single Family Status: Sold (last 6 months)
Closed Lot Bldg List Sold

Date Address BR Bth Gar DOM Sq Ft Sq Ft Yr Price Price
6/5/2017 724 4 3 3 62 10,050 2,814 2010 $449,900* $425,000

Evergreen
Terrace
5/2/2017 124 Conch 4 2.5 2 5 12,528 2,850 2003 $499,900 $495,000

St.
Chapter 4
3/22/2017 812 Hauser 4 3.5 2 12 7,444 2,143 2003 $414,900 $387,250 Working With
St. Sellers
Average 4 3 2 ___ 10,007 2602 - $454,900 $435,750
Avg price per sq.ft. (Average Sales Price / Average Sq Ft) : ($435,750 /2602 ) = $167.67
Property Type: Single Family Status: Pending
Lot Bldg List Sold

Date Address BR Bth Gar DOM Sq Ft Sq Ft Yr Price Price
7/6/2017 1000 Mammon 3 2.5 3 90 8,000 2,414 2005 $417,900* Pending

Ln.
Property Type: Single Family Status: Expired
Lot Sq Bldg Sq
Address BR Bth Gar DOM Ft Ft Yr List Price
322 Maple 3 3 2 90 6,999 2,485 2002 $440,750*
423 Gravelpit Terrace 4 3.5 2 180 7,145 2,392 2005 $379,900*
* Indicates a price reduction during the term of the listing.
143

CASE STUDY - CMA CONT’D
NOTE: The REALTOR® Code of Ethics requires you to list your initial search criteria on any
CMA that you perform. Your initial search criteria will be based on the year built, building square
footage, and subdivision of the seller’s property that you enter into the MLS. The information gen-
erated will be current as of the date the search was initiated.
The following language is required on every CMA, usually at the bottom.
THIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS AND

SHOULD NOT BE CONSIDERED AN APPRAISAL OR OPINION OF VALUE. In mak-
ing any decision that relies upon my work, you should know that I have not followed the guidelines
for the development of an appraisal or analysis contained in the Uniform Standards of Professional
Appraisal Practice of the Appraisal Foundation.
Chapter 4
Working With
Sellers
144

EXERCISE - TRUE OR FALSE
Statement T or F
1. CMA stands for Competitive Market Area.
2. A good tip for your listing presentation is for you to mirror the sellers’ style
and demeanor.
3. The four major types of listing agreements are the open listing, the closed
listing, the exclusive agency listing, and the secret agency listing agreement.
4. The exclusive right to sell listing usually calls for the broker to enter the
listing into the MLS.
5. If you are a buyer’s agent, you can request more compensation than the
listing broker entered into the MLS for cooperating brokers.
6. MLS exposes properties to a much larger buyer’s pool.
7. The four reasons a house does not sell are price, location, traffic noise and
proximity to schools.
8. Most first-time buyers usually gravitate toward FSBOs because they don’t Chapter 4
feel that they need a professional to help them find their first house. Working With
Sellers
9. Senate Bill 489 outlawed subagency in Texas.
10. It is a good idea to tell your sellers to build in a price reduction option to
lower the price by small percentages if the property hasn’t sold in 30, 60, or
90 days.
145

TEXAS REALTORS® RESIDENTIAL REAL ESTATE LISTING
AGREEMENT EXCLUSIVE RIGHT TO SELL
On the right is a copy of the Texas REALTORS® Exclusive Right to Sell Listing Agreement.
Paragraph 1. Parties: Identifies the parties. Enter the seller’s name as it appears on the deed. The
address should be the current mailing address. Likewise, enter the broker’s name and address.
The last sentence in Paragraph 1 creates the employment agreement between the broker and seller
by giving the broker the exclusive right to sell the property.
Paragraph 2. Property: The property includes the land and all improvements to the land, as out-
lined in 2.A.-C.
Chapter 4
Working With
Sellers
Paragraph 2.A. Land: Identifies the physical land. If in a subdivision, enter the lot, block, section,
and subdivision name. If the description is by metes and bounds, enter “see attached” and attach a
copy of the description.
Paragraph 2.B. Improvements: This includes a listing of the permanently installed and built-in
improvements that will be included in the sale.
Paragraph 2.C. Accessories: Many of the accessories are related to items listed in 2.B. With regard
to both 2.A and 2.B., take great care that the seller understands what is to be included in the sale.
Paragraph 2.D. Exclusions: These are items to be excluded from the sale. As a rule, it is better to
remove items from the property that the seller wishes to exclude prior to putting the house on the
market.
Paragraph 2.E. Owners’ Association: Check the appropriate box. If an owners’ association fee
must be paid, it is a mandatory association.
146

RESIDENTIAL REAL ESTATE LISTING AGREEMENT
EXCLUSIVE RIGHT TO SELL
USE OF THIS FORM BY PERSONS WHO ARE NOT MEMBERS OF THE TEXAS ASSOCIATION OF REALTORS®, INC. IS NOT AUTHORIZED.
©Texas Association of REALTORS®, Inc. 2020
1. PARTIES: The parties to this agreement (this Listing) are:
Seller:
Address:
City, State, Zip:
Phone: Fax:
e
E-Mail:
Broker:
Address:
City, State, Zip:
Phone:
E-Mail:
pl Fax:
Seller appoints Broker as Seller’s sole and exclusive real estate agent and grants to Broker the exclusive
right to sell the Property.
2. PROPERTY: “Property” means the land, improvements, and accessories described below, except for any
m
described exclusions. Chapter 4
Working With
A. Land: Lot , Block , Sellers
Addition, City of ,
in County, Texas known as
(address/zip code),
or as described on attached exhibit. (If Property is a condominium, attach Condominium Addendum.)
sa
B. Improvements: The house, garage and all other fixtures and improvements attached to the above-
described real property, including without limitation, the following permanently installed and built-in
items, if any: all equipment and appliances, valances, screens, shutters, awnings, wall-to-wall carpeting,
mirrors, ceiling fans, attic fans, mail boxes, television antennas, mounts and brackets for televisions and
speakers, heating and air-conditioning units, security and fire detection equipment, wiring, plumbing and
lighting fixtures, chandeliers, water softener system, kitchen equipment, garage door openers, cleaning
equipment, shrubbery, landscaping, outdoor cooking equipment, and all other property owned by Seller
and attached to the above-described real property.
C. Accessories: The following described related accessories, if any: window air conditioning units, stove,
fireplace screens, curtains and rods, blinds, window shades, draperies and rods, door keys, mailbox
keys, above-ground pool, swimming pool equipment and maintenance accessories, artificial fireplace
logs, and controls for: (i) satellite dish systems, (ii) garage doors, (iii) entry gates, and (iv) other
improvements and accessories.
D. Exclusions: The following improvements and accessories will be retained by Seller and must be removed
prior to delivery of possession:
.
E. Owners’ Association: The Property  is  is not subject to mandatory membership in a property

owners’ association.
(TXR-1101) 05-01-20 Initialed for Identification by Broker/Associate ________and Seller________, ________ Page 1 of 10
147

RESIDENTIAL REAL ESTATE LISTING AGREEMENT EXCLUSIVE RIGHT TO SELL (PAGE 2)
Paragraph 3. Listing Price: Enter the list price here, which should be based upon a careful analysis
of the market by creating a Comparative Market Analysis (CMA).
Paragraph 4. Term: All listing agreements must have a definite termination date. The listing term
should be long enough to market the property under market conditions at the time.
Paragraph 5.A. Broker’s Compensation: The broker’s fee is usually a fixed percentage of the sale
price. If the fee is a flat fee such as a fixed dollar amount, enter it in 5.A(2). If the fee is a combination
of a percentage and other terms, both A(1) and A(2) may be used.
Paragraph 5.B. Earned: Note that, according to B(1), the broker is due a fee even if the seller sells
the property. The broker also earns the fee if the broker procures a ready, willing, and able buyer who
is willing to purchase the property at the list price or on other terms acceptable to the seller.
Chapter 4
Working With
Sellers
Paragraph 5.C. Payable: In most cases, the fee is payable upon the closing and funding of a sale of
the property, but there are exceptions. Note that, if the broker met the requirements of Paragraph
5.B(2) above, the fee would be immediately payable under 5.C(2) if the seller refused to sell.
148

Residential Listing concerning___________________________________________________________________________________
3. LISTING PRICE: Seller instructs Broker to market the Property at the following price: $
(Listing Price). Seller agrees to sell the Property for the Listing Price or any other price acceptable to Seller.
Seller will pay all typical closing costs charged to sellers of residential real estate in Texas (seller’s typical
closing costs are those set forth in the residential contract forms promulgated by the Texas Real Estate
Commission).
4. TERM:
A. This Listing begins on and ends at 11:59 p.m. on .
B. If Seller enters into a binding written contract to sell the Property before the date this Listing begins and
the contract is binding on the date this Listing begins, this Listing will not commence and will be void.
5. BROKER COMPENSATION:
e
A. When earned and payable, Seller will pay Broker:
 (1) % of the sales price.
 (2) pl
B. Earned: Broker's compensation is earned when any one of the following occurs during this Listing:
(1) Seller sells, exchanges, options, agrees to sell, agrees to exchange, or agrees to option the Property
to anyone at any price on any terms;
(2) Broker individually or in cooperation with another broker procures a buyer ready, willing, and able to
.
buy the Property at the Listing Price or at any other price acceptable to Seller; or
(3) Seller breaches this Listing.
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C. Payable: Once earned, Broker's compensation is payable either during this Listing or after it ends at the Working With
earlier of: Sellers
(1) the closing and funding of any sale or exchange of all or part of the Property;
(2) Seller's refusal to sell the Property after Broker’s compensation has been earned;
(3) Seller’s breach of this Listing; or
(4) at such time as otherwise set forth in this Listing.
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Broker's compensation is not payable if a sale of the Property does not close or fund as a result of: (i)
Seller's failure, without fault of Seller, to deliver to a buyer a deed or a title policy as required by the
contract to sell; (ii) loss of ownership due to foreclosure or other legal proceeding; or (iii) Seller's failure
to restore the Property, as a result of a casualty loss, to its previous condition by the closing date set forth
in a contract for the sale of the Property.
D. Other Compensation:
(1) Breach by Buyer Under a Contract: If Seller collects earnest money, the sales price, or damages by
suit, compromise, settlement, or otherwise from a buyer who breaches a contract for the sale of the
Property entered into during this Listing, Seller will pay Broker, after deducting attorney’s fees and
collection expenses, an amount equal to the lesser of one-half of the amount collected after
deductions or the amount of the Broker's Compensation stated in Paragraph 5A. Any amount paid
under this Paragraph 5D(1) is in addition to any amount that Broker may be entitled to receive for
subsequently selling the Property.
(2) Service Providers: If Broker refers Seller or a prospective buyer to a service provider (for example,
mover, cable company, telecommunications provider, utility, or contractor) Broker may receive a fee
from the service provider for the referral. Any referral fee Broker receives under this Paragraph 5D(2)
is in addition to any other compensation Broker may receive under this Listing.
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Paragraph 5.E. Protection Period: The protection period is a period after the listing expires,
during which the seller may owe the broker a fee if the property sells.
Paragraph 5.E(1). The protection period runs for a fixed number of days after the expiration of the
listing. The length of the protection period is negotiated between the seller and the broker.
Paragraph 5.E(2). The broker must provide the list within 10 days.
Paragraph 5.E(3). The protection period terminates under several conditions, including the listing
of a property with another member of Texas REALTORS®.
Paragraphs 5B-G. The agent should explain this paragraph carefully to the seller to avoid the
unlawful practice of law. A few of these paragraphs open the door to discuss and clarify what the
listing broker might be able to do should the seller breach the listing agreement.
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Paragraph 6. Listing Services. Notice Regarding Public Marketing: Listings publicly marketed
must be filed with the MLS within one business day. This notice outlines what is considered “public
marketing.”
Paragraph 6.A. The broker has five days in which to enter the listing in MLS. In most cases, a
listing should be entered into MLS immediately.
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(3) Other Fees and/or Reimbursable Expenses:
E. Protection Period:
(1) “Protection period” means that time starting the day after this Listing ends and continuing for
days. “Sell” means any transfer of any fee simple interest in the Property whether by oral or written
agreement or option.
(2) Not later than 10 days after this Listing ends, Broker may send Seller written notice specifying the
names of persons whose attention was called to the Property during this Listing. If Seller agrees to
sell the Property during the protection period to a person named in the notice or to a relative of a
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person named in the notice, Seller will pay Broker, upon the closing of the sale, the amount Broker
would have been entitled to receive if this Listing were still in effect.
(3) This Paragraph 5E survives termination of this Listing. This Paragraph 5E will not apply if:
(a) Seller agrees to sell the Property during the protection period;
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(b) the Property is exclusively listed with another broker who is a member of Texas REALTORS® at
the time the sale is negotiated; and
(c) Seller is obligated to pay the other broker a fee for the sale.
F. County: All amounts payable to Broker are to be paid in cash in

County, Texas.
G. Escrow Authorization: Seller authorizes, and Broker may so instruct, any escrow or closing agent
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authorized to close a transaction for the purchase or acquisition of the Property to collect and disburse
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to Broker all amounts payable to Broker under this Listing. Working With
Sellers
6. LISTING SERVICES:
Notice Regarding Public Marketing: If the Property is publicly marketed, MLS rules require that
Broker file this Listing with the Multiple Listing Services (MLS) within one (1) business day. Public
marketing includes, but is not limited to, fliers displayed in the windows, yard signs, digital marketing
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on public-facing websites, brokerage website displays (including IDX and VOW), digital
communications marketing (email blasts), multi-brokerage listing sharing networks, and other
applications available to the general public.
A. Filing: Seller instructs Broker as follows: (Check 1 or 2 only.)
 (1) Broker will file this Listing with one or more Multiple Listing Services (MLS) according to the following:
(Check only one box.)
 (a) Broker will file this Listing with one or more Multiple Listing Services (MLS) by the earlier of the
time required by MLS rules or 5 days after the date this Listing begins. Seller authorizes Broker to
submit information about this Listing and the sale of the Property to the MLS.
 (b) Seller instructs Broker not to file this Listing with one or more Multiple Listing Services (MLS) until
days after the date this Listing begins for the following purpose(s):
.
(NOTE: Do not check if prohibited by Multiple Listing Service(s).)
Notice Regarding MLS Rules: MLS rules require Broker to accurately and timely submit all information
the MLS requires including final closing of sales and sales prices. MLS rules may require that the
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Paragraph 6.A(2). Check this box if the property will not be entered into MLS or publicly mar-
keted. The last sentence of this section underscores the requirement that publicly marketed listings
be entered into the MLS within one business day.
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Paragraph 7.A. Authorizing Access: The seller’s cooperation in granting access to the property is a
critical factor in the successful marketing of the listing.
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information be submitted to the MLS throughout the time the Listing is in effect. Subscribers to the MLS
and appraisal districts may use the information for market evaluation or appraisal purposes.
Subscribers are other brokers, agents, and real estate professionals such as appraisers. Any
information filed with the MLS becomes the property of the MLS for all purposes. Submission of
information to MLS ensures that persons who use and benefit from the MLS also contribute
information.
 (2) Broker will not file this Listing with any Multiple Listing Services (MLS) or other listing service.
Seller acknowledges and understands that if this option is checked: (1) the Property will not be
publicly marketed; (2) the Property will not be included in the MLS database available to real
estate agents and brokers from other real estate offices who subscribe to and participate in the
MLS, and their buyer clients may not be aware that the Property is offered for sale; (3) the Property
will not be included in the MLS’s download to various real estate Internet sites that are used by
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the public to search for property listings; and (4) real estate agents, brokers, and members of the
public may be unaware of the terms and conditions under which Seller is marketing the Property.
Seller further acknowledges and understands that if this option is checked, and the Property is
publicly marketed by anyone, including Seller, MLS rules require that Broker file this Listing with
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the MLS within one (1) business day.
B. Listing Content: If Broker files this Listing under Paragraph 6A, the parties agree to the following:
(1) Definitions:
(a) “Listing Content” means all photographs, images, graphics, video recordings, virtual tours,
drawings, written descriptions, remarks, narratives, pricing information, and other copyrightable
elements relating to the Property.
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(b) “Seller Listing Content” means Listing Content provided by Seller to Broker or Broker’s associates. Chapter 4
(c) “Broker Listing Content” means Listing Content that is otherwise obtained or produced by Broker Working With
or Broker’s associates in connection with this Listing. Sellers
(2) Seller grants Broker a non-exclusive, irrevocable, worldwide, royalty-free license to use, sublicense
through multiple tiers, publish, display, and reproduce the Seller Listing Content, to prepare derivative
works of the Seller Listing Content, and to distribute the Seller Listing Content, including any
derivative works of the Seller Listing Content. This Paragraph 6B(2) survives termination of this
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Listing.
(3) All Broker Listing Content is owned exclusively by Broker, and Seller has no right, title or interest in
or to any Broker Listing Content.
(4) Seller understands and agrees that both the Seller Listing Content and Broker Listing Content,
including any changes to such content, may be filed with the MLS, included in compilations of listings,
and otherwise distributed, publicly displayed and reproduced.
7. ACCESS TO THE PROPERTY:
A. Authorizing Access: Authorizing access to the Property means giving permission to another person to
enter the Property, disclosing to the other person any security codes necessary to enter the Property, and
lending a key to the other person to enter the Property, directly or through a keybox. To facilitate the
showing and sale of the Property, Seller instructs Broker to:
(1) access the Property at reasonable times;
(2) authorize other brokers, their associates, inspectors, appraisers, and contractors to access the
Property at reasonable times; and
(3) duplicate keys to facilitate convenient and efficient showings of the Property.
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Paragraph 7.B. Scheduling Companies: are organizations that handle the scheduling of showings
for listed properties. Most scheduling companies allow agents to schedule showings over the phone
or online. Scheduling companies are a convenience that probably results in an increased number of
showings.
Paragraph 7.C. Keybox: The keybox, more commonly referred to as a lockbox, may be of the type
that is secured with a combination lock, a key, or electronically. The electronic box (e-key) is the
most common.
Paragraph 8. Cooperation With Other Brokers: Back in Paragraph 5, we specified the total fee
charged by the broker. In this paragraph, we specify what the broker will pay another broker who
sells the property in a cooperative sale. The cooperative broker is also known as the “other broker.”
Chapter 4 Paragraph 8.A. MLS Participants: Note that this paragraph has two “tiers” of payment, one for
Working With a buyer’s agent, and another for a subagent. In many cases, the listing broker will pay the same to
Sellers either and will enter the same amount in A(1) and A(2). Other brokers will enter a different fee in
A(2).
The fee that the listing broker will pay a buyer’s agent and subagent is in the listing data in MLS.
Paragraphs 6, 7, and 8 open discussion and provide the opportunity for the agent to educate the
seller as to the various options available for marketing the property through the Multiple Listing
Service (MLS), the various showing options, and further discussion as to how the listing broker will
disburse commission funds to a cooperating broker if another broker is involved in the transaction.
During this discussion, the agent obtains the written permission required to enter property data
into the MLS and the written permission to place a key box device on the property.
Please note that not all sellers want information about their property in the MLS, and while MLS
input is not required, should the seller agree to have the property entered into the MLS, input will
be subject to MLS rules and guidelines as expressed in the agreement.
Paragraph 9. Intermediary: Addresses the all-important agency law requirements for written con-
sent to enter into an intermediary status, or not. In a practical sense, if the agent has not already
had a discussion with the seller about the various agency relationships that could develop, this is the
time.
It is an opportune time to explain statutory intermediary in a practical sense. For example, the
seller should know that without written consent, the broker cannot show the seller’s property to any
prospective buyers who may be represented by the broker’s firm.
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B. Scheduling Companies: Broker may engage the following companies to schedule appointments and to
authorize others to access the Property: .
C. Keybox: A keybox is a locked container placed on the Property that holds a key to the Property.
A keybox makes it more convenient for brokers, their associates, inspectors, appraisers, and
contractors to show, inspect, or repair the Property. The keybox is opened by a special
combination, key, or programmed device so that authorized persons may enter the Property, even
in Seller’s absence. Using a keybox will probably increase the number of showings, but involves
risks (for example, unauthorized entry, theft, property damage, or personal injury). Neither the
Association of REALTORS® nor MLS requires the use of a keybox.
(1) Broker  is  is not authorized to place a keybox on the Property.
(2) If a tenant occupies the Property at any time during this Listing, Seller will furnish Broker a written
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statement (for example, TXR No. 1411), signed by all tenants, authorizing the use of a keybox or
Broker may remove the keybox from the Property.
D. Liability and Indemnification: When authorizing access to the Property, Broker, other brokers, their
associates, any keybox provider, or any scheduling company are not responsible for personal injury or
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property loss to Seller or any other person. Seller assumes all risk of any loss, damage, or injury. Except
for a loss caused by Broker, Seller will indemnify and hold Broker harmless from any claim for
personal injury, property damage, or other loss.
8. COOPERATION WITH OTHER BROKERS: Broker will allow other brokers to show the Property to
prospective buyers. Broker will offer to pay the other broker a fee as described below if the other broker
procures a buyer that purchases the Property.
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A. MLS Participants: If the other broker is a participant in the MLS in which this Listing is filed, Broker will
offer to pay the other broker: Working With
Sellers
(1) if the other broker represents the buyer: % of the sales price or $ ; and
(2) if the other broker is a subagent: % of the sales price or $ .
B. Non-MLS Brokers: If the other broker is not a participant in the MLS in which this Listing is filed, Broker
will offer to pay the other broker:
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(1) if the other broker represents the buyer: % of the sales price or $ ; and
(2) if the other broker is a subagent: % of the sales price or $ .
9. INTERMEDIARY: (Check A or B only.)
 A. Intermediary Status: Broker may show the Property to interested prospective buyers who Broker
represents. If a prospective buyer who Broker represents offers to buy the Property, Seller authorizes
Broker to act as an intermediary and Broker will notify Seller that Broker will service the parties in
accordance with one of the following alternatives.
(1) If a prospective buyer who Broker represents is serviced by an associate other than the associate
servicing Seller under this Listing, Broker may notify Seller that Broker will: (a) appoint the associate
then servicing Seller to communicate with, carry out instructions of, and provide opinions and advice
during negotiations to Seller; and (b) appoint the associate then servicing the prospective buyer to
the prospective buyer for the same purpose.
(2) If a prospective buyer who Broker represents is serviced by the same associate who is servicing
Seller, Broker may notify Seller that Broker will: (a) appoint another associate to communicate with,
carry out instructions of, and provide opinions and advice during negotiations to the prospective
buyer; and (b) appoint the associate servicing the Seller under this Listing to the Seller for the same
purpose.
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Paragraph 9.B. No Intermediary Status: Check this box if the seller does not want the broker to
show the property to buyers that the broker represents.
This language is required under the Texas Real Estate License Act when a client gives Intermediary
consent.
Paragraph 10. Confidential Information: Remember that confidential information remains con-
fidential forever, subject to the limitations in this paragraph.
Chapter 4 Paragraph 11. Broker’s Authority: The broker has a wide range of authority in determining how
Working With to market the property. The broker promises to use reasonable efforts and act diligently to market
Sellers the property.
Paragraph 11.C. Remember that, under the special agency relationship created by this listing
agreement, the broker cannot sign or initial any document on behalf of the seller.
Paragraph 11.D. This is where the broker obtains written permission to advertise on social media.
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(3) Broker may notify Seller that Broker will make no appointments as described under this Paragraph
9A and, in such an event, the associate servicing the parties will act solely as Broker’s intermediary
representative, who may facilitate the transaction but will not render opinions or advice during
negotiations to either party.
 B. No Intermediary Status: Seller agrees that Broker will not show the Property to prospective buyers who
Broker represents.
Notice: If Broker acts as an intermediary under Paragraph 9A, Broker and Broker’s associates:
 may not disclose to the prospective buyer that Seller will accept a price less than the
asking price unless otherwise instructed in a separate writing by Seller;
 may not disclose to Seller that the prospective buyer will pay a price greater than the price
submitted in a written offer to Seller unless otherwise instructed in a separate writing by
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the prospective buyer;
 may not disclose any confidential information or any information Seller or the prospective
buyer specifically instructs Broker in writing not to disclose unless otherwise instructed
in a separate writing by the respective party or required to disclose the information by the
Real Estate License Act or a court order or if the information materially relates to the
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condition of the property;
 may not treat a party to the transaction dishonestly; and
 may not violate the Real Estate License Act.
10. CONFIDENTIAL INFORMATION: During this Listing or after it ends, Broker may not knowingly disclose
information obtained in confidence from Seller except as authorized by Seller or required by law. Broker may
not disclose to Seller any confidential information regarding any other person Broker represents or previously
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represented except as required by law. Chapter 4
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11. BROKER’S AUTHORITY: Sellers
A. Broker will use reasonable efforts and act diligently to market the Property for sale, procure a buyer, and
negotiate the sale of the Property.
B. If box 6A(1) is checked, Broker is authorized to display this Listing on the Internet without limitation unless
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one of the following is checked:
 (1) Seller does not want this Listing to be displayed on the Internet.
 (2) Seller does not want the address of the Property to be displayed on the Internet.
Notice: Seller understands and acknowledges that, if box 11B(1) is checked, consumers who conduct
searches for listings on the Internet will not see information about this Listing in response to their search.
C. Broker is authorized to market the Property with the following financing options:
 (1) Conventional  (5) Texas Veterans Land Program

 (2) VA  (6) Owner Financing
 (3) FHA  (7) Other
 (4) Cash
D. In accordance with applicable MLS rules as outlined in Paragraph 6, Broker may:

(1) advertise the Property by means and methods as Broker determines, including but not limited to
creating and placing advertisements with interior and exterior photographic and audio-visual images
of the Property and related information in any media and the Internet;
(2) place a “For Sale” sign on the Property and remove all other signs offering the Property for sale or
lease;
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Paragraph 12. Seller’s Representations: The seller makes some important representations in this
paragraph, and states that the property is not subject to encumbrances that limit the seller’s ability
to deliver sufficient title.
Paragraph 12.B. Emphasizes the importance that the seller is not currently engaged in a listing
agreement with another broker. Entering into agreements with more than one broker at a time could
result in a seller owing more than one commission.
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Paragraph 13. Seller’s Additional Promises: The seller agrees to cooperate with the broker in
marketing the property, including making the property available for showing at reasonable times.
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(3) furnish comparative marketing and sales information about other properties to prospective buyers;
(4) disseminate information about the Property to other brokers and to prospective buyers, including
applicable disclosures or notices that Seller is required to make under law or a contract;
(5) obtain information from any holder of a note secured by a lien on the Property;
(6) accept and deposit earnest money in trust in accordance with a contract for the sale of the Property;
(7) disclose the sales price and terms of sale to other brokers, appraisers, or other real estate
professionals;
(8) in response to inquiries from prospective buyers and other brokers, disclose whether the Seller is
considering more than one offer (Broker will not disclose the terms of any competing offer unless
specifically instructed by Seller);
(9) advertise, during or after this Listing ends, that Broker “sold” the Property; and
(10) place information about this Listing, the Property, and a transaction for the Property on an electronic
transaction platform (typically an Internet-based system where professionals related to the
transaction such as title companies, lenders, and others may receive, view, and input information).
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E. Broker is not authorized to execute any document in the name of or on behalf of Seller concerning the
Property.
12. SELLER’S REPRESENTATIONS: Except as provided by Paragraph 15, Seller represents that:
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A. Seller has fee simple title to and peaceable possession of the Property and all its improvements and
fixtures, unless rented, and the legal capacity to convey the Property;
B. Seller is not bound by a listing agreement with another broker for the sale, exchange, or lease of the
Property that is or will be in effect during this Listing;
C. any pool or spa and any required enclosures, fences, gates, and latches comply with all applicable laws
and ordinances;
D. no person or entity has any right to purchase, lease, or acquire the Property by an option, right of refusal,
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or other agreement; Chapter 4
E. Seller is current and not delinquent on all loans and all other financial obligations related to the Property, Working With
including but not limited to mortgages, home equity loans, home improvement loans, homeowner Sellers
association fees, and taxes, except
;
F. Seller is not aware of any liens or other encumbrances against the Property, except
;
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G. the Property is not subject to the jurisdiction of any court;

H. all information relating to the Property Seller provides to Broker is true and correct to the best of Seller’s
knowledge;
I. the name of any employer, relocation company, or other entity that provides benefits to Seller when
selling the Property is: ;
and
J. the Seller Listing Content, and the license granted to Broker for the Seller Listing Content, do not violate
or infringe upon the rights, including any copyright rights, of any person or entity.
13. SELLER’S ADDITIONAL PROMISES: Seller agrees to:

A. cooperate with Broker to facilitate the showing, marketing, and sale of the Property;
B. not rent or lease the Property during this Listing without Broker’s prior written approval;
C. not negotiate with any prospective buyer who may contact Seller directly, but refer all prospective buyers
to Broker;
D. not enter into a listing agreement with another broker for the sale, exchange, lease, or management of
the Property to become effective during this Listing without Broker’s prior written approval;
E. if box 6A(2) is checked, promptly inform Broker in the event Seller becomes aware that the Property has
been publicly marketed;
F. maintain any pool and all required enclosures in compliance with all applicable laws and ordinances;
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Sellers
Paragraph 15. Special Provisions: This paragraph is reserved for factual business details or
statements not addressed in the agreement, and for which there is no TREC-promulgated addendum,
lease, or other mandatory forms. Take special care when adding anything in Paragraph 15. Poorly
constructed provisions in this paragraph could be construed as the unlawful practice of law. The
listing broker should be clear and concise as to how his/her agents utilize this paragraph.
Paragraph 18. Attorney’s Fees: The prevailing party in a lawsuit has the right to recover reasonable
attorney’s fees and court costs.
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G. provide Broker with copies of any leases or rental agreements pertaining to the Property and advise
Broker of tenants moving in or out of the Property;
H. complete any disclosures or notices required by law or a contract to sell the Property; and
I. amend any applicable notices and disclosures if any material change occurs during this Listing.
14. LIMITATION OF LIABILITY:
A. If the Property is or becomes vacant during this Listing, Seller must notify Seller’s casualty insurance
company and request a “vacancy clause” to cover the Property. Broker is not responsible for the security
of the Property nor for inspecting the Property on any periodic basis.
B. Broker is not responsible or liable in any manner for personal injury to any person or for loss or
damage to any person’s real or personal property resulting from any act or omission not caused
by Broker’s negligence, including but not limited to injuries or damages caused by:
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(1) other brokers, their associates, inspectors, appraisers, and contractors who are authorized to
access the Property;
(2) other brokers or their associates who may have information about the Property on their
websites;
(3) acts of third parties (for example, vandalism or theft);
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(4) freezing water pipes;
(5) a dangerous condition on the Property;
(6) the Property’s non-compliance with any law or ordinance; or
(7) Seller, negligently or otherwise.
C. Seller agrees to protect, defend, indemnify, and hold Broker harmless from any damage, costs,
attorney’s fees, and expenses that:
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(1) are caused by Seller, negligently or otherwise; Chapter 4
(2) arise from Seller’s failure to disclose any material or relevant information about the Property; Working With
or Sellers
(3) are caused by Seller giving incorrect information to any person.
15. SPECIAL PROVISIONS:

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16. DEFAULT: If Seller breaches this Listing, Seller is in default and will be liable to Broker for the amount of
the Broker’s compensation specified in Paragraph 5A and any other compensation Broker is entitled to
receive under this Listing. If a sales price is not determinable in the event of an exchange or breach of this
Listing, the Listing Price will be the sales price for purposes of computing compensation. If Broker breaches
this Listing, Broker is in default and Seller may exercise any remedy at law.
17. MEDIATION: The parties agree to negotiate in good faith in an effort to resolve any dispute related to this
Listing that may arise between the parties. If the dispute cannot be resolved by negotiation, the dispute will
be submitted to mediation. The parties to the dispute will choose a mutually acceptable mediator and will
share the cost of mediation equally.
18. ATTORNEY’S FEES: If Seller or Broker is a prevailing party in any legal proceeding brought as a result of
a dispute under this Listing or any transaction related to or contemplated by this Listing, such party will be
entitled to recover from the non-prevailing party all costs of such proceeding and reasonable attorney’s fees.
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Paragraph 19. Addenda and Other Documents: Check the appropriate boxes as needed. Notice
that the Information About Brokerage Services addenda is pre-selected.
Paragraph 20.A. Entire Agreement: When completing this form, ensure that it includes the entire
agreement and that there are no significant oral promises that you have not included in the form.
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Sellers
Paragraph 21. Lists important additional notices involving brokerage fees, Fair Housing laws,
and other items that could trigger the need for additional addenda or disclosures; specifically, any
property built prior to 1978 requires the seller to complete the Lead-Based Paint and Lead-Based
Hazards Addendum by Federal law.
Paragraph 21.A. The client and the broker always negotiate the broker’s fees.
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19. ADDENDA AND OTHER DOCUMENTS: Addenda that are part of this Listing and other documents that
Seller may need to provide are:
X A. Information About Brokerage Services;
 B. Seller Disclosure Notice (§5.008, Texas Property Code);
 C. Addendum for Seller’s Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards
(required if Property was built before 1978);
 D. Residential Real Property Affidavit (T-47 Affidavit; related to existing survey);
 E. MUD, Water District, or Statutory Tax District Disclosure Notice (Chapter 49, Texas Water Code);
 F. Request for Information from an Owners’ Association;
 G. Request for Mortgage Information;
 H. Information about Mineral Clauses in Contract Forms;
 I. Information about On-Site Sewer Facility;
 J. Information about Property Insurance for a Buyer or Seller;
 K. Information about Special Flood Hazard Areas;
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 L. Condominium Addendum to Listing;
 M. Keybox Authorization by Tenant;
 N. Seller’s Authorization to Release and Advertise Certain Information; and
 O.
20. AGREEMENT OF PARTIES:

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A. Entire Agreement: This Listing is the entire agreement of the parties and may not be changed except by
written agreement.
B. Assignability: Neither party may assign this Listing without the written consent of the other party.
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Chapter 4
C. Binding Effect: Seller’s obligation to pay Broker earned compensation is binding upon Seller and Seller’s Working With
heirs, administrators, executors, successors, and permitted assignees. Sellers
D. Joint and Several: All Sellers executing this Listing are jointly and severally liable for the performance of
all its terms.
E. Governing Law: Texas law governs the interpretation, validity, performance, and enforcement of this
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Listing.
F. Severability: If a court finds any clause in this Listing invalid or unenforceable, the remainder of this
Listing will not be affected and all other provisions of this Listing will remain valid and enforceable.
G. Notices: Notices between the parties must be in writing and are effective when sent to the receiving
party’s address, fax, or e-mail address specified in Paragraph 1.
21. ADDITIONAL NOTICES:
A. Broker’s compensation or the sharing of compensation between brokers is not fixed, controlled,
recommended, suggested, or maintained by the Association of REALTORS®, MLS, or any listing
service.
B. In accordance with fair housing laws and the National Association of REALTORS® Code of Ethics,
Broker’s services must be provided and the Property must be shown and made available
to all persons without regard to race, color, religion, national origin, sex, disability, familial status,
sexual orientation, or gender identity. Local ordinances may provide for additional protected
classes (for example, creed, status as a student, marital status, or age).
163

Paragraph 21.D. After entering this listing in MLS, consider delivering a printout to the seller.
Have the seller sign a copy of the printout, acknowledging that what is in the MLS accurately
describes the property. Taking this extra step shows the seller that you are diligent. It could also
limit your liability in the event of errors.
Paragraph 21.E. Most property theft is a “crime of opportunity” when tempting objects are left out
in plain view. These items should be secured and out of sight.
Chapter 4
Working With
Sellers
Finally, the listing agreement requires the signature of every owner of the property. If any signature
is missing, the listing is not in effect.
The agent signs the listing agreement on behalf of his or her sponsoring broker, which illustrates the
general agency relationship between the broker and the sponsored agent; the sponsored agent has
the authority to bind his or her broker in a general agency relationship.
A copy of the listing agreement should be promptly provided to the seller to comply with the
TRELA.
164

C. Broker advises Seller to contact any mortgage lender or other lien holder to obtain information
regarding payoff amounts for any existing mortgages or liens on the Property.
D. Broker advises Seller to review the information Broker submits to an MLS or other listing service.
E. Broker advises Seller to remove or secure jewelry, prescription drugs, other valuables, firearms
and any other weapons.
F. Broker advises Seller to consult an attorney before using any type of surveillance device in the
Property to record or otherwise monitor prospective buyers without their knowledge or consent.
Seller should be aware that a prospective buyer might photograph or otherwise record the
Property without Seller’s knowledge or consent.
G. Statutes or ordinances may regulate certain items on the Property (for example, swimming pools
and septic systems). Non-compliance with the statutes or ordinances may delay a transaction
e
and may result in fines, penalties, and liability to Seller.
H. If the Property was built before 1978, Federal law requires the Seller to: (1) provide the buyer with
the federally approved pamphlet on lead poisoning prevention; (2) disclose the presence of any
known lead-based paint or lead-based paint hazards in the Property; (3) deliver all records and
pl
reports to the buyer related to such paint or hazards; and (4) provide the buyer a period up to 10
days to have the Property inspected for such paint or hazards.
I. If Seller is a “foreign person” as defined by federal law, a buyer may be required to withhold
certain amounts from the sales proceeds and deliver the same to the Internal Revenue Service to
comply with applicable tax law. A “foreign person” is a: (1) nonresident alien individual; (2)
foreign corporation that has not made an election under section 897(i) of the Internal Revenue
Code to be treated as a domestic corporation; or (3) foreign partnership, trust, or estate. The
m
definition does not include a resident alien individual. Seller notifies Broker that Seller  is Chapter 4
 is not a “foreign person” as defined by federal law. If Seller is unsure whether Seller qualifies
as a “foreign person” under federal law, Broker advises Seller to consult a tax professional or an Working With
Sellers
attorney.
J. Broker advises Seller to refrain from transmitting personal information, such as bank account
numbers or other financial information, via unsecured email or other electronic communication
to reduce risk of wire fraud.
sa
K. Broker cannot give legal advice. READ THIS LISTING CAREFULLY. If you do not understand
the effect of this Listing, consult an attorney BEFORE signing.
Broker’s Printed Name License No. Seller’s Printed Name
 Broker’s Signature Date Seller’s Signature Date

 Broker’s Associate’s Signature, as an authorized
agent of Broker
_______________________________________________
Broker’s Associate’s Printed Name, if applicable Seller’s Printed Name
Seller’s Signature Date
165

ENTER THE LISTING INTO THE MLS
Most MLS systems have an approved format for the required sequence and fields that need to be
entered into the MLS system before a new listing is active. Each broker will have required proce-
dures and documents that you must complete before you, or the staff can enter the data. Again,
practice these steps and forms, and the time invested will expedite your listing processes in the
future.
You must know the MLS rules and policies that govern your board. You must know the essential
rules, such as how long you can have a signed exclusive right to sell before you must input it into
the MLS, and how quickly you have to note status changes, such as “under contract.” You will be
required to take an orientation at your local board, and it is highly suggested to take all of the MLS
and related courses.
The data in the MLS is used by listing agents to encourage other agents to show their listings to
buyers, thereby increasing the buyer pool. Brokers are also required to post the closing data (sales
data), which will help agents determine price and aid appraisers in determining value.
Not all MLS systems are run by the local REALTOR® board; some are run by private, third-party
vendors.
The MLS system not only increases the buying pool locally, but the data from the MLS is sent to
syndicated sites like Zillow and REALTOR.com, so buyers and agents from all over the country
can find it. While these sites are increasingly popular with buyers, agents have access to the most
current data on the MLS.
RECEIVE A CONTRACT OFFER ON YOUR LISTING

Chapter 4 You receive an offer on your seller’s listing. Contact the seller to set a time to present the offer, run
Working With the current comparables, and review the numbers. Find out all that you can about the buyers to
Sellers present a clear picture to your sellers.
You should present the buyers in a positive light; however, remember whose interests you are looking
out for - the seller.
NEGOTIATE THE OFFER

If the offer comes in on the lower end, the sellers will likely counteroffer. The current comparable
information you pulled from the MLS will help inform the counteroffer. If you receive multiple
offers, you must present all offers to your clients promptly, in the order in which they were submitted.
Additionally, inform the other parties of your procedure for handling multiple offers, and keep them
in the loop. The price will not be the only thing you will negotiate on behalf of your sellers; other
important terms like earnest money, the closing date, potential contingencies, and the purchasing
strength of the buyer can influence your clients’ final decision. A strong buyer is particularly attrac-
tive in a situation with multiple offers.
COUNTEROFFERS (SELLERS)
Presenting a seller’s counteroffer is another important negotiating skill. Keep the following in mind
when presenting a counteroffer to sellers:
•
Think of the big picture. Remind sellers that many times the value of concessions tends to be
less costly than more days on the market.
•
If the price is reasonable, prevent the seller from continuing to negotiate just for the sake of
negotiating. Remind them that a counteroffer is an entirely new offer that makes the first offer
non-binding. They could lose the buyers if the buyers choose to walk away from the negotia-
166 tion, especially if they perceive the sellers as unreasonable.
• Work to put a low-priced offer into perspective if it is within the market range. More time on
the market will cost your seller more money.
YOUR SELLERS ACCEPT A CONTRACT

Once an offer is accepted, be sure that the contract contains all of the negotiated terms. Have your
sellers sign the final contract. Then, send a copy to all parties and follow all or your company’s proce-
dures for paperwork. Your notes and record keeping are critical at this stage. Keep a list of timelines
and deadlines, and who is responsible for meeting them. No one wants surprises; however, if they
arise, then handle them with ease.
BETWEEN CONTRACT AND CLOSING

The next seven to ten days after acceptance are a busy period for all parties involved in the contract.
The buyers will have the home inspected by a licensed inspector. The buyer’s agent will present any
items of concern, which you will then present to the seller. The negotiating continues.
The lender will send out an appraiser to assess the value for loan approval. Follow the potential con-
tingencies throughout the process and be available to assist in any way.
GOING TO THE CLOSING

Stay in contact with the closer to ensure that the process is going smoothly. Most closings are gener-
ally positive experiences. If tensions arise due to unexpected delays or other issues, remain calm and
professional and offer to help if possible.
Typically, the commission checks will be cut to the brokers, and agents turn in their paperwork at
the office and wait for the company account to disburse the commissions. Find out the turnaround
time of your office, and be patient.
Chapter 4
FOLLOW-UP AFTER THE CLOSING Working With
Follow up after the closing. You have now developed a working relationship with several key people Sellers
in your field. Send Thank You cards to each one.
Do not forget your sellers. Make sure that you send them a Thank You card or a small closing gift to
let them know that you appreciate their business and would love to represent them again.
167

CHAPTER 4 QUIZ
1. Who is the procuring cause of a real estate transaction?
a. The listing broker

b. The first broker who sells the property
c. The first broker to sue for commission
d. The mortgage originator
2. Which statement regarding net listings is FALSE?
a. Net listings are considered unethical and are illegal in Texas.

b. Net listings are the preferred listing type amongst brokers.
c. Net listings always produce the best price and brokerage service for the seller.
d. All of these statements are false.
3. The act of removing outdated wallpaper and painting over unusual wall colors is referred to as
_____.
a. Dynamizing
b. Repairing
c. Neutralizing
d. Decluttering
Chapter 4
Working With
Sellers
168

CHAPTER 5
The Professional
Codes of Ethics

Chapter 5: The Professional Codes of Ethics
ethics morals law
fiduciary integrity competence
Consumer Protection Notice discrimination advisory letter
code of ethics
PRE-TEST
1. ______ Code of Ethics a. an individual’s personal beliefs beyond what

society says
2. ______ Fiduciary b. what a society deems as correct
c. a real estate broker or sales agents, while acting as

3. ______ Ethics an agent for another
d. an important guide to business behavior

Chapter 5 4. ______ Morals
The Professional e. a disciplinary action that can be warranted by the
Codes of Ethics grievance panel
5. ______ Reprimand
1. d 2. c 3. b 4. a 5. e
Answers to Pre-test
170

DISTINCTIONS BETWEEN LAW, ETHICS, AND MORALS
A ll license holders are required to adhere to the provisions of the Texas Real Estate License Act
(TRELA) and to the Rules of the Texas Real Estate Commission (TREC). The Act and the rules
describe a wide range of lawful and unlawful behavior. The fact that brokers do business in an ethical
manner requires far more than a strict application of rules and laws. A business practice may not be
ethical, even if it is legal.
Today, many define ethics as the way that society thinks about and evaluates the decisions and
actions of others within the constraints of what that society deems as “correct.” In other words, a
society or group defines the rules of conduct, and as members of that group, individuals must think
about how to act, then act accordingly. Many professional organizations have strict codes of ethics
that all members must adhere to or face the consequences.
Ethics are especially important in the business world, and many large companies have adopted their
own “corporate culture” that addresses the manner in which an employee, as a representative of that
company, should conduct himself or herself. Refusing to comply with that corporate culture could
endanger the employee’s position in the company.
Morals, on the other hand, are an individual’s personal values and beliefs going beyond what society
deems as the established norm. Many people derive their morals from the religion that they practice,
which spells out for them, specifically, what is right or wrong, good or evil in the eyes of a higher
power. It is, therefore, possible for people in a society to have different morals, depending on which
religion they identify with, or in the absence of religion, which political system or value system they
subscribe to. Essentially, morals look to an authority higher than that of common society for the
right way to behave.
Chapter 5
How does law fit in? Law is inherently connected to ethics but is not the same thing. Governments The Professional
enact legislation to enforce the minimum ethics of a society and to regulate the behavior and conduct Codes of Ethics
of its individuals, creating order among the chaos. Laws do not necessarily reflect the teachings of a
supreme being or adhere to the morals of some members of the society; something can be legal even
if it is considered immoral by some. One need only look to some of the more hotly debated topics in
the news to see that there is often a disparity between morality and the law.
In the world of real estate, there are many ethical concerns that an agent must take into consider-
ation. Depending on the state in which an agent practices, and to which professional organizations
that agent belongs, there are many canons of professional ethics that the agent must adhere to. All
states in the Union have a minimum code of ethics, which license holders are required to uphold or
risk suspension or revocation of license.
Our business conduct is influenced by many factors, including:
• Our own sense of morality (right vs. wrong)
• Federal, state, and local law
• Ethical standards set within our profession
An individual’s perception of right and wrong is established at a very young age. Most experts agree
that a person has developed that sense prior to the age of ten.
171

The factors that shape a person’s sense of morality are almost too numerous to list but include the
influence of:
•
Immediate family
•
Religious training
•
School experience
Most people have a good understanding of what is right or wrong. Recognizing and navigating con-
flicting moral dilemmas poses the greatest challenge to license holders. What might seem right for
one party to a transaction may seem less so for the other.
FEDERAL AND STATE LAW RELATING TO CONDUCT

Major federal laws applicable to the conduct of license holders include:
Federal Fair Housing Act - covers the sale and rental of most housing. No one may take any of the
following actions based on race, color, national origin, religion, sex, familial status, or handicap in
the sale or rental of housing:
• Refuse to rent or sell • Refuse to negotiate for • Make housing unavailable

housing housing
• Deny availability of housing • Set different terms, condi- • Provide different housing
tions or privileges for sale or services or facilities
Chapter 5 rental of a dwelling
The Professional
Codes of Ethics • Falsely deny that housing is • For profit, persuade owners • Deny anyone access to or
available for inspection, sale, to sell or rent (blockbusting) membership in a facility or
or rental service (such as a multiple
listing service) related to the
sale or rental of housing
Americans With Disabilities Act (ADA) - prohibits discrimination against those with disabilities
by denying them the full and equal enjoyment of goods, facilities, accommodations, services and
privileges. When readily achievable, the ADA requires the removal of architectural and communi-
cation barriers. The ADA affects almost all public accommodations. Single-family homes, private
clubs, historic buildings, and religious organizations are exempt from the ADA.
ruth In Lending Act (TILA)- protects consumers by providing them with complete information
T
regarding loans and the actual cost of borrowing, including interest and all other charges associ-
ated with the loan. The law closely regulates the advertising of financial terms. In addition, the law
requires lenders to provide the borrower with a full disclosure of the loan costs within three business
days of loan application.
eal Estate Settlement Procedures Act (RESPA) - ensures that consumers throughout the nation
R
are provided with more helpful information about the cost of the mortgage settlement and are
protected from unnecessarily high settlement charges caused by certain abusive practices. The Act
requires mortgage loan originators and servicers of residential loans to provide borrowers with timely
disclosures of the nature and costs of the real estate settlement process. RESPA also prohibits abu-
sive practices such as undisclosed referral fees and kickbacks. RESPA is applicable to all “federally
related” mortgage loans.
172

Securities Act of 1933 - prohibits deceit in the sale of securities and provides for the complete and
accurate disclosure of all information to potential investors. Securities can include real estate invest-
ments as there is an expectation of profit. The sale or offering of securities must be registered with
the Securities and Exchange Commission (SEC) and all material information must be disclosed to
shareholders.
Sherman Anti-Trust Act - prevents any combination in restraint of trade. Commission rates must
always be a matter of negotiation between the broker and the client. Any hint that there is a “stan-
dard” or “going rate’ for commissions in a given market area could be evidence of violation and
restraint of trade. Any attempt to boycott a discount real estate broker is a violation. Attempts to
limit competition by allocating markets or customers is also a violation. Any attempt by a group
of brokers or brokerage firms to set the commission rates in their area would be considered illegal
price-fixing.
Texas Free Enterprise and Anti-Trust Act - prohibits any attempt to fix prices, limit competition
by assigning market areas, or boycotting of discount brokers. An illegal boycott is an agreement
among two or more competitors not to do business with another competitor for the purpose of
inducing the other competitor to change its business practices. The state law is enforced by the Texas
Attorney General.
All of these federal and state laws were designed and enacted to protect consumers and their rights.
If license holders engage in practices that violate these laws, they are subject to penalties, including
fines, actual damages, and attorney fees as well as suspension or revocation of membership to trade
associations and action by their real estate commission.
CANONS OF PROFESSIONAL ETHICS AND CONDUCT

All license holders are required to adhere to the provisions of the Texas Real Estate License Act, Chapter 5
and to the Rules of the Texas Real Estate Commission. The Act and the Rules describe a wide range The Professional
of lawful and unlawful behavior. The fact that brokers do business in an ethical manner requires far Codes of Ethics
more than a strict application of rules and laws. Remember, a business practice may not be ethical,
even if it is legal.
The Texas Real Estate Commission has included the Canons of Professional Ethics and Conduct
(Chapter 531 of TREC Rules) for real estate license holders in the Rules of the Commission.
CANON 1. FIDELITY
A real estate broker or salesperson, while acting as an agent for another is a fiduciary. Special
obligations are imposed when such fiduciary relationships are created. They demand:
• That the primary duty of the real estate agent is to represent the interests of the agent’s client,
and the agent’s position, in this respect, should be clear to all parties concerned in a real estate
transaction, that however, the agent, in performing duties to the client, shall treat other par-
ties to a transaction fairly;
• That the real estate agent be faithful and observant to trust placed in the agent, and be
scrupulous and meticulous in performing the agent’s functions;
• That the real estate agent place no personal interest above that of the agent’s client.
Absent any specific definition in a set of rules or statute, the common definition of the word or term
normally applies. Scrupulously is defined as acting in strict regard for what is considered right or
proper; punctiliously exact; painstaking. Meticulously is defined as marked by extreme or excessive
care in the consideration or treatment of details; careful. Therefore, one can conclude by these defi-
nitions that the license holder must perform his or her duties in a way that exhibits a knowledge of
what is right and appropriate under the circumstances and with care about details. 173

CANON 2. INTEGRITY
A real estate broker or salesperson has a special obligation to exercise integrity in the discharge of
the license holder’s responsibilities, including employment of prudence and caution so as to avoid
misrepresentation, in any way, by acts of commission or omission.
CANON 3. COMPETENCY
It is the obligation of a license holder to be knowledgeable as a real estate brokerage practitioner.
The license holder must:
1. be informed on local market issues and conditions affecting real estate in the geographic
area where a license holder provides services to a client;
2. be informed on national, state, and local issues and developments in the real estate indus-
try;
3. exercise judgment and skill in the performance of brokerage activities;
4. be educated in the characteristics involved in the specific type of real estate being brokered
by others.
In determining whether they are maintaining competence, license holders might ask the
following:
• What are my strengths and deficiencies?
• Do I attend classes to improve my services to my clients or customers? How often?

Chapter 5
The Professional • What resources are available to help me maintain my competency?
Codes of Ethics
• Do I keep abreast of market conditions in the area in which I practice? How?
• Am I aware of trends in real estate practices? How do I usually find out about these trends?
• Do I read Real Estate Commission and trade publications? Which ones? How do they help
me maintain my competence?
• Can I identify local, state and national issues that are currently under development or
consideration?
CANON 4. CONSUMER INFORMATION

(a) The Commission adopts by reference the Consumer Protection Notice TREC No. CN 1-3. This
document is published by and available from the Texas Real Estate Commission, P.O. Box 12188,
Austin, Texas 78711-2188, www.trec.texas.gov.
(b) Each active real estate broker and sales agent shall provide the notice adopted under subsection
(a) by:
(1) displaying it in a readily noticeable location in each place of business the broker maintains;
and
(2) providing a link to it in a readily noticeable place on the homepage of each business website,
labeled:
(A) “Texas Real Estate Commission Consumer Protection Notice”, in at least 10 point font; or
(B) “TREC Consumer Protection Notice”, in at least 12 point font.
(c) For purposes of this section, business website means a website on the internet that:
174

(1) is accessible to the public;
(2) contains information about a license holder’s real estate brokerage services; and
(3) the content of the website is controlled by the license holder.
(d) For purposes of providing the link required under subsection (b)(2) on a social media platform,
the link may be located on:
(1) the account holder profile; or
(2) a separate page or website through a direct link from the social media platform or account
holder profile.
TREC published the following facts and TIPS regarding the Consumer Protection Notice in its
Broker Responsibility 3.1 course:
CONSUMER PROTECTION NOTICE FAQS

• The Consumer Protection Notice is required to be posted at your place of business AND on
your website. This includes a business Facebook page.
• The Consumer Protection Notice cannot be altered in any way. Do not change the font or add
your logo to the notice.
• The link to the Consumer Notice must read, “Texas Real Estate Commission Consumer Pro-
tection Notice”, and be in at least 10-point font in a readily noticeable place on your homepage.
TIPS Chapter 5
• Post a link to the Consumer Protection Notice, labeled “Texas Real Estate Commission Con- The Professional
sumer Protection Notice on your business website homepage, in a readily noticeable place in Codes of Ethics
at least 10-point font.
• Post an image on your website of the completed Consumer Protection Notice and label the
image “Texas Real Estate Commission Consumer Protection Notice.”
• If you are limited to the amount of text you can use in a link on your business website, you may
abbreviate the link to “TREC Consumer Notice.”
CANON 5. DISCRIMINATORY PRACTICES

(a) No real estate license holder shall inquire about, respond to or facilitate inquiries about, or make a
disclosure of an owner, previous or current occupant, potential purchaser, lessor, or potential lessee of
real property which indicates or is intended to indicate any preference, limitation, or discrimination
based on the following:
(1) race;
(2) color;
(3) religion;
(4) sex;
(5) national origin;
(6) ancestry;
(7) familial status; or 175

(8) disability.
(b) For the purpose of this section, disability includes AIDS, HIV-related illnesses, or HIV
infection as defined by the Centers for Disease Control of the United States Public Health Service.
Minimum levels of service are spelled out by TREC and required of real estate brokers and their
agents. Whether you are a discount broker or a co-broker with a discount broker, you need to
understand these four levels of minimum service.
1. Put the interest of the client above all others including the broker’s own interests.
2. Inform the client of material information about the property or the transaction received by
the broker.
3. Answer the client’s questions and present any offer to or counteroffer from the client.
4. Treat all parties to a real estate transaction honestly and fairly.
Of note, brokers who sponsor a sales agent, or the broker of an entity, or those authorized to super-
vise other license holders must be available to offer advice for the agents under the brokerage. The
broker should not be an “undercover broker.”
Chapter 5
The Professional
Codes of Ethics
176

TREC Complaints
A person may file a complaint with TREC against a real estate license holder if the person believes
the license holder violated the Texas Real Estate License Act (TRELA). If TREC has jurisdic-
tion over the complaint, it will typically investigate the allegations by interviewing the parties and
witnesses and gathering relevant information. After review, TREC’s enforcement division will
notify the license holder if it intends to initiate disciplinary proceedings. After a hearing or other
settlement procedure, it will render a decision. If the evidence establishes a violation, TREC may
impose a reprimand, suspension of the license, revocation of the license, a fine, probation, or any
combination.
Complaint Priorities
TREC is required to maintain a system to act promptly and efficiently on complaints and must
maintain a file on each complaint. TREC gives priority to the investigation of complaints filed by a
consumer and an enforcement case resulting from the consumer complaint. TRELA requires that
TREC assign priorities and investigate complaints using a risk-based approach based on the:
• Degree of potential harm to the consumer,
• Potential for immediate harm to the consumer,
• Overall severity of the allegations and the complaint,
• Number of license holders potentially involved in the complaint,
• Previous complaint history of the license holder, and
• Number of potential violations in the complaint. Chapter 5

The Professional
Refund to Consumer Codes of Ethics
TREC may order a license holder to pay a refund to a consumer as provided by an agreement result-
ing from an informal settlement conference or an enforcement order, in addition to imposing an
administrative penalty, suspension, revocation or other sanction.
TREC Advisory Letters

When appropriate, TREC may close a complaint file by issuing an advisory letter to a license holder.
This is generally appropriate in more technical matters, when the provision that was violated is new,
or when evidentiary or procedural problems exist, such as the unavailability of witnesses. An advi-
sory letter is not formal disciplinary action. Instead, the advisory letter is a notification that there
were items revealed in the investigation that do not warrant disciplinary action but, if not corrected,
could lead to further complaints and, ultimately, disciplinary action.
Informal Proceedings
TREC is also required to adopt procedures governing informal disposition of contested cases. An
informal disposition must provide the complainant and the license holder the opportunity to be
heard. The proceeding requires the presence of a public member of TREC for a case involving a
consumer complaint, and at least two TREC staff members with experience in the regulatory area
that is the subject of the proceeding.
Temporary Suspension
TREC’s presiding officer, for a case involving a consumer, is required to appoint a disciplinary panel,
consisting of three Commission members to determine whether a person’s license to practice should
be suspended temporarily. If the disciplinary panel determines that the license holder constitutes a
threat to the public by continuing to practice, or the license holder constitutes a continuing threat to
the public welfare, the panel will temporarily suspend that person’s license.
177

THE TEXAS REAL ESTATE COMMISSION (TREC) REGULATES
REAL ESTATE BROKERS AND SALES AGENTS, REAL ESTATE INSPECTORS,
HOME WARRANTY COMPANIES, EASEMENT AND RIGHT‐OF‐WAY AGENTS,
AND TIMESHARE INTEREST PROVIDERS

YOU CAN FIND MORE INFORMATION AND
CHECK THE STATUS OF A LICENSE HOLDER AT
WWW.TREC.TEXAS.GOV
YOU CAN SEND A COMPLAINT AGAINST A LICENSE HOLDER TO TREC
A COMPLAINT FORM IS AVAILABLE ON THE TREC WEBSITE

TREC ADMINISTERS TWO RECOVERY FUNDS WHICH MAY BE USED TO SATISFY A CIVIL
COURT JUDGMENT AGAINST A BROKER, SALES AGENT, REAL ESTATE INSPECTOR, OR
EASEMENT OR RIGHT‐OF‐WAY AGENT, IF CERTAIN REQUIREMENTS ARE MET.

Chapter 5 REAL ESTATE INSPECTORS ARE REQUIRED TO MAINTAIN ERRORS AND OMISSIONS
The Professional INSURANCE TO COVER LOSSES ARISING FROM THE PERFORMANCE OF A REAL ESTATE
Codes of Ethics
INSPECTION IN A NEGLIGENT OR INCOMPETENT MANNER.

PLEASE NOTE: INSPECTORS MAY LIMIT LIABILITY THROUGH PROVISIONS IN THE CONTRACT
OR INSPECTION AGREEMENT BETWEEN THE INSPECTOR AND THEIR CLIENTS. PLEASE BE
SURE TO READ ANY CONTRACT OR AGREEMENT CAREFULLY. IF YOU DO NOT UNDERSTAND
ANY TERMS OR PROVISIONS, CONSULT AN ATTORNEY.
TEXAS REAL ESTATE COMMISSION

P.O. BOX 12188
AUSTIN, TEXAS 78711-2188
(512) 936-3000
178

MINIMUM ETHICAL STANDARDS
Ethics refers to standards of behavior that tell us how human beings should act in the many situa-
tions in which they find themselves as friends, parents, children, citizens, business people, teachers,
and professionals.
Which of the following thoughts best reflects the way that you view ethics?
“Ethics has to do with what my feelings tell me is right or wrong.”

“Ethics has to do with my religious beliefs.”
“Being ethical is doing what the law requires.”
“Ethics consists of the standards of behavior our society accepts.”
Each statement defines ethics a little differently, but they exhibit that, at the core, ethics is about
what is right or wrong.
Individuals who work for businesses make decisions every day, and their actions can impact the lives
of many other people. When business people make decisions that are not ethical, many people can
be hurt (including employees, customers, and members of the general population) as well as the
business itself.
Companies that are operated by people who do not choose to do what is right are often entities that
do not survive for the long term. Often, making business decisions that are counter to what is right
may result in short-term profit, but lead to the eventual demise of the organization.
Chapter 5
Good ethics are good business. With so many reasons why ethics are important, it is easy to see why cre- The Professional
ating an ethical culture is something that many companies are focusing on. Organizations that are Codes of Ethics
committed to long-term success recognize and realize that creating a culture where ethical behaviors
are rewarded and encouraged is the ultimate key to survival today and growth in the future.
It is clear that minimally adhering to state and federal law in the practice of real estate is not suf-
ficient. A practice can be legal and still not be ethical. The duty to disclose material facts about a
property and all aspects of a transaction requires far more than merely following the letter of the law.
179

ACTIVITY - REAL ETHICAL DILEMMAS IN REAL ESTATE
Directions: Read the following short ethical dilemmas and answer the questions that follow.
Dilemma 1
Tanya is a second-year real estate agent who is representing sellers Max and Cynthia in the sale of
their 4 BD, 2 BTH home. Max and Cynthia are currently going through a divorce and are selling
the home that they had purchased together. They have agreed to split the proceeds because their
household incomes will soon be half of what they were when they were married, and neither party
can afford to keep the house. They have requested that Tanya keep the divorce quiet because they do
not want the neighbors to find out.
Tanya knows that the former couple is motivated to sell, and arranges an open house for Saturday
and Sunday. Several people viewed the property, all complimenting the hard work that went into
remodeling the 70-year-old home. At the end of the second day of the open house, there have been
no offers.
Tanya continues to market the property with no takers. All the while, Max and Cindy are getting
nervous that they will not be able to sell the house. Tanya holds another open house three weeks later
and encounters Adam. Adam seems very interested in the property, asking all the right questions
and putting off buying signals. He finally asks Tanya why the sellers would want to leave such an
amazing home that they so lovingly remodeled.
Tanya knows from experience that Adam is fishing for a reason not to put in an offer on the property.
If he thinks that something is wrong with the property, he will walk away. Tanya can put his fears to
rest and get the couple an offer on the house if she reveals that they are divorcing and are desperate
Chapter 5 to sell.
The Professional
Codes of Ethics 1. What should Tanya do?
a. T anya should tell Adam that the sellers are going through a tough divorce and are
motivated to sell the home because neither one of them wants to take on the mortgage
note.
b. Tanya should tell Adam to mind his own business.
c. Tanya should tell Adam that she represents the seller.
d. Tanya should lie and tell Adam that the original owners bought the home to remodel
and then flip.
180

Dilemma 2
Myron is a real estate sales agent who has been in the business for 15 years. He has a lot of
experience in residential sales, representing both buyers and sellers. He is an excellent negotiator
and has obtained several designations, including the Certified Negotiation Expert (CNE®), and the
Accredited Buyer’s Representative (ABR®).
Myron is typically in the 1st quartile of agents at his brokerage, but lately, his numbers have been
slipping. He attends a marketing seminar and is inspired to reinvent himself. He chooses a new
slogan for his marketing materials: “I, Myron Santiago, the Number One Real Estate Agent in the
Southwest, guarantee I will sell your house!”
Myron prints the statement on his business cards, website, and flyers. He even takes out a billboard
at the intersection of two busy roads.
2. Is there anything wrong with Myron’s new marketing plan?
a. N o. If Myron believes that he is the number one real estate agent in the Southwest,
then he can advertise himself as such.
b. Yes. Myron’s statement that he is the “Number one real estate agent in the Southwest”
is untrue, given that he is only in the 1st quartile of agents at his brokerage. Also,
agents should refrain from using the term “guarantee,” as it is misleading.
3. What if Myron were to change his slogan to: “Let Myron Santiago, an experienced,
knowledgeable, real estate agent, sell your house for you”?
a. This is also false advertising because Myron cannot prove that he is knowledgeable. Chapter 5
b. This is an acceptable slogan because Myron makes no false pronouncements and does The Professional
not make any guarantees. Codes of Ethics
181

Dilemma 3
Desmond is an agent whose listing recently sold to Kylie and Sherman. Kylie made it known upfront
to anyone that would listen that she did not want to live in a home in which a death had occurred for
fear it would be haunted. The home that they purchased on Ocean Avenue seemed perfect for them
with one caveat-- a former owner committed suicide in the home in the 1970s, and one other former
owner died of pneumonia stemming from HIV-related complications while undergoing hospice care
in the home. That death occurred more than 20 years prior.
The current owner did not wish for this information to be disclosed to prospective buyers, assuring
Desmond that the home was not haunted. Desmond encouraged the homeowner to disclose the
deaths, but the homeowner knew the law and was certain that disclosing the deaths would hurt the
home’s chances on the market.
Shortly after Kylie and Sherman moved into the home, a neighbor came over to speak to them while
they were in the driveway unloading groceries and asked them if they had heard about the suicide
that had occurred in the home.
4. Should Desmond have told the couple about the deaths in the home?
a. No. The Texas Property Code is specific about what information the seller must disclose.
The seller and Desmond, as the seller’s agent, have no duty to disclose the suicide. The
former owner’s death from an HIV-related illness is not to be disclosed, as it could be
considered a discriminatory issue.
b. Yes. Desmond knew that Kylie was afraid of ghosts and that she wouldn’t have
purchased the home if she had known about the two deaths occurring in the home.
Desmond should have exercised his own judgment and told the couple regardless of
Chapter 5 his client’s instructions to the contrary.
The Professional c. Yes and No. The suicide should have been disclosed to the couple, but the HIV-related
Codes of Ethics death in the home should not have been.
d. No. There is no ethical dilemma here because deaths of any kind occurring on a
property do not have to be disclosed.
182

EXERCISE 1- TRUE OR FALSE
Statement T or F
1. Texas real estate license holders who are members of NAR or Texas
REALTORS® are not required to adhere to TRELA.
2. Law, ethics, and morals are all the same thing.
3. Many corporations have adopted ethical codes to reflect their corporate

culture.
4. Morals are often decided upon based on the social norm.
5. Morals are legislated, enacted and enforced by the government.
6. There are no real laws in Texas that govern the practice of real estate.
7. TREC investigates every complaint that it receives about license holders

in the exact order in which the complaints are filed.
8. A business practice can be unethical, yet legal.

Chapter 5
9. According to the Canons of Professional Ethics and Conduct for Real The Professional
Estate License holders, there are 21 articles to which license holders must Codes of Ethics
adhere.
10. Real estate license holders are rarely if ever presented with ethical
dilemmas.
183

DECEPTIVE TRADE PRACTICES CONSUMER PROTECTION ACT
Whether the buyer is your client or your customer, it is your obligation to treat him fairly and hon-
estly. No matter how much you try to do so, some buyers and some sellers will be convinced that they
have been treated unfairly. In today’s social environment, the response to that is typically a lawsuit.
Most lawsuits filed against real estate sales agents fall under the Deceptive Trade Practices Act. This
law allows consumers to sue the providers of goods or services that employ deceptive trade practices.
According to the law, a house or real estate is considered to be “goods,” and the act of brokerage is
considered to be “services.” Because of these legal definitions, this law has a tremendous impact on
the activities of license holders. The following is a list of some of the items covered by the law that
apply to real estate transactions.
STATUTE:
causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of
goods or services; Sec. 17.46(b)(2)
EXAMPLE:
If a kitchen has solid surface countertops, you should not refer to them as Corian® unless they actually are.
STATUTE:
causing confusion or misunderstanding as to affiliation, connection, or association with, or certifi-
cation of another: Sec. 17.46(b)(3)
EXAMPLE:
An agent calls himself a REALTOR® when he is not a National Association of REALTORS® member.
STATUTE:
Chapter 5 representing that goods or services have sponsorship, approval, characteristics, ingredients, uses,
The Professional benefits, or quantities which they do not have, or that a person has a sponsorship, approval, status,
Codes of Ethics affiliation, or connection which he does not: Sec 17.46(b)(5)
EXAMPLE:
During the signing process, and agent uses forms or publications provided by the National Association of
REALTORS® or the Texas REALTORS®, when she is not a member of those organizations.
STATUTE:
representing that goods are original or new if they are deteriorated, reconditioned, reclaimed, used,
or secondhand: Sec. 17.46(b)(6)
EXAMPLE:
If you tell the buyers that the carpet is new, it should be brand new, not one year old. This is true for any
features that are quoted as being “new.”
STATUTE:
representing that goods or services are of a particular standard, quality, or grade, or that goods are
of a particular style or model, if they are of another: Sec. 17.46(b)(7)
EXAMPLE:
An agent tells a buyer that all of the appliances are “top-of-the-line” when they are actually mid-grade.
STATUTE:
advertising goods or services with intent not to sell them as advertised: Sec 17.46(b)(9)
EXAMPLE:
If a builder’s model home includes upgrades that are not part of the ordinary package, then this must be
184 stated.
STATUTE:
making false or misleading statements of fact concerning the reasons for, existence of, or amount of,
price reductions: Sec. 17.46(b)(11)
EXAMPLE:
While already on the market, a house received significant foundation damage due to a recent earthquake,
and the list price was decreased by $30,000. When asked about the price reduction, the listing agent told
her out-of-state clients that the home did not sustain damage.
STATUTE:
representing that an agreement confers or involves rights, remedies, or obligations which are prohib-
ited by law: Sec 17.46(b)(12)
EXAMPLE:
An agent offers an assumption without approval when lender approval is required .
STATUTE:
knowingly making false or misleading statements concerning the need for parts, replacement, or
repair service: Sec.17.46(b)(13)
EXAMPLE:
An agent requires and/or charges for unnecessary repairs.
STATUTE:
misrepresenting the authority of a salesman, representative, or agent to negotiate the final terms of
a consumer transaction: Sec.17.46 (b)(14)
Chapter 5
EXAMPLE: The Professional
An agent implies or states that she has the authority to negotiate price or terms and conditions when she Codes of Ethics
does not.
STATUTE:
representing that work or services have been performed on, or parts replaced in, goods when the
work or services were not performed or the parts replaced: Sec.17.46 (b)(22)
EXAMPLE:
An agent bills a principal for services that have not been provided, states that repairs have been made
when they have not, or states parts were replaced when they were not.
STATUTE:
failing to disclose information concerning goods or services which was known at the time of the
transaction if such failure to disclose such information was intended to induce the consumer into a
transaction into which the consumer would not have entered had the information been disclosed:
Sec.17.46(b)(24)
EXAMPLE:
The buyer’s agent fails to disclose the information from prior inspections concerning latent structural
defects, and the client is buying without having his own inspection.
185

There are three categories of deceptive practices under the law:
The deception was unintentional The plaintiff can sue for:
• damages
• court costs and attorney’s fees
The deception was intentional The plaintiff can sue for:
• treble economic damages
• treble mental anguish damages
• court costs and attorney’s fees
The deception was knowing, but not intentional The plaintiff can sue for:
(not intended to hurt a specific buyer, but
detrimental to all buyers in general) • treble economic damages
• straight mental anguish damages
• court costs and attorney’s fees.
Errors and omissions insurance, also known as professional liability insurance or E&O, does not
Chapter 5 always protect you against a DTPA suit. Review the policy for language that mentions exceptions to
The Professional coverage. Such exclusions include but are not limited to:
Codes of Ethics
• punitive or multiplied damages
• incidents known at inception by any insured
• dishonest actions regardless of intention
• claims related to mold or pollution
There are several areas in which deceptive trade suits are the most successful. These include problems
with the foundation, roof, flooding, and termite damage. Your best defense against these types of
complaints and lawsuits is a correctly completed Seller’s Disclosure Notice, a written recommenda-
tion to your buyers that they have structural, mechanical, and termite inspections done, obtaining
information from government records, such as square footage from tax records, and your own
honesty.
186

Statement T or F
1. Real estate sales agents in Texas have no duty to treat customers fairly,
only clients.
2. DTPA affects real estate advertising.
3. According to DTPA, builders must state whether or not amenities in

their model homes are upgrades that come at an additional cost.
4. Advertising something as “new” when it is reconditioned is considered

false or misleading.
5. There are 14 categories of deceptive practices under the law.
6. Every real estate agent can call himself a REALTOR®.
7. DTPA was created to protect consumers from deceptive trade practices.
8. One of the best defenses in a DTPA lawsuit is to have the seller complete
the Seller’s Disclosure Notice.
Chapter 5
9. DTPA allows plaintiffs to sue for treble economic damages. The Professional
Codes of Ethics
10. Under DTPA, real estate is considered a service and brokerage is a good.
187

PROFESSIONAL CODES OF ETHICS
Most brokerage firms have adopted a code of ethics that license holders must follow. The firm’s code of
ethics can be attached to or made a part of an independent contractor agreement signed by the spon-
sored license holder. It would be prudent to review the code of ethics occasionally to underscore the fact
that it is an important guide to business behavior and not just a document signed and hidden away in a
file. When confronting an ethical issue, the code of ethics can be a guide to its solution.
The National Association of REALTORS®, founded in 1908, is America’s largest trade association,
representing 1.4 million members. Membership is composed of residential and commercial REAL-
TORS®, who are brokers, sales agents, property managers, appraisers, counselors, and others engaged
in all aspects of the real estate industry. Members belong to one or more of some 1,200 local associ-
ations/boards and fifty-four state and territory associations of REALTORS®. They are pledged to a
strict Code of Ethics and Standards of Practice.
The term REALTOR® is a registered collective membership mark that identifies a real estate
professional who is a member of the National Association of REALTORS® and subscribes to its strict
Code of Ethics. The Code of Ethics is so highly regarded as a model for ethical conduct, that it became
the basis for real estate license laws in many cases.
In addition to the Code of Ethics, members may take advantage of tools such as marketing materi-
als, forms, and educational materials. Membership is voluntary; therefore, not all license holders are
REALTORS®. Members or not, all license holders are regulated by the Texas Real Estate Commis-
sion and must abide by TREC rules and regulations.
The National Association of REALTORS® and other trade associations receive complaints alleging
Chapter 5 ethics violations against their members. Such complaints can be directed to the local association to
The Professional which the member belongs. Typically, a grievance panel will conduct an initial review to determine
Codes of Ethics if the complaint alleges a violation of the organization’s code of ethics. If there is an alleged ethics
violation, a hearing panel will convene to hear testimony and the presentation of evidence, decide
whether a violation of the association’s code of ethics occurred, and order any warranted disciplinary
action. Disciplinary action could include:
•
A reprimand,
•
A fine,
•
Probation,
• Suspension of membership,
• Revocation of membership, or
• Any combination of the above actions.
The panel will advise the parties of any rights to appeal the decision.
PATHWAYS TO PROFESSIONALISM
BY THE NATIONAL ASSOCIATION OF REALTORS®
While the Code of Ethics and Standards of Practice of the National Association of REALTORS®
establishes objective, enforceable ethical standards governing the professional conduct of
REALTORS®, it does not address the issues of courtesy or etiquette.
188

Based on input from many sources, the Professional Conduct Working Group of the Professional
Standards Committee developed the list of professional courtesies on the following page for use by
REALTORS® on a voluntary basis. This list is not all-inclusive and may be supplementedEthics
by local
custom and practice.
Pathways to Professionalism
These professional courtesies are intended to be used by RealtoRs® on a voluntary basis, and cannot form the basis for a professional
standards complaint.
Respect for the Public

1. Follow the “Golden Rule”—Do unto others as you would have them do unto you.
2. Respond promptly to inquiries and requests for information.
3. Schedule appointments and showings as far in advance as possible.
4. Call if you are delayed or must cancel an appointment or showing.
5. If a prospective buyer decides not to view an occupied home, promptly explain the situation to the listing broker or the occupant.
6. Communicate with all parties in a timely fashion.
7. When entering a property, ensure that unexpected situations, such as pets, are handled appropriately.
8. Leave your business card if not prohibited by local rules.
9. Never criticize property in the presence of the occupant.
10. Inform occupants that you are leaving after showings.
11. When showing an occupied home, always ring the doorbell or knock—and announce yourself loudly—before entering. Knock and
announce yourself loudly before entering any closed room.
12. Present a professional appearance at all times; dress appropriately and drive a clean car.
13. If occupants are home during showings, ask their permission before using the telephone or bathroom.
14. Encourage the clients of other brokers to direct questions to their agent or representative.
15. Communicate clearly; don’t use jargon or slang that may not be readily understood.
16. Be aware of and respect cultural differences.
17. Show courtesy and respect to everyone.
18. Be aware of—and meet—all deadlines. Chapter 5
19. Promise only what you can deliver—and keep your promises. The Professional
20. Identify your RealtoR® and your professional status in contacts with the public. Codes of Ethics
21. Do not tell people what you think—tell them what you know.
Respect for Property

1. Be responsible for everyone you allow to enter listed property.
2. Never allow buyers to enter listed property unaccompanied.
3. When showing property, keep all members of the group together.
4. Never allow unaccompanied access to property without permission.
5. Enter property only with permission even if you have a lockbox key or combination.
6. When the occupant is absent, leave the property as you found it (lights, heating, cooling, drapes, etc.). If you think something is
amiss (e.g., vandalism) contact the listing broker immediately.
7. Be considerate of the seller’s property. Do not allow anyone to eat, drink, smoke, dispose of trash, use bathing or sleeping facilities,
or bring pets. Leave the house as you found it unless instructed otherwise.
8. Use sidewalks; if weather is bad, take off shoes and boots inside property.
9. Respect sellers’ instructions about photographing or videographing their properties’ interiors or exteriors.
Respect for Peers

1. Identify your RealtoR® and professional status in all contacts with other RealtoRs®.
2. Respond to other agents’ calls, faxes, and e-mails promptly and courteously.
3. Be aware that large electronic files with attachments or lengthy faxes may be a burden on recipients.
4. Notify the listing broker if there appears to be inaccurate information on the listing.
5. Share important information about a property, including the presence of pets, security systems, and whether sellers will be present
during the showing.
6. Show courtesy, trust, and respect to other real estate professionals.
7. Avoid the inappropriate use of endearments or other denigrating language.
8. Do not prospect at other RealtoRs®’ open houses or similar events.
9. Return keys promptly.
10. Carefully replace keys in the lockbox after showings.
11. To be successful in the business, mutual respect is essential.
12. Real estate is a reputation business. What you do today may affect your reputation—and business—for years to come.
189
(Revised 11/13)
vii Code of Ethics and Arbitration Manual
ETHICS AND BUSINESS PRINCIPLES FOR NEW REALTORS®
At the beginning of their real estate careers, fledgling agents typically focus primarily on prospect-
ing for listings, finding buyers and locating them new homes, and closing their first transactions.
Understandably, since income is tied to production and it does generally take a few months to get
going in such a competitive business, many new agents feel thrust into an unfamiliar environment
and enter into a “learn-as-you-go” mode of existence. However, learn as you go is not always the best
approach, especially when it comes to good business practices and ethics for real estate agents who
are members of NAR.
Learning about the daily duties of the real estate business will not only help you build a strong foun-
dation in the business that will last, but it will also ensure that you are in the business for as long as
you choose to be. Doing things right the first time will be the key to your prosperity and building
of your referral business.
The basic principles of the REALTOR® Code of Ethics are:

• Truthfulness in advertising and statements
• Duties to clients
• Respecting exclusive relationships of other REALTORS® and their clients
• Cooperation with other brokers
It is important to note that the Code of Ethics serves as the basis for many of the real estate laws
that govern the practice of real estate. When real estate disputes are brought into the court systems,
it is the Code of Ethics that the practitioner is held accountable to, especially if the case is unclear
Chapter 5 or open to interpretation. In these types of cases, the courts almost always look to the standards of
The Professional industry practice. New REALTORS® should read and reread the Code of Ethics in their beginning
Codes of Ethics years.
The Code of Ethics contains 17 Articles, under which Standards of Practice are listed. The Code is
updated every year, and REALTORS® should read the updated Codes. Here are a few examples of
situations that a beginning agent may find himself/herself in and how he/she may look to the Code
of Ethics for the standards of practice that are expected of him/her.
Article 1 is a daily reminder of a REALTOR’S® primary function as a real estate agent - the agent
should never put his interests above those of his client. Article 1 also states that agents must be
honest with ALL parties to a transaction, not only their clients but also with the other parties to
the transaction.
Example: Mike is an agent with Shiny House Realty. As a means of promoting in-house listings,
Mike’s brokerage offers bonuses to the company’s agents for each in-house listing that they sell.
Mike then represents a buyer who requires a swimming pool for health and fitness reasons. Mike
shows the buyer several properties in a particular subdivision, including an in-house listing with a
swimming pool. The buyer purchases the home. Some months later, the buyer lodges an ethics com-
plaint against Mike for not showing him a similarly priced listing in the same neighborhood with a
swimming pool better suited for his health needs.
After a hearing, it was determined that Mike chose not to show the other property because of his
bonus incentive for selling an in-house listing; therefore, he violated Article 1 because he put his
own interests (bonus incentive) ahead of his client’s.
190

Article 2 reiterates the necessity of being honest when dealing with all parties and requires full dis-
closure for all pertinent facts relating to the property and the transaction to the buyer and/or seller.
Example: James was asked by his seller-client not to disclose to potential buyers that the roof leaks.
What should James do? Per Article 2, James must disclose the leak in the roof, and as stated Article
1, he must be honest with ALL parties. In other words, James must not misrepresent or conceal
pertinent information and facts about the property.
Strong ethical practices, especially in this respect, are vital to your reputation and success in real
estate. If you represent a seller who asks you to conceal facts about his property, you will want to
remind your seller about your duty to disclose and that an inspection will uncover any property
defects. Do not set yourself up to take the fall on behalf of your seller. Let a dubious seller know
that is not the way you do business. You can also decide to “fire” your seller if he/she insists on your
concealing property defects from potential buyers.
Article 3 states that REALTORS® are obligated to cooperate with other brokers in the sale of
listings; however, this article does NOT include the obligation to share commissions, fees, or to
compensate another broker. This article has a significant effect on the practice of real estate.
Example: You make your first sale and are attending the closing. Do you expect to be compensated
for your role in finding the buyer and bringing the sale to the closing? Of course, you do. However,
according to the Code of Ethics, as a cooperating broker, you may not assume that the offer of coop-
eration includes an offer of compensation. This very situation is unlike any other industry. Imagine
if car dealerships operated this way!
Article 12 expresses how vital it is for you to build trust with other agents and your clients through
truthful advertising, marketing, and other forms of representation. Chapter 5
The Professional
Example: Agent Mike creates a neighborhood newsletter as a means of prospecting for business. Codes of Ethics
One section of his newsletter is titled “Recently Sold” under which he lists several transactions in the
neighborhood that he pulled from the MLS. Another agent, Susan, creates a similar neighborhood
newsletter, also with a section of recently sold houses pulled from the MLS.
Mike is called before the board of the local association for violating a “true picture” in his advertis-
ing. Here is why, Mike violated Article 12, misleading his readers by implying that HE had listed
and sold all of the properties listed in the “Recently Sold” section of his neighborhood newsletter.
Susan did not mislead readers because she included a disclaimer that she took the information from
the MLS and that she did not claim to have personally listed or sold the properties listed.
A good rule of thumb is to run all of your advertising and marketing materials by your broker or sales
manager for proofing and editing before you publish them.
Article 16 clearly states that REALTORS® are not to interfere with or contact buyers or sellers who
already have an exclusive relationship with another agent unless you have express authorization from
the agent to do so.
Example: Mike is in the grocery store, and as always, he is wearing his name tag as a means of
marketing his services. Glenda spots Mike in the frozen foods aisle, attracted by his name tag that
announces to the world that he is a REALTOR®. Glenda approaches Mike and tells him that she
is unhappy with her current listing agent; she asks him if he would like an opportunity to sell her
home. What should Mike do?
191

To avoid violating Article 16 of the Code of Ethics, Mike should tell Glenda that he would be open
to listing the home for her in the future, but only upon the expiration of the existing agreement that
she has with another agent.
REALTORS® should not use MLS data to solicit another agent’s current client. Since brokers are
required to share listing information through the MLS, other agents are not allowed to seize this as
an opportunity to solicit other agents’ current clients.
Visit the National Association of REALTORS® website for case studies and more information
related to ethics and the Code of Ethics. www.nar.realtor.
Chapter 5
The Professional
Codes of Ethics
192

CODE OF ETHICS AND STANDARDS OF PRACTICE
OF THE NATIONAL ASSOCIATION OF REALTORS®
Effective January 1, 2021
Where the word REALTORS® is used in this Code and Preamble, it In the interpretation of this obligation, REALTORS® can take no safer
shall be deemed to include REALTOR ASSOCIATE®s. guide than that which has been handed down through the centuries,
embodied in the Golden Rule, “Whatsoever ye would that others
While the Code of Ethics establishes obligations that may be higher
should do to you, do ye even so to them.”
than those mandated by law, in any instance where the Code of
Ethics and the law conflict, the obligations of the law must Accepting this standard as their own, REALTORS® pledge to observe
take precedence. its spirit in all of their activities whether conducted personally,
through associates or others, or via technological means, and to
Preamble conduct their business in accordance with the tenets set forth below.
Under all is the land. Upon its wise utilization and widely allocated (Amended 1/07)
ownership depend the survival and growth of free institutions and
of our civilization. REALTORS® should recognize that the interests Duties to Clients and Customers
of the nation and its citizens require the highest and best use of the
land and the widest distribution of land ownership. They require Article 1
the creation of adequate housing, the building of functioning
cities, the development of productive industries and farms, and the When representing a buyer, seller, landlord, tenant, or other client
preservation of a healthful environment. as an agent, REALTORS® pledge themselves to protect and promote
the interests of their client. This obligation to the client is primary,
Such interests impose obligations beyond those of ordinary but it does not relieve REALTORS® of their obligation to treat all
commerce. They impose grave social responsibility and a patriotic parties honestly. When serving a buyer, seller, landlord, tenant or
duty to which REALTORS® should dedicate themselves, and for other party in a non-agency capacity, REALTORS® remain obligated
which they should be diligent in preparing themselves. REALTORS®, to treat all parties honestly. (Amended 1/01)
therefore, are zealous to maintain and improve the standards of
their calling and share with their fellow REALTORS® a common • Standard of Practice 1-1
responsibility for its integrity and honor. REALTORS®, when acting as principals in a real estate transaction, Chapter 5
remain obligated by the duties imposed by the Code of Ethics.
In recognition and appreciation of their obligations to clients, (Amended 1/93) The Professional
customers, the public, and each other, REALTORS® continuously Codes of Ethics
• Standard of Practice 1-2
strive to become and remain informed on issues affecting real
The duties imposed by the Code of Ethics encompass all real
estate and, as knowledgeable professionals, they willingly share
estate-related activities and transactions whether conducted in
the fruit of their experience and study with others. They identify
person, electronically, or through any other means.
and take steps, through enforcement of this Code of Ethics and
by assisting appropriate regulatory bodies, to eliminate practices The duties the Code of Ethics imposes are applicable whether
which may damage the public or which might discredit or bring REALTORS® are acting as agents or in legally recognized non-
dishonor to the real estate profession. REALTORS® having direct agency capacities except that any duty imposed exclusively on
personal knowledge of conduct that may violate the Code of agents by law or regulation shall not be imposed by this Code of
Ethics involving misappropriation of client or customer funds or Ethics on REALTORS® acting in non-agency capacities.
property, discrimination against the protected classes under the As used in this Code of Ethics, “client” means the person(s)
Code of Ethics, or fraud, bring such matters to the attention of the or entity(ies) with whom a REALTOR® or a REALTOR®’s firm
appropriate Board or Association of REALTORS®. (Amended 1/21) has an agency or legally recognized non-agency relationship;
Realizing that cooperation with other real estate professionals “customer” means a party to a real estate transaction who
promotes the best interests of those who utilize their services, receives information, services, or benefits but has no contractual
REALTORS® urge exclusive representation of clients; do not attempt relationship with the REALTOR® or the REALTOR®’s firm;
to gain any unfair advantage over their competitors; and they refrain “prospect” means a purchaser, seller, tenant, or landlord who is
from making unsolicited comments about other practitioners. not subject to a representation relationship with the REALTOR® or
In instances where their opinion is sought, or where REALTORS® REALTOR®’s firm; “agent” means a real estate licensee (including
believe that comment is necessary, their opinion is offered in an brokers and sales associates) acting in an agency relationship
objective, professional manner, uninfluenced by any personal as defined by state law or regulation; and “broker” means a real
motivation or potential advantage or gain. estate licensee (including brokers and sales associates) acting
as an agent or in a legally recognized non-agency capacity.
The term REALTOR® has come to connote competency, fairness, (Adopted 1/95, Amended 1/07)
and high integrity resulting from adherence to a lofty ideal of moral
conduct in business relations. No inducement of profit and no • Standard of Practice 1-3
instruction from clients ever can justify departure from this ideal. REALTORS®, in attempting to secure a listing, shall not
deliberately mislead the owner as to market value.
193

• Standard of Practice 1-4 • Standard of Practice 1-11
REALTORS®, when seeking to become a buyer/tenant REALTORS® who are employed to maintain or manage a client’s
representative, shall not mislead buyers or tenants as to savings property shall exercise due diligence and make reasonable efforts
or other benefits that might be realized through use of the to protect it against reasonably foreseeable contingencies and
REALTOR®’s services. (Amended 1/93) losses. (Adopted 1/95)
REALTORS® may represent the seller/landlord and buyer/tenant When entering into listing contracts, REALTORS® must advise
in the same transaction only after full disclosure to and with sellers/landlords of:
informed consent of both parties. (Adopted 1/93) 1) the REALTOR®’s company policies regarding cooperation
• Standard of Practice 1-6 and the amount(s) of any compensation that will be offered
REALTORS® shall submit offers and counter-offers objectively and to subagents, buyer/tenant agents, and/or brokers acting in
as quickly as possible. (Adopted 1/93, Amended 1/95) legally recognized non-agency capacities;
• Standard of Practice 1-7 2) the fact that buyer/tenant agents or brokers, even if
When acting as listing brokers, REALTORS® shall continue to compensated by listing brokers, or by sellers/landlords may
submit to the seller/landlord all offers and counter-offers until represent the interests of buyers/tenants; and
closing or execution of a lease unless the seller/landlord has 3) any potential for listing brokers to act as disclosed
waived this obligation in writing. Upon the written request of a dual agents, e.g., buyer/tenant agents. (Adopted 1/93,
cooperating broker who submits an offer to the listing broker, Renumbered 1/98, Amended 1/03)
the listing broker shall provide, as soon as practical, a written
affirmation to the cooperating broker stating that the offer has • Standard of Practice 1-13
been submitted to the seller/landlord, or a written notification When entering into buyer/tenant agreements, REALTORS® must
that the seller/landlord has waived the obligation to have the advise potential clients of:
offer presented. REALTORS® shall not be obligated to continue 1) the REALTOR®’s company policies regarding cooperation;
to market the property after an offer has been accepted by
the seller/landlord. REALTORS® shall recommend that sellers/ 2) the amount of compensation to be paid by the client;
landlords obtain the advice of legal counsel prior to acceptance 3) the potential for additional or offsetting compensation from
of a subsequent offer except where the acceptance is contingent other brokers, from the seller or landlord, or from other
on the termination of the pre-existing purchase contract or lease. parties;
(Amended 1/20)
4) any potential for the buyer/tenant representative to act as a
• Standard of Practice 1-8 disclosed dual agent, e.g., listing broker, subagent, landlord’s
REALTORS®, acting as agents or brokers of buyers/tenants, agent, etc.; and
shall submit to buyers/tenants all offers and counter-offers until
5) the possibility that sellers or sellers’ representatives may
acceptance but have no obligation to continue to show properties
not treat the existence, terms, or conditions of offers
Chapter 5 to their clients after an offer has been accepted unless otherwise
as confidential unless confidentiality is required by law,
agreed in writing. REALTORS®, acting as agents or brokers of
The Professional regulation, or by any confidentiality agreement between the
buyers/tenants, shall recommend that buyers/tenants obtain the
Codes of Ethics parties. (Adopted 1/93, Renumbered 1/98, Amended 1/06)
advice of legal counsel if there is a question as to whether a pre-
existing contract has been terminated. (Adopted 1/93, • Standard of Practice 1-14
Amended 1/99) Fees for preparing appraisals or other valuations shall not be
contingent upon the amount of the appraisal or valuation.
(Adopted 1/02)
The obligation of REALTORS® to preserve confidential information
(as defined by state law) provided by their clients in the course of • Standard of Practice 1-15
any agency relationship or non-agency relationship recognized REALTORS®, in response to inquiries from buyers or cooperating
by law continues after termination of agency relationships or any brokers shall, with the sellers’ approval, disclose the existence
non-agency relationships recognized by law. REALTORS® shall of offers on the property. Where disclosure is authorized,
not knowingly, during or following the termination of professional REALTORS® shall also disclose, if asked, whether offers were
relationships with their clients: obtained by the listing licensee, another licensee in the listing
firm, or by a cooperating broker. (Adopted 1/03, Amended 1/09)
1) reveal confidential information of clients; or
2) use confidential information of clients to the disadvantage of
REALTORS® shall not access or use, or permit or enable others to
clients; or
access or use, listed or managed property on terms or conditions
3) use confidential information of clients for the REALTOR®’s other than those authorized by the owner or seller. (Adopted 1/12)
advantage or the advantage of third parties unless:
a) clients consent after full disclosure; or Article 2
b) REALTORS® are required by court order; or REALTORS® shall avoid exaggeration, misrepresentation, or
c) it is the intention of a client to commit a crime and the concealment of pertinent facts relating to the property or the
information is necessary to prevent the crime; or transaction. REALTORS® shall not, however, be obligated to discover
d) it is necessary to defend a REALTOR® or the REALTOR®’s latent defects in the property, to advise on matters outside the
employees or associates against an accusation of scope of their real estate license, or to disclose facts which are
wrongful conduct. confidential under the scope of agency or non-agency relationships
as defined by state law. (Amended 1/00)
Information concerning latent material defects is not
considered confidential information under this Code of • Standard of Practice 2-1
Ethics. (Adopted 1/93, Amended 1/01) REALTORS® shall only be obligated to discover and disclose
adverse factors reasonably apparent to someone with expertise
in those areas required by their real estate licensing authority.
REALTORS® shall, consistent with the terms and conditions of their
Article 2 does not impose upon the REALTOR® the obligation of
real estate licensure and their property management agreement,
expertise in other professional or technical disciplines.
competently manage the property of clients with due regard for
(Amended 1/96)
the rights, safety and health of tenants and others lawfully on the
premises. (Adopted 1/95, Amended 1/00)
194

• Standard of Practice 2-2 personal or on behalf of a client and, if on behalf of a client, their
(Renumbered as Standard of Practice 1-12 1/98) relationship with the client. (Amended 1/11)
(Renumbered as Standard of Practice 1-13 1/98) REALTORS® shall not misrepresent the availability of access to
• Standard of Practice 2-4 show or inspect a listed property. (Amended 11/87)
REALTORS® shall not be parties to the naming of a false • Standard of Practice 3-9
consideration in any document, unless it be the naming of an REALTORS® shall not provide access to listed property on terms
obviously nominal consideration. other than those established by the owner or the listing broker.
• Standard of Practice 2-5 (Adopted 1/10)
Factors defined as “non-material” by law or regulation or which • Standard of Practice 3-10
are expressly referenced in law or regulation as not being subject The duty to cooperate established in Article 3 relates to the
to disclosure are considered not “pertinent” for purposes of obligation to share information on listed property, and to make
Article 2. (Adopted 1/93) property available to other brokers for showing to prospective
purchasers/tenants when it is in the best interests of sellers/
Article 3 landlords. (Adopted 1/11)
REALTORS® shall cooperate with other brokers except when • Standard of Practice 3-11
cooperation is not in the client’s best interest. The obligation to REALTORS® may not refuse to cooperate on the basis of a broker’s
cooperate does not include the obligation to share commissions, race, color, religion, sex, handicap, familial status, national origin,
fees, or to otherwise compensate another broker. (Amended 1/95) sexual orientation, or gender identity. (Adopted 1/20)
REALTORS®, acting as exclusive agents or brokers of sellers/
Article 4
landlords, establish the terms and conditions of offers to REALTORS® shall not acquire an interest in or buy or present offers
cooperate. Unless expressly indicated in offers to cooperate, from themselves, any member of their immediate families, their
cooperating brokers may not assume that the offer of cooperation firms or any member thereof, or any entities in which they have
includes an offer of compensation. Terms of compensation, if any, any ownership interest, any real property without making their
shall be ascertained by cooperating brokers before beginning true position known to the owner or the owner’s agent or broker.
efforts to accept the offer of cooperation. (Amended 1/99) In selling property they own, or in which they have any interest,
REALTORS® shall reveal their ownership or interest in writing to the
purchaser or the purchaser’s representative. (Amended 1/00)
Any change in compensation offered for cooperative services
must be communicated to the other REALTOR® prior to the time • Standard of Practice 4-1
that REALTOR® submits an offer to purchase/lease the property. For the protection of all parties, the disclosures required by
After a REALTOR® has submitted an offer to purchase or lease Article 4 shall be in writing and provided by REALTORS® prior to
property, the listing broker may not attempt to unilaterally modify the signing of any contract. (Adopted 2/86)
the offered compensation with respect to that cooperative
Chapter 5
transaction. (Amended 1/14) Article 5 The Professional
• Standard of Practice 3-3 REALTORS® shall not undertake to provide professional services Codes of Ethics
Standard of Practice 3-2 does not preclude the listing broker and concerning a property or its value where they have a present or
cooperating broker from entering into an agreement to change contemplated interest unless such interest is specifically disclosed
cooperative compensation. (Adopted 1/94) to all affected parties.
• Standard of Practice 3-4 Article 6
REALTORS®, acting as listing brokers, have an affirmative
obligation to disclose the existence of dual or variable rate REALTORS® shall not accept any commission, rebate, or profit on
commission arrangements (i.e., listings where one amount of expenditures made for their client, without the client’s knowledge
commission is payable if the listing broker’s firm is the procuring and consent.
cause of sale/lease and a different amount of commission is When recommending real estate products or services (e.g.,
payable if the sale/lease results through the efforts of the seller/ homeowner’s insurance, warranty programs, mortgage financing,
landlord or a cooperating broker). The listing broker shall, as title insurance, etc.), REALTORS® shall disclose to the client or
soon as practical, disclose the existence of such arrangements to customer to whom the recommendation is made any financial
potential cooperating brokers and shall, in response to inquiries benefits or fees, other than real estate referral fees, the REALTOR®
from cooperating brokers, disclose the differential that would or REALTOR®’s firm may receive as a direct result of such
result in a cooperative transaction or in a sale/lease that results recommendation. (Amended 1/99)
through the efforts of the seller/landlord. If the cooperating
broker is a buyer/tenant representative, the buyer/tenant
REALTORS® shall not recommend or suggest to a client or a
representative must disclose such information to their client
customer the use of services of another organization or business
before the client makes an offer to purchase or lease.
entity in which they have a direct interest without disclosing
(Amended 1/02)
such interest at the time of the recommendation or suggestion.
• Standard of Practice 3-5 (Amended 5/88)
It is the obligation of subagents to promptly disclose all pertinent
facts to the principal’s agent prior to as well as after a purchase or Article 7
lease agreement is executed. (Amended 1/93) In a transaction, REALTORS® shall not accept compensation from
• Standard of Practice 3-6 more than one party, even if permitted by law, without disclosure
REALTORS® shall disclose the existence of accepted offers, to all parties and the informed consent of the REALTOR®’s client or
including offers with unresolved contingencies, to any broker clients. (Amended 1/93)
seeking cooperation. (Adopted 5/86, Amended 1/04)
Article 8
When seeking information from another REALTOR® concerning REALTORS® shall keep in a special account in an appropriate
property under a management or listing agreement, REALTORS® financial institution, separated from their own funds, monies coming
shall disclose their REALTOR® status and whether their interest is into their possession in trust for other persons, such as escrows, trust
funds, clients’ monies, and other like items.
195

Article 9 • Standard of Practice 10-5
REALTORS® must not use harassing speech, hate speech, epithets,
REALTORS®, for the protection of all parties, shall assure whenever or slurs based on race, color, religion, sex, handicap, familial status,
possible that all agreements related to real estate transactions national origin, sexual orientation, or gender identity. (Adopted
including, but not limited to, listing and representation agreements, and effective November 13, 2020)
purchase contracts, and leases are in writing in clear and
understandable language expressing the specific terms, conditions, Article 11
obligations and commitments of the parties. A copy of each
The services which REALTORS® provide to their clients and
agreement shall be furnished to each party to such agreements
customers shall conform to the standards of practice and
upon their signing or initialing. (Amended 1/04)
competence which are reasonably expected in the specific real
• Standard of Practice 9-1 estate disciplines in which they engage; specifically, residential
For the protection of all parties, REALTORS® shall use reasonable real estate brokerage, real property management, commercial
care to ensure that documents pertaining to the purchase, sale, and industrial real estate brokerage, land brokerage, real estate
or lease of real estate are kept current through the use of written appraisal, real estate counseling, real estate syndication, real estate
extensions or amendments. (Amended 1/93) auction, and international real estate.
• Standard of Practice 9-2 REALTORS® shall not undertake to provide specialized professional
When assisting or enabling a client or customer in establishing services concerning a type of property or service that is outside
a contractual relationship (e.g., listing and representation their field of competence unless they engage the assistance of one
agreements, purchase agreements, leases, etc.) electronically, who is competent on such types of property or service, or unless
REALTORS® shall make reasonable efforts to explain the nature the facts are fully disclosed to the client. Any persons engaged to
and disclose the specific terms of the contractual relationship provide such assistance shall be so identified to the client and their
being established prior to it being agreed to by a contracting contribution to the assignment should be set forth. (Amended 1/10)
party. (Adopted 1/07)
When REALTORS® prepare opinions of real property value or
Duties to the Public price they must:
Article 10 1) be knowledgeable about the type of property being valued,
REALTORS® shall not deny equal professional services to any person 2) have access to the information and resources necessary to
for reasons of race, color, religion, sex, handicap, familial status, formulate an accurate opinion, and
national origin, sexual orientation, or gender identity. REALTORS® 3) be familiar with the area where the subject property is
shall not be parties to any plan or agreement to discriminate located
against a person or persons on the basis of race, color, religion,
sex, handicap, familial status, national origin, sexual orientation, or unless lack of any of these is disclosed to the party requesting the
gender identity. (Amended 1/14) opinion in advance.
Chapter 5 When an opinion of value or price is prepared other than in
REALTORS®, in their real estate employment practices, shall not
The Professional discriminate against any person or persons on the basis of race, pursuit of a listing or to assist a potential purchaser in formulating
Codes of Ethics color, religion, sex, handicap, familial status, national origin, sexual a purchase offer, the opinion shall include the following unless the
orientation, or gender identity. (Amended 1/14) party requesting the opinion requires a specific type of report or
different data set:
When involved in the sale or lease of a residence, REALTORS® 1) identification of the subject property
shall not volunteer information regarding the racial, religious 2) date prepared
or ethnic composition of any neighborhood nor shall they 3) defined value or price
engage in any activity which may result in panic selling, however,
4) limiting conditions, including statements of purpose(s) and
REALTORS® may provide other demographic information.
intended user(s)
(Adopted 1/94, Amended 1/06)
5) any present or contemplated interest, including the
• Standard of Practice 10-2 possibility of representing the seller/landlord or buyers/
When not involved in the sale or lease of a residence, REALTORS® tenants
may provide demographic information related to a property,
6) basis for the opinion, including applicable market data
transaction or professional assignment to a party if such
demographic information is (a) deemed by the REALTOR® to 7) if the opinion is not an appraisal, a statement to that effect
be needed to assist with or complete, in a manner consistent 8) disclosure of whether and when a physical inspection of the
with Article 10, a real estate transaction or professional property’s exterior was conducted
assignment and (b) is obtained or derived from a recognized, 9) disclosure of whether and when a physical inspection of the
reliable, independent, and impartial source. The source of property’s interior was conducted
such information and any additions, deletions, modifications, 10) disclosure of whether the REALTOR® has any conflicts of
interpretations, or other changes shall be disclosed in reasonable interest (Amended 1/14)
detail. (Adopted 1/05, Renumbered 1/06)
• Standard of Practice 10-3 The obligations of the Code of Ethics in respect of real estate
REALTORS® shall not print, display or circulate any statement or disciplines other than appraisal shall be interpreted and applied in
advertisement with respect to selling or renting of a property accordance with the standards of competence and practice which
that indicates any preference, limitations or discrimination based clients and the public reasonably require to protect their rights
on race, color, religion, sex, handicap, familial status, national and interests considering the complexity of the transaction, the
origin, sexual orientation, or gender identity. (Adopted 1/94, availability of expert assistance, and, where the REALTOR® is an
Renumbered 1/05 and 1/06, Amended 1/14) agent or subagent, the obligations of a fiduciary. (Adopted 1/95)
As used in Article 10 “real estate employment practices” relates to When REALTORS® provide consultive services to clients which
employees and independent contractors providing real estate- involve advice or counsel for a fee (not a commission), such advice
related services and the administrative and clerical staff directly shall be rendered in an objective manner and the fee shall not
supporting those individuals. (Adopted 1/00, Renumbered be contingent on the substance of the advice or counsel given. If
1/05 and 1/06)
196

brokerage or transaction services are to be provided in addition “sold” the property. Prior to closing, a cooperating broker may
to consultive services, a separate compensation may be paid with post a “sold” sign only with the consent of the listing broker.
prior agreement between the client and REALTOR®. (Amended 1/96)
(Adopted 1/96) • Standard of Practice 12-8
• Standard of Practice 11-4 The obligation to present a true picture in representations to the
The competency required by Article 11 relates to services public includes information presented, provided, or displayed on
contracted for between REALTORS® and their clients or REALTORS®’ websites. REALTORS® shall use reasonable efforts
customers; the duties expressly imposed by the Code of Ethics; to ensure that information on their websites is current. When it
and the duties imposed by law or regulation. (Adopted 1/02) becomes apparent that information on a REALTOR®’s website is
no longer current or accurate, REALTORS® shall promptly take
Article 12 corrective action. (Adopted 1/07)
REALTORS® shall be honest and truthful in their real estate • Standard of Practice 12-9
communications and shall present a true picture in their advertising, REALTOR® firm websites shall disclose the firm’s name and state(s)
marketing, and other representations. REALTORS® shall ensure of licensure in a reasonable and readily apparent manner.
that their status as real estate professionals is readily apparent
Websites of REALTORS® and non-member licensees affiliated
in their advertising, marketing, and other representations, and
with a REALTOR® firm shall disclose the firm’s name and that
that the recipients of all real estate communications are, or have
REALTOR®’s or non-member licensee’s state(s) of licensure in a
been, notified that those communications are from a real estate
reasonable and readily apparent manner. (Adopted 1/07)
professional. (Amended 1/08)
• Standard of Practice 12-1 REALTORS®’ obligation to present a true picture in their
Unless they are receiving no compensation from any source for advertising and representations to the public includes Internet
their time and services, REALTORS® may use the term “free” and content, images, and the URLs and domain names they use, and
similar terms in their advertising and in other representations only prohibits REALTORS® from:
if they clearly and conspicuously disclose:
1) engaging in deceptive or unauthorized framing of real estate
1) by whom they are being, or expect to be, paid; brokerage websites;
2) the amount of the payment or anticipated payment; 2) manipulating (e.g., presenting content developed by
3) any conditions associated with the payment, offered others) listing and other content in any way that produces a
product or service, and; deceptive or misleading result;
4) any other terms relating to their compensation. 3) deceptively using metatags, keywords or other devices/
(Amended 1/20) methods to direct, drive, or divert Internet traffic; or
4) presenting content developed by others without either
attribution or without permission; or
(Deleted 1/20)
5) otherwise misleading consumers, including use of misleading
Chapter 5
images. (Adopted 1/07, Amended 1/18) The Professional
The offering of premiums, prizes, merchandise discounts or
other inducements to list, sell, purchase, or lease is not, in itself, • Standard of Practice 12-11 Codes of Ethics
unethical even if receipt of the benefit is contingent on listing, REALTORS® intending to share or sell consumer information
selling, purchasing, or leasing through the REALTOR® making gathered via the Internet shall disclose that possibility in a
the offer. However, REALTORS® must exercise care and candor reasonable and readily apparent manner. (Adopted 1/07)
in any such advertising or other public or private representations • Standard of Practice 12-12
so that any party interested in receiving or otherwise benefiting REALTORS® shall not:
from the REALTOR®’s offer will have clear, thorough, advance
understanding of all the terms and conditions of the offer. The 1) use URLs or domain names that present less than a true
offering of any inducements to do business is subject to the picture, or
limitations and restrictions of state law and the ethical obligations 2) register URLs or domain names which, if used, would present
established by any applicable Standard of Practice. less than a true picture. (Adopted 1/08)
(Amended 1/95) • Standard of Practice 12-13
• Standard of Practice 12-4 The obligation to present a true picture in advertising, marketing,
REALTORS® shall not offer for sale/lease or advertise property and representations allows REALTORS® to use and display only
without authority. When acting as listing brokers or as subagents, professional designations, certifications, and other credentials to
REALTORS® shall not quote a price different from that agreed which they are legitimately entitled. (Adopted 1/08)
upon with the seller/landlord. (Amended 1/93)
Article 13
REALTORS® shall not advertise nor permit any person employed REALTORS® shall not engage in activities that constitute the
by or affiliated with them to advertise real estate services or unauthorized practice of law and shall recommend that legal
listed property in any medium (e.g., electronically, print, radio, counsel be obtained when the interest of any party to the
television, etc.) without disclosing the name of that REALTOR®’s transaction requires it.
firm in a reasonable and readily apparent manner either in the
advertisement or in electronic advertising via a link to a display Article 14
with all required disclosures. (Adopted 11/86, Amended 1/16) If charged with unethical practice or asked to present evidence
• Standard of Practice 12-6 or to cooperate in any other way, in any professional standards
REALTORS®, when advertising unlisted real property for sale/ proceeding or investigation, REALTORS® shall place all pertinent
lease in which they have an ownership interest, shall disclose their facts before the proper tribunals of the Member Board or affiliated
institute, society, or council in which membership is held and shall
status as both owners/landlords and as REALTORS® or real estate
take no action to disrupt or obstruct such processes.
licensees. (Amended 1/93)
(Amended 1/99)
Only REALTORS® who participated in the transaction as the listing
REALTORS® shall not be subject to disciplinary proceedings in
broker or cooperating broker (selling broker) may claim to have
more than one Board of REALTORS® or affiliated institute, society,
197

or council in which they hold membership with respect to alleged geographical area or in a given profession, business, club, or
violations of the Code of Ethics relating to the same transaction or organization, or other classification or group is deemed “general”
event. (Amended 1/95) for purposes of this standard. (Amended 1/04)
• Standard of Practice 14-2 Article 16 is intended to recognize as unethical two basic types of
REALTORS® shall not make any unauthorized disclosure or solicitations:
dissemination of the allegations, findings, or decision developed
First, telephone or personal solicitations of property owners
in connection with an ethics hearing or appeal or in connection
who have been identified by a real estate sign, multiple listing
with an arbitration hearing or procedural review. (Amended 1/92)
compilation, or other information service as having exclusively
• Standard of Practice 14-3 listed their property with another REALTOR® and
REALTORS® shall not obstruct the Board’s investigative or Second, mail or other forms of written solicitations of prospects
professional standards proceedings by instituting or threatening whose properties are exclusively listed with another REALTOR®
to institute actions for libel, slander, or defamation against any when such solicitations are not part of a general mailing but
party to a professional standards proceeding or their witnesses are directed specifically to property owners identified through
based on the filing of an arbitration request, an ethics complaint, compilations of current listings, “for sale” or “for rent” signs, or
or testimony given before any tribunal. (Adopted 11/87, other sources of information required by Article 3 and Multiple
Amended 1/99) Listing Service rules to be made available to other REALTORS®
• Standard of Practice 14-4 under offers of subagency or cooperation. (Amended 1/04)
REALTORS® shall not intentionally impede the Board’s • Standard of Practice 16-3
investigative or disciplinary proceedings by filing multiple ethics Article 16 does not preclude REALTORS® from contacting the
complaints based on the same event or transaction. client of another broker for the purpose of offering to provide,
(Adopted 11/88) or entering into a contract to provide, a different type of real
estate service unrelated to the type of service currently being
Duties to REALTORS® provided (e.g., property management as opposed to brokerage)
or from offering the same type of service for property not subject
Article 15 to other brokers’ exclusive agreements. However, information
received through a Multiple Listing Service or any other offer
REALTORS® shall not knowingly or recklessly make false or of cooperation may not be used to target clients of other
misleading statements about other real estate professionals, their REALTORS® to whom such offers to provide services may be
businesses, or their business practices. (Amended 1/12) made. (Amended 1/04)
REALTORS® shall not knowingly or recklessly file false or REALTORS® shall not solicit a listing which is currently listed
unfounded ethics complaints. (Adopted 1/00) exclusively with another broker. However, if the listing broker,
when asked by the REALTOR®, refuses to disclose the expiration
Chapter 5 • Standard of Practice 15-2
date and nature of such listing, i.e., an exclusive right to sell,
The obligation to refrain from making false or misleading
The Professional statements about other real estate professionals, their businesses, an exclusive agency, open listing, or other form of contractual
Codes of Ethics and their business practices includes the duty to not knowingly agreement between the listing broker and the client, the
or recklessly publish, repeat, retransmit, or republish false or REALTOR® may contact the owner to secure such information
misleading statements made by others. This duty applies whether and may discuss the terms upon which the REALTOR® might
false or misleading statements are repeated in person, in writing, take a future listing or, alternatively, may take a listing to become
by technological means (e.g., the Internet), or by any other means. effective upon expiration of any existing exclusive listing.
(Adopted 1/07, Amended 1/12) (Amended 1/94)
REALTORS® shall not solicit buyer/tenant agreements from
The obligation to refrain from making false or misleading
buyers/ tenants who are subject to exclusive buyer/tenant
statements about other real estate professionals, their businesses,
agreements. However, if asked by a REALTOR®, the broker
and their business practices includes the duty to publish a
refuses to disclose the expiration date of the exclusive buyer/
clarification about or to remove statements made by others on
tenant agreement, the REALTOR® may contact the buyer/tenant
electronic media the REALTOR® controls once the REALTOR®
to secure such information and may discuss the terms upon which
knows the statement is false or misleading. (Adopted 1/10,
the REALTOR® might enter into a future buyer/tenant agreement
Amended 1/12)
or, alternatively, may enter into a buyer/tenant agreement to
become effective upon the expiration of any existing exclusive
Article 16 buyer/tenant agreement. (Adopted 1/94, Amended 1/98)
REALTORS® shall not engage in any practice or take any action
inconsistent with exclusive representation or exclusive brokerage
When REALTORS® are contacted by the client of another
relationship agreements that other REALTORS® have with clients.
REALTOR® regarding the creation of an exclusive relationship
(Amended 1/04)
to provide the same type of service, and REALTORS® have not
• Standard of Practice 16-1 directly or indirectly initiated such discussions, they may discuss
Article 16 is not intended to prohibit aggressive or innovative the terms upon which they might enter into a future agreement
business practices which are otherwise ethical and does not or, alternatively, may enter into an agreement which becomes
prohibit disagreements with other REALTORS® involving effective upon expiration of any existing exclusive agreement.
commission, fees, compensation or other forms of payment or (Amended 1/98)
expenses. (Adopted 1/93, Amended 1/95)
• Standard of Practice 16-2 The fact that a prospect has retained a REALTOR® as an
Article 16 does not preclude REALTORS® from making general exclusive representative or exclusive broker in one or more past
announcements to prospects describing their services and the transactions does not preclude other REALTORS® from seeking
terms of their availability even though some recipients may have such prospect’s future business. (Amended 1/04)
entered into agency agreements or other exclusive relationships • Standard of Practice 16-8
with another REALTOR®. A general telephone canvass, general The fact that an exclusive agreement has been entered into with a
mailing or distribution addressed to all prospects in a given REALTOR® shall not preclude or inhibit any other REALTOR® from
198

entering into a similar agreement after the expiration of the prior • Standard of Practice 16-17
agreement. (Amended 1/98) REALTORS®, acting as subagents or as buyer/tenant
representatives or brokers, shall not attempt to extend a listing
• Standard of Practice 16-9 broker’s offer of cooperation and/or compensation to other
REALTORS®, prior to entering into a representation agreement, brokers without the consent of the listing broker. (Amended 1/04)
have an affirmative obligation to make reasonable efforts to
determine whether the prospect is subject to a current, valid • Standard of Practice 16-18
exclusive agreement to provide the same type of real estate REALTORS® shall not use information obtained from listing
service. (Amended 1/04) brokers through offers to cooperate made through multiple
listing services or through other offers of cooperation to refer
• Standard of Practice 16-10 listing brokers’ clients to other brokers or to create buyer/tenant
REALTORS®, acting as buyer or tenant representatives or relationships with listing brokers’ clients, unless such use is
brokers, shall disclose that relationship to the seller/landlord’s authorized by listing brokers. (Amended 1/02)
representative or broker at first contact and shall provide
written confirmation of that disclosure to the seller/landlord’s • Standard of Practice 16-19
representative or broker not later than execution of a purchase Signs giving notice of property for sale, rent, lease, or exchange
agreement or lease. (Amended 1/04) shall not be placed on property without consent of the seller/
landlord. (Amended 1/93)
On unlisted property, REALTORS® acting as buyer/tenant • Standard of Practice 16-20
representatives or brokers shall disclose that relationship to the REALTORS®, prior to or after their relationship with their current
seller/landlord at first contact for that buyer/tenant and shall firm is terminated, shall not induce clients of their current firm
provide written confirmation of such disclosure to the seller/ to cancel exclusive contractual agreements between the client
landlord not later than execution of any purchase or lease and that firm. This does not preclude REALTORS® (principals)
agreement. (Amended 1/04) from establishing agreements with their associated licensees
governing assignability of exclusive agreements. (Adopted 1/98,
REALTORS® shall make any request for anticipated compensation Amended 1/10)
from the seller/landlord at first contact. (Amended 1/98)
• Standard of Practice 16-12 Article 17
REALTORS®, acting as representatives or brokers of sellers/ In the event of contractual disputes or specific non-contractual
landlords or as subagents of listing brokers, shall disclose that disputes as defined in Standard of Practice 17-4 between
relationship to buyers/tenants as soon as practicable and shall REALTORS® (principals) associated with different firms, arising out of
provide written confirmation of such disclosure to buyers/tenants their relationship as REALTORS®, the REALTORS® shall mediate the
not later than execution of any purchase or lease agreement. dispute if the Board requires its members to mediate. If the dispute
(Amended 1/04) is not resolved through mediation, or if mediation is not required,
• Standard of Practice 16-13 REALTORS® shall submit the dispute to arbitration in accordance
All dealings concerning property exclusively listed, or with buyer/ with the policies of the Board rather than litigate the matter. Chapter 5
tenants who are subject to an exclusive agreement shall be In the event clients of REALTORS® wish to mediate or arbitrate
carried on with the client’s representative or broker, and not with The Professional
contractual disputes arising out of real estate transactions,
the client, except with the consent of the client’s representative or REALTORS® shall mediate or arbitrate those disputes in accordance Codes of Ethics
broker or except where such dealings are initiated by the client. with the policies of the Board, provided the clients agree to be
Before providing substantive services (such as writing a bound by any resulting agreement or award.
purchase offer or presenting a CMA) to prospects, REALTORS® The obligation to participate in mediation and arbitration
shall ask prospects whether they are a party to any exclusive contemplated by this Article includes the obligation of REALTORS®
representation agreement. REALTORS® shall not knowingly (principals) to cause their firms to mediate and arbitrate and be
provide substantive services concerning a prospective transaction bound by any resulting agreement or award. (Amended 1/12)
to prospects who are parties to exclusive representation
agreements, except with the consent of the prospects’ exclusive • Standard of Practice 17-1
representatives or at the direction of prospects. (Adopted 1/93, The filing of litigation and refusal to withdraw from it by
Amended 1/04) REALTORS® in an arbitrable matter constitutes a refusal to
arbitrate. (Adopted 2/86)
REALTORS® are free to enter into contractual relationships or to • Standard of Practice 17-2
negotiate with sellers/landlords, buyers/tenants or others who Article 17 does not require REALTORS® to mediate in those
are not subject to an exclusive agreement but shall not knowingly circumstances when all parties to the dispute advise the Board
obligate them to pay more than one commission except with their in writing that they choose not to mediate through the Board’s
informed consent. (Amended 1/98) facilities. The fact that all parties decline to participate in
mediation does not relieve REALTORS® of the duty to arbitrate.
In cooperative transactions REALTORS® shall compensate Article 17 does not require REALTORS® to arbitrate in those
cooperating REALTORS® (principal brokers) and shall not circumstances when all parties to the dispute advise the Board
compensate nor offer to compensate, directly or indirectly, in writing that they choose not to arbitrate before the Board.
any of the sales licensees employed by or affiliated with other (Amended 1/12)
REALTORS® without the prior express knowledge and consent of • Standard of Practice 17-3
the cooperating broker. REALTORS®, when acting solely as principals in a real estate
• Standard of Practice 16-16 transaction, are not obligated to arbitrate disputes with other
REALTORS®, acting as subagents or buyer/tenant representatives REALTORS® absent a specific written agreement to the contrary.
or brokers, shall not use the terms of an offer to purchase/lease (Adopted 1/96)
to attempt to modify the listing broker’s offer of compensation • Standard of Practice 17-4
to subagents or buyer/tenant representatives or brokers nor Specific non-contractual disputes that are subject to arbitration
make the submission of an executed offer to purchase/lease pursuant to Article 17 are:
contingent on the listing broker’s agreement to modify the offer of
compensation. (Amended 1/04) 1) Where a listing broker has compensated a cooperating
broker and another cooperating broker subsequently claims
to be the procuring cause of the sale or lease. In such cases
199

the complainant may name the first cooperating broker as 4) Where two or more listing brokers claim entitlement to
respondent and arbitration may proceed without the listing compensation pursuant to open listings with a seller or
broker being named as a respondent. When arbitration landlord who agrees to participate in arbitration (or who
occurs between two (or more) cooperating brokers and requests arbitration) and who agrees to be bound by the
where the listing broker is not a party, the amount in dispute decision. In cases where one of the listing brokers has been
and the amount of any potential resulting award is limited compensated by the seller or landlord, the other listing
to the amount paid to the respondent by the listing broker broker, as complainant, may name the first listing broker
and any amount credited or paid to a party to the transaction as respondent and arbitration may proceed between the
at the direction of the respondent. Alternatively, if the brokers. (Adopted 1/97)
complaint is brought against the listing broker, the listing 5) Where a buyer or tenant representative is compensated by
broker may name the first cooperating broker as a third- the seller or landlord, and not by the listing broker, and the
party respondent. In either instance the decision of the listing broker, as a result, reduces the commission owed by
hearing panel as to procuring cause shall be conclusive with the seller or landlord and, subsequent to such actions, claims
respect to all current or subsequent claims of the parties to be the procuring cause of sale or lease. In such cases
for compensation arising out of the underlying cooperative arbitration shall be between the listing broker and the buyer
transaction. (Adopted 1/97, Amended 1/07) or tenant representative and the amount in dispute is limited
2) Where a buyer or tenant representative is compensated by to the amount of the reduction of commission to which the
the seller or landlord, and not by the listing broker, and the listing broker agreed. (Adopted 1/05)
listing broker, as a result, reduces the commission owed
by the seller or landlord and, subsequent to such actions,
The obligation to arbitrate established in Article 17 includes
another cooperating broker claims to be the procuring cause
disputes between REALTORS® (principals) in different states
of sale or lease. In such cases the complainant may name
in instances where, absent an established inter-association
the first cooperating broker as respondent and arbitration
arbitration agreement, the REALTOR® (principal) requesting
may proceed without the listing broker being named as
arbitration agrees to submit to the jurisdiction of, travel to,
a respondent. When arbitration occurs between two (or
participate in, and be bound by any resulting award rendered
more) cooperating brokers and where the listing broker is
in arbitration conducted by the respondent(s) REALTOR®’s
not a party, the amount in dispute and the amount of any
association, in instances where the respondent(s) REALTOR®’s
potential resulting award is limited to the amount paid to
association determines that an arbitrable issue exists.
the respondent by the seller or landlord and any amount
(Adopted 1/07)
credited or paid to a party to the transaction at the direction
of the respondent. Alternatively, if the complaint is brought Explanatory Notes
against the listing broker, the listing broker may name the
first cooperating broker as a third-party respondent. In either The reader should be aware of the following policies which
instance the decision of the hearing panel as to procuring have been approved by the Board of Directors of the National
cause shall be conclusive with respect to all current or Association:
subsequent claims of the parties for compensation arising In filing a charge of an alleged violation of the Code of Ethics by a
Chapter 5 out of the underlying cooperative transaction. REALTOR®, the charge must read as an alleged violation of one or
(Adopted 1/97, Amended 1/07) more Articles of the Code. Standards of Practice may be cited in
The Professional
3) Where a buyer or tenant representative is compensated support of the charge.
Codes of Ethics
by the buyer or tenant and, as a result, the listing broker The Standards of Practice serve to clarify the ethical obligations
reduces the commission owed by the seller or landlord and, imposed by the various Articles and supplement, and do not
subsequent to such actions, another cooperating broker substitute for, the Case Interpretations in Interpretations of the Code
claims to be the procuring cause of sale or lease. In such of Ethics.
cases the complainant may name the first cooperating broker
as respondent and arbitration may proceed without the Modifications to existing Standards of Practice and additional new
listing broker being named as a respondent. Alternatively, Standards of Practice are approved from time to time. Readers are
if the complaint is brought against the listing broker, the cautioned to ensure that the most recent publications are utilized.
listing broker may name the first cooperating broker as a
third-party respondent. In either instance the decision of
the hearing panel as to procuring cause shall be conclusive
with respect to all current or subsequent claims of the parties
for compensation arising out of the underlying cooperative
transaction. (Adopted 1/97)
430 North Michigan Avenue | Chicago, IL 60611-4087

800.874.6500 | www.nar.realtor
©2021 NATIONAL ASSOCIATION OF REALTORS®
166-288-21 (01/21 BFC)
200

CHAPTER 5 QUIZ
1. Which of the following is discussed in the text as a factor that can shape a person’s sense of
morality?
a. School experience
b. The media
c. Literature
d. Real estate training
2. The Code of Ethics and Standards of Practice is designed for _____ to adhere to.
a. All Texas real estate sales agents

b. Real estate inspectors
c. REALTORS®
d. Brokers only
3. A real estate broker or sales agent, while acting as an agent for another, is a(n) _____.
a. Fiduciary
b. REALTOR®
c. Easement
d. Plaintiff
Chapter 5
The Professional
Codes of Ethics
201

Notes
202

CHAPTER 6
The Transaction Process

and Closing

Chapter 6: The Transaction Process and Closing
offer acceptance rejection
counteroffer negotiating transaction process
closing Closing Disclosure
PRE-TEST
1. _____ Transaction process a. doing everything in your power to get the

offer accepted
2. _____ Counteroffer b. the process by which the buyer pays for the
property and the seller conveys title
3. _____ Negotiation c. both parties agree to all terms and conditions

of the offer
Chapter 6 4. _____ Acceptance d. begins after the terms of the contract have
been negotiated, and it has been signed
The Transaction
Process
and Closing
5. _____ Closing e. an offer that is made in response to another
1. d 2. e 3. a 4. c 5. b
Answers to Pre-test
204

THE EARNEST MONEY CONTRACT
A s a license holder, you will be required to use the Texas Real Estate Commission’s promulgated
earnest money contract forms. There are some exceptions to this rule. If the buyer or the seller
has a form or one prepared by an attorney, then you may use that form. If you are using an earnest
money contract other than the TREC form, then advise the other principal in the transaction to
have an attorney also. An attorney will protect the other principal’s interest in a way that you are not
qualified to do.
Remember that under no circumstances can you practice law. You may only fill in the blanks on the
pre-approved forms. Still, your buyer or seller relies on you to help prepare, explain, and interpret
the forms, so you must know what you are doing.
In securing an offer from your buyer, he will likely seek your advice and counseling about certain
parts of the offer. If you are acting as a buyer’s agent, then you are free to advise on terms and
conditions and work to make the offer as favorable to your buyer as possible. You must realize that
this does not mean you can work miracles in getting the seller to accept these terms and conditions;
however, a properly worded and presented offer can often secure some concessions from the seller.
If you are working under Intermediary status as an appointee with the buyer, you can give advice and
opinions. Additionally, you must be careful not to suggest a lower-than-list-price offer, although you
can certainly present one.
If you are working as a seller’s subagent, then you can provide the buyer with information only, such
as comparable properties listed or sold in the neighborhood and current market conditions. You
should be careful not to counsel the buyers, as it is your responsibility to put the sellers’ interests first. Chapter 6
In any case, preparing the contract is a big step.
The Transaction
Process
THE OFFER and Closing
Assume you are working as a buyer’s agent. Your buyers are ready to write an offer. One of the first
things you should do is contact the listing agent. After disclosing that you are a buyer’s agent, you
will explain that your buyers have seen many homes in Friendly Village subdivision. One of these
is his listing. Indicate that you have sent the agent your feedback email, text, or fax and that your
buyers are considering submitting an offer. At this point, you can begin to ask the listing agent
for information. The wording of your questions is essential. For example, suppose your buyers are
desperate for a quick closing and occupancy and can wait no longer than thirty days. Below are two
ways to determine if this would be acceptable to the seller. Which of these questions should a buyer’s
agent use, and why?
1. “My buyers would like a thirty-day closing and occupancy. Would this work for your
sellers?”
2. “If my buyers were to make an offer, Mr. Listing Agent, what conditions on closing and
occupancy would most likely be acceptable to your sellers?”
The first question gives some valuable information about your buyers to the sellers’ agent. If the
sellers know this, it could give them an edge in negotiating. The second question, on the other hand,
is non-committal about your buyers and may give you some information about the sellers. This
approach would be the best way to question the listing agent. By using these types of questions, it is
likely that you can determine a good deal about what will be acceptable to the seller and what will
not be. This knowledge can help you draw up a viable offer on the property.
Once you have gathered as much information as possible from the listing sales agent, it is time to
write up the offer. Again, you may have to use several techniques with your buyers, depending on the
situation. For example, suppose you have buyers who insist on submitting a meager offer. As a buyer’s 205

agent, you want to help your buyers get the best deal possible. One way is to help them is to be
realistic. If the price is way too low, then begin preparing the contract. Write in all the information
that you can without entering the price. The act of preparing the contract makes the buyers think
about owning the home. Cover such details as repair costs, inspections, closing date, occupancy, and
the Seller’s Disclosure Notice. Ask the buyers if there were any items at the property that the buyers
specifically want to stay with the property. Write these items into the contract, as these are the very
things that could cause trouble later.
Now, sit and face your buyers. Ask them if they are sincere in their desire to own this home. Remind
them of the knowledge they have gained about your market and current prices and ask if they are
sure about their offering price. Just as a listing sales agent should work to ensure a realistic list price,
a Selling Sales agent should work for a realistic sale price. It is your job to disclose if the offering
price is too low or too high. If your buyers insist, of course, you must offer what they say. One final
question is to ask if they were the owners, would they sell for this price? Often this line of question-
ing will help your buyers to come to a more practical decision. It would be in their best interest to
remind them that a low price could alienate sellers completely, and then the sellers will not even wish
to negotiate. To avoid this, it is often a good idea to put a good-sized earnest money deposit with the
offer to demonstrate their sincere interest in the property.
Beyond helping the buyers come to a price, you can also recommend terms, such as requiring the
sellers to provide a homeowners’ warranty policy. A homeowner’s warranty is a great way to give
your buyers some peace of mind about the property condition and repairs for their first year in the
home.
In Texas, it is traditional for the listing sales agent to submit the offer. If you are acting as a Buyers’
Chapter 6 Agent and are a good negotiator, it is a good idea to have your buyers request, as part of the offer,
that you be present when the sellers receive the offer. Although the listing agent may not be too
The Transaction happy about this, remember, your job is to place the buyers’ interests first. Often, the best way to
Process
and Closing
represent the buyers’ interests is to be there to present the offer in the best possible light.
PRESENTING THE OFFER

Once you have an offer, you must prepare to present it. Your presentation will vary depending on
whether you are the listing agent or the buyers’ agent. Let’s look at it from the perspective of a listing
agent first.
• Read the offer carefully and be sure that you understand all of the terms and conditions.
• Prepare a new Seller’s Net sheet based on the offer.
• Review the MLS to see if there are any new “solds” in the neighborhood since you originally
prepared the CMA and listing presentation. If there is new information, prepare to be able to
present it to your sellers.
• Determine any benefits to the offer other than the price. For example, the requested closing
date may be the date that your sellers want. Another positive feature could be a relocation
buyer whose company will pay all closing costs. A pre-approved buyer who already has financ-
ing is another excellent incentive to accept an offer.
• You should be able to make a recommendation about accepting, rejecting, or countering the
offer based on your knowledge of the market and current market conditions. Of course, the
decision is the sellers’, but you should have an opinion backed by reliable information.
• Make an appointment to present the offer to both parties. Do not disclose any of the terms of
the offer until you are face-to-face with your sellers. Revealing the price over the phone before
206

you have a chance to present all the terms could lead to the seller rejecting it without proper
consideration.
If you are a buyer’s agent and will present the offer, or be present when the offer is presented, then
you should do the following things.
• Prepare a Sellers’ Net sheet in case the listing agent has not done so. It is better to have
two of these than none at all.
• Check the MLS for recent sales that help to justify your offering price.
• Be prepared to give a little information about your buyers and to stress the positive aspects
of the offer, other than the price. Once the buyers seem like people to the sellers, rather
than just names on a piece of paper, the offer seems more sincere.
• Make an appointment to meet with the sellers. Never disclose the price over the phone as
it places too much emphasis on one aspect of the offer over the others.
NOTE ABOUT CONTRACTS:

• An offer can be revoked at any time prior to acceptance by the seller, so it is important to act
on an offer as quickly as possible.
• An offer can be accepted, rejected, or countered.
• Acceptance means total acceptance of all the terms and conditions as presented in the offer.
Nothing is changed. The seller signs the offer exactly as it is presented to him. Chapter 6
•
A rejection is simply that. The seller refuses to accept the offer. The Transaction
Process
and Closing
•
A counteroffer is really a rejection. The buyers are now off the hook. The counteroffer is a
new offer from the seller to the buyer with terms and conditions different from those in the
listing. It can be treated just like the buyer’s original offer. That is, it can be withdrawn prior
to acceptance by the seller. Alternatively, the buyer can accept, reject, or counter it.
OVERCOMING OBJECTIONS AND OBTAINING COUNTEROFFERS

If you have done your best to present the offer in the most favorable light, and the sellers do not
want to accept the offer, several avenues are open to you. Again, your agency relationship will play
a part. If you are the listing agent and honestly believe it is a reasonable offer, use all the knowledge
and material facts available to convince your sellers. Emphasize your position in the selling cycle
and the length of time the property has been available. Stress all positive features of the offer as well
as the buyers, including size of the deposit, the buyers’ qualifications, and the closing date. Discuss
market activity and interest rates and uncertainty in waiting for a better offer. Empathize with their
position, but stress the need to be realistic about value.
If, on the other hand, you feel that the sellers are right and the price is too low, encourage a
counteroffer, but be sure they understand that it is a rejection, that lets the buyer off the hook.
If you are the buyer’s agent and you receive another counteroffer, be sure the sellers understand that
it is a rejection. You should encourage the sellers to be realistic in their counteroffering price. Work
to get the sellers to tell you the lowest price they will accept, and then work on other conditions
that are important to your buyers. You are aware of them, and you can impress the seller with their
importance to getting your buyers’ agreement. After all, you will have to sell this counteroffer to
your buyers.
207

NEGOTIATING
When you write an offer, you should always discuss with the buyers the possibility of a counteroffer.
There is no guarantee that any offer will be accepted. If the buyers are offering less than the asking,
either in price or terms, there could be a rejection or a counteroffer. Carefully and conscientiously
review the weak points of the offer before you present it, to prepare the buyers. For example, if the
listing says possession on June 1st and your buyers are asking for March 1st, then you can tell them
this could be a problem, especially since they are not offering full price. Then, promise to do every-
thing in your power to get the offer accepted.
Once you have a counteroffer, take it to your buyers in person. Start with the positive aspects of the
counteroffer, just as you did with the sellers. For example, in the case above, you could say, “Guess
what, March 1st is okay with them,” so that is one problem we won’t have to deal with. Now lead to
the price, which is usually the biggest problem. Instead of stating the seller’s counter, it is probably
a better idea to say something like, “They countered at $5,000 more than you offered.” Your buyers
may do the addition themselves and say, “You mean they want $185,000 for the house?!?” You should
repeat the difference, “Yes, they want $5,000 more.” This is much less intimidating than $185,000,
yet totally honest.
As a buyer’s agent, you are prepared to try to get the buyer the best possible terms and conditions.
If you believe the sellers’ price is realistic, then use all the information and data available to you to
sell it. It is much more effective to sell amenities than to argue the price. So remind the buyers of all
the ways the property meets their needs and all the positives it has. Stress its advantages over other
available properties, and finally, if necessary, figure the buyer’s cost. If the interest rates are 9%, and
the loan is for 30 years, the added monthly payment is $40.25. Can your buyers afford this, and will
the property save them that much in other ways?
Chapter 6
Another technique is to ask the buyers if they want to go back and look at their second and third
The Transaction choices again. By dismissing the first choice, you could encourage one party or the other to become
Process
and Closing
adamant in their desire to have it.
Finally, if your buyers cannot or will not pay more than their original offer, you may want to wait
a few days (usually 3) and try again. Especially if a weekend has gone by and the sellers have had
no additional activity or offers, they may be regretting their rejection. If your buyers are willing to
do this, it never hurts to try. At least they will know for sure if there is any chance of obtaining the
property, or if they should earnestly pursue another property. Also, it is possible that after this cool-
ing-off period, they may have figured out a way to increase their offer, as their desire for the property
may have increased. If you are going to use this tactic, you must remain in contact with the buyers,
and continue to work in their best interests.
Whether you have been negotiating for the buyer or the seller, you have been trying to get the two
sides to agree. Often in the process, you will have to deal with stubbornness, pride, ego, and other
personality traits that will get in the way of the transaction. In every case, it is to your benefit to
be calm, pleasant, and patient; it never hurts to be diplomatic. If you cannot agree with someone,
at least do not disagree. Show an understanding of their position. Words of sympathy, empathy, or
understanding can go a long way toward helping the negotiating process. The philosophy behind
these types of remarks is that if you cannot give someone exactly what they want in terms, price, or
conditions, you can at least give them the satisfaction of agreeing with their position or opinion and
letting them feel they are justified in thinking that way.
Try using phrases like:

“I completely understand your position.”
“You’re right. I’ve been there myself.”
208 “I sympathize with you.”

ACCEPTANCE
Once you have buyers and sellers who have accepted each others’ terms and conditions, be sure to get
everything signed, have everyone initial all changes to the original offer, and give everyone a copy
of the signed agreement.
CLOSING TECHNIQUES
On average, around 20% of real estate transactions fail to make it to the closing table. This percentage
can be minimized by preparing the involved parties in advance and by being a close participant
of the process, keeping everyone informed along the way, and, most importantly, following up.
The following steps illustrate practical ways that new agents can ensure their clients are satisfied
throughout the whole process.
STEP 1: EDUCATE BUYERS AND SELLERS

Buyers and sellers can harbor unspoken fears and concerns, all of which will manifest in their resis-
tance to a particular course of action or decision. Fears and concerns can prevent buyers or sellers
from committing to the process and the purchase or sale of a home. By preparing and informing cli-
ents of the inner workings of offers and counteroffers, loan applications, appraisals and inspections,
title searches, and the closing process, you will be able to mitigate your clients’ fears and lessen their
apprehension about the transaction.
Advising your clients of the transaction’s steps and providing a timeline to them is an easy way of
acknowledging that the process can be complicated and confusing, and opening the door to ques-
tions about any particular point they may wish to have clarified. Many title companies provide
helpful flow charts that you can use.
The narrative steps may include: Chapter 6

• Credit checks, loan application, and pre-qualification
The Transaction
Process
• The process of finding a home or listing and selling and Closing
• Making an offer, counteroffer, acceptance of the offer
• Earnest money
• The loan process, verification, and fees
• Title search and title insurance
• Appraisal process, inspections, and repairs
• Homeowner’s insurance (and warranties)
• Preparing for moving, utilities, keys
• The closing and related documents, recording of the deed
STEP 2: SOLID PRE-QUALIFICATION

This stage is critical to the closing of a transaction. A high percentage of home sales fail due to the
inability to qualify for a mortgage loan, which translates into a loss of valuable time and dollars for
the unskilled agent who allows an unqualified buyer to use their time and resources - for free.
Before beginning the buying process, agents should take the necessary steps and time to determine if
their clients qualify for their targeted price range, have the available funds, can afford the payments,
and have an acceptable credit rating.
209

Due to the number of foreclosures in the past, lenders carefully examine the client’s ability to pay
and maintain payment of the loan. It is better to know upfront if your client will have problems
obtaining credit. The client should talk to a lender to potentially resolve the issues or decide on a
course of action best suited to your buyer’s profile. Lenders are the agent’s willing partners in the
transaction process, and many offer a relatively brief pre-qualifying session at no cost to the buyer.
By encouraging your buyers to be pre-qualified, you are doing them a great service. No one wants
to have to start the buying process over again after investing significant time. The lender will know
of the best loan package for your client, and by having them formally pre-qualified, you will be
working with a buyer who will actually buy. Buyers will be more honest with a lender than they may
initially be with a real estate agent. Willingness and desire are not going to replace a negative credit
report. Only time and appropriate action can do that. With the pre-qualification step in place, you
are closer to the “accepted offer” stage.
STEP 3: FOLLOW UP AFTER THE OFFER IS ACCEPTED

There is quite a bit more involved in getting a contract signed than finding the right property. As
mentioned in the first step of the process, diligently following the steps of the offer through to the
closing is not only your responsibility as an agent. It is vital to the successful completion of the
transaction. That can never be better explained than at the point when other professionals enter the
process, such as other agents, lenders, inspectors, appraisers, and title companies.
There can be a very delicate balance to be maintained because you do not ever want to demean the
work of another professional related to your business, but you must exercise sound professional judg-
ment by maintaining a presence in all that is involved. Particularly important is your duty to keep the
parties informed and keep track of all the details; this translates into communication and utilizing a
Chapter 6 system for tracking and monitoring transaction activity.
The Transaction Stay in touch with your clients and those who are involved in the process. Timeliness is essential,
Process
and Closing
and attention to detail will help ease stress. Employ a checklist to ensure that you do not forget
anything.
STEP 4: DAY OF CLOSING

If you have diligently and thoroughly followed through with the previous three steps, you will now
be entering the well-deserved and much-anticipated day of closing. The critical details of the mort-
gage loan process, the title search, inspections, and repairs are all complete. Could there be anything
else to consider? Unfortunately, yes. However, preparation will be the key to success.
There is a psychological component in play at this point - everyone wants to feel comfortable and
confident, and yet there could be something unexpected that arises. Contact the closing officer in
the days before closing (again if necessary) to confirm that the final details have been accounted
for. Often last-minute details can delay a closing. Try to take everything into account, is there any
final step regarding repairs or funds, homeowner’s insurance premiums or coverage verification,
document verification and deliver, final loan approval and credit review that must be addressed? Do
other people make mistakes or forget things? Of course! The closing documents should be reviewed
for proper spellings, names, terms, numbers, and legal descriptions. Last-minute changes can delay
the closing time and funding.
STEP 5: FOLLOW UP AFTER THE CLOSING

Unfortunately, this step is where many otherwise successful agents may lose future business. Most
satisfied clients would like to use their agent again and would even refer business the agent’s way if
only they could remember the name and contact information; this is a sad but true reality. Thousands
of dollars in repeat and referral business are lost each year due to the lack of this one simple, strategic
step - follow up after the closing. The consummate professional is the one who checks in with clients
after the paycheck has been received and cashed.
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Before going to the closing, prepare a handwritten thank you note or a letter thanking the client for
their business. Small closing gifts are also a nice gesture when accompanied by a note.
For example, if your client has a homeowner’s warranty/service provider contract, take the time to
review the policy, paying attention to the process of submitting requests for repair, with him. Try to
think of ways to help your clients maintain their homes, and they will be happy homeowners - that
is, until they become home sellers and call you again!
TRANSACTION PROCESS
Once the terms of a contract have been negotiated and the contract has been signed by all parties,
the transaction process begins. Both the buyer and seller have considerable obligations to meet if
the contract is to close. The period between the signing of a contract and closing will vary depending
on the complexity of the transaction and the manner of payment (cash, third-party financing, and
seller finance).
A simple cash transaction can take place in a short time and can often close in a matter of a few
days or a couple of weeks. Transactions financed with a new mortgage loan will require considerably
more time to close. A consequence of the financial crisis and the resulting Dodd-Frank Act is that
loans are taking longer to close than previously because of the compliance requirements placed upon
lenders.
Once the terms of the sale have been agreed to by both the buyer and the seller, the signed contract
and all associated exhibits and addenda should be delivered to the title company. The earnest money
deposit and fee option, if applicable, should be made payable to the escrow agent and then delivered
to the escrow agent. License holders should take care to ensure that all parties and agents have a copy Chapter 6
of the final contract forms and that the proper final contract forms are delivered to the title company.
The Transaction
Process
The contract can be delivered to the title company by either the buyer or seller’s agent. The agent and Closing
should receive a receipt from the title company that documents the date and time that the contract
was received. The agent or buyer should also receive a receipt from the escrow agent that documents
the date and time the earnest money was received.
211

THE SALES PROCESS - RESIDENTIAL
Chapter 6
The Transaction
Process
and Closing
212

THE SALES PROCESS - COMMERCIAL
Chapter 6
The Transaction
Process
and Closing
213

SAMPLE CHECKLIST
A sample checklist for a typical residential transaction using the TREC-promulgated One of Four
Family Residential Contract (Resale) is included on the following pages. Not all elements will be
relevant to every transaction.
1. PARTIES
Seller’s name as it appears on the deed , Buyer’s name as the

buyer would like it to appear on the title
2. LEGAL PROPERTY DESCRIPTION
Lot # ; Block # ; Addition, City ,
County , Address/ Zip Code
EXCLUSIONS
3. SALES PRICE
A. Down Payment (in cash)............ $
B. Sum of all ﬁnancing ...................$
C. Sales Price (A+B) ........................$

Chapter 6 4. LICENSE HOLDER DISCLOSURE
The Transaction
Process 5. EARNEST MONEY
and Closing
Amount $
Name of Escrow Agent ; Address
Additional earnest money $ ; # of days
6. TITLE POLICY AND SURVEY
Title Policy : Buyer’s expense Seller’s expense
Title company issuing the policy
Survey
# of days to furnish ; who will pay? ( Buyer’s expense / Seller’s expense)
OBJECTIONS
# of days to object Title Notices: The property is is not subject to man-

datory membership in a POA(s)
7. PROPERTY CONDITION
SELLER’S DISCLOSURE NOTICE
1. Buyer has received the notice

2. Buyer has not received the notice; # of days to furnish
214 3. Seller is not required to furnish the notice

LEAD-BASED PAINT ADDENDUM: Was the house built before 1978?
Yes No
ACCEPTANCE OF PROPERTY CONDITION:
Buyer accepts the property As Is ;
Buyer accepts the property As Is with speciﬁc repairs and treatments
RESIDENTIAL SERVICE CONTRACTS:
$ Seller contribution to cost of residential contract
8. BROKERS’ FEES: Contained within separate written agreements
9. CLOSING
Date of closing
10. POSSESSION
BUYER’S POSSESSION: Upon closing and funding According to a TREC-pro

mulgated temporary release
11. SPECIAL PROVISIONS Chapter 6

12. SETTLEMENT AND OTHER EXPENSES The Transaction
Process
and Closing
SELLER EXPENSES $
215

21. NOTICES
Buyer Seller
Address
Telephone
Facsimile
E-mail
22. AGREEMENT OF PARTIES: Which addendum is part of this contract?
Third Party Financing Addendum Environmental Assessment, Threatened or Endan-

gered Species and Wetlands Addendum
Seller Financing Addendum Seller’s Temporary Residential Lease
Addendum for Property Subject to Mandatory Addendum for Property Located Seaward of the
Membership in a Property Owners Association Gulf Intracoastal Waterway
Buyer’s Temporary Residential Lease Addendum for Seller’s Disclosure of Information on

Lead-based Paint and Lead-based Paint Hazards as
Required by Federal Law
Chapter 6
The Transaction Loan Assumption Addendum Addendum for Property in a Propane Gas System
Process Service Area
and Closing
Addendum for Sale of Other Property by Buyer Other (list):
Addendum for Reservation of Oil, Gas and Other

Minerals
Addendum for “Back-Up” Contract
Addendum for Coastal Area Property
23. TERMINATION OPTION
$ Amount of option fee
# of days option fee purchases The option fee will / will not be credited to the Sales Price at closing.
24. CONSULT AN ATTORNEY BEFORE SIGNING
Buyer’s Attorney Seller’s Attorney
Name
Telephone
Facsimile
E-mail
216

Contract Concerning Page of 11 11-10-2020
PROMULGATED BY THE(Address
TEXASofREAL ESTATE COMMISSION (TREC)
Property)
ONE TO FOUR FAMILY RESIDENTIAL CONTRACT (RESALE)
NOTICE: Not For Use For Condominium Transactions EQUAL HOUSING
OPPORTUNITY
1. PARTIES: The parties to this contract are

(Seller) and (Buyer).
Seller agrees to sell and convey to Buyer and Buyer agrees to buy from Seller the Property defined
below.
2. PROPERTY: The land, improvements and accessories are collectively referred to as the
Property (Property).
A. LAND: Lot Block ,
Addition, City of , County of ,
Texas, known as
(address/zip code), or as described on attached exhibit.
B. IMPROVEMENTS: The house, garage and all other fixtures and improvements attached to the
above-described real property, including without limitation, the following permanently installed
and built-in items, if any: all equipment and appliances, valances, screens, shutters,
awnings, wall-to-wall carpeting, mirrors, ceiling fans, attic fans, mail boxes, television
antennas, mounts and brackets for televisions and speakers, heating and air-conditioning units,
security and fire detection equipment, wiring, plumbing and lighting fixtures, chandeliers, water
softener system, kitchen equipment, garage door openers, cleaning equipment, shrubbery,
landscaping, outdoor cooking equipment, and all other property attached to the above
described real property.
C. ACCESSORIES: The following described related accessories, if any: window air conditioning
units, stove, fireplace screens, curtains and rods, blinds, window shades, draperies and rods,
door keys, mailbox keys, above ground pool, swimming pool equipment and maintenance
accessories, artificial fireplace logs, security systems that are not fixtures, and controls for: (i)
garage doors, (ii) entry gates, and (iii) other improvements and accessories. “Controls” includes
Seller’s transferable rights to the (i) software and applications used to access and control
improvements or accessories, and (ii) hardware used solely to control improvements or Chapter 6
accessories. The Transaction
D. EXCLUSIONS: The following improvements and accessories will be retained by Seller and Process
must be removed prior to delivery of possession: . and Closing
E. RESERVATIONS: Any reservation for oil, gas, or other minerals, water, timber, or other
interests is made in accordance with an attached addendum.
3. SALES PRICE:
A. Cash portion of Sales Price payable by Buyer at closing ........................... $
B. Sum of all financing described in the attached:  Third Party Financing Addendum,
 Loan Assumption Addendum,  Seller Financing Addendum .......... $
C. Sales Price (Sum of A and B) ............................................................... $
4. LEASES: Except as disclosed in this contract, Seller is not aw are of any leases affecting
the Property. After the Effective Date, Seller may not, without Buyer's written consent, create a
new lease, amend any existing lease, or convey any interest in the Property. (Check all applicable
boxes)
 A. RESIDENTIAL LEASES: The Property is subject to one or more residential leases and the
Addendum Regarding Residential Leases is attached to this contract.
 B. FIXTURE LEASES: Fixtures on the Property are subject to one or more fixture leases (for
example, solar panels, propane tanks, water softener, security system) and the Addendum
Regarding Fixture Leases is attached to this contract.
 C. NATURAL RESOURCE LEASES: “Natural Resource Lease” means an existing oil and gas,
mineral, water, wind, or other natural resource lease affecting the Property to which Seller is a
party.
 (1) Seller has delivered to Buyer a copy of all the Natural Resource Leases.
 (2) Seller has not delivered to Buyer a copy of all the Natural Resource Leases. Seller shall
provide to Buyer a copy of all the Natural Resource Leases within 3 days after the Effective
Date. Buyer may terminate the contract within _____ days after the date the Buyer
receives all the Natural Resource Leases and the earnest money shall be refunded to
Buyer.
Initialed for identification by Buyer and Seller TREC NO. 20-15

217

Contract Concerning Page 2 of 11 11-10-2020
(Address of Property)
5. EARNEST MONEY AND TERMINATION OPTION:
A. DELIVERY OF EARNEST MONEY AND OPTION FEE: Within 3 days after the Effective Date, Buyer
must deliver to , as escrow agent, at
____________________ (address): $
as earnest money and $ as the Option Fee. The earnest money and Option
Fee shall be made payable to escrow agent and may be paid separately or combined in a single
payment.
(1) Buyer shall deliver additional earnest money of $ to escrow agent
within days after the Effective Date of this contract.
(2) If the last day to deliver the earnest money, Option Fee, or the additional earnest money
falls on a Saturday, Sunday, or legal holiday, the time to deliver the earnest money, Option
Fee, or the additional earnest money, as applicable, is extended until the end of the next
day that is not a Saturday, Sunday, or legal holiday.
(3) The amount(s) escrow agent receives under this paragraph shall be applied first to the
Option Fee, then to the earnest money, and then to the additional earnest money.
(4) Buyer authorizes escrow agent to release and deliver the Option Fee to Seller at any time
without further notice to or consent from Buyer, and releases escrow agent from liability for
delivery of the Option Fee to Seller. The Option Fee will be credited to the Sales Price at
closing.
B. TERMINATION OPTION: For nominal consideration, the receipt of which Seller acknowledges,
and Buyer's agreement to pay the Option Fee within the time required, Seller grants Buyer the
unrestricted right to terminate this contract by giving notice of termination to Seller within
days after the Effective Date of this contract (Option Period). Notices under this
paragraph must be given by 5:00 p.m. (local time where the Property is located) by the date
specified. If Buyer gives notice of termination within the time prescribed: (i) the Option Fee will
not be refunded and escrow agent shall release any Option Fee remaining with escrow agent to
Seller; and (ii) any earnest money will be refunded to Buyer.
C. FAILURE TO TIMELY DELIVER EARNEST MONEY: If Buyer fails to deliver the earnest money
within the time required, Seller may terminate this contract or exercise Seller’s remedies under
Paragraph 15, or both, by providing notice to Buyer before Buyer delivers the earnest money.
D. FAILURE TO TIMELY DELIVER OPTION FEE: If no dollar amount is stated as the Option Fee or if
Chapter 6 Buyer fails to deliver the Option Fee within the time required, Buyer shall not have the
unrestricted right to terminate this contract under this paragraph 5.
The Transaction E. TIME: Time is of the essence for this paragraph and strict compliance with the time for
Process performance is required.
and Closing 6. TITLE POLICY AND SURVEY:
A. TITLE POLICY: Seller shall furnish to Buyer at  Seller’s  Buyer’s expense an owner policy of
title insurance (Title Policy) issued by (Title
Company) in the amount of the Sales Price, dated at or after closing, insuring Buyer against
loss under the provisions of the Title Policy, subject to the promulgated exclusions (including
existing building and zoning ordinances) and the following exceptions:
(1) Restrictive covenants common to the platted subdivision in which the Property is located.
(2) The standard printed exception for standby fees, taxes and assessments.
(3) Liens created as part of the financing described in Paragraph 3.
(4) Utility easements created by the dedication deed or plat of the subdivision in which the
Property is located.
(5) Reservations or exceptions otherwise permitted by this contract or as may be approved by
Buyer in writing.
(6) The standard printed exception as to marital rights.
(7) The standard printed exception as to waters, tidelands, beaches, streams, and related
matters.
(8) The standard printed exception as to discrepancies, conflicts, shortages in area or boundary
lines, encroachments or protrusions, or overlapping improvements:
 (i) will not be amended or deleted from the title policy; or
 (ii) will be amended to read, "shortages in area" at the expense of  Buyer  Seller.
(9) The exception or exclusion regarding minerals approved by the Texas Department of
Insurance.
B. COMMITMENT: Within 20 days after the Title Company receives a copy of this contract, Seller
shall furnish to Buyer a commitment for title insurance (Commitment) and, at Buyer's expense,
legible copies of restrictive covenants and documents evidencing exceptions in the Commitment
(Exception Documents) other than the standard printed exceptions. Seller authorizes the Title
Company to deliver the Commitment and Exception Documents to Buyer at Buyer's address
shown in Paragraph 21. If the Commitment and Exception Documents are not delivered to
Buyer within the specified time, the time for delivery will be automatically extended up to 15
days or 3 days before the Closing Date, whichever is earlier. If the Commitment and Exception
Documents are not delivered within the time required, Buyer may terminate this contract and
the earnest money will be refunded to Buyer.
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C. SURVEY: The survey must be made by a registered professional land surveyor acceptable to the
Title Company and Buyer’s lender(s). (Check one box only)
(1)Within days after the Effective Date of this contract, Seller shall furnish to Buyer and
Title Company Seller's existing survey of the Property and a Residential Real Property
Affidavit promulgated by the Texas Department of Insurance (T-47 Affidavit). If Seller fails to
furnish the existing survey or affidavit within the time prescribed, Buyer shall
obtain a new survey at Seller's expense no later than 3 days prior to Closing Date.
If the existing survey or affidavit is not acceptable to Title Company or Buyer's lender(s),
Buyer shall obtain a new survey at Seller's Buyer's expense no later than 3 days prior to
Closing Date.
(2)Within days after the Effective Date of this contract, Buyer shall obtain a new survey
at Buyer's expense. Buyer is deemed to receive the survey on the date of actual receipt or
the date specified in this paragraph, whichever is earlier.
(3)Within days after the Effective Date of this contract, Seller, at Seller's expense shall
furnish a new survey to Buyer.
D. OBJECTIONS: Buyer may object in writing to defects, exceptions, or encumbrances to title:
disclosed on the survey other than items 6A(1) through (7) above; disclosed in the
Commitment other than items 6A(1) through (9) above; or which prohibit the following use or
activity: .
Buyer must object the earlier of (i) the Closing Date or (ii) days after Buyer receives the
Commitment, Exception Documents, and the survey. Buyer’s failure to object within the time
allowed will constitute a waiver of Buyer’s right to object; except that the requirements in
Schedule C of the Commitment are not waived by Buyer. Provided Seller is not obligated to
incur any expense, Seller shall cure any timely objections of Buyer or any third party lender
within 15 days after Seller receives the objections (Cure Period) and the Closing Date will be
extended as necessary. If objections are not cured within the Cure Period, Buyer may, by
delivering notice to Seller within 5 days after the end of the Cure Period: (i) terminate this
contract and the earnest money will be refunded to Buyer; or (ii) waive the objections. If
Buyer does not terminate within the time required, Buyer shall be deemed to have waived the
objections. If the Commitment or Survey is revised or any new Exception Document(s) is
delivered, Buyer may object to any new matter revealed in the revised Commitment or Survey
or new Exception Document(s) within the same time stated in this paragraph to make Chapter 6
objections beginning when the revised Commitment, Survey, or Exception Document(s) is
delivered to Buyer. The Transaction
E. TITLE NOTICES: Process
(1) ABSTRACT OR TITLE POLICY: Broker advises Buyer to have an abstract of title covering the and Closing
Property examined by an attorney of Buyer’s selection, or Buyer should be furnished with or
obtain a Title Policy. If a Title Policy is furnished, the Commitment should be promptly
reviewed by an attorney of Buyer’s choice due to the time limitations on Buyer’s right to
object.
(2) MEMBERSHIP IN PROPERTY OWNERS ASSOCIATION(S): The Property is is not subject
to mandatory membership in a property owners association(s). If the Property is subject to
mandatory membership in a property owners association(s), Seller notifies Buyer under
§5.012, Texas Property Code, that, as a purchaser of property in the residential community
identified in Paragraph 2A in which the Property is located, you are obligated to be a
member of the property owners association(s). Restrictive covenants governing the use and
occupancy of the Property and all dedicatory instruments governing the establishment,
maintenance, or operation of this residential community have been or will be recorded in
the Real Property Records of the county in which the Property is located. Copies of the
restrictive covenants and dedicatory instruments may be obtained from the county clerk.
You are obligated to pay assessments to the property owners association(s). The
amount of the assessments is subject to change. Your failure to pay the
assessments could result in enforcement of the association’s lien on and the
foreclosure of the Property.
Section 207.003, Property Code, entitles an owner to receive copies of any document that
governs the establishment, maintenance, or operation of a subdivision, including, but not
limited to, restrictions, bylaws, rules and regulations, and a resale certificate from a
property owners' association. A resale certificate contains information including, but not
limited to, statements specifying the amount and frequency of regular assessments and the
style and cause number of lawsuits to which the property owners' association is a party,
other than lawsuits relating to unpaid ad valorem taxes of an individual member of the
association. These documents must be made available to you by the property owners'
association or the association's agent on your request.
If Buyer is concerned about these matters, the TREC promulgated Addendum for
Property Subject to Mandatory Membership in a Property Owners Association(s)
should be used.
(3) STATUTORY TAX DISTRICTS: If the Property is situated in a utility or other statutorily
created district providing water, sewer, drainage, or flood control facilities and services,
219

Chapter 49, Texas Water Code, requires Seller to deliver and Buyer to sign the statutory
notice relating to the tax rate, bonded indebtedness, or standby fee of the district prior to
final execution of this contract.
(4) TIDE WATERS: If the Property abuts the tidally influenced waters of the state, §33.135,
Texas Natural Resources Code, requires a notice regarding coastal area property to be
included in the contract. An addendum containing the notice promulgated by TREC or
required by the parties must be used.
(5) ANNEXATION: If the Property is located outside the limits of a municipality, Seller notifies
Buyer under §5.011, Texas Property Code, that the Property may now or later be included in
the extraterritorial jurisdiction of a municipality and may now or later be subject to
annexation by the municipality. Each municipality maintains a map that depicts its
boundaries and extraterritorial jurisdiction. To determine if the Property is located within a
municipality’s extraterritorial jurisdiction or is likely to be located within a municipality’s
extraterritorial jurisdiction, contact all municipalities located in the general proximity of the
Property for further information.
(6) PROPERTY LOCATED IN A CERTIFICATED SERVICE AREA OF A UTILITY SERVICE PROVIDER:
Notice required by §13.257, Water Code: The real property, described in Paragraph 2, that
you are about to purchase may be located in a certificated water or sewer service area,
which is authorized by law to provide water or sewer service to the properties in the
certificated area. If your property is located in a certificated area there may be special costs
or charges that you will be required to pay before you can receive water or sewer service.
There may be a period required to construct lines or other facilities necessary to provide
water or sewer service to your property. You are advised to determine if the property is in a
certificated area and contact the utility service provider to determine the cost that you will
be required to pay and the period, if any, that is required to provide water or sewer service
to your property. The undersigned Buyer hereby acknowledges receipt of the foregoing
notice at or before the execution of a binding contract for the purchase of the real property
described in Paragraph 2 or at closing of purchase of the real property.
(7) PUBLIC IMPROVEMENT DISTRICTS: If the Property is in a public improvement district,
§5.014, Property Code, requires Seller to notify Buyer as follows: As a purchaser of this
Chapter 6 parcel of real property you are obligated to pay an assessment to a municipality or county
The Transaction for an improvement project undertaken by a public improvement district under Chapter 372,
Process Local Government Code. The assessment may be due annually or in periodic installments.
and Closing More information concerning the amount of the assessment and the due dates of that
assessment may be obtained from the municipality or county levying the assessment. The
amount of the assessments is subject to change. Your failure to pay the assessments could
result in a lien on and the foreclosure of your property.
(8) TRANSFER FEES: If the Property is subject to a private transfer fee obligation, §5.205,
Property Code, requires Seller to notify Buyer as follows: The private transfer fee obligation
may be governed by Chapter 5, Subchapter G of the Texas Property Code.
(9) PROPANE GAS SYSTEM SERVICE AREA: If the Property is located in a propane gas system
service area owned by a distribution system retailer, Seller must give Buyer written notice
as required by §141.010, Texas Utilities Code. An addendum containing the notice approved
by TREC or required by the parties should be used.
(10) NOTICE OF WATER LEVEL FLUCTUATIONS: If the Property adjoins an impoundment of
water, including a reservoir or lake, constructed and maintained under Chapter 11, Water
Code, that has a storage capacity of at least 5,000 acre-feet at the impoundment’s normal
operating level, Seller hereby notifies Buyer: “The water level of the impoundment of water
adjoining the Property fluctuates for various reasons, including as a result of: (1) an entity
lawfully exercising its right to use the water stored in the impoundment; or (2) drought or
flood conditions.”
7. PROPERTY CONDITION:
A. ACCESS, INSPECTIONS AND UTILITIES: Seller shall permit Buyer and Buyer’s agents access
to the Property at reasonable times. Buyer may have the Property inspected by inspectors
selected by Buyer and licensed by TREC or otherwise permitted by law to make inspections.
Any hydrostatic testing must be separately authorized by Seller in writing. Seller at Seller's
expense shall immediately cause existing utilities to be turned on and shall keep the utilities
on during the time this contract is in effect.
B. SELLER'S DISCLOSURE NOTICE PURSUANT TO §5.008, TEXAS PROPERTY CODE (Notice):
(Check one box only)
 (1) Buyer has received the Notice.
 (2) Buyer has not received the Notice. Within days after the Effective Date of this
contract, Seller shall deliver the Notice to Buyer. If Buyer does not receive the Notice,
Buyer may terminate this contract at any time prior to the closing and the earnest money

220

will be refunded to Buyer. If Seller delivers the Notice, Buyer may terminate this contract for
any reason within 7 days after Buyer receives the Notice or prior to the closing, whichever first
occurs, and the earnest money will be refunded to Buyer.
 (3) The Seller is not required to furnish the notice under the Texas Property Code.
C. SELLER’S DISCLOSURE OF LEAD-BASED PAINT AND LEAD-BASED PAINT HAZARDS is required
by Federal law for a residential dwelling constructed prior to 1978.
D. ACCEPTANCE OF PROPERTY CONDITION: “As Is” means the present condition of the Property
with any and all defects and without warranty except for the warranties of title and the
warranties in this contract. Buyer’s agreement to accept the Property As Is under Paragraph
7D(1) or (2) does not preclude Buyer from inspecting the Property under Paragraph 7A, from
negotiating repairs or treatments in a subsequent amendment, or from terminating this
contract during the Option Period, if any.
(Check one box only)
 (1) Buyer accepts the Property As Is.
 (2) Buyer accepts the Property As Is provided Seller, at Seller’s expense, shall complete the
following specific repairs and treatments:
(Do not insert general phrases, such as “subject to inspections” that do not identify specific
repairs and treatments.)
E. LENDER REQUIRED REPAIRS AND TREATMENTS: Unless otherwise agreed in writing, neither
party is obligated to pay for lender required repairs, which includes treatment for wood
destroying insects. If the parties do not agree to pay for the lender required repairs or
treatments, this contract will terminate and the earnest money will be refunded to Buyer. If
the cost of lender required repairs and treatments exceeds 5% of the Sales Price, Buyer may
terminate this contract and the earnest money will be refunded to Buyer.
F. COMPLETION OF REPAIRS AND TREATMENTS: Unless otherwise agreed in writing: (i) Seller
shall complete all agreed repairs and treatments prior to the Closing Date; and (ii) all required
permits must be obtained, and repairs and treatments must be performed by persons who are
licensed to provide such repairs or treatments or, if no license is required by law, are
commercially engaged in the trade of providing such repairs or treatments. At Buyer’s
election, any transferable warranties received by Seller with respect to the repairs and
treatments will be transferred to Buyer at Buyer’s expense. If Seller fails to complete any Chapter 6
agreed repairs and treatments prior to the Closing Date, Buyer may exercise remedies under
Paragraph 15 or extend the Closing Date up to 5 days if necessary for Seller to complete the The Transaction
repairs and treatments. Process
G. ENVIRONMENTAL MATTERS: Buyer is advised that the presence of wetlands, toxic substances, and Closing
including asbestos and wastes or other environmental hazards, or the presence of a threatened
or endangered species or its habitat may affect Buyer’s intended use of the Property. If Buyer
is concerned about these matters, an addendum promulgated by TREC or required by the
parties should be used.
H. RESIDENTIAL SERVICE CONTRACTS: Buyer may purchase a residential service contract from a
residential service company licensed by TREC. If Buyer purchases a residential service
contract, Seller shall reimburse Buyer at closing for the cost of the residential service contract
in an amount not exceeding $ . Buyer should review any residential service
contract for the scope of coverage, exclusions and limitations. The purchase of a residential
service contract is optional. Similar coverage may be purchased from various
companies authorized to do business in Texas.
8. BROKERS AND SALES AGENTS:
A. BROKER OR SALES AGENT DISCLOSURE: Texas law requires a real estate broker or sales
agent who is a party to a transaction or acting on behalf of a spouse, parent, child, business
entity in which the broker or sales agent owns more than 10%, or a trust for which the
broker or sales agent acts as a trustee or of which the broker or sales agent or the broker or
sales agent’s spouse, parent or child is a beneficiary, to notify the other party in writing
before entering into a contract of sale. Disclose if applicable:
.
B. BROKERS’ FEES: All obligations of the parties for payment of brokers’ fees are contained in
separate written agreements.
9. CLOSING:
A. The closing of the sale will be on or before , 20 , or within 7 days
after objections made under Paragraph 6D have been cured or waived, whichever date is later
(Closing Date). If either party fails to close the sale by the Closing Date, the non-defaulting
party may exercise the remedies contained in Paragraph 15.
B. At closing:
(1) Seller shall execute and deliver a general warranty deed conveying title to the Property to
Buyer and showing no additional exceptions to those permitted in Paragraph 6 and furnish
tax statements or certificates showing no delinquent taxes on the Property.
(2) Buyer shall pay the Sales Price in good funds acceptable to the escrow agent.
221

(3) Seller and Buyer shall execute and deliver any notices, statements, certificates, affidavits,
releases, loan documents and other documents reasonably required for the closing of the
sale and the issuance of the Title Policy.
(4) There will be no liens, assessments, or security interests against the Property which will not
be satisfied out of the sales proceeds unless securing the payment of any loans assumed
by Buyer and assumed loans will not be in default.
10. POSSESSION:
A. BUYER’S POSSESSION: Seller shall deliver to Buyer possession of the Property in its present or
required condition, ordinary wear and tear excepted: upon closing and funding according
to a temporary residential lease form promulgated by TREC or other written lease required by
the parties. Any possession by Buyer prior to closing or by Seller after closing which is not
authorized by a written lease will establish a tenancy at sufferance relationship between the
parties. Consult your insurance agent prior to change of ownership and possession because
insurance coverage may be limited or terminated. The absence of a written lease or
appropriate insurance coverage may expose the parties to economic loss.
B. SMART DEVICES: “Smart Device” means a device that connects to the internet to enable
remote use, monitoring, and management of: (i) the Property; (ii) items identified in any Non-
Realty Items Addendum; or (iii) items in a Fixture Lease assigned to Buyer. At the time Seller
delivers possession of the Property to Buyer, Seller shall:
(1) deliver to Buyer written information containing all access codes, usernames, passwords,
and applications Buyer will need to access, operate, manage, and control the Smart
Devices; and
(2) terminate and remove all access and connections to the improvements and accessories
from any of Seller’s personal devices including but not limited to phones and computers.
11. SPECIAL PROVISIONS: (I nsert only factual statements and business details applicable
to the sale. TREC rules prohibit license holders from adding factual statements or business
details for which a contract addendum, lease or other form has been promulgated by TREC for
mandatory use.)
Chapter 6
The Transaction
Process
and Closing
12. SETTLEMENT AND OTHER EXPENSES:
A. The following expenses must be paid at or prior to closing:
(1) Expenses payable by Seller (Seller's Expenses):
(a) Releases of existing liens, including prepayment penalties and recording fees; release of
Seller’s loan liability; tax statements or certificates; preparation of deed; one-half of
escrow fee; and other expenses payable by Seller under this contract.
(b) Seller shall also pay an amount not to exceed $ to be applied in the
following order: Buyer’s Expenses which Buyer is prohibited from paying by FHA, VA,
Texas Veterans Land Board or other governmental loan programs, and then to other
Buyer’s Expenses as allowed by the lender.
(2) Expenses payable by Buyer (Buyer's Expenses): Appraisal fees; loan application fees;
origination charges; credit reports; preparation of loan documents; interest on the notes
from date of disbursement to one month prior to dates of first monthly payments;
recording fees; copies of easements and restrictions; loan title policy with endorsements
required by lender; loan-related inspection fees; photos; amortization schedules; one-half
of escrow fee; all prepaid items, including required premiums for flood and hazard
insurance, reserve deposits for insurance, ad valorem taxes and special governmental
assessments; final compliance inspection; courier fee; repair inspection; underwriting fee;
wire transfer fee; expenses incident to any loan; Private Mortgage Insurance Premium
(PMI), VA Loan Funding Fee, or FHA Mortgage Insurance Premium (MIP) as required by the
lender; and other expenses payable by Buyer under this contract.
B. If any expense exceeds an amount expressly stated in this contract for such expense to be
paid by a party, that party may terminate this contract unless the other party agrees to pay
such excess. Buyer may not pay charges and fees expressly prohibited by FHA, VA, Texas
Veterans Land Board or other governmental loan program regulations.
13. PRORATIONS: Taxes for the current year, interest, maintenance fees, assessments,
dues and rents will be prorated through the Closing Date. The tax proration may be calculated
taking into consideration any change in exemptions that will affect the current year's taxes. If
taxes for the current year vary from the amount prorated at closing, the parties shall adjust the
prorations when tax statements for the current year are available. If taxes are not paid at or prior
to closing, Buyer shall pay taxes for the current year.

222

14. CASUALTY LOSS: If any part of the P roperty is damaged or destroyed by fire or other
casualty after the Effective Date of this contract, Seller shall restore the Property to its previous
condition as soon as reasonably possible, but in any event by the Closing Date. If Seller fails to do
so due to factors beyond Seller’s control, Buyer may (a) terminate this contract and the earnest
money will be refunded to Buyer (b) extend the time for performance up to 15 days and the
Closing Date will be extended as necessary or (c) accept the Property in its damaged condition
with an assignment of insurance proceeds, if permitted by Seller’s insurance carrier, and receive
credit from Seller at closing in the amount of the deductible under the insurance policy. Seller’s
obligations under this paragraph are independent of any other obligations of Seller under this
contract.
15. DEFAULT: I f Buyer fails to comply w ith this contract, Buyer w ill be in default, and Seller
may (a) enforce specific performance, seek such other relief as may be provided by law, or both,
or (b) terminate this contract and receive the earnest money as liquidated damages, thereby
releasing both parties from this contract. If Seller fails to comply with this contract, Seller will be
in default and Buyer may (a) enforce specific performance, seek such other relief as may be
provided by law, or both, or (b) terminate this contract and receive the earnest money, thereby
releasing both parties from this contract.
16. MEDIATION: It is the policy of the State of Texas to encourage resolution of disputes
through alternative dispute resolution procedures such as mediation. Any dispute between Seller
and Buyer related to this contract which is not resolved through informal discussion will be
submitted to a mutually acceptable mediation service or provider. The parties to the mediation
shall bear the mediation costs equally. This paragraph does not preclude a party from seeking
equitable relief from a court of competent jurisdiction.
17. ATTORNEY'S FEES: A Buyer, Seller, Listing Broker, Other Broker, or escrow agent w ho
prevails in any legal proceeding related to this contract is entitled to recover reasonable attorney’s
fees and all costs of such proceeding.
18. ESCROW:
A. ESCROW: The escrow agent is not (i) a party to this contract and does not have liability for the
performance or nonperformance of any party to this contract, (ii) liable for interest on the
earnest money and (iii) liable for the loss of any earnest money caused by the failure of any
financial institution in which the earnest money has been deposited unless the financial
institution is acting as escrow agent. Escrow agent may require any disbursement made in Chapter 6
connection with this contract to be conditioned on escrow agent’s collection of good funds
The Transaction
acceptable to escrow agent.
B. EXPENSES: At closing, the earnest money must be applied first to any cash down payment, Process
then to Buyer's Expenses and any excess refunded to Buyer. If no closing occurs, escrow agent and Closing
may: (i) require a written release of liability of the escrow agent from all parties; and (ii)
require payment of unpaid expenses incurred on behalf of a party. Escrow agent may deduct
authorized expenses from the earnest money payable to a party. “Authorized expenses” means
expenses incurred by escrow agent on behalf of the party entitled to the earnest money that
were authorized by this contract or that party.
C. DEMAND: Upon termination of this contract, either party or the escrow agent may send a
release of earnest money to each party and the parties shall execute counterparts of the
release and deliver same to the escrow agent. If either party fails to execute the release, either
party may make a written demand to the escrow agent for the earnest money. If only one party
makes written demand for the earnest money, escrow agent shall promptly provide a copy of
the demand to the other party. If escrow agent does not receive written objection to the
demand from the other party within 15 days, escrow agent may disburse the earnest money to
the party making demand reduced by the amount of unpaid expenses incurred on behalf of the
party receiving the earnest money and escrow agent may pay the same to the creditors. If
escrow agent complies with the provisions of this paragraph, each party hereby releases escrow
agent from all adverse claims related to the disbursal of the earnest money.
D. DAMAGES: Any party who wrongfully fails or refuses to sign a release acceptable to the escrow
agent within 7 days of receipt of the request will be liable to the other party for (i) damages;
(ii) the earnest money; (iii) reasonable attorney's fees; and (iv) all costs of suit.
E. NOTICES: Escrow agent's notices will be effective when sent in compliance with Paragraph 21.
Notice of objection to the demand will be deemed effective upon receipt by escrow agent.
19. REPRESENTATIONS: All covenants, representations and warranties in this contract survive
closing. If any representation of Seller in this contract is untrue on the Closing Date, Seller will be
in default. Unless expressly prohibited by written agreement, Seller may continue to show the
Property and receive, negotiate and accept back up offers.
20. FEDERAL TAX REQUIREMENTS: If Seller is a " foreign person,” as defined by Internal
Revenue Code and its regulations, or if Seller fails to deliver an affidavit or a certificate of non-
foreign status to Buyer that Seller is not a "foreign person,” then Buyer shall withhold from the
sales proceeds an amount sufficient to comply with applicable tax law and deliver the same to the
Internal Revenue Service together with appropriate tax forms. Internal Revenue Service
regulations require filing written reports if currency in excess of specified amounts is received in
the transaction.
223

21. NOTICES: All notices from one party to the other must be in w riting and are effective
when mailed to, hand-delivered at, or transmitted by fax or electronic transmission as follows:
To Buyer at: To Seller at:
Phone: ( ) Phone: ( )
E-mail/Fax: E-mail/Fax:
E-mail/Fax: E-mail/Fax:
22. AGREEMENT OF PARTIES: This contract contains the entire agreement of the parties
and cannot be changed except by their written agreement. Addenda which are a part of this
contract are (Check all applicable boxes):
 Third Party Financing Addendum  Seller’s Temporary Residential Lease

 Seller Financing Addendum  Short Sale Addendum
 Addendum for Property Subject to
Mandatory Membership in a Property  Addendum for Property Located Seaward
Owners Association of the Gulf Intracoastal Waterway
 Buyer’s Temporary Residential Lease  Addendum for Seller's Disclosure of
Information on Lead-based Paint and Lead-
 Loan Assumption Addendum based Paint Hazards as Required by
 Addendum for Sale of Other Property by Federal Law
Buyer
Chapter 6  Addendum for Property in a Propane Gas
 Addendum for Reservation of Oil, Gas System Service Area
The Transaction and Other Minerals
 Addendum Regarding Residential Leases
Process  Addendum for "Back-Up" Contract Addendum Regarding Fixture Leases
and Closing 
 Addendum for Coastal Area Property
Addendum for Authorizing Hydrostatic  Other (list):
 Testing
Addendum Concerning Right to
 Terminate Due to Lender’s Appraisal
 Environmental Assessment, Threatened
or Endangered Species and Wetlands
Addendum
23. CONSULT AN ATTORNEY BEFORE SIGNING: TREC rules prohibit real estate license
holders from giving legal advice. READ THIS CONTRACT CAREFULLY.
Buyer's Seller's
Attorney is: Attorney is:
Phone: ( ) Phone: ( )
Fax: ( ) Fax: ( )
E-mail: E-mail:

224

EXECUTED the day of , 20 (Effective Date).

(BROKER: FILL IN THE DATE OF FINAL ACCEPTANCE.)
Chapter 6
The Transaction
Buyer Seller Process
and Closing
Buyer Seller
The form of this contract has been approved by the Texas Real Estate Commission. TREC forms are
intended for use only by trained real estate license holders. No representation is made as to the legal
validity or adequacy of any provision in any specific transactions. It is not intended for complex
transactions. Texas Real Estate Commission, P.O. Box 12188, Austin, TX 78711-2188, (512) 936-3000
(http://www.trec.texas.gov) TREC NO. 20-15. This form replaces TREC NO. 20-14.

225

FOLLOWING THROUGH TO THE CLOSING
If you are working with the sellers, prepare them for the days ahead. Let them know about inspections
and that they will be required. An appraiser will be coming to view the property to satisfy loan
requirements. A surveyor will also be there to measure the property at some point. They probably
have to supply a termite inspection certificate. Give them a time frame for these activities and time
limits for their responsibilities.
If you are working with the buyers, it is to your advantage to be sure they make a loan application
and begin the inspection process as soon as possible. Give them a time frame for carrying out their
responsibilities and keep track of things until the closing.
For yourself, print out a time frame for all the required activities and inspections to take this deal
from paper to closing. As time passes, check on the progress regularly. Keep everything moving. If
delays pop up, find out the cause and do all you can to remove them. Remember, your livelihood is
at stake.
Create a schedule that shows when things should be done and CHECK, CHECK, CHECK.
Keep your clients informed and remind them of deadlines for their required actions. Use whichever
method you prefer (email, faxes, notes, or phone calls), as long as the lines of communication are
working. If your sellers or buyers have asked for recommendations of inspectors, lenders, title
companies, repairmen, etc., then have a list of reliable people to recommend. Let the tradespeople
know when you are pleased with their efforts and promise to continue recommendations based on
positive experiences.
Finally, never assume that others will do their job. Keep track of what is happening, and the closing
will be much more likely to run smoothly. Remember, gentle nagging is much more effective than
Chapter 6 aggression or anger. Call often, until your needs have been met!
The Transaction
Process CLOSING THE TRANSACTION
and Closing
The final consummation of a transaction is the closing, where the buyer pays for the property,
and the seller conveys title. In some markets, the closing is referred to as settlement. Automated
underwriting systems for loans have reduced the amount of time that it takes to close a transaction.
In many markets, a transaction involving a new loan can be closed in as little as thirty to forty-five
days. An all-cash transaction can be closed even more quickly. The contract will have a specified
closing date and location. The date is most often an “on or before” date, meaning the closing can be
held early if all requirements have been met and the parties are ready to do so.
Closing procedures vary depending upon the laws and customs of different states. As mentioned
earlier, title companies perform two primary services: title insurance and escrow. When a title com-
pany holds a closing, they are performing escrow services. Most closings in Texas are conducted at
a title company.
In the past, it was common for both the buyer and the seller to close the transaction together in the
same office. Closing together is rarer today for several reasons:
• If the buyer is obtaining a loan, he or she has many more documents to sign than does the
seller. Since the buyer requires more time to close, it makes sense to do so separately.
• Technology allows documents to be transmitted easily over the Internet, making separate
closings feasible.
• The ability to easily transfer funds by wire makes separate and distant closings feasible.
• Separate closings are especially desirable when the relationship between the parties has been
226 strained because of protracted negotiations over repairs or other issues.
The order in which the parties close is of no consequence. When the seller closes, the seller will:
• Sign a deed conveying the property to the buyer.
• Provide title insurance.
• Authorize the title company to pay off any existing mortgages or liens. The title company will
have obtained the payoff information prior to closing. Some lenders require written authori-
zation from the seller allowing the title company to provide payoff information.
• Sign other documents as needed. Common additional documents include:
• Affidavits of marital history - Sometimes, the title record is unclear because an individual
may have acquired title under one name and is selling under another.
• Affidavits from the seller certifying that there are no outstanding charges or liens against
the property that are not being paid off at closing.
• Affidavit of identity - The seller certifies that they are who they claim to be and that they
have the legal authority to convey title. All parties to the transaction will need to provide
a photo ID at closing.
• A ffidavit acknowledging that the attorneys who drew the closing documents are not
representing either party to the transaction.
• Wiring instructions will be provided at closing so that the title company can deposit the Chapter 6
seller’s net proceeds.
The Transaction
Process
When the buyer closes, he or she has a large number of documents to sign, including: and Closing
• Promissory note payable to the lender.
• Deed of Trust securing the repayment of the promissory note.
TREC-promulgated contracts stipulate that possession be delivered to the buyer upon closing AND
funding. In some cases, the lender will fund a transaction immediately, a process that is known as
table funding. In other cases, the lender will fund after a brief delay that allows them to do a quick
review of the documents. Still others will delay funding for six hours or more to allow time for a
more thorough review of the documents.
The license holder’s involvement in the closing process can be minimal. As a rule, it is a good practice
for the agent to attend closing. The buyer and seller each know their respective agents better than
anybody else in the transaction. They expect their agents to be with them and to be available to
answer questions during what can be a very stressful transaction.
Buyers and sellers should be aware of the funding policy of the lender so that they can better plan
move out and move in. Sellers may be concerned about funding because they are purchasing a new
property and need the funds to close.
CLOSING CHECKLIST FOR BUYERS AND SELLERS

Because you have diligently and thoroughly followed through on the previous three steps, you will
now be entering into a joyous day of closing! Real estate license holders must be knowledgeable
about the closing settlement statement.
Every federally related residential transaction must be closed on the Closing Disclosure form. This
makes the form standard across the United States. The license holder does not perform the closing, 227

but the seller and buyer will look to the agent for a reasonable estimate of their closing expenses
prior to closing.
Explain to the client that the agent’s figures are only estimates, and the actual closing amounts for
each party will be made available prior to the closing.
CLOSING CHECKLIST FOR BUYERS AND SELLERS

For Buyers
1. Send out change of mailing address notices
2. Give notice to landlord (if applicable)
3. Obtain utility deposit refunds
4. Cancel old insurance policies; start new ones
5. Make arrangements for moving-- time and date
6. Arrange new furniture/appliance deliveries
7. Return keys to old property; pick up keys to the new property
8. Obtain records from children’s old school; enroll them in the new school
9. Obtain medical records; locate new doctor, dentist, etc.

Chapter 6
10. Have banking and credit history transferred
The Transaction
Process
and Closing
For Sellers
1. Send out change of mailing address notices
2. Coordinate moving arrangements
3. Complete repairs and inspections
4. Obtain utility deposit refunds
5. Change insurance policies
6. Give keys to the property to the buyer
228

CREDITS
Items typically credited to the buyer include:
• Earnest money held in an escrow account
• Existing mortgage on an assumption or the buyer’s new mortgage he successfully secured

from the lender
• Unearned rents (previously collected by the lender)
• Tenant’s security deposits
• Accrued items (items owed by the seller, but the bill is not yet due; e.g., taxes on
property)
• Items paid on behalf of the buyer outside closing (POC - paid outside closing)
Items credited to the seller include:
• Sales price of the property
• Prepaid items (items paid in advance, e.g., insurance, HOA dues, etc.)
• Escrow account overages (prepaid insurance, tax)
CHARGES TO THE BUYER/SELLER Chapter 6

Items usually charged to the buyer:
The Transaction
Process
• Survey and Closing
• Mortgage loan fees charged by the lender
• Copies of deed restrictions
• Mortgagee’s Title Insurance Policy
• Credit report ( POC)
• Appraisal (POC)
• Prepaid items for setting up escrow accounts
• Private mortgage insurance
• Recording fees for the deed and mortgage instruments
• Inspections on property including termite, structural, mechanical
• Attorney’s fees
• Messenger fees
229

Items usually charged to the seller:
• Real estate commission
• Attorney’s fees
• Repairs to property
• Owner’s title policy
• Existing loan payoff
• Recording fee for release of lien
• Messenger fee
• Unpaid taxes on property
• Accrued interest on loan from last payment to the day of closing
• Unearned rent collected in advance
• Tenant’s security deposit
Chapter 6
The Transaction
Process
and Closing
230

CLOSING COUNTDOWN − PROTOCOL
Selling Agent: Calls title company to pick up contract and earnest money.
Selling Agent: Provides inspector referrals (at least 3) to buyer and advises buyer of time
schedule for ordering inspections. Provides information to listing agent.
Buyer: Buyer applies for loan and may need some or all of the following:
1. List of debtors and account numbers
2. Bank address and account numbers
3. Year-to-date check stubs
4. Tax returns
Selling Agent: Negotiates repairs during option period. Reminds buyer to order
insurance.
Lender: Orders appraisal and credit report, verification of employment, etc. as

part of the loan processing procedure.
Title Company: Sends title commitments to agents and lender.
Listing & Selling Agents: Gives copies of the title commitments to buyer and seller.
Listing Agent: Provides title company with name and loan number of existing lien
holder.
Chapter 6
Title Company: Obtain payoff on existing lien. Order tax certificates.
The Transaction
Process
Listing Agent & Title Works together to clear any objections to title. and Closing
Company
Listing Agent: Ensures repairs are done, and unpaid bills are sent to title company.
Receipts, receipts, receipts.
Selling Agent: Follows up often with new lender to make sure loan is being processed
efficiently, that all requirements are being met, and to find out when to
expect loan approval. Watch third-party finance deadline.
Title Company Orders survey.
Lender: Approves loan, draws up papers, and reviews/approves survey.
***AGENTS CONFER WITH PRINCIPALS, MORTGAGE COMPANY, AND TITLE COMPANY

TO SET CLOSING DATE AND TIME***
Selling Agent: Reminds buyer to order insurance and gives the information to the title
company.
Lender: Sends completed closing package and Closing Disclosure to TITLE

COMPANY to prepare the closing statement and gives figures to buyer.
Selling Agent: Schedules final walkthrough.
Listing Agent: Brings keys to closing for the buyers and removes lockbox and sign.
231

CLOSING DISCLOSURE
Most closings must be conducted using the Closing Disclosure form, which replaced the HUD-1
settlement statement that had previously been in use for over forty years. While the Closing Dis-
closure form has most of the information contained in the old HUD-1 form, it is organized very
differently. The Closing Disclosure is closely tied to the Loan Estimate form, which replaced the old
Good Faith Estimate.
The Closing Disclosure must contain the actual terms and costs of the transaction. Creditors may
estimate disclosures using the best information reasonably available when the actual term or cost is
not reasonably available to the creditor at the time the disclosure is made; however, creditors must
act in good faith and use due diligence in obtaining the information. The creditor normally may rely
on the representations of other parties in obtaining the information, including, for example, the set-
tlement agent. The creditor is required to provide corrected disclosures containing the actual terms
of the transaction at or before consummation.
Closing Disclosure Delivery Requirement

The TILA-RESPA Integrated Disclosures, or TRID rules, require that the consumer receive the
Closing Disclosure no later than three business days before consummation. If the Closing Disclosure
is not delivered in person, it is presumed received three business days after it is placed in the mail,
sent by email, or otherwise delivered; however, the creditor may rely on evidence that the consumer
received the Closing Disclosure earlier (e.g., the consumer’s signed receipt of delivery by overnight
mail or acknowledgment of receipt via email).
The creditor must ensure that the consumer receives the Closing Disclosure form at least three busi-
Chapter 6 ness days before the consumer closes the loan. The creditor is responsible for delivering the Closing
Disclosure form to the consumer, but creditors may use settlement agents to provide the Closing
The Transaction Disclosure, provided that they comply with the TRID rule’s requirements for the Closing Disclo-
Process
and Closing
sure. However, as with the Loan Estimate, the creditor retains ultimate responsibility and liability
for ensuring that the disclosure is provided in accordance with the TRID rule.
For purposes of these requirements, “business day” means all calendar days except Sundays and the
legal public holidays. The three-business-day waiting period may be waived or modified in the case
of a bona fide personal financial emergency.
Revisions and Corrections to Closing Disclosures

Creditors must re-disclose terms or costs on the Closing Disclosure if certain changes occur to the
transaction after the Closing Disclosure was first provided that cause the disclosures to become
inaccurate.
If one of the following occurs after delivery of the Closing Disclosure and before consummation, the
creditor must provide a corrected Closing Disclosure containing all changed terms and ensure that
the consumer receives it no later than three business days before consummation.
1. The disclosed APR becomes inaccurate. If the APR previously disclosed becomes inac-
curate, the creditor must provide a corrected Closing Disclosure with the corrected APR
disclosure and all other terms that have changed. As defined in Regulation Z, a change in
the APR of more than 1/8 of 1 percentage point above or below the disclosed APR or, if
the transaction is irregular (e.g., multiple advances or irregular payment periods), a change
of more than 1/4 of 1 percentage point, is considered inaccurate.
2. The loan product changes. If the loan product previously disclosed becomes inaccurate, the
creditor must provide a corrected Closing Disclosure with the corrected loan product and
all other terms that have changed.
232

3. A prepayment penalty is added. If a prepayment penalty is added to the transaction,
the creditor must provide a corrected Closing Disclosure with the prepayment penalty
provision disclosed and all other terms that have changed.
For any other changes before consummation that do not fall under the three categories above (i.e.,
related to the APR, loan product, or the addition of a prepayment penalty), the creditor still must
provide a corrected Closing Disclosure with any terms or costs that have changed and ensure that
the consumer receives it.
For these changes, there is no additional three-business-day waiting period required. The creditor
must ensure that the consumer receives the revised Closing Disclosure at or before consummation.
The following pages contain a Consumer Financial Protection Bureau Closing Disclosure form, a
statement of final loan terms, and closing costs.
Chapter 6
The Transaction
Process
and Closing
233

This form is a statement of final loan terms and closing costs. Compare this
Closing Disclosure document with your Loan Estimate.
Closing Information Transaction Information Loan Information

Date Issued 4/15/2013 Borrower Michael Jones and Mary Stone Loan Term 30 years
Closing Date 4/15/2013 123 Anywhere Street Purpose Refinance
Disbursement Date 4/15/2013 Anytown, ST 12345 Product Fixed Rate
Settlement Agent Zeta Title Lender Ficus Bank
File # 12-3456 Loan Type x ConventionalFHA
Property 123 Anywhere Street VA _____________
Anytown, ST 12345 Loan ID # 123456789
Appraised Prop. Value $180,000 MIC # 009874513
Loan Terms Can this amount increase after closing?

Loan Amount $150,000 NO
Interest Rate 4.25% NO
Monthly Principal & Interest $737.91 NO

See Projected Payments below for your
Estimated Total Monthly Payment
Does the loan have these features?

Prepayment Penalty NO
Balloon Payment NO
Chapter 6
The Transaction Projected Payments
Process
and Closing Payment Calculation Years 1-4 Years 5-30
Principal & Interest $737.91 $737.91
Mortgage Insurance + 82.35 + —

Estimated Escrow + 206.13 + 206.13
Amount can increase over time
Estimated Total
Monthly Payment $1,026.39 $944.04
This estimate includes In escrow?
Estimated Taxes, Insurance x Property Taxes YES
& Assessments $356.13 x Homeowner’s Insurance YES
Amount can increase over time a month x Other: HOA Dues NO
See details on page 4
See page 4 for escrowed property costs. You must pay for other property
costs separately.
Costs at Closing
Closing Costs $5,757.57 Includes $3,495.50 in Loan Costs + $2,762.07 in Other Costs – $500
in Lender Credits. See page 2 for details.
Cash to Close $29,677.43 Includes Closing Costs. See Calculating Cash to Close on page 3 for details.
From x To Borrower
234 CLOSING DISCLOSURE PAGE 1 OF 5 • LOAN ID # 123456789

Closing Cost Details
Borrower-Paid Paid by
Loan Costs At Closing Before Closing Others
A. Origination Charges $1,950.00
01 .5 % of Loan Amount (Points) $750.00
02 Application Fee $250.00
03 Origination Fee $450.00
04 Underwriting Fee $500.00
05
06
07
08
B. Services Borrower Did Not Shop For $610.00
01 Appraisal Fee to John Smith Appraisers Inc. $405.00
02 Credit Report Fee to Information Inc. $30.00
03 Flood Determination Fee to Info Co. $20.00
04 Flood Monitoring Fee to Info Co. $45.00
05 Tax Monitoring Fee to Info Co. $65.00
06 Tax Status Research Fee to Info Co. $45.00
07
08
09
10
C. Services Borrower Did Shop For $935.50
01 Pest Inspection Fee to Pests Co. $85.00
02 Title – Insurance Binder to Epsilon Title Co. $50.00
03 Title – Lender’s Title Policy to Epsilon Title Co. $250.50
04 Title – Settlement Agent Fee to Epsilon Title Co. $350.00
05 Title – Title Search to Epsilon Title Co. $200.00
06
07
08
D. TOTAL LOAN COSTS (Borrower-Paid) $3,495.50
Loan Costs Subtotals (A + B + C) $3,060.50 $435.00 Chapter 6
The Transaction
Other Costs
Process
E. Taxes and Other Government Fees $60.00 and Closing
01 Recording Fees Deed: Mortgage: $60.00 $60.00
02
F. Prepaids $2,125.12
01 Homeowner’s Insurance Premium ( 12 mo.) to Insurance Co. $1,209.96
02 Mortgage Insurance Premium ( mo.)
03 Prepaid Interest ( $17.71 per day from 4/15/2013 to 5/1/2013 ) $283.36
04 Property Taxes ( 6 mo.) to Any County USA $631.80
05
G. Initial Escrow Payment at Closing $576.95
01 Homeowner’s Insurance $100.83 per month for 2 mo. $201.66
02 Mortgage Insurance $82.35 per month for 2 mo. $164.70
03 Property Taxes $105.30 per month for 2 mo. $210.60
04
05
06
07
08 Aggregate Adjustment – $0.01
H. Other
01
02
03
04
05
06
07
08
I. TOTAL OTHER COSTS (Borrower-Paid) $2,762.07
Other Costs Subtotals (E + F + G + H) $2,762.07
J. TOTAL CLOSING COSTS (Borrower-Paid) $5,757.57

Closing Costs Subtotals (D + I) $5,822.57 $435.00
Lender Credits – $500.00
CLOSING DISCLOSURE PAGE 2 OF 5 • LOAN ID # 123456789 235

Payoffs and Payments Use this table to see a summary of your payoffs and payments to others from your loan amount.
TO AMOUNT
01 Rho Servicing to pay off existing loan $115,000.00
02
03
04
05
06
07
08
09
10
11
Chapter 6
The Transaction
Process 12
and Closing
13
14
15
K. TOTAL PAYOFFS AND PAYMENTS $115,000.00
Calculating Cash to Close Use this table to see what has changed from your Loan Estimate.
Loan Estimate Final Did this change?
Loan Amount $150,000.00 $150,000.00 NO
Total Closing Costs (J) – $5,099.00 – $5,757.57 YES • See Total Loan Costs (D) and Total Other Costs (I)
Closing Costs Paid Before Closing $0 $435.00 YES • You paid these Closing Costs before closing
Total Payoffs and Payments (K) – $120,000.00 – $115,000.00 YES • See Payoffs and Payments (K)
Cash to Close $24,901.00 $29,677.43
From x To From x To
Borrower Borrower Closing Costs Financed (Paid from your Loan Amount) $5,322.57

Additional Information About This Loan
Loan Disclosures
Assumption Escrow Account
If you sell or transfer this property to another person, your lender For now, your loan
will allow, under certain conditions, this person to assume this x will have an escrow account (also called an “impound” or “trust”
loan on the original terms. account) to pay the property costs listed below. Without an escrow
x will not allow assumption of this loan on the original terms. account, you would pay them directly, possibly in one or two large
payments a year. Your lender may be liable for penalties and interest
Demand Feature for failing to make a payment.
Your loan
has a demand feature, which permits your lender to require early Escrow
repayment of the loan. You should review your note for details. Escrowed $2,473.56 Estimated total amount over year 1 for
x does not have a demand feature. Property Costs your escrowed property costs:
over Year 1 Property Taxes, Homeowner’s Insurance
Late Payment
If your payment is more than 15 days late, your lender will charge a
Non-Escrowed $1,800.00 Estimated total amount over year 1 for
late fee of 5% of the monthly principal and interest payment. Property Costs your non-escrowed property costs:
over Year 1 HOA Dues
Negative Amortization (Increase in Loan Amount)
Under your loan terms, you You may have other property costs.
are scheduled to make monthly payments that do not pay all of Initial Escrow $576.95 A cushion for the escrow account you
the interest due that month. As a result, your loan amount will Payment pay at closing. See Section G on page 2.
increase (negatively amortize), and your loan amount will likely
become larger than your original loan amount. Increases in your
loan amount lower the equity you have in this property. Monthly Escrow $206.13 The amount included in your total
Payment monthly payment.
may have monthly payments that do not pay all of the interest
due that month. If you do, your loan amount will increase
(negatively amortize), and, as a result, your loan amount may
will not have an escrow account because you declined it your
become larger than your original loan amount. Increases in your
lender does not offer one. You must directly pay your property Chapter 6
loan amount lower the equity you have in this property.
costs, such as taxes and homeowner’s insurance. Contact your
x do not have a negative amortization feature. lender to ask if your loan can have an escrow account.
The Transaction
Process
Partial Payments No Escrow and Closing
Your lender Estimated Estimated total amount over year 1. You
x may accept payments that are less than the full amount due Property Costs must pay these costs directly, possibly
over Year 1 in one or two large payments a year.
(partial payments) and apply them to your loan.
may hold them in a separate account until you pay the rest of the Escrow Waiver Fee
payment, and then apply the full payment to your loan.
In the future,
does not accept any partial payments.
Your property costs may change and, as a result, your escrow pay-
If this loan is sold, your new lender may have a different policy. ment may change. You may be able to cancel your escrow account,
but if you do, you must pay your property costs directly. If you fail
Security Interest to pay your property taxes, your state or local government may (1)
You are granting a security interest in impose fines and penalties or (2) place a tax lien on this property. If
123 Anywhere Street, Anytown, ST 12345 you fail to pay any of your property costs, your lender may (1) add
the amounts to your loan balance, (2) add an escrow account to your
loan, or (3) require you to pay for property insurance that the lender
You may lose this property if you do not make your payments or buys on your behalf, which likely would cost more and provide fewer
satisfy other obligations for this loan. benefits than what you could buy on your own.
CLOSING DISCLOSURE PAGE 4 OF 5 • LOAN ID # 1234567890 237

Loan Calculations Other Disclosures
Total of Payments. Total you will have paid after Appraisal

you make all payments of principal, interest, If the property was appraised for your loan, your lender is required to
mortgage insurance, and loan costs, as scheduled. $273,214.50 give you a copy at no additional cost at least 3 days before closing.
If you have not yet received it, please contact your lender at the
Finance Charge. The dollar amount the loan will information listed below.
cost you. $121,029.00
Contract Details
See your note and security instrument for information about
Amount Financed. The loan amount available after
• what happens if you fail to make your payments,
paying your upfront finance charge. $148,241.94
• what is a default on the loan,
• situations in which your lender can require early repayment of the
Annual Percentage Rate (APR). Your costs over loan, and
the loan term expressed as a rate. This is not your • the rules for making payments before they are due.
interest rate. 4.543%
Liability after Foreclosure
Total Interest Percentage (TIP). The total amount If your lender forecloses on this property and the foreclosure does not
of interest that you will pay over the loan term as a cover the amount of unpaid balance on this loan,
percentage of your loan amount. 77.29% state law may protect you from liability for the unpaid balance. If you
refinance or take on any additional debt on this property, you may
lose this protection and have to pay any debt remaining even after
foreclosure. You may want to consult a lawyer for more information.
x state law does not protect you from liability for the unpaid balance.
?
Questions? If you have questions about the Refinance
loan terms or costs on this form, use the contact Refinancing this loan will depend on your future financial situation,
information below. To get more information the property value, and market conditions. You may not be able to
or make a complaint, contact the Consumer refinance this loan.
Financial Protection Bureau at
www.consumerfinance.gov/mortgage-closing Tax Deductions
If you borrow more than this property is worth, the interest on the
Chapter 6 loan amount above this property’s fair market value is not deductible
from your federal income taxes. You should consult a tax advisor for
The Transaction
more information.
Process
and Closing
Contact Information
Lender Mortgage Broker Settlement Agent
Name Ficus Bank Zeta Title
Address 4321 Random Blvd. 321 Uptown Dr.
Somecity, ST 12340 Anytown, ST 12345
NMLS ID 222222
ST License ID P76821
Contact Joe Smith Joan Taylor
Contact NMLS ID 12345
Contact __ License ID
Email joesmith@ficusbank.comFICUS- joan@zt.bizICUSBANK.
BANK.CO
Phone 123-456-7890 555-321-9876
Confirm Receipt
By signing, you are only confirming that you have received this form. You do not have to accept this loan because you have signed or received
this form.
Applicant Signature Date Co-Applicant Signature Date

Directions: Directions: Read each statement carefully. Place a T or an F in the column indicat-
ing whether or not the statement is true or false.
Statement T or F
1. Real estate agents are expected to give legal advice to their clients.
2. When your buyers are ready to write an offer, the first thing that you
should do is contact the sellers directly.
3. A counteroffer is really a rejection.
4. On average, about 75% of real estate transactions never make it to the

closing table.
5. The final consummation of a real estate transaction is the closing.
6. TREC-promulgated contracts stipulate that possession be delivered to the

buyer upon closing; the closing agent need not wait until funding.
7. The buyer is usually charged the real estate commissions compensating the
broker(s).
8. The Closing Disclosure must be delivered to the consumer no later than Chapter 6
three business days before consummation.
The Transaction
Process
9. According to the Closing Disclosure, Sunday is included as a “business and Closing
day.”
10. A corrected Closing Disclosure must be provided to the consumer if a

prepayment penalty is added.
239

3 10 1 3
5 15 7 10
8.B 3 3
1. The Closing Disclosure replaced the HUD-_____.
2. Agents should provide buyers with the names of at least _____. inspectors.
3. The Closing Disclosure should be received by the buyer in _____ business days.
4. Earnest money should be entered in Paragraph _____ of the One To Four Family
Residential Contract.
5. According to the contract, the closing of the sale will be on or before a specified date
OR within _____ days after objections have been cured or waived, whichever comes
first.
Chapter 6 6. Broker information is entered on page _____ of the TREC One to Four Family
Residential Contract.
The Transaction
Process
and Closing
7. Texas law requires a license holder who is a party to a transaction or acting on behalf of
a business entity in which he/she owns more than _____% to disclose this information
in the Broker or Sales Agent Disclosure section of the One to Four Family Residential
Contract..
8. Paragraph _____ of the TREC One To Four Family Residential Contract addresses
brokers’ fees.
9. The sales price of the property is entered in Paragraph _____ of the One To Four
Family Residential Contract.
10. If the Commitment and Exception Documents are not delivered to the buyer within
the specified time, the time for delivery will be automatically extended up to _____ days
OR ___ days before the closing date, whichever is earlier.
240

CHAPTER 6 QUIZ
1. If clients ask for recommendations of inspectors, lenders, title companies, or repairmen, you
should:
a. Provide a list of reliable people/companies

b. Inform them that it is against the Code of Ethics to make recommendations
c. Refer them to Yelp so they can do their own searches
d. Tell them that you will personally handle any services they require
2. Which of the following is an item that is typically credited to the seller?
a. Unearned rents
b. Earnest money being held in an escrow account
c. Tenant’s security deposits
d. Prepaid items
3. When does the transaction process begin?
a. When an offer is made

b. When the listing is taken
c. When the negotiations have ended and the contract has been signed by all parties
d. When all offers have been presented
Chapter 6
The Transaction
Process
and Closing
241

Notes
242

CHAPTER 7
Technology Creates
a Powerful Offic

Chapter 7: Technology Creates a Powerful Office
Zillow blog TikTok
social media Facebook Twitter
YouTube LinkedIn Instagram
Pinterest virtual reality augmented reality
artificial intelligence search engine optimization analytics
PRE-TEST
1. _____ TikTok a. a video-sharing app where users perform short dances

and complete challenges
2. _____ LinkedIn b. a syndicated listings website
Chapter 7 c. an online journal

Technology 3. _____ Virtual reality
Creates d. the professional’s social media platform
a Powerful
Office 4. _____ Zillow e. a headset that allows a person to take a simulated walk
around a property
5. _____ Blog
1. a 2. d 3. e 4. b 5. c
Answers to Pretest
244

THE WAY PEOPLE DO BUSINESS HAS CHANGED
FOREVER
E mail, texting, and social media have dramatically changed the way people communicate. Try
calling the average teenager, for example. What is the likelihood the teen will answer a phone
call? Very slim. However, text the average teenager, and you may receive an immediate response.
Teens are not the only group that has embraced these advances in technology. Many age groups
prefer text over email today. Some may even prefer an instant message from Facebook Messenger or
Twitter over a regular text message. Some people prefer a good old-fashioned phone call. No matter
how we communicate today, remember that the consumer is still the star of all transactions. When
communicating with a buyer or seller, take the time to learn how they use technology and their
favorite form of communication to reach them at their level.
Changes in communication mirror advances in technology that bring productivity and innovation
to the forefront of the business model. The Internet is an illustrative example of changing business
models. A handful of decades ago, the Internet was an emerging technology that some dismissed as
merely a fad. More than a quarter-century later, the business world, for all its face-to-face relation-
ships, runs via the Internet. It has, in a very short amount of time, become both the driving force
behind and the facilitator of, innovation and increased productivity and profitability.
Applying what we know about the Internet and its effect on the standard business model to current
emerging technologies opens a window into the future of how people do business. Many other new
technologies could have similar far-reaching effects, not only in the real estate industry but also in
the business world in general. While it can take significant amounts of time, sometimes years, for Chapter 7
new technologies to have real-world applications, it can only benefit an agent to be aware of what Technology
technologies are coming, and how they may affect not just communication, but the way people do Creates
business. a Powerful
Office
Time Magazine called the Gutenberg Printing Press the most significant invention of the last mil-
lennium because it allowed for the mass production of written information. Books were reproduced
by the thousands, delivering information to the masses. The Internet, and now the smartphone and
tablet, have made access to information not just easy, but immediate, giving access to everyone who
is connected online, whether by computer, smartphone, or tablet.
Though the millennium is relatively young, the advent of the smartphone has redefined the speed at
which communication happens. With sites like Twitter and Facebook, and text messaging provided
by phone carriers, people across the globe can participate in real-time written conversations with a
multitude of people simultaneously. SocialFlow posted an article on August 26, 2011, regarding an
earthquake centered in Virginia that was felt along the Eastern Seaboard. The article, “All Shook
Up: Mapping Earthquake News on Twitter from Virginia to Maine,” shows that people in New
York City had more than a 30-second notice before the quake hit the city. The speed at which news
is now able to travel from primary sources to others is instantaneous.
The Pew Research Center recently reported that 86% of all U.S. adults use mobile devices to access
the Internet. The survey further stated that 28% of Americans rely on their mobile devices to keep
them constantly connected. These statistics are significant because they reflect the ease with which
consumers access information with their mobile devices to make informed purchasing decisions.
This information-driven consumerism has spawned new opportunities for individuals to provide
opinions about products and services through a variety of avenues. Instead of reaching out to the
companies that produce goods and provide services, today, consumers reach out to each other
through applications (apps) like Yelp and Facebook to research consumer approval ratings of prod-
ucts and services. By the time a homeowner, for example, reaches out to a real estate professional, 245

the homeowner may already have seen reviews provided by others who have enlisted the services of
the agent. Yes, consumers truly can get it all!
The online Multiple Listing Services and the syndicated listing services provide real-time infor-
mation to consumers about much more than new listings. Whether an interested buyer is using an
association MLS website or a host of listing syndicated sites like Zillow or Trulia, the buyer can
view listings as soon as they enter the market. The buyer no longer needs to wait for the agent to
research available properties; the buyer has immediate access to listings.
With these innovations and a change in consumer behavior and demands, the real estate community
has rapidly changed. Like consumers, agents can access information no matter where they are. They
have instant access to both written and oral communication and the ability to disseminate informa-
tion through multiple channels in an instant.
However, with these fast-paced changes comes the never-ending need to quickly embrace new tech-
nology and learn how to implement it into business models seamlessly and professionally. The list of
new and updated technology and systems includes video production and marketing, transactional
management software, lead management software, cloud-based storage, electronic devices including
phones, computers, tablets, and cameras, social media outlets, and more.
Real estate agents have to scramble to keep up with new technologies, including how to implement
them in their businesses, as it is necessary to know the capabilities of their tools. Fortunately, com-
panies like Apple and Google provide classes on how to use their tools. Champions School of Real
Estate provides workshops and CE classes on how to use new technologies in the field of real estate.
Chapter 7 Mobility continues to be the trend with both real estate agents and agencies. As real estate agen-
Technology cies race to reduce office space, agents are spending less time in offices and more time working
Creates from home or a completely mobile office. Agents then must have reached the point where they
a Powerful can function almost entirely outside of the corporate office. Smart devices must allow agents to be
Office fully functional while in the field. Mobile apps enable agents to map areas, research properties, and
acquire other relevant data with a simple search. Agents can receive email and text messages, post
videos, and send documents to clients and colleagues without ever having to go to the office.
HOT TECHNOLOGY BUYS FOR THE SUCCESSFUL AGENT

What technology tools should agents invest in?
1. Buy a smartphone like an Apple iPhone or an Android. Put all your contacts into Micro-
soft Outlook and sync them into your new phone.
2. Buy a new laptop (notebook) computer with enough hard drive space and memory for all
of your files.
3. Buy a new wide-angle digital camera. The lens must go down to the equivalent of 28mm or
less.
4. Buy a car/air power adapter or inverter for your notebook—you’re going to need it every-
where.
5. Subscribe to Top Producer Online.
6. Buy an external hard drive for easy, inexpensive backup of your valuable data.
7. Buy an inexpensive all-in-one memory card reader.
246

8. Buy USB flash drives for easy data storage and portability. Prices continue to fall as capaci-
ties rise.
9. Buy G Suite, Google’s cloud-based solution for keeping track of documents, spreadsheets,
and contacts in real-time. G Suite allows for easy collaboration and sharing access with
your team or assistant.
10. Download Skype or Zoom for free. With these apps, agents can perform virtual walk-
throughs and also video conference with clients on-the-go or at the office.
K ABOUT IT - TECHNOLOGY AWARENESS

THIN
1. How will you be able to utilize these different Internet platforms to-
wards your marketing strategy?
2. Which particular type of technology mentioned in this chapter do you be-

lieve will increase your success in your business?
3. How will keeping up with technological trends improve the future of

your career in real estate?
Chapter 7
Technology
Creates
a Powerful
Office
247

TECHNOLOGY MOVES THE REAL ESTATE INDUSTRY IN A NEW DIRECTION
Technology has propelled many industries in new directions. For example, modern travel revolves
around getting on the Internet and price checking between Expedia and other discounters who
advertise fiercely on television. Companies such as Über and Lyft have created competition within
the transportation industry, taking business away from traditional cab companies. Websites and apps
(such as Twitter, Snapchat, Instagram, and Facebook), along with text messaging, have essentially
replaced traditional communication over landlines. Like these other industries, real estate has been
affected by online real estate companies such as Zillow, Trulia, and Redfin, competing for the
attention of license holders by changing the way we search for buyers, sellers, tenants, and landlords.
Recent studies show that the majority of home searches begin with the consumer going online and
searching by themselves. They can map the area, price compare, get school district information, and
acquire other important data, all with an Internet search.
MLS systems syndicate their data to companies like Redfin, Trulia, Zillow, and Realtor.com who
then compile the MLS listings into one searchable, user-friendly website or app for consumers.
Given that 95% of buyers use online services, around 43% of whom start their home search online,
this has obviously been a gamechanger in the real estate arena.
Redfin is a real estate site with a large following (more than 20 million visitors per month!) that
offers “brick and mortarless” real estate services. What does this mean exactly? Redfin combines
online search tools, which buyers can use to view listings and picture galleries as well as take virtual
tours of properties from the comfort of their own living rooms with real agents in the field who are
ready to meet with buyers as soon as they want to view a home in person. Redfin is largely buyer-fo-
cused, capturing buyers who view their listings and then parsing out the leads to their own Redfin
agents who are employees of the brokerage rather than independent contractors.
Chapter 7
Technology The company has found a way to successfully keep the leads in-house by offering not only an online
Creates venue for buyers to search for their dream home but also a human component to personalize the
a Powerful experience. Buyers are pleased because the agents’ commissions are lower due to their employee
Office status at the brokerage.
Zillow and Trulia are similar, yet different sites that offer consumers and agents access to a plethora
of services and home and market data. Zillow, for example, obtains its data from MLS systems,
FSBOs, builders, brokers, and franchises, so that consumers and agents can gain access to list-
ings that might not be on the local MLS. Consumers who start their home search on Trulia can
search zip codes for listings, view photo galleries and virtual walk-throughs, access crime statistics,
research area restaurants, and shopping, calculate commute time to and from the home, and deter-
mine monthly mortgage payments. Buyers can also get pre-qualified for a mortgage. Both Trulia
and Zillow link to informative blogs geared toward potential homebuyers and sellers. Zillow and
Trulia both allow FSBOs to post their properties to the sites, giving them much wider market expo-
sure than was possible before, coupled with the ability to track their leads. Buyers and sellers also
have an option to find an agent.
Realtor.com is based almost entirely on MLS data from around the country, so it is touted as the
most up-to-date app. Just like Zillow, Trulia, and other similar sites, Realtor.com provides links for
both REALTORS® and consumers, as well as real estate-related blogs, relevant news and articles,
and the ubiquitous property search function, which can be tailored according to search criteria.
248

P I CS IN REAL ESTATE - HOME SEARCH APPS
HOT TO
Today, buyers and sellers have many options when it comes to choosing an agent, and
with sites like Zillow gaining popularity with consumers, buyers and sellers now have
options that do not even include agents.
Traditionally, real estate agents were the gatekeepers of market knowledge. If a buyer
needed to find a house, he/she contacted an agent, and off they would go to view listings.
Now the control has been shifted by home search apps. FSBOs, once a treasure trove for
agents to prospect, can now list their own property via these apps, track interest, and even
get offers through the app itself, eliminating the need for an agent entirely.
Many agents are grappling with the question of whether or not to submit their listings to
home search sites that do not pull primarily from the MLS. Several brokers have started to
pull back from syndicating their market data to these apps. This creates a bit of a dilemma
for many agents as agents have a duty to their clients to look after their best interests. Cer-
tainly, sharing listings with home search sites that are viewed nationwide will increase the
buyers pool for clients’ listings However, by doing so, brokers and agents are losing control
of the process. Trying to regain that control would be in the agents’ best interest, not in
the clients’.
Is it in the best interest of a client for an agent to push listings to home search apps or for
the agent to keep control of the process?
How can agents compete with the Internet?
Chapter 7
Technology
Creates
Agents can make technology work for them instead of against them. Some agents choose to sub- a Powerful
scribe to these syndicated sites, purchasing leads through them, which can increase their revenue. Office
However, remember that the most current data is the data on your MLS. Agents can use their MLS
to pull expired listings for marketing or run a search of leases that will be expiring and market to
them - focus on those buyers looking for a certain price point lease. Brokerages like Redfin have
been able to take control of the process, by keeping everything in-house while offering online search
and services comparable to Zillow and Trulia.
An example of a real estate aggregator that many agents love to use is ListHub, which is one of the
leading real estate players in the game. ListHub is like a super freeway of real estate traffic that many
large brokerages choose to travel daily, connecting to publishers like Homes.com and Realtor.com
as well as several MLS systems. If ListHub is the freeway and market data is the traffic, the user is
the transit authority that can route the traffic in any direction that they like. Reports generated from
ListHub can be used by brokers and agents for data and metrics to guide their marketing campaigns.
ListHub allows users to compare sites like Realtor.com and Zillow and Homes.com metrics.
WEBSITES AND APPS

How does a brokerage reach potential clients through the Internet? Moz.com is an SEO (Search
Engine Optimization) toolset that helps businesses improve their search visibility and site rankings
on the Internet. It is an all-in-one SEO toolset, so you do not have to hire an SEO writer. Moz also
offers Moz Local, which allows you to improve your local search performance, strengthening your
local marketing power.
Nearly 70% of U.S. adults have a Facebook account, so why not take advantage of that fact when you
market? Facebook Live videos are very much on-trend and are easy to post. As an agent, you should
always have your smartphone or tablet with you. You can easily film a short video from your device
while you are out in the field, and then post it to Facebook. No specialized technical knowledge 249

is needed to reach an audience with whom you can share your video over and over, so it will keep
working for you even after you have moved on to posting other videos.
Sometimes, buyers have trouble visualizing how to make a space work for them. They might not
be able to figure out how to arrange furniture in a house that you are showing them. Though many
agents work with home stagers, this can often be expensive and time-consuming. Now, there is
rooomy.com. A 3-D virtual design tool, Rooomy offers virtual staging teams who manage the
design process so that the brokers and agents can focus on closing the deal. Many brokers are already
utilizing similar software to post virtually staged photos of their listings on the MLS and other sites
like realtor.com so potential buyers can see decorating options.
Virtual reality and interactive 3-D experiences are no longer a science-fiction fantasy; they are a
reality. A virtual reality tool for the real estate industry is matterport.com. Matterport is a market-
ing tool that allows real estate agents to bring their listings to life in 3-D. Agents can leverage this
technology to separate themselves from other agents in the market who are merely posting gallery
images, and 360-panoramas of their listings. Agents using Matterport capture their listings, creat-
ing 3-D virtual showcases that are just like being there. Viewers can “walk through” a property from
anywhere in the world. No specialized training is required, and most properties take around one
hour to capture. There is an initial investment in the 360-camera and a web application that must be
downloaded to smart devices. Matterport is just another example of how technology is changing real
estate by enhancing the home buying experience and creating buyer engagement.
Adwerx is a website that can help real estate professionals create awareness for their prospects by
advertising to their database on websites, mobile apps, and Facebook. Brokers can utilize adwerx.
com to recruit agents for their firms and teams. Agents can use adwerx to promote their brand to
potential clients, follow prospects online, and target local people in the market who can use their
Chapter 7 services. Agents can target ads right down to the zip code.
Technology
Creates CINC (cincpro.com/) is a real estate platform that advertises better leads, higher conversion rates,
a Powerful and faster growth for real estate teams. CINC offers products and mobile solutions like CINC
Office Agent, Open Houses, and Etta Homes to help agents capture prospects’ contact information and
manage leads.
To-do lists are a necessary evil for every busy agent. Throughout an agent’s education and training,
he or she will hear the phrase “write it down” enumerable times. Now agents can leverage technology
by utilizing Get It Done (getitdoneapp.com). Get It Done is a task manager that users can access
via a web browser or smart device. Users can prioritize and can set up reminders to complete certain
tasks. Busy brokers can even delegate tasks to assistants and team members through the app, which
will automatically appear in the assistant’s inbox. The app is available for iPhone and Android and
supports Google Calendar, Apple iCal, and other calendar apps.
Commercial real estate agents have many resources available to them, as well. Loopnet (loopnet.
com) is the realtor.com of the commercial market, connecting commercial agents and clients. Agents
can search for and post properties for sale and lease, as well as advertise their services on the site.
LoopNet also provides a downloadable app with access to commercial listings anywhere, any time.
CoStar (costar.com) functions much like a residential MLS, connecting commercial agents with
brokerages, owners, lenders, property managers appraisers, and investors. Agents have access to data
and tools through the site and can use the site to pull information for market research. Buyers can
track millions of commercial listings through the site. Commercial brokerages should be utilizing
this technology to grow their business and increase their sales revenue.
Landwatch.com is the site where consumers and agents can search for raw land. Landwatch has
become a popular site for retirement-age Americans searching for land near areas of interest such as
lakes, beaches, mountains, or recreational areas. Landwatch is also helpful for finding hunting land,
250 farm and ranch land, and timberland.
BLOGS: THE DELIVERY OF INFORMATION
The word blog is a contraction (without the apostrophe) of the compound word weblog. A blog is a
website usually maintained by an individual. A blog contains text like commentary or a description
of an event. A blog may also contain links to other sites, videos, or pictures. Blog entries are often
displayed in reverse chronological order.
Many blogs are like public journals posted by an individual. The author of the blog, called a blogger,
uses the different media to express his or her feelings, thoughts, and opinions about a specific subject
or event. Some blogs are like technical manuals - “How-Tos” - on specific topics. Each blog post can
be a separate subject or a part of a larger series.
Real estate bloggers often post blogs about current market and home trends and Top Ten Lists of
what sellers can do to get more money for their homes. The best advice for bloggers is to stay current.
Real estate markets and buying trends are continually changing, and readers (whether consumers
professionals in the business) want up-to-date posts and hot information. Post a link to your Face-
book and Twitter accounts when you have an updated blog available.
Limiting Your Blog Liability

Add an agreement to your blog requiring those who post to warrant that all material they post is
original and non-defamatory. Include a disclaimer that you assume no responsibility for the accuracy
of any information. If you do not want others to copy your material, add a copyright notice stating
that information on your blog may not be used without your permission.
Bloggers who worry about liability for user comments can take heart with the outcome or ruling
from the California Supreme Court that held that the owners of online sites are not responsible for
defamatory statements posted by others. The court did say that the original sources of those state- Chapter 7
ments could be held liable. Technology
Creates
SOCIAL MEDIA FOR BUSINESS a Powerful

Office
Using social media is fun, and it is an excellent way to stay in contact with old friends, past and
present clients, and people who share similar interests. Activity on social media sites happens in real-
time. Users make posts and receive immediate feedback, creating the opportunity for conversations.
Social media is a great way to make new contacts.
Most social traffic happens on the popular social media sites: Facebook, Instagram, LinkedIn, Twit-
ter, YouTube and most recently, TikTok. Each of these sites has a different focus and purpose.
Consider the following analogy when using these social media sites.
FACEBOOK
Today, Facebook (www.facebook.com) is still the largest social media platform in the world. Face-
book’s daily active users (DAUs) number over one-and-a-half billion. Their monthly active users
(MAUs) are nearly two-and-a-half billion. Many of these users access the social network giant from
their mobile devices.
People access their Facebook accounts multiple times per day, looking for opportunities to interact
with friends. Facebook and other social media platforms serve as a means of human interaction and
communication. Real estate agents and other marketers who spend all their Facebook time sending
out advertisements are missing the main point of Facebook. Facebook is a communication channel,
not a marketing channel. To prove this, watch posts by friends. Which posts get more likes and
comments? The posts talking about upcoming open houses and new listings, or the posts that share
an authentic moment of life?
251

When posting on Facebook consider the following:
• Be personal, not all business.
• Be you. Be authentic.
• Act like you would at a dinner party.
• Don’t be the talker. Be the listener.
• It’s not about selling a house. It’s about making a relationship.
Using Facebook to create and foster relationships is a great way to find new clients and maintain
previous ones. To do this successfully, agents have to be intentional about what they post. They
have to create a plan that helps develop relationships between themselves and their friends. Before
using Facebook for business, create a posting plan that will build an online persona and will develop
the relationships desired. Ask, “What do my friends and followers need from me, the real estate
specialist?
BUSINESS PAGE VS. PROFILE PAGE

Be aware that Facebook does not allow the solicitation of business on the regular side, called the
Profile Page, of Facebook. It is common, however, to see many business owners use their Profile
Page for business. Facebook can freeze an account if the Profile Page is used this way. Facebook users
are looking for relationships, NOT products and services when they are logged in.
Chapter 7 It is easy to create a Business Page and post to it. It is not as easy to gain Likes as it is on a Profile
Technology Page. Successful Business Page users spend marketing dollars to place ads for their Business Page.
Creates Facebook ads come in several types, pay-per-click and impression ads, and Like ads. Practice setting
a Powerful up ads before spending money on a campaign. People who successfully use direct mail will appre-
Office ciate the facility of using Facebook ads. Just like with any marketing campaign, set goals before
creating and using a Facebook ad. Facebook advertising, like other forms of advertising, is a passive
form of prospecting. It is a numbers and waiting game, a passive form of advertisement. The more
appropriately and consistently placed an ad is, the better the results.
FACEBOOK LISTS AND GROUPS

To further develop relationships with people on Facebook, consider using the List feature. Facebook
creates Lists automatically based on the About section. Facebook creates Work, Family, City, Edu-
cation Lists without prompting. Users can create additional lists to follow friends easier. Friends can
be in more than one List at a time. Lists filter the Newsfeed to just the friends in the List. It makes
listening, liking, and commenting easier. Posts can be directed at a List as well. It may be more
beneficial, for example, to post about a local event to those who live nearby.
Groups are another great feature on Facebook. Groups allow Facebook Users with similar interests
to have conversations and share posts. Groups can be private or public. Public Groups are searchable
on Facebook. Real estate agents may consider creating a neighborhood Group where members can
share local events, new store and restaurant openings, and even post items for sale. A Group may be
a great place to post an open house or a new listing. Interview local business owners and restaura-
teurs, posting the interview on the Group page. Share community updates and community photos.
Ask questions, plenty of questions to keep members of the group engaged. Great questions include,
“Where’s the best ____ in town?” or “What’s your favorite, a, b, or c?” Consider keeping the group
public, but making membership to the group by permission and not open.
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Facebook Best Practices
• Grammar is important
• Short and sweet
• Punchy
• Fun
• Ask yourself what would it take to get me to comment, like, or share a post?
• Are you consistent? Once a day?
• Write a sentence or two. Then ask a question.
• Improve your visibility by asking questions and generating comments.
• Promote your post on Twitter
• Use the URL link for the Facebook post
• Don’t post and run. Go back and reply and respond.
• Focus on liking, commenting, or sharing 5 things your friends posted.
• Create lists of potential and past clients. Chapter 7

Technology
INSTAGRAM Creates
Instagram, also known as “Insta” or even “the Gram,” has become one of the most popular platforms a Powerful
with the younger generations, supplanting social media mainstay Twitter in recent years. Everyone Office
who’s anyone in the world of influencers, bloggers, and vloggers is active on Instagram.
Business owners who want to appeal to the Millennials and GenZ cannot ignore the power of the
“Gram.” The social networking app began in 2010 as a platform to connect people through video and
photo sharing. The app quickly grew in popularity due to its filter features that allow users to edit
their photos employing different photographic effects. The result? Professional-looking photos and
videos that individuals and businesses can use to build their brands.
Social media experts insist that the best way to use filters in Instagram is not to overdo it and to
consistent. Just because you can oversaturate a photo’s color palette does not mean that you should.
Oversaturation often produces harsh results. Instead, choose a filter that is appealing and reflective
of your brand. Once you have decided on your favorite filter, use it consistently.
HOW TO USE “INSTA” FOR REAL ESTATE BUSINESS

Instagram is an excellent platform for real estate agents to promote their brand and generate leads,
particularly among the newest generations of homebuyers. Agents should identify their target mar-
kets and tailor their posts accordingly. For example, an agent who deals primarily with luxury home
buyers should generate and post content geared toward that market. Figure out what luxury home
buyers are looking for, and then deliver it to them via professional-quality still photography, videos,
information, and statistics they would be interested in. An agent who works mainly with first-time
buyers will tailor his/her content accordingly, perhaps offering home buying tips that first-timers
need to know.
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Agents can set up a business account that is separate from their personal Instagram account. While
it can be time-consuming to post to separate accounts, agents should create and share content
expressly for real estate marketing and brand promotion to their business account. It is sometimes
refreshing to break up serious business marketing with some personal Instagram Stories, so feel free
to intersperse some of your personal achievements or heartfelt stories with your marketing posts.
One caveat for real estate professionals when posting to Instagram, do not overedit listing pics.
Using a filter to lend that “classic” touch to a photo is fine, but overediting a photo can cause an agent
quite the headache. Be aware that overediting could violate REALTOR® ethics. Buyers want to see
an image that is representative of the property’s true condition, not a romanticized version of reality.
Learn more about using Instagram for real estate by visiting placester.com/real-estate-mar-
keting-academy/real-estate-social-media-instagram# and www.homelight.com/blog/
agent-real-estate-instagram-strategy/.
TWITTER
Much more open and very searchable, Twitter offers another social media option. A Twitter account
and profile are created much the same way a Facebook account is created. Instead of having “friends,”
Twitter has “followers;” the difference being that Twitter profiles do not require acceptance or per-
mission to follow someone.
To use Twitter successfully for real estate, brainstorm a list of the influencers in a community or
sphere that are of interest. Follow them and begin to comment on their tweets when appropriate.
Search for Facebook friends and other friends on Twitter and follow them as well. Not everyone
who uses Facebook uses Twitter, and vice versa. Brainstorm a list of topics that would interest past,
Chapter 7 present, and future clients, then start tweeting. Do not forget to share from Facebook on Twitter.
Technology Grab the URL to a Facebook post and post it on Twitter.
Creates
a Powerful Killin’ it on Twitter
Office • @. “Atting” makes the tweet/post visible to all while tagging/recognizing a specific person.
If you want only one person to view your message, consider sending him/her a DM
(direct message).
• Retweeting is flattering.
• Adding a comment can amplify the tweet.
• Leave a little room. 280 characters is the current limit.
• Don’t tweet and run. Create a conversation by replying and responding.
• #. Hashtags make a topic searchable. It’s a highlighter that helps filter keywords.
• Don’t overdo the hashtagging (#). This isn’t Instagram.
• Tweet more about others than yourself.
• Drive traffic to a blog or your professional website.
• Use advanced search options to see what’s trending or to find certain topics:
https://twitter.com/explore
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YOUTUBE
Media giant YouTube has been consistently in the top ten social media platforms for years. People of
all ages and walks of life log into the Google-owned site regularly to watch and share videos with the
world. Due to its popularity, it is no surprise that influencers and marketing gurus utilize YouTube
to get their message out.
HOW TO USE YOUTUBE FOR REAL ESTATE BUSINESS

Since 2005, YouTube visitors have watched billions and billions of hours of videos. Savvy real estate
agents realized the need for industry-related content and set about creating videos on everything
from how to help buyers find a house to how to become a top producer.
The COVID-19 pandemic created a wrinkle in the home-showing process due to restrictions on
non-essential travel and public gatherings. YouTube provided agents with a platform for posting
video walkthroughs of listings. By posting their videos on YouTube and YouTube Live, agents have
extended their marketing reach to encompass a much wider audience. While many states were on
lockdown, real estate agents were still able to market digitally and conduct business virtually.
Real estate agents use YouTube in several ways. Some agents post property videos and virtual tours,
while others make “How-To” and market information videos. Some agents record videos about their
communities, and some use YouTube for client testimonials. Today, video should be a part of every
agent’s marketing plan. There is no shortage of real estate content available to viewers, so be relevant
yet creative to gain viewership.
For up-to-date statistics on YouTube’s viewership, visit youtube.com/about/press/.
LINKEDIN Chapter 7
LinkedIn is the professional’s social media platform. It is a vital piece in a well-rounded social media Technology
platform. LinkedIn allows users to set up a profile that may include: Creates
a Powerful
•
Background Information Office
•
Job History
•
Skills
•
Interests
•
Organizations
•
Education
• Congratulate your connections who have new jobs and promotions
• Search new connections
• Update your profile
•
Write recommendations
• Endorse others’ skills
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Spend the time to thoughtfully fill out as much information as possible to create a profile. Often,
users set up their profiles with job descriptions and skills and then infrequently or never return.
Instead, check and update LinkedIn regularly, once a week or every other week is enough.
Some agents link their Twitter and Facebook Business Pages to their LinkedIn account. Please con-
sider the content of Twitter posts before including this on a LinkedIn account.
TIKTOK
TikTok burst onto the social media scene in 2016 as yet another video-sharing app. The app quickly
became famous for users’ short videos of themselves doing hip-hop dances and lip-syncing to pop-
ular music. Initially popular with younger generations, TikTok is now responsible for many videos
going “viral” and has surpassed the one billion mark for videos viewed per day.
The message here is clear-- with so many people downloading videos from TikTok, it has become
an excellent platform to share your brand and market to a global audience. Like most social media
platforms, marketers have learned how to harness the app’s power to reach the worldwide market
and engage with consumers, creating traffic to their sites.
HOW TO USE TIKTOK FOR REAL ESTATE BUSINESS

TikTok proves to be a conduit for reaching young people, like the newer generation of home buyers
and sellers. Agents should create brief yet relevant videos that reflect their brand and market their
services. TikTok users love videos with music, so agents should create videos that incorporate music
available on the app without copyright infringement. Like Instagram, TikTok offers users a variety
of filters to enhance their videos. Agents can use hashtags to make it easier for others to find their
posts, and they can share their videos across platforms, so it appears on their Instagram and Facebook
Chapter 7 pages.
Technology
Creates TikTok is the platform where brands can have a little fun. Do a little dance with your client when
a Powerful you sell their home. Toss a home’s keys to your buyer in a jump cut or transition. Make it fun and
Office relevant for your followers, and use hashtags to make your posts accessible to a wider audience.
Consider creating a business account separate from your personal account, unless you want potential
clients to see you doing “The Floss Challenge” in your kitchen at midnight.
For more information on using TikTok to promote your business, visit myrealpage.com/5-easy-
tiktok-video-ideas-realtors/, blog.z57.com/a-real-estate-agents-guide-to-using-tiktok, and
outfront.kw.com/training/tiktok-for-real-estate-agents-land-leads/.
PINTEREST
Pinterest is a popular social media platform that involves ‘pinning’ a variety of media to your per-
sonal board. Pinned media can include photos, links to websites, articles, or commentary via blog or
video. Pinterest users can view each others’ boards, creating an interesting method for sharing real
estate-related ideas. Users can share everything from interior decorating and landscaping ideas to
information on reputable vendors in the industry. Users can search interests easily by keyword, topic,
or theme, so your information can reach an interested consumer in a variety of ways.
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HOW TO USE SOCIAL MEDIA FOR BUSINESS
You are familiar with the sites, you know that they can help you generate leads, but how do you use
them for your business? Social media can be used for:
• Announcing your career in real estate
• Posting pictures and videos of listings
• Expanding your sphere of influence
• Staying in touch with past and current clients
• Recruiting sales agents for your team/brokerage
Not all social media sites are created equally. Some sites are used more heavily by certain demo-
graphics. For example, more Baby Boomers will have Facebook pages than Snapchat accounts. If
you want to target Baby Boomers and you post heavily to Snapchat, then you will miss your mark.
You chose your target market, so you should know it well. Do not narrow your focus to sites that
your market does not use regularly. You want the most exposure to your target market that you can
get.
Each social media site has different guidance for posting and its own culture at work, so you cannot
necessarily use the same approach on every site. It is like going into Starbucks and ordering a “small”
coffee. Anyone who frequents Starbucks with any regularity knows that a small coffee is called a
“Tall” in Starbucks’ jargon. You are “a friend” with someone on Facebook and a “follower” on Twit- Chapter 7
ter. You “repost” on Facebook and “retweet” on Twitter. Spend some time learning the culture of Technology
the sites that you use. Creates
a Powerful
Unless you have endless hours in the day to update every social media network (or employ a social Office
media coordinator to do so for you), choose two or three that you will work consistently, and then
actually be consistent. You can use an online social media marketing management tool with a dash-
board interface like Hootsuite (hootsuite.com) to schedule posts to multiple social media networks,
so you do not feel overwhelmed.
Some agents feel like they are losing business if they do not post to every social media site available
to them, but are they really losing out? Evaluate the traffic you get from social media and use ana-
lytics to track traffic and return on investment (ROI). Hootsuite offers real-time analytics so you
can measure how your social media campaign is working for you. Google Analytics is also a popular
measurement tool that will allow you to evaluate how your social media content is working for or
against you.
SOCIAL MEDIA DON’TS

There are several rules by which social media marketers should abide when posting for business.
DON’T
•
Brag about yourself. You’re great! However, arrogance is a big turn off for most, so remain
humble and express your gratitude through congratulatory house closing posts and shout outs
for business referrals.
• Rant. No one wants to hear how awful you think the market is, or how badly your broker is
treating you. Keep it positive. It is the Law of Attraction - what you put out; you get back.
Positivity breeds positivity. Negativity does the same. Which would you rather project to your
friends/followers?
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• Market your services constantly. Remember the 80/20 Rule? Post by it! You do not want to be
that one person at the cocktail party whom everyone avoids because you always talk business
at people. People can still avoid you on social media for the same reason by hiding your posts,
blocking you, or unfriending/unfollowing you.
•
Lie or mislead. If you post another agent’s recent sale to generate interest in your target mar-
ket, do not take responsibility for it. Lying could also get you in trouble with your broker
and the other agents in your office. Buyers/sellers will not sign contracts with untrustworthy
people.
•
Be too personal. Many professionals live dual social media lives - one business, the other per-
sonal. Keep the super-private information for your personal page. It goes without saying that
you should not use provocative language or photographs on your business profile. You want to
be known for your professionalism and sales experience, not for your smoldering stare.
• Be inconsistent. Remember, marketing = consistency. The same formula applies to social
media marketing. You want to remain in the public consciousness. Your friends/followers
should never think to themselves, “Whatever happened to ____?” They should know where
you are and what you are doing - Real Estate!
•
Be too wordy. Choose your words wisely. Too much text is a turn-off, and 9 out of 10 people
will not finish reading it.
•
Beg for likes and reposts/retweets. You want to get the word about your services out to as
many people (prospective buyers/sellers) as possible, and social media is an excellent platform
Chapter 7 for that. However, pestering people for likes and reposts comes off like begging. That is not
Technology the image that you want to project. You are good enough, professional enough, and people
Creates want you!
a Powerful
Office •
Ignore tracking social media ROI. You NEED to know where your business is coming from,
and social media is just one outlet you should be tapping into. Businesses, both big and small,
utilize some form of analytics software to track their marketing efforts. It is one thing to put
the word out there; it is another thing entirely to know if it is working for you.
SOCIAL MEDIA DOS
DO
•
Announce on social media that you are in real estate. Use your social media contacts to
expand your sphere of influence. If you have 236 Facebook friends, then that is 236 members
of your sphere of influence, and they all need to know that you can help them with all of their
house-buying needs.
•
Post pictures and videos of your listings to engage your followers. You never know, someone in
your sphere of influence may know someone who is looking for a property in your market area.
Ensure that your pictures are high-quality, even if they are from a smartphone. Low-quality
pictures are not professional.
•
Post links to your blog, website, and brokerage’s website. You want to get your content out to
as many people as possible. Friends/followers may repost or retweet and share your content. If
you blog, provide a link to your latest blog post. Be consistent.
•
Congratulate buyers/sellers on closings. Post a congratulatory message on your clients’ social
media pages when they close. This practice shows your followers that you appreciate your
258 clients and that you successfully help people achieve their dreams of owning a home.
•
Post pictures and videos from events you attend. Whether it is for a charity event or a business
seminar, post a picture of you looking your best. It will get your image out there in people’s
newsfeeds and show that you are socially conscious by volunteering or participating in local
events. If you post pictures of yourself at seminars or educational events, then it will project
the image that you take your education very seriously and are learning everything that you can
about the business.
• Post testimonials from satisfied clients. Testimonials are free advertising. Do not pass up
the opportunity to capitalize on that. You can post direct quotes or a short video of the
testimonial.
•
Post awards received and designations and certifications earned. It is not bragging; it is a fact.
Your accomplishments deserve a like and a share.
•
Respond to comments positively, even if they are negative. Do not engage in a war of words
with a hater; it is not worth it. You are a professional, not a reality show diva. Potential clients
will appreciate your positivity.
•
Post facts and figures about the market, especially if they are positive. If they are negative, you
may need to put some positive spin on them.
•
Post information about open houses that you will be hosting or attending. It is a good idea to
let people know when you will be at a property that they can either view or recommend to a
friend for viewing.
Tackling social media marketing can be daunting for many entrepreneurs, especially if social media Chapter 7
is not a natural part of their everyday lives. If you are not exploring it, you definitely should be. Technology
Creates
Take a look at the following links to see just how important social media has become to the general a Powerful
public today: Office
adespresso.com/blog/facebook-statistics/
blog.hootsuite.com/twitter-statistics/
business.linkedin.com/marketing-solutions/blog/linkedin-b2b-marketing/2019/10-surpris-
ing-stats-you-didn-t-know-about-content-on-linkedin
www.facebook.com/business/
HOT TOPICS IN REAL ESTATE - SOCIAL MEDIA MARKETING AND THE TREC RULES
Due to the increasing number of agents using social media sites like Facebook, Twitter, and Ins-
tagram to advertise listings, the Texas Real Estate Commission has begun to examine these posts
closely. TREC Rule §535.155 states that advertisements on behalf of license holders must contain
the broker’s name in at least half the size of the largest contact information for any sales agent,
associated broker, or team name in the advertisement. Many of the agents who are posting on social
media today do not follow this rule.
Texas law also requires all brokers and sales agents to post either a picture of a completed IABS form
on business websites and social media profiles or a link to a completed IABS, as well as a picture or
a link to a completed CN 1-3.
How many social media postings or agent profiles have you spotted lately that fall safely within
Texas real estate law? The answer is probably not many.
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For the last few years, many agents have been posting listings and open house notifications to social
media sites without considering the legality of the post. They may not realize it, but TREC views
these posts as advertising.
“Advertisement” is any form of communication by or on behalf
of a license holder designed to attract the public to use real
estate brokerage services and includes, but is not limited to,
all publications, brochures, radio or television broadcasts, all
electronic media including email, text messages, social media, the
Internet, business stationery, business cards, displays, signs and
billboards.
To ensure that agents conform to TREC advertising rules, they should identify themselves and
their sponsoring broker. Any posts that listings or open house notifications should contain the name
of the agent’s broker. There should also be images of a completed IABS and CN 1-3 on an agent’s
Facebook profile.
VIRTUAL REALITY
Many new technologies are being applied by industry practitioners looking for ways to enhance the
real estate experience. Virtual reality headsets may eliminate the need for multiple property tours
since they allow an individual to take a virtual walk around a home. The headset can give buyers
the full tour of walking from room to room so they can determine if each room feels like the right
fit for their family. Sellers can get their homes ready for pictures and then not worry about unmade
beds and dirty dishes.
Chapter 7
Technology Originally intended the video game industry, VR technology soon became known by commercial
Creates entities as a new way to demonstrate products. You can go on a virtual tour of a ship or experience
a Powerful being on a cruise. Hotels and resorts can also use VR technology so users can view different rooms
Office and compare the differences in size and amenities.
For now, real estate companies who want to use VR need to buy equipment powerful enough to
capture 3-D video to be compatible headsets.
The VR reality is that it gives the consumer the feeling of realistic space. The user can look around
the space to determine if it meets expectations. New technology allows consumers to walk into a
virtual room and change the colors or even the floor plan of the room. On the commercial side, ten-
ants can visualize the set-up of cubicles in an office building. These options allow consumers more
control over property selection.
Many agents are already using VR tools like the Oculus Rift headset and app to show their proper-
ties in their office.
Industry experts predict “holoportation,” virtual, 3-D technology in real-time will replace regular
showings with as many as the first and second “showings” being virtual before the buyer decides to
go to the house to view it in person.
AUGMENTED REALITY
Like virtual reality, augmented reality (AR) provides a modified view of reality for the user. Though
AR is similar to VR, AR does not create a new reality for the user. It enhances the user’s current
perception and experience of reality. AR has many real-world applications across disciplines. Most
notably, for real estate brokerages, AR can be integrated into visual marketing materials. It can also
be used for training and educational purposes.
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AR was widely introduced to the public through the Pokemon Go App, its popularity soaring in
2016. Real Estate agents can move beyond flat, one-dimensional marketing materials to materials
that have been enhanced through AR. Agents can help clients visualize spaces and customize them
virtually by clicking a button to change wall colors or flooring materials
A company out of Hong Kong called Spacious uses AR to show buyers supposedly haunted prop-
erties by overlaying graphics on top of maps. When users are near “haunted” locations in certain
Asian countries, a graphic of a ghost will appear in the app’s interface on top of a location in which
there has been a death. Spacious is a novelty app that capitalized on the popularity of Pokemon Go.
However, it demonstrates that the real estate industry can exert some control over a user’s experience
by using AR in conjunction with property search apps. Imagine the possibilities that exist.
ARTIFICIAL INTELLIGENCE
The concept of artificial intelligence (A.I.), at its most basic, is a way of describing intelligence
exhibited by machines. However, what we really mean when we say artificial intelligence, or A.I., is
a machine or program that replicates human thought processes or actions.
At its core, however, A.I. is far more complex, and the definition of what constitutes A.I. is constantly
changing as we learn more about machines and make them increasingly capable of sophisticated
tasks. In today’s world of Siri, Alexa and Cortana, A.I. is constituted by one or more of the following
capabilities:
• Understanding human speech
• Competing in complex strategic game systems (such as chess)

Chapter 7
• Operating complex machinery (think self-driving cars) Technology
Creates
• Interpreting and analyzing complex data sets a Powerful
Office
A.I. was described in 1956 thusly, by a group of Dartmouth summer workshop participants: “...
human intelligence can be so precisely described that a machine can be made to simulate it.”
We see with this concept that A.I. is intended to simulate human thought and action. However, the
human brain is a complex organ that scientists still do not fully comprehend. What this means from
a research and development perspective is that our understanding of what constitutes human intel-
ligence is still growing, thus our understanding of what must constitute A.I. changes accordingly.
Evidence of this can be seen in the increasing sophistication of A.I. and A.I.-like programs available
to consumers and professionals.
A.I. IN ACTION
As mentioned above, we see A.I. in use more and more in our daily interaction with technology. Siri,
the Apple platform’s interactive A.I., has been in use for several years and has steadily increased in
sophistication and capability. Siri can answer questions, perform user-directed searches, and other
similar tasks. What makes Siri and other voice-interactive A.I. platforms like it unique is their abil-
ity to learn from the user.
Another prime example of A.I. that we experience in our everyday lives is the use of what are
referred to as ‘bots’ on social media platforms such as Facebook. Bots are generally described as any
software which automates a task typically performed by humans. In relation to Facebook, specifi-
cally the Facebook Messenger platform, bots can be used to understand conversational language and
learn from their interactions with the humans they exchange messages with. This ability is the key
to understanding the reason that the use of A.I. is proliferating so rapidly.
261

While bots are a very simplistic form of A.I., their recent prevalence is an indicator that more and
more, programs and machines are being created to perform activities in which their human coun-
terparts do not have the time to engage. For example, 1-800-Flowers recently implemented a bot
that allows a Facebook user to message the 1-800-Flowers Facebook page, order flowers, have them
shipped, and tender payment. All of this takes place with a human user interacting with a program-
matic intelligence.
These applications for A.I. will continue to grow in use, for a very simple reason...an A.I. does not
require payment or have a family to go home to every night. A.I.s can fulfill a function that can cost
a business more time and resources employing a human worker to perform, thus reducing overhead
and inconsistency of process.
CREATING A PROFESSIONAL WEBSITE

Websites are at the core of every company’s tool kit. Two out of three people research their agents
before reaching out to them. Do a simple web search for real estate brokers in your area. How many
results were generated? How do you compete with all of those other agents out there vying for
business?
SEARCH ENGINE OPTIMIZATION

Why is search engine optimization (SEO) important? Because without it, your website might end
up buried on page 12 or 13 of a Google search, and everyone knows that the majority of web-surfers
do not click past page 2 or 3 of the results. SEO employs strategies that promote your site up in
the ranks of a search results page, making you more visible to prospective clients. Agents can enlist
the services of professional SEO writers who understand the complex algorithms that major search
engines like Google and Yahoo use to index websites.
Chapter 7
Technology One caveat to using SEO is not to over-utilize it. In other words, do not inundate your site’s visitors
Creates with the same keywords over and over and over. Do not sacrifice the professionalism and relevance
a Powerful of your site for the sake of SEO.
Office
To make your website stand out:
• include videos of community events that you or your brokerage participated in
• video testimonials of satisfied clients
• local news feed
• scalable content for mobile devices
• local business listings/directory
• links to relevant articles that deal with your market or state
Consult with an SEO writer or use one of the sites like moz.com to get your website noticed. All of
your content pages should be keyword-oriented, relevant to your business, and your visitors, local or
regional, regularly updated and well constructed.
People will find your page through mentions or links on other sites or blogs, or from reviews on sites
like Yelp as well as through popular search engines like Google, Yahoo, and Bing. You want your
brokerage’s site to be one of the top sites clicked on, and that is where SEO plays a significant role.
Professional web developers can utilize technology to analyze traffic to your page and can build in
lead generation.
262

WEBSITE DOS AND DON’TS
Do Don’t
• Update your site regularly • Leave outdated information on your site
• Make good use of whitespace on your page • Pack or crowd your page with unnecessary
graphics and buttons that can take a long time
to load
• Include short videos • Include annoying music or cursor trails that

follow the user’s mouse around the page
• Use the psychology of color on your site (how • Use colors that clash or dark text on a dark
color can affect behavior patterns) page/light text on a light page
• Use a clean, easy-to-read font (sans serif fonts • Use a font that is hard for people to read (avoid
work best) cursive fonts or fonts that are too narrow)
• Include contact information on every page • Bury contact information, making it hard to
find
• Make use of a page counter or lead generation • Require visitors to enter personal information
before using your site
• Link to your social media pages • Ignore the traffic that you can get from social Chapter 7
media Technology
Creates
• Include your brokerage’s mission statement • Include too much text; visitors do not want to a Powerful
read a book from your site Office
If you are interested in creating your own professional, private website, take the time to talk to a
professional website designer who will work with you to create a polished site with working links
that customers and clients can utilize to keep up with what you are doing and what you are selling.
Working with a professional in the field will help you avoid some of the pitfalls of amateur website
design such as busy backgrounds, too much text, fonts, and font colors that hard to read, broken
links, or links that do not lead to the places you think they do. You want your site to be clean,
load quickly, and, most of all, be informative for the average customer/client. There are many tem-
plates available online for agents to utilize in the creation of their sites. The National Association of
REALTORS® endorses PLACESTER, which provides design templates for agents.
Do not forget to include links to any documents required by TREC, like the Information About
Brokerage Services or the TREC Consumer Information Notice 1-3. You should include your
broker’s information on every page of your site.
263

DATA MANAGEMENT TRENDS
GOOGLE ANALYTICS
Analytics has become increasingly vital in today’s digital marketplace. With more and more con-
sumers utilizing the Internet and mobile apps, it has become necessary for companies to collect,
track, and measure digital data to gain valuable insights into the customer’s world. In this consum-
er-driven real estate industry, What does the customer want? and When does the customer want it? are
questions that Google Analytics and other similar programs are trying to answer.
Brokerages can employ Google Analytics or analytic software to:

• improve consumer engagement
• promote website content
• perform market research
• analyze data for insight into consumer behavior
• manage tags (code embedded into the site which allows for 3rd-party tracking, analysis, etc.)
• personalize the customer experience
• run reports based on collected analytics data
Analytics has proven to be invaluable for designing marketing campaigns and gaining insight into
consumer buying patterns and behaviors. Large, well-known companies have utilized analytics to
Chapter 7 their advantage, leveraging technology for their benefit.
Technology
Creates Analytics is a trend with staying power, especially for real estate sales. If your brokerage is not
a Powerful currently using Google Analytics or another, equally powerful analytics software, then you should
Office begin planning and budgeting for its integration soon. Agents will naturally gravitate toward bro-
kerage firms that provide the latest and the most innovative technology.
INTERNET ETIQUETTE
PROPER USE OF THIRD-PARTY SOCIAL MEDIA SITES (FACEBOOK, YOUTUBE, TWITTER,
ETC.)
There are hundreds of providers of social media services with which real estate agents may participate.
The purpose of this policy is to provide guidelines intended to provide both agents and the brokerage
with legal liability risk management and to protect the brokerage’s reputation and goodwill in the
community. The scope of this policy is intended to relate to the use of social media in connection
with the real estate business.
Agents are required to read and be familiar with the policies and requirements of any site on which
they participate and to comply with the requirements of that site. In particular, Agents should know
the privacy practices and policies of the sites. Where options are provided, the Agent may select an
option that provides a level of protection to Users of Agent’s social media site consistent with the
level of protection afforded by the brokerage at the brokerage’s web site.
Agents should remain aware that items posted on social media sites may be forwarded or used for
purposes other than originally intended. Agents should be aware of this when making decisions as
to what to include on their social media sites.
The following are ideas that agents should consider when posting to any social media website as they
are managing risk and keeping their careers and reputations on the highest professional level.
264

Posting of Professional Contacts/Qualifications (e.g., LinkedIn)
1. Agent is responsible for assuring that any listing of qualifications, credentials, or training
contained on the site is current, accurate, and not misleading. Any changes to the foregoing
shall be promptly revised on the site.
2. Agent shall not falsely claim association with any person or group
3. Notwithstanding any provision herein, Agent remains responsible for complying with the
license laws and regulations governing the conduct of licensees and all applicable local,
state and federal laws.
4. Agent is responsible for assuring that the content conforms to the standards established in
the Code of Ethics
Posting of text (e.g., Facebook, Twitter)

1. All text shall be the Agent’s own and not plagiarized or copied from another party with-
out that party’s permission. This shall not prohibit the use of reasonable quotations from
the writings of others or writing for which the Agent has received permission to use or
using writings consistent with the practices of the site (e.g., retweeting). No content which
infringes the rights of any third party may be used.
2. Agent may/may not write regarding the listings of other licensees within the brokerage
3. Agent may /may not write regarding the listings of other brokerages
Chapter 7
4. Agent shall assure that writings do not contain unauthorized disclosures of confidential Technology
information of clients, customers or REALTOR® Creates
a Powerful
5. Agent is responsible for assuring that the use of the site is consistent with the Code of Office
Ethics, local, state, and federal laws and all applicable real estate license laws and regula-
tions, including where necessary identifying Agent.
Posting of comments to social media pages of others

1. Any statement regarding the brokerage shall clearly disclose the Agent’s relationship to the
brokerage
2. The Agent shall disclose his/her status as a real estate professional as a part of any real
estate related statement
3. Agent may/may not accept compensation for placing a comment on a site
4. Agent is responsible for assuring that the use of the site is consistent with the Code of
Ethics, local, state and federal laws and all applicable real estate license laws and regula-
tions, including where necessary identifying Agent.
Posting of photos (Instagram)

1. Agent is responsible for assuring that the Agent is authorized to use any photo posted to
the site (to avoid copyright issues)
2. Agent shall secure permission to post for marketing purposes the image of another person
on the site
Ethics, local, state, and federal laws and all applicable real estate license laws and regula- 265

tions, including where necessary identifying Agent. Posting of audio/video (YouTube)
4. Agent is responsible for assuring that that Agent is authorized to use any audio/video post-
ed to the site (to avoid copyright issues)
5. Agent shall secure permission to post for marketing purposes the image of another person
on the site
6. If an image has been altered in any way by Agent, the fact that the image is altered shall be
disclosed
Ethics and all applicable real estate license laws, and regulations, including where necessary
identifying Agent.
EMAIL ETIQUETTE
Email is as important as live phone conversations in today’s companies, and many employers are losing
customers, leads, and dollars due to poorly handled emails. People often judge an agent’s character,
performance, and intelligence by the way he/she writes, replies, and uses email communication.
Let’s start with the basics of email. There must be a subject line that demonstrates the core meaning
of your email message. There should always be a greeting as with any mail correspondence; that is
just good manners. The closing should not make you sound terse or annoyed.
Be sure you address the note with the same formality as you would in personal or business commu-
Chapter 7 nication such as Dear Ms. Santamaria or Dear Rita. Always verify the correct spelling of the person’s
Technology name and spelling within the body of the note.
Creates
a Powerful Read your email out loud before clicking send to check the tone of your message. Choose words
Office that reflect your meaning and try not to be abrupt. Using all capital letters gives the recipient the
feeling you are screaming at them. Bolding your words show you are emphasizing a point and being
emphatic. Using all lower case sounds like you are mumbling.
Do not abbreviate words like two, too, for “2” or you with “U.” You are giving a first impression of
yourself over the electronic mail delivery system, and abbreviations give your associates and clients
the impression you are in a hurry, disorganized, or uneducated.
The use of !!! and ??? demonstrate too much emotion in an email unless it is a personal email. If the
intention is not to have a personally charged tone in your email, walk away from the computer, cell
phone, relax for a while and then reread your remarks and ask yourself if you were on the receiving
end of the note would a working solution occur based on the wording and tone of the email you are
writing? Review the sender’s email to verify you are interpreting their message correctly. When in
doubt, pick up the phone and call that person to verify the sender’s information.
Colons (:) tend to send an immediate “unwelcome” feeling to any email. Emails with typos are not
taken seriously or could degrade the person’s intelligence level.
Type complete sentences and use correct sentence structure. The use of thank you, please, how are
you, and other niceties are always proper communication techniques and relevant to every form of
communication.
Replying to “all” in an email should only be used as requested.
266

Statement T or F
1. Loopnet is a marketing tool that brings listing to life in 3-D.
2. Facebook’s daily active users (DAU) are over one-and-a-half billion.
3. Agents should overedit property photos to attract the most attention on

Instagram.
4. For marketing purposes, YouTube should only be used for virtual tours.
5. The TikTok app allows agents to appeal to younger generations.
6. You should always brag about your accomplishments on social media, so

potential clients know how successful you are.
Chapter 7
7. According to TREC Rules, posting listings and open house details on Technology
social media is a form of advertising. Creates
a Powerful
8. SEO stands for “search engine organization.” Office
9. The IABS and CN 1-3 should be linked to your professional website.
10. Google Analytics can analyze data and perform market research, among
other things.
267

CHAPTER 7 QUIZ
1. Which of the following is NOT a social media platform that agents can use for marketing?
a. Skype
b. Twitter
c. Instagram
d. TikTok
2. Before using Facebook for business, create a _____ that will help you build an online persona
and develop desired professional relationships.
a. LinkedIn account
b. Listing package
c. Posting plan
d. Buyer’s book
3. Which social media site highlights job history, job skills, and education?
a. LinkedIn
b. Pinterest
c. Instagram
d. Twitter
Chapter 7
Technology
Creates
a Powerful
Office
268

CHAPTER 8
Becoming Seasoned
and Staying Afloa

Chapter 8: Becoming Seasoned and Staying Afloat
community involvement mentor designations
distractions goal setting open house
the little extra checklist
PRE-TEST
1. _____ Mentor a. agents should try to do at least one each week
b. volunteering for local events to help others

2. _____ Open house
c. someone you want to emulate who can help
you be successful
3. _____ Designations
d. spending time with clients doing special
things
Chapter 8 4. _____ Community involvement
Becoming e. ABR, MRP, ALHS, etc.
Seasoned
and Staying 5. _____ The “little extra”
Afloat
1. c. 2. a. 3. e. 4. b. 5. d.
Answers to Pre-Test
270

GROWING AND MOVING FORWARD
W hen should you consider additional training and professional certifications? After you have
worked in real estate for about a year, you will have had considerable exposure to people and
situations that contribute to a successful career in real estate. You may even have run across some
challenges or aspects of the industry that you prefer to others. Whatever your preference or skill
level, it is always wise to go beyond the required renewal courses for your first years.
Not only can you substantially improve your business and level of services, but you will also gain
understanding and insight into segments of the real estate industry of which you may have none.
Sometimes, even seasoned agents may not be aware of the material covered in many of the continu-
ing education courses.
First, consider the GRI (Graduate REALTOR® Institute)

courses and designations. These courses are geared toward
agents in their first to third years in business. GRI courses
help lay the foundation for future success and are well worth
R emember, there is more to
your business development
and expenses than purchasing
the time invested. marketing materials and running
the business. Investment in your
Next, consider the ABR (Accredited Buyer Representa- development is crucial.
tion) designation. This designation not only positions you
for successful business practices and handling buyers, but
it also covers the issues of representation in-depth to keep
you operating ethically and legally for a long time. Then, you can consider other designations that
may take more years of experience or transactions. For example, the Certified Residential Specialist
(CRS) provides valuable information from nationally recognized speakers who cover topics specifi- Chapter 8
cally related to increasing your production. Becoming
Seasoned
NAR’s e-pro certification program is ideal for agents who want to improve their technology skills and and Staying
learn how to compete and succeed in the digital age of real estate. Check with your local associations Afloat
to locate a list and descriptions of the designations they offer.
COMMUNITY INVOLVEMENT
The first few years of a career in real estate can seem rather hectic; this is only an indication of what
is to come. Real estate is a “busy” business. There is always a list of tasks to complete, one of the
most important being prospecting. A large part of prospecting is community involvement. In many
ways, you are selling buyers on community.
Being involved in community activities and local charity events will earn you name recognition
and put you in contact with some of the area’s heavy hitters, not to mention it is an excellent source
of business and referrals. As an added benefit, you are helping others, which should make you feel
good.
If you take the time to build relationships within the community, then the business will flow in and
fill the gaps in your business. Community involvement can also take you beyond the professional
role of a real estate agent and allow you to interact with people on another, more personal level.
Herein lies the secret to developing lasting relationships – meeting over a common goal, interest, or
initiative.
271

CHOOSE YOUR SERVICES CAREFULLY
Carefully select the organizations in which you will participate to position your business for success.
You may also choose activities based solely on giving back to the community. Once you join, then
volunteer to serve on committees that will provide frequent contact with a potential client base. You
may even consider volunteering for large organizations that hold annual events (e.g., annual silent
auction).
Once you become involved in an organization, treat your involvement as you would any other profes-
sional relationship, follow through on your commitments, and give your absolute best.
Respect other committee members’ time and positions. Offer to help in other areas if a large event
is in the works; however, as with any business decision, do not take on more than you can handle.
Do not overload yourself. Volunteering to help the community should not supersede running your
real estate business or prospecting. The more you are willing to help others, the more willing they
will be to help you. When they see how hard you work for a good cause, they will be assured that
you will work equally hard for the referrals they send to you. What could be better than developing
professional relationships while working for the community?
WHAT’S IN IT FOR YOU? (W.I.I.F.Y.)

• Viewed as a community leader
• Frequent contact with community movers and shakers
• Free publicity in newspaper and other sources of the media
Chapter 8 • You will enjoy networking because you are contributing to your community and other people’s
Becoming lives
Seasoned
and Staying • Gain communication skills and public speaking opportunities
Afloat
• Exercise negotiating skills for fund-raising or through other efforts
• Practice and learn more organization skills
• Forced to practice good time management
• Learn something new
WISH YOU HAD A MENTOR?

If you ask any new agent, they are likely to tell you they wish they could have had a mentor in their
first year to show them the ropes and to guide them through the challenging first years of real estate.
Before you burst into someone’s office and ask them to be your mentor, there are some things you
should know about the mentoring relationship.
It is common for successful people in any business or personal endeavor to seek a mentor to reap the
benefits of a good mentoring relationship. The right mentor will provide valuable guidance, ideas,
support, and time-saving advice.
272

MENTORING CHARACTERISTICS
• Mentors can become your closest ally next to your family or immediate personal support
system.
• Mentors can help you define the critical components of your business.
• Mentors can teach you accountability, which is essential for new agents who are learning a
new business.
• Your mentor should be someone you want to emulate, who espouses a business philosophy
with which you agree.
• Your mentor should inspire you to do things better while at the same time, provide non-judg-
mental support. Many mentors will share their journey from the new agent who made mistakes
to the experienced producer with much to teach.
If you listen to your mentor and act accordingly, then you can put yourself months ahead of the nor-
mal learning curve. Seize the opportunity to learn from others and then incorporate the knowledge
into your business practices. Look for a mentor with a high level of integrity and respect from their
peers. If they have made it to the top by burning bridges and trampling professional relationships,
you may want to rethink your choice in a mentor. Financial success does not equate to life success.
Mentorship carries some responsibility on your behalf. Your mentor will expect you to work for the
benefit of receiving their time and knowledge. Prove to your mentor that you take your business seri-
ously, and your mentor will become your cheering squad for every success – big and small, monetary
and non-monetary. Chapter 8
Becoming
Most importantly, respect their business and the time they are taking away to spend with you, so Seasoned
communicate with them if you have a change in plans. and Staying
Afloat
WHAT TO LOOK FOR IN A MENTOR
Remember that it is a big decision for a successful agent to take on the role of a mentor. When you
both agree, sit down and discuss each other’s expectations and roles. Establish a time frame for the
relationship with scheduled “check-ins.”
Listen to your mentor’s advice with an open mind. You do not have to agree with everything your
mentor believes or says; however, you may find that you want to reconsider your position on a few
subjects. Always check with other sources and always check in with your broker.
Sometimes, one mentor is not enough. You may want time management advice from one mentor,
and prospecting advice from another.
When looking for a mentor, keep these tips in mind:

•
Are you and your mentor compatible? Look for a compatible mentor who will push you beyond
your comfort zone into new territory and growing opportunities. This is an opportunity to
grow.
•
Does your mentor share your business focus? Your mentor must understand your business
goals so that he/she can provide the guidance you seek.
•
Does your mentor communicate skillfully? Your mentor should be a master of dialogue for any
situation in the industry. If you are lucky, you can sit in on a few conversations and learn some
communication tips.
273

•
Is your mentor willing and able to be honest with you? You want honest feedback; it is the only
way to grow and improve your business. Attend networking events with them and emulate
their masterful techniques.
What are some characteristics that you are looking for in a mentor?
What are the benefits of having a mentor during this time of growth in your professional business?
QUESTIONS TO ASK YOUR MENTOR

Chapter 8 • What skills are necessary for me to achieve my business goals?
Becoming
Seasoned • What are some of the challenges I could face in my career?
and Staying
Afloat • What services and resources do you recommend I use? Why?
• What top three experiences shaped your career/where you are today?
• W hy did you choose a career in real estate? Do the same reasons keep you in the business
today?
• What were your goals when you began? What are they today?
• Do you view my goals as realistic, and what things would you suggest altering?
• Is there anything I can help you with?
Expect to work hard. Share great ideas with your mentor as you learn, and if you see an area in which
you can assist them (technology, for example), then help them out.
274

STAY QUALIFIED
Sales agents must be experts in the area of real estate they practice. The broker is responsible for
confirming that the sales agent is competent to carry out the various real estate activities. Continu-
ing education, designations, certifications, mentoring, and in-house training help ensure that a sales
agent is qualified. Champions School of Real Estate has classes on negotiations, farm and ranch,
commercial, and numerous designation and certification classes including:
Accredited Buyer’s Representative (ABR) Designation
Show your buyers that you are an expert in the field with
the designation that is solely dedicated to the buyer’s
representative.
Accredited Luxury Home Specialist (ALHS)

Designation
Give your clients confidence that you have been well

trained in selling their luxury homes with the designation
that gives you an edge on the high-end real estate market.
Certified Home Marketing Specialist (CHMS)

Designation Chapter 8
Becoming
Help your clients prepare their homes for sale with this Seasoned
designation dedicated to marketing dialogue and staging and Staying
techniques. Afloat
Marketing Strategy and Lead Generation
Employ a creative and memorable marketing approach to

generate leads, while clearly communicating services and
value based on the buyer’s needs and expectations.
Military Relocation Professional (MRP) Designation
Learn to help our military professionals relocate.
NAR’s Green Designation
Learn the principles of green as well as green building

trends and practices.
275

New Home Construction (NHC) Certification
Discover how the development and new-home sales

process work and the type of services the buyer needs.
Pricing Strategy Advisor (PSA) Certification
Improve your skills in creating CMAs, pricing properties,

understanding home values, and working with appraisers.
Real Estate Negotiation Expert (RENE) Certification
Hone your negotiation techniques to be a skillful advocate

for your clients.
Seller Representative Specialist (SRS) Designation
Gain the necessary knowledge to apply methods, tools,

Chapter 8 and techniques to provide support and services that
Becoming sellers want.
Seasoned
and Staying
Afloat
Seniors Real Estate Specialist (SRES) Designation
Counsel senior clients through the major financial and

lifestyle transitions involved in relocating, refinancing, or
selling the family home.
Texas Real Estate Broker Designation
Obtain the only designation the general public recognizes.
276

STAY SAFE, STAY SUCCESSFUL
Safety has been a topic that has received much attention in light of news reports about several sales
agents being tragically killed or hurt in the past few years. Various ways to promote safety in your
profession include:
• Safety classes taught by police officers in the community
•
Self-defense classes
• Procedures for showing properties and meeting with customers/clients - Sales agents should
always let someone know where they will be and to whom they will be showing properties.
Never meet a stranger at a property, no matter how nice they sound.
• Trust your instincts! They will never fail you
The National Association of REALTORS® has assembled a list of 56 tips regarding safety measures.1
56 SAFETY TIPS FOR REALTORS®

Share knowledge, awareness, and empowerment with your members year-round.
Keep a strong focus on REALTOR® Safety throughout the year when you share these safety tips
with your members every week. You can post them on your website, add them to your newsletters,
or email them directly to your members.
Feel free to rearrange the tips if you like. Regardless of when you send them, these weekly tips Chapter 8
will help remind our members of the tenets of REALTOR® Safety: knowledge, awareness, and Becoming
empowerment. Seasoned
and Staying
TIP #1 Afloat
Keep it light
Show properties before dark. If you are going to be working after hours, advise your associate or
first-line supervisor of your schedule. If you must show a property after dark, turn on all lights and
open shades prior to going inside with your client.
TIP #2
Checking-in
When you have a new client, ask him/her to stop by your office and complete a Prospect Identifi-
cation Form (Find a copy online at www.REALTOR.org/Safety). Also, photocopy their driver’s
license and retain this information at your office. Be certain to properly discard this personal infor-
mation when you no longer need it.
TIP #3
Don’t be too public
Limit the amount of personal information you share. Consider advertising without using your pho-
tograph, home phone number, and/or home address in the newspaper or on business cards. Don’t use
your full name with middle name or initial. Use your office address or list no address at all. Giving
out too much of the wrong information can make you a target.
TIP #4
Touch base
Always let someone know where you are going and when you will be back; leave the name and phone
number of the client you are meeting and schedule a time for your office to call you to check in.
1 https://cdn.nar.realtor/sites/default/files/documents/Safety-Program-56-Tips-English.pdf 277

TIP #5
Open house safety
Open house: it ain’t over till it’s over. Don’t assume that everyone has left the premises at the end of
an open house. Have a colleague or buddy help you check all of the rooms and the backyard prior
to locking the doors.
TIP #6
Stranger danger
Tell your clients not to show their home by themselves. Alert them that not all agents, buyers, and
sellers are who they say they are. Predators come in all shapes and sizes. We tell our children not to
talk to strangers. Tell your sellers not to talk to other agents or buyers, and to refer all inquiries to
you.
TIP #7
Sturdy doors are key to home safety
Make sure that all your home’s doors to the outside are metal or solid, 1 ¾” hardwood, and have
good, sturdy locks.
TIP #8
Block identity theft
Contact the fraud department of any of the three consumer reporting companies— Equifax®,
ExperianSM, and Trans Union®—to place a fraud alert on your credit report. The fraud alert
automatically lets credit card companies and other creditors know they must contact you before
opening any new accounts or making any changes to your existing accounts.
Chapter 8 TIP #9
Becoming Keep track of colleagues
Seasoned Have a check-out employee board at your office, listing your name, destination, customer name, date
and Staying and, expected return time.
Afloat
TIP #10
Wear your REALTOR® ID
Always wear visible company identification such as a badge. It is also best to drive a vehicle clearly
marked with your company name. These will be invaluable for identification if you need to get
assistance.
TIP #11
Bring up the rear
When showing a home, always have your prospect walk in front of you. Don’t lead them, but rather,
direct them from a position at least 3-4 arm lengths behind them. You can gesture for them to go
ahead of you and say, for example, “The main bedroom is in the back of the house.”
TIP #12
Pick up some self-defense skills
The best way to find a good self-defense class is to learn what is available, and then make a deci-
sion. Many health clubs, martial arts studios and community colleges offer some type of class. You
can also ask your peers, friends and family if they have taken a self-defense class that they would
recommend.
TIP #13
You take the wheel
Do not drive clients in your car. Instead, have them meet you at the property. When you leave your
car, lock it.
278

TIP #14
Shield your computer from e-mail viruses
Computer viruses can impair and seriously damage your computer. Viruses are often distributed via
attachments in e-mail spam. Never open an attachment from someone you don’t know, and, if you
receive a strange or impersonal-sounding message from a familiar address, check with that person
to make sure that they really sent it.
TIP #15
Got cell service, everywhere?
When you’re showing commercial property, thick walls and/or remote locations may interfere with
mobile phone reception. Be sure to check the cell service of the property before the showing, call the
listing agent if necessary, if there is no or poor cell service always take an accompaniment.
TIP #16
Choose flight over fight
While every real estate agent should take a basic self-defense course, the primary goal in any threat-
ening situation is to escape from immediate danger and call for help.
TIP #17
“Who’s calling?”
Install caller I.D. on your telephone, which should automatically reject calls from numbers that have
been blocked. This will provide you with immediate information about the source of the call.
TIP #18
Your trash is another man’s treasure
Just bought a new entertainment system? A bunch of empty boxes out by the curb triggers an alarm Chapter 8
to would-be thieves. Instead of putting boxes out in plain sight, cut them down, and stuff them in Becoming
trash bags. Seasoned
and Staying
TIP #19 Afloat
Hide personal information
Tell your sellers: DON’T leave personal information like mail or bills out in the open where anyone
can see it. Be sure to lock down your computer and lock up your laptop and any other expensive,
easy-to-pocket electronics, like iPads, before your showing.
TIP #20
Agree on an office distress code
Create a voice distress code, a secret word or phrase that is not commonly used but can be worked
into any conversation for cases where you feel that you are in danger. Use this if the person you are
with can overhear the conversation, but you don’t want to alarm them. Example: “Hi, this is Jennifer.
I’m with Mr. Henderson at the Elm Street listing. Could you email me the RED FILE?”
TIP #21
Have your excuse ready
Part of being prepared to deal with a threatening situation is having “an out.” Prepare a scenario
in advance so that you can leave—or you can encourage someone who makes you uncomfortable to
leave. Examples: Your cell phone went off and you have to call your office, you left some important
information in your car, or another agent with buyers is on his way.
TIP #22
Take two seconds when you arrive at your destination to check out potential dangers:
• Is there any questionable activity in the area?
• Are you parked in a well-lit, visible location?
• Can you be blocked in the driveway by another vehicle?
279

TIP #23
You are not alone
If you encounter an individual while working late or alone in your office, indicate to that person that
you are not alone. Say something like, “Let me check with my supervisor to see whether she’s able
to see you now.”
TIP #24
Your email is public
Don’t send any vital or private information via email. Keep in mind that unlike websites, email is
never secure.
TIP #25
Don’t get lost
If you are in an unfamiliar area, make mental notes of landmarks, points of interest, and intersections.
And always know the exact address of where you are going. If you must use a GPS, then pull over
and stop in a safe place first.
TIP #26
Careful with cash deposits!
If you periodically carry large deposits to the bank, be especially aware of any strangers lurking
around the office parking lot. If you must transport cash deposits, use the buddy system or arrange
for a security service or police escort.
TIP #27
Lock up client keys
Chapter 8 Be sure to use the lockbox property-key procedure that has been established to improve real estate
Becoming agent safety. A reliable, secure lockbox system such as those made by NAR REALTOR® Benefits®
Seasoned Partner SentriLock (sentrilock.com) ensures that keys don’t fall into the wrong hands.
and Staying
Afloat TIP #28
Shop online safely
When shopping online, check out a website before entering your credit card number or other per-
sonal information. Enter this information only on secure web pages with addresses that start with
“https” and have a closed padlock symbol at the bottom of the browser window. These are signs that
your information will be encrypted or scrambled, protecting it from hackers.
TIP #29
Nothing personal…
When talking to clients and prospects, be friendly but still keep your personal information private.
This means avoiding mention of where you live, your after-work or vacation plans, and similar
details.
TIP #30
Take two seconds as you walk towards your destination to check out potential risks.
• Are people coming and going, or is the area unusually quiet?
• Do you observe any obstacles or hiding places in the parking lot or along the street?
• Is anyone loitering in the area?
TIP #31
Be careful with keys
Don’t hand out house keys to friends, even if they are trustworthy. Know the location of all your
house keys all the time. Never use hide-a-keys or leave the key under the doormat, above the door,
in a flowerpot, or anywhere outside the house. You may think you’re being clever, but experienced
thieves know all the tricks. Also, keep your car keys and house keys on a different ring if you ever
280 use valet parking or leave your keys with parking lot attendants or even at a repair garage.
TIP #32
From dawn till dusk
When showing a vacant commercial site, find out if the property is well-lit and has good cell phone
coverage—if one or both of those criteria do not apply, take someone with you on the appointment.
TIP #33
Thwart thieves
Remind your clients that strangers will be walking through their home during showings or open
houses. Tell them to hide any valuables in a safe place. For security’s sake, remember to remove keys,
credit cards, jewelry, crystal, furs, and other valuables from the home or lock them away during
showings. Also remove prescription drugs. Some seemingly honest people wouldn’t mind getting
their hands on a bottle of Viagra, uppers, or downers.
TIP #34
Long-term thinking
If you think it may be some time before a property sells (and you may, therefore, be showing it often),
get acquainted with a few of the immediate neighbors. You will feel better knowing they know your
vehicle, and they will feel better about the stranger (you) who frequently visits their neighborhood.
TIP #35
Don’t dial and drive!
Using a cell phone while driving can cause an accident. For driving safety, purchase a hands-free
phone kit for your vehicle. And never attempt to take notes while driving – pull over and stop in a
safe place first.
TIP #36 Chapter 8

Carry less Becoming
If you carry a purse, lock it in your car trunk before arriving at an appointment. Carry only non- Seasoned
valuable business items (except for your cell phone), and do not wear expensive jewelry or watches, and Staying
or appear to be carrying large sums of money. Afloat
TIP #37
Don’t get parked-in
When showing property or meeting someone, park your car in front of the property rather than in
the driveway. You will avoid having your car blocked in, you’ll have an easier time escaping in your
vehicle, and you will attract lots of attention running and screaming to your car at the curb area.
TIP #38
Monitor your financial accounts
Open your credit card bills and bank statements right away. Check for any unauthorized charges
or withdrawals and report them immediately. Call if bills don’t arrive on time. It may mean that
someone has changed contact information to hide fraudulent charges.
TIP #39
Take two seconds to pause and look around as you enter your destination.
• Does anything seem out of place?
• Is anyone present who shouldn’t be there or who isn’t expected?
TIP #40
Plan ahead with escape routes
Upon entering an open house property for the first time, check each room and determine at least two
“escape” routes. Make sure all deadbolt locks are unlocked for easy access to the outside. If necessary,
move furniture slightly to create a straighter path to the door. If there is an interior door and a storm
door, open the interior door; this increases visibility and ensures that you do not have to open an
inward swinging door to escape. 281

TIP #41
Keep it professional
All of your marketing materials should be polished and professional. Don’t use alluring or provocative
photography in advertising, on the Web, or on your business cards. There are many documented cases
of criminals actually circling photographs of their would-be victims in newspaper advertisements.
TIP #42
Best practices for model home showings
When a person comes through the office to view a model home, have them complete a guest register
that includes their full name, address, phone number, email, and vehicle information.
TIP #43
Safe apartment living
Moving into an apartment? Have the locks changed when you move in (the maintenance crew can
simply swap lock cylinders with a random vacant apartment, a project that is free and takes only a
few minutes). And just use your last name, or if necessary last name and first initial, on your door or
mailbox. This keeps strangers from knowing your gender or how many people live in your apartment.
TIP #44
Rely on good neighbors
Inform a neighbor that you will be hosting an open house, and ask if he or she would keep an eye
and ear open for anything out of the ordinary.
TIP #45
Be prepared: pre-program!
Chapter 8 To best prepare for an emergency, pre-program important numbers into your cell phone. These may
Becoming include your office, your roadside assistance service or garage, and 9-1-1.
Seasoned
and Staying TIP #46
Afloat Beware of “phishers”
Don’t respond to emails requesting personal or private information such as passwords, credit card
numbers or bank account numbers. Even if a message appears to be from your bank or a trusted
vendor, credible companies never request private information this way.
TIP #47
Scam alert!
Control your open house traffic by limiting the number of people allowed in the house at any
given time. Police have reported groups of criminals that target open houses, showing up en
masse near the end of the afternoon. While several “clients” distract the agent, others go through
the house and steal anything they can quickly take.
TIP #48
Make your clients your “safety partners”
Inform clients who are selling that while you are taking safety precautions, and that you’ve
checked and locked the home before leaving, they should immediately double-check all locks and
scout for missing items immediately upon their return, in case you’ve missed any less-than-ob-
vious means of entry.
TIP #49
Don’t use the “v word”
When describing a listing, never say that a property is “vacant.” This may be an invitation to
criminals or squatters.
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TIP #50
Check suspicious emails
Before you act on an email request, check a list of the latest email scams on the FTC
(Federal Trade Commission) website at: https://www.ftc.gov/news-events/media-resources/
identity-theft-and-data-security/phishing-scams.
TIP #51
When in doubt, shred!
Thoroughly shred all papers with personal information before you throw them away. Shred
unwanted credit card applications and “convenience checks” that come in the mail, credit card
receipts with your account number, outdated financial papers and papers containing your clients’
personal information.
TIP #52
Public transportation should be for the public… not from the public
If you plan on using public transportation, whether it’s from a convention or to an open house,
make sure that you are riding in a registered taxi (before entry). Be aware that people may be
soliciting rides using their own vehicles. Ask yourself some questions before entering.
• Can you definitively indicate that the vehicle you are about to enter is a registered form of
public transportation? (Look for signs, symbols, or a phone number on the car to confirm
its validity)
• If in doubt, stay out
TIP #53
Be in charge
Whenever possible, be sure your cell phone battery is charged, and always check the cell cover- Chapter 8
age of the property prior to the appointment. If needed, call the listing agent to confirm. If there Becoming
is poor or no cell coverage at the property, always take someone with you. Seasoned
and Staying
TIP #54 Afloat
People are not who they say they are
Even with the help of caller I.D, you can never be too sure you know who you are talking to. For
example, if someone who claims to know you gives you a call and starts to make unusual requests
on your behalf, then STOP TALKING. Scammers feed of your reactions in order to compile
additional information. Hint: If the caller has no recollection of previous conversations, then
they are not who they say they are.
TIP #55
Have a lifeline
Always let someone know when you are headed to an appointment and when they should expect to
hear from you. Always check-in after appointments to let a colleague/spouse/friend know that you
have left the appointment and are safe.
TIP #56
Be aware of adware and malware
Be sure that you don’t click on error messages with unfamiliar logos that state “your computer has
been infected with a virus” or “Trojan found.” These messages with unfamiliar logos will tell you
there is something wrong with your computer and to download their protection service, when in
actuality you are downloading a virus and setting yourself up for information loss.
283

SELF-CHECK BUSINESS AND PERSONAL LIFE
Some agents have the enviable ability to work from home without issue. Others, however, often lack
self-discipline and get sucked into the everyday distractions that await them around every corner
of their home, for example, a pile of dirty laundry or a dishwasher full of clean dishes just begging
to be emptied. Agents must focus on the daily activities vital to their living, such as prospecting for
buyers and marketing listings. Often, distractions in the home pose too much of a threat to their
livelihood. If you are an agent who falls victim to the distractions around your home, it would be in
your best interest and the interests of your clients, to work from your broker’s office where you can
concentrate on growing your business.
If you do not have the option of working from your broker’s office, perhaps your broker has more
a virtual office with no workspace for agents, then dedicate a corner of your house as “your space.”
“Your space” should not be the dinner table or the sofa in front of the television. If you do not have a
place to go to, you WILL sit in front of the TV, and that will NOT grow your business. Instead, pick
a space where you are insulated from noises like the television and arguing children. Designate it as
your own. Organize it so that it is free of clutter; clutter on your desk will clutter your brain. Chaos
breeds chaos, so keep your desk clean. Have your To-Do List, prepared either the night before or at
the beginning of the day, in plain sight, and mark off activities as you complete them. It feels good
to mark things off your To-Do List. Accomplishment is empowering.
Examine your life. What aspects of your personal life affect your business life?
• Distractions - Relationships, texting with friends, social media unconnected to work are, for
most of us, daily distractions. If you are easily distracted, then you should devise a plan
that will allow you to concentrate on work rather than on idle pastimes. Schedule a time,
like lunchtime, when you return non-business, non-emergency text messages, or check your
Chapter 8 personal Facebook page. Do not give in to the temptation to watch that funny cat video on
Becoming YouTube that your friend texted you two minutes ago when you should have been cold calling
Seasoned prospects. Wait until the appropriate time when you can devote yourself properly to truly
and Staying enjoy those feline antics the way your friend meant for you to.
Afloat
Think of it in terms of money. If you calculated that your worth is $64 per hour and you just
spent 45 minutes of your day on funny Internet videos, then you just lost $48. If you do this
periodically throughout the day, you are wasting even more. Time = Money.
•
Having a bad day - Everyone has a bad day once in a while, whether you blame it on the lunar
cycle or just a bad night of sleep, you should be aware of the activities that you have planned
for the day and how your current mood might affect them. For example, maybe you should not
make cold calls if you are having a bad day. Your lousy mood could come through in the tone
of your voice, or in the way you approach the conversation, which could cost you a potential
client.
Is it possible for busy entrepreneurs to have a personal life? The answer is yes. It can sometimes be
challenging to separate the two; you have to make a concerted effort to do so. Your business is critical
to you. After all, your business is what helps put food on the table and kids through college. How-
ever, you cannot let it take up all of your time. There needs to be a healthy separation between work
life and home life. Agents with busy schedules often have children with busy schedules. Schedule
their activities on your calendar just like you would your work appointments. You can be there for
their little league games, cheerleading competitions, and choir concerts if you manage your time
correctly.
Remember, time management is integral to the success of your career, and also to your personal life.
Have a regularly scheduled date night with your significant other that you put on your calendar. That
way, you will not schedule another appointment in that time slot. If you want to take a vacation,
284

book it immediately, and add it to your calendar. Now it is scheduled, possibly even paid for, so there
is no way that you will cancel it. You will work around it.
If you are happy and have a positive attitude about yourself and what you do, your confidence and
your business will grow.
SELF-CHECK GOAL SETTING

Remember those goals that you set at the beginning of your career and in Chapter 2 of this book?
You need to review and track them consistently. You know that you should break down your goals
into daily, weekly, monthly, and quarterly goals that should be attainable. Goal setting is essential
for any salesperson because you have to have goals to get to the next step. The goals are the what.
Your marketing and business plans are the how you are going to do to get to the what.
Self-check yourself. If your goal was three closings for the quarter and you fall short by one, ask
yourself why. What was it that you did or did not do?
For example, let’s say your buyer wanted a new water heater, and the seller said no way. You closed
your mind immediately to the idea that there might be some kind of compromise and therefore did
not pursue one. The contract was terminated. There went your three closings for the quarter! What
could you have done before throwing in the towel? Examine the contract. You know that the seller
is paying closing costs of $3,000. Ask the buyer, “Do you really want the house?” If the answer is
yes, then suggest asking the seller to pay $2,500 in closing costs, and then negotiate with the seller
for $500 toward a new water heater. The sellers accept. Bingo! You just made your quarterly goal.
If you are not able to meet the goals that you set for yourself consistently, then review your goals. Are
they attainable? Perhaps you have set goals for yourself that are unrealistic or too far out of reach. Chapter 8
If your goals jibe with what you are capable of achieving, then self-check yourself. If you are not Becoming
getting any buyers, ask yourself why. If you are getting buyers and listings, but none are getting to Seasoned
the closing table, why is this happening? What can you do? and Staying
Afloat
If you are not getting any buyers:
• How many open houses are you attending?
• Are you networking?
• Are you too reliant on one form of prospecting or marketing? If you are and you are not get-
ting any action from that method, then try another.
• Ask for feedback from colleagues. Discuss your approach and methodology with a colleague.
He or she might have some tips that will point you in the right direction.
If you feel that you are not getting any buyers because you are still a new agent and buyers feel like
you lack experience, make a goal to obtain one designation per year for the first five years. Des-
ignations can carry a lot of weight because potential clients are often impressed with agents who
have taken the time to educate themselves. Education can sometimes supersede experience in some
clients’ minds.
Think about this, if you see a lot of REALTOR® signs in a neighborhood, do you run away from
that neighborhood, or do you run towards it? Many agents might just turn away from it, thinking
that it might not be worth their time. You have a choice. If you run toward it, you want to be a part
of it. You can step in and help with open houses or get involved in the neighborhood, both of which
will give you exposure; if the people know you, they will come to you. Make a goal to help out top
producers in the neighborhood with open houses.
285

Do not limit your marketing goals to buyers only; open houses are great for finding sellers as well.
Commit to one open house per month. If you do not have another listing, hold one for another
agent. Set yourself up on an easy-to-follow schedule. You can keep a calendar or daytimer, or down-
load a calendar/scheduling app to your smartphone or tablet.
Real estate is all about relationship building. All agents, no matter how long they have been in the
business, follow the same process: prospect for listings, set listing appointments, find buyers, write
up contracts, get loans processed, and go to closings. For you, it is all about the personal touches that
you add to the process to gain buyers’ and sellers’ trust.
BIGGEST CHALLENGES
The world of real estate is fraught with many challenges. Any seasoned agent you talk to will have
stories about the challenges they have faced and the methods that they devised to overcome those
challenges. Remember the 3Ps of successful goal setting and success: Patience, Persistence, and
Perseverance? You must have all three to make it in real estate.
Some challenges you might encounter during your career in real estate include:
• Changing real estate market. Any agent who has been in the business for more than five years
will tell you that the market changes constantly. Think about the economic crisis of 2008-
2014. This crisis directly affected the housing market across the country, with some markets
hurting worse than others. This time was exceptionally tough for real estate agents and bro-
kers. This economic crisis was not the first to affect the housing market, nor will be the last.
That is why you must prepare. Put aside as much money as you can each month for the lean
times. They will come, and then they will go.
Chapter 8 • Changing interest rates. Many agents fret and obsess over any rise in interest rates. While
Becoming rising interest rates will affect real estate sales (more people apply for mortgage loans when
Seasoned rates are low), the truth is that people will still buy real estate. Low interest rates like those of
and Staying the past several years since the economic crisis of 2008, were unheard of in the years previous.
Afloat Talk to real estate agents who were practicing in the 80s or 90s. They will tell you that if the
interest rates fell to 11%, that was indeed a miracle. Just think, in 1981, rates for a 30-year
mortgage hit an unbelievable 18.45%. We cannot even imagine that today. Yet, people still
bought and sold homes.
•
Buyers choosing the wrong lenders. Many new buyers, especially those belonging to the
younger generation, shop online for everything, including their mortgage loans. While there
is nothing wrong with that, buyers often do not have a good grasp of the process and do not
understand when they are not getting a good deal. It is often better for the buyer to choose a
lender that will keep the agent informed during the process so that the agent has an element
of control in helping to get the buyer to the closing table. Sometimes choosing the lender
online without knowing much about them can lead to loans that do not close. Refer lenders
you know and trust to get the job done to your clients. Give them a list of at least three to four
lenders to choose from whom you know will work with and for the buyer.
•
Properties that do not appraise. Inevitably, a property will not appraise. The majority of agents
have dealt with this, even the best ones. This situation can make you doubt your own CMA.
Take your CMA to the lender to talk about why you think that the appraisal was off, and then
request a different appraiser. There is nothing wrong with getting a second opinion.
286

ADVICE FOR NEW AND SEASONED AGENTS
GO BACK TO THE BASICS
In today’s fast-paced world, life can be overly complicated. It can be a refreshing change to go back to
the basics of real estate. Basics are called basics for a reason. They are tried-and-true techniques that
work. If purchasing leads and flooding social media with your brand and message is not working,
then take a step back and return to the simplicity of the following activities.
•
Do open houses every weekend. Many seasoned agents will tell you not to waste your time
with open houses, while others just refuse to do them, but there is a reason why successful
agents still advocate in their favor. Open houses serve agents in a variety of ways. One, hold-
ing open houses will help you learn how to speak to people. Communication is critical in this
line of work; it pays to hone your skills. Two, open houses help you to understand the market
and familiarize yourself with the area. Visitors to open houses will often want to find out what
you know about the market in their neighborhood. If you prepare for an open house ahead of
time, you will impress them with your knowledge, and it just might supply you with a new
client. Your aim should be to get at least one client from each open house that you hold. More
than one is always better, but if you are consistently holding open houses every weekend, one
client per will add up in no time. Those are clients that you did not have access to before.
•
How to prepare for an open house:
•
Prepare a week in advance by researching the market, printing flyers, and posting to
social media.
•
Knock on the neighbors’ doors. Many agents do not want to knock on people’s doors, but Chapter 8
it works. Choose a pattern that works for you. For example, five houses to the right, Becoming
five houses to the left, across the street, right and left for a total of twenty houses. Seasoned
Invite the neighbors to the open house for refreshments and conversation. When they and Staying
show up at the open house (because let’s be honest, they are going to be curious about Afloat
what the interior of the home looks like and who is viewing it as they are all potential
neighbors) ask them if they have any friends or relatives who would like to live in
the neighborhood. They may know someone who is in the market for a home, which
could lead to listings for you.
•
Do the “little extra.” The little extra means spending time with your clients doing special
things. This will aid in strengthening your relationship, solidifying their loyalty to you, and
will give you an advantage over other agents when they refer their friends and family your
way. Determine what the “little extra” might be. For example, an agent offers to powerwash a
seller’s driveway. Sure, it is hard work, but it is the “little extra”they will remember.
•
Offer to do free CMAs for your friends. Your friends might be surprised by what properties
in their neighborhoods are selling for. It will certainly make them think about the real estate
market, and they just might decide to list with you.
•
Attend as many conferences, seminars, summits, and events as you can, including broker open
houses. You want to learn as much as you can about the business while getting the maximum
amount of exposure that you can. These are excellent occasions for networking and making
connections that you would not have made otherwise. You may even learn techniques that you
had not known about or considered before.
•
Listen to the experiences of others related to the industry. This might include a mentor with
whom you are working. Only take notes on the things that stand out, instead of everything
that they say. If you write it down, you have a better chance of remembering it. If you write
everything down, you will not remember the important details. 287

•
Learn from every experience that you have. Every lender, every transaction, every buyer, and
every seller is different, and you cannot control every little nuance of the transaction. There
are valuable lessons to be learned from each one, whether it is how to work with a particular
personality type or how to keep a level head when everything around you seems to be chaos;
these experiences will give you new skills and prepare you for the future.
•
Put a premium on your education. Get as many designations as you can. This only increases
your knowledge base, and clients will appreciate the fact that you take the time to be informed.
•
Keep up with your past clients. Your past clients can provide you with future clients. Send
them holiday cards.
• Consider becoming a licensed assistant for another agent. Working as an assistant will provide
on-the-job-training for newly licensed agents. As an assistant, you will become familiar with
the MLS, learn how to write up real estate contracts, and watch another agent in action, all
in preparation for your own business. You will make a steady income in the process.
• Set up your finances. As an independent contractor working for a commission, you must think
about where the next sale is going to come from and how you are going to pay your bills. That
is why it is crucial to establish a system for your finances from the very beginning.
• Think about your taxes. Brokers are not responsible for withholding federal income taxes
from agents’ payroll.
• Download an app to your smartphone or tablet to record your mileage so that you are
Chapter 8 ready to write it off at tax time.
Becoming
Seasoned • Open a separate bank account for your commissions and expenses, so you have an easy
and Staying way to see where your money goes. Keep as much money in reserves for the leaner times
Afloat to reduce stress. Try to have enough money set aside for an entire year.
• Do not buy unnecessary items. You do not have to have a brand new BMW or Mercedes
right away, or the most expensive laptop available. People will still hire you even if you are
not wearing $800 shoes.
•
Be in it for the relationship, not just the commission. Successful real estate agents create
strong relationships with their clients. People can tell if you are just in it for the money or if
you genuinely care about their needs and wants. If you are just hungry for money, it shows.
Take the time to cultivate and nurture those relationships, do not just milk them for the dollar
signs.
•
Put your plan in writing and do it! It is true that if you commit it to writing, then you will do
it.
Remember that you are your own business. You have to put time and money into your business.
You must do some or all of the activities listed above, and give it at least six months to a year. If you
commit yourself in this way, you will be productive and get listings.
ADVICE FOR SEASONED AGENTS

Your brokerage will be comprised of new agents, but also some veteran talent who have the expertise
and the knowledge to help you achieve your goals. That being said, even accomplished, competent
agents need a little encouragement now and again. No independent contractor ever really gets over
worrying about when their next sale will be, no matter how long their tenure in the business. Here
is some advice for agents who may be experiencing burnout or having a less than productive period.
288

•
Reinvest in yourself. Do not get lazy or become complacent. If you made $100,000 last year,
how much of it was take home? You need to be aware of that. If $70,000 of that $100,000 is
gone, where did it go? Go back to the beginning to figure out where your expenses are. If you
have neglected to make a budget because you feel it is no longer necessary, sit down and create
one just like you did in the beginning. If you are spending too much money on marketing
efforts that are not panning out, go back to the basics that worked for you in the beginning
when you did not make $100,000 a year. What did you do then that made you successful?
Maybe that was 15 years ago. That is ok. The same strategies still hold true and still work
today.
• Strive to be more effective and efficient. If you are experiencing burnout because you have too
many irons in the fire and you are always on the run with clients and juggling paperwork, it
might be time for you to hire an assistant. You can hire a full-time or part-time assistant, or
maybe just one on an as-needed basis. You can create a team for leverage. A team could double
or triple your business. Having an assistant, a transaction coordinator, and an office manager
frees you up to devote your time to generating business while someone else handles the paper-
work and the administrative functions that take so much of your time. Learn how to delegate.
•
Expect that people will say “no” to you. Hearing no is undoubtedly the least enjoyable part
of the job. You will have some failures, but you have to persevere. If a high-dollar transaction
suddenly blows up before it makes it to the closing table, remind yourself that just because the
buyer or seller said no this time, that does not mean that they will always say no; it is not the
end of the work, nor should it be the end of your career. Remember that agents and brokers
need to be determined, passionate, and friendly. If you are determined, you will not give up.
If you are passionate, others will feel your passion. If you are friendly, you will attract people
to you. Chapter 8
Becoming
• Give back by teaching other agents. Other agents will benefit from your wisdom and expe- Seasoned
rience, and by sharing your knowledge and expertise with others, you may just rekindle that and Staying
love for your career all over again. Afloat
DAILY CHECKLIST FOR SALES SUCCESS

The following is a checklist to be used daily to ensure that you are the most productive and success-
ful real estate professional you can be. This list applies to both new and seasoned agents as well as
broker managers. Brokers can share this list with their agents to help them be successful.
1. Arrive and be prepared for the day. (Dress for it!)
2. Prospect, Prospect, Prospect! Every single day.
3. Write 5 personal hand-written notes before the end of each day.
4. Read an inspiring book or message every day. Carve out an hour to read over lunch if pos-
sible. After lunch is usually when most people hit the wall. Use the inspirational words to
deliver a much-needed pick-me-up.
5. Have a To-Do-List. Create it either first thing in the morning or the night before.
6. Check out newly listed properties in your farm territory. Overnight your competition may
have gotten a listing.
7. Check out newly listed properties in your office. Hold an open house for the listing agent,
or maybe you have a buyer who would like to buy it.
289

8. Send out a notice of sale for a particular sale in your office, either through email, social
media, or through the mail. Make sure that you get the permission of the listing agent
beforehand.
9. Attend a community networking event; it could be a school event or other type of event.
This is your chance to give back to the community. Wear your name badge and bring your
business cards.
10. Spend 30 minutes catching up on current affairs. Stay informed so that you can carry on
conversations with clients and at networking and community events, but do not dwell on
the more negative aspects of the news. Always remain positive with your clients.
11. Check your social media platforms. Ask your friends to like your Facebook page. Keep
up with your friends. Capture short video testimonials with your phone and post them to
Facebook.
12. Send out relocation materials to new people moving into the area. Do not wait for the list
to grow to overwhelming proportions.
13. Connect with your spheres of influence on the phone, voice to voice. Call expireds and
those to whom you sent notice of sale information.
14. Select a property for an open house over the weekend.
15. Ask yourself if you are organized and if you have a good plan. Build muscle through pros-
Chapter 8 pecting. Being organized and following through with your plan will allow you to grow your
Becoming business. Real estate IS prospecting. That is why it is so vital that it is on your daily check-
Seasoned list.
and Staying
Afloat IN CONCLUSION
Stick with the basics because they never change. What was true for agents 10 or 20 years ago still
holds true today:
• Be honest
• Be trustworthy
• Build relationships
• Be positive about your career
290

REVISE YOUR ACTION PLAN FOR ACCOUNTABILITY
List the top ten commitments for your career moving forward:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Chapter 8
Becoming
Seasoned
and Staying
Afloat
291

Statement T or F
1. The GRI, Graduate REALTOR® Institute, designations are geared

toward agent who have been in the business more than 15 years.
2. Mentors should be older, retired people who can devote all of their time to
guiding you in your career.
3. Financial success equals life success.
4. Be very open about your public life on social media, including your home
address and home phone number.
5. Do not use alluring or provocative photographs of yourself on your

marketing materials.
6. All real estate agents work better when they are working from home.
Chapter 8 7. You should break down your goals into daily, weekly, monthly, and
Becoming quarterly goals.
Seasoned
and Staying 8. Open houses are only good for finding buyers.
Afloat
9. Most successful agents do not hold or attend open houses.
10. No one buys homes when interest rates are high.
292

WORD LIST FOR FILL-IN THE BLANK
Directions: Use the word bank below to complete the fill-in-the-blank exercise on the following
pages. Note: Not all terms will be used.
To-Do-List DTPA Control Knowledgeable
Race, Creed, Sex, Offers Listen Gestures

Handicap
Expressions Counteroffers Objections Achieve
Continuing education Long-term Feel Mistakes
Motivated Salable Intermediate-term Perseverance
High Organized Telephone call Short-term
Personal visit Transmitting Communication Consistency
Chapter 8
Low Acquire an interest Smartphone Disinterest Becoming
Seasoned
and Staying
Informed Notes Disclosing Counselors Afloat
Early evening Compatible Writing Persistence
Write down Direct mail Newsfeeds Touch
Feelers Conclusion Problem Solver
293

EXERCISE - POWER HOUSE FILL IN THE BLANK
1. True _____ is a give and take exchange.
2. When you operate on fear, you make _____.
3. A salesperson who spends all his/her time _____ cannot receive.
4. Real estate agents are like _____ for their clients.
5. Announce that you are in real estate on Facebook. It will show up in your friends’ _____.
6. Your _____ has many of the built-in capabilities for you to start your marketing campaign right
away.
7. What are the three categories of goals?
1. ________________________________
2. ________________________________
3. ________________________________
8. Goals must be in _____.
Chapter 8 9. The three Ps for successful goal setting is patience, _____, and perseverance.
Becoming
Seasoned 10. To achieve your goals, spend the larger portion of your time on _____ pay off items and activ-
and Staying ities.
Afloat
11. To avoid time loss, keep your work area clean and _____.
12. _____ things you need to remember.
13. The three steps to prospecting for listings are:
1. ________________________________
2. ________________________________
3. ________________________________
14. The best time to cold call is afternoon or _____.
15. Asking the seller, “Why are you selling?”, tells the agent how _____ the seller is.
16. The successful sales agent lists the property at _____ prices.
17. The successful sales agent keeps the seller _____.
18. Essential to good communication is the ability to _____.
19. The agent should take _____ when talking with the seller.
294

20. The agent needs to observe the seller’s _____, his facial _____, and his reaction to what the
sales agent says.
21. Create your own _____ either first thing in the morning or the night before.
22. Find a _____ mentor who will push you beyond your comfort zone.
23. The buyer wants the agent to be the _____ individual.
24. In The Standard of Practice 1-6, the REALTORS’® Code of Ethics states the REALTOR®,
acting as listing broker, shall submit _____ and _____ to the seller, as quickly as possible .
25. The REALTOR® shall not deny equal professional services to anyone for reasons of _____,
_____, _____, or country of national origin, or due to a _____ or familial status.
26. Under the Texas _____, false, misleading, or deceptive acts or practices in the conduct of any
trade or commerce are declared unlawful and the subject to action by the consumer protection
division.
27. Standard of Practice 12-5, REALTORS® Code of Ethics states the REALTOR® shall not
advertise nor permit any person employed by or affiliated with him to advertise listed property
without _____ the name of the firm.
28. _____ means six months or more.
29. A closing technique is a natural _____to the sales process. Chapter 8

Becoming
30. The attraction to real estate sales is the _____ capital investment. Seasoned
and Staying
31. Most successful agents have a high need to _____. Afloat
32. The successful agent continually grows through _____.
33. An agent must not take _____ personally.
34. A REALTOR® shall not _____ in or buy for themselves or any immediate family member
without disclosing this to the owner or owners agent according to article 4 of the Code of
Ethics
35. A REALTOR® could be called a _____.
295

CHAPTER 8 QUIZ
1. A _____ should be someone that you wish to emulate and who espouses the level of success and
philosophy that you respect.
a. Mentor
b. Mentalist
c. Competitor
d. Influencer
2. What does GRI stand for?
a. Great REALTOR® Information

b. Galaxy of Realty Information
c. Graduate REALTOR® Institute
d. Graduate REALTOR® Insurance
3. Which of the following designations/courses are helpful and informative for real estate agents?
a. E-Pro
b. ABR
c. CRS
d. All of these are helpful for real estate agents
Chapter 8
Becoming
Seasoned
And Staying
Afloat
296

Answer Key

5. True
ANSWER KEY
6. False
CHAPTER 1
EXERCISE 1 - TRUE OR FALSE 7. True
1. False
8. False
2. True
9. True
3. False
10. False
4. False
5. False 1. 52
6. False 2. 25
7. True 3. 20
8. True 4. 3
9. False 5. 10
10. False 6. 5, 10
EXERCISE 2 - FILL IN THE BLANK 7. 13

Answer
1. 1
Key 8. 100
2. 31
9. 64
3. 150
10. 3
4. 400, 500
CHAPTER 3
5. 40,000 EXERCISE 1 - TRUE OR FALSE
1. False
6. 22
2. True
7. 48
3. False
8. 5
4. False
9. 87
5. True
10. 12
6. False
CHAPTER 2
EXERCISE 1 - TRUE OR FALSE 7. True
1. True
8. False
2. False
9. True
3. False
10. False
298 4. False
EXERCISE 2 - TRUE OR FALSE 5. False
1. True
6. True
2. True
7. False
3. True
8. False
4. False
9. False
5. True
10. True
6. False
CHAPTER 5
7. False ACTIVITY - ETHICAL DILEMMAS IN REAL
ESTATE
8. True 1. c. (Rationale: Since Tanya is repre-
senting the sellers, she must put their
9. True personal interests above her own. Even
though she feels that by telling Adam
10. False the truth about why the house is for
sale will ultimately help her clients, she
CHAPTER 4 has been advised by them not to reveal
CMA CASE STUDY the circumstances for the sale of the
1. b. home. Tanya should tell Adam that she
represents the sellers and the sellers’
2. c. (105 + 5 + 27 = 137 /3 = 46) interests and cannot reveal private
information.) Answer
3. a. Key
2. b. (Rationale: Myron’s statements could
4. c. (62 + 5 + 12 = 79 / 3 = 26) be considered false advertising. There is
no indication in the short scenario that
5. b. ($387,250 / $414,900 = 0.9333 × 100 Myron has been named the Number
= 93%) One Real Estate Agent in the South-
west by any association or firm. Sales
6. a. ($435,750 / $454,900 = 0.9579 × 100 agents should never guarantee any-
= 96% thing. What happens if Myron cannot
sell a client’s home?
7. c.
3. b. (Rationale: There is nothing wrong
8. b. with the wording of this marketing
slogan as it does not make any inflated
9. b. (Based on the lowest and highest claims or guarantees.)
active properties and solds, this price
range would most likely create an offer 4. a. (Rationale: Desmond and his seller
minimizing days on market with maxi- have no obligation under Texas law to
mum price.) disclose or to inquire about either the
suicide or the HIV-related death on
EXERCISE - TRUE OR FALSE the property; Desmond who is repre-
1. False senting the seller must comply with
the seller’s instructions not to disclose
2. True the deaths. Desmond did his best to
encourage the homeowners to disclose
3. False the deaths, but ultimately it is up to the
seller whether or not to do so. The sit-
4. True uation is ethically ambiguous because 299

the buyers have purchased a home in 4. False
which two deaths have occurred when
they were very specific about not want- 5. True
ing to do so.)
6. False
1. False 7. False
2. False 8. True
3. True 9. False
4. True 10. True
5. False EXERCISE 2 - FILL IN THE BLANK
6. False 1. 1
7. False 2. 3
8. True 3. 3
9. False 4. 5
10. False 5. 7
Answer
EXERCISE 3 - TRUE OR FALSE 6. 10
Key 1. False
7. 10
2. True
8. 8.B
3. True
9. 3
4. True
10. 15, 3
5. False
CHAPTER 7
6. False EXERCISE - TRUE OR FALSE
7. True 1. False
8. True 2. True
9. True 3. False
10. False 4. False
CHAPTER 6 5. True
6. False
1. False
7. True
2. False
8. False
300 3. True
9. True 13. (1) telephone call, (2) personal visit, (3)
direct mail
10. True
14. early evening
CHAPTER 8
EXERCISE - TRUE OR FALSE 15. motivated
1. False 16. salable
2. False 17. informed
3. False 18. listen
4. False 19. notes
5. True 20. gestures, expressions
6. False 21. to-do-list
7. True 22. compatible
8. False 23. knowledgeable
9. False 24. offers, counteroffers
10. False 25. race, creed, sex, handicap

Answer
EXERCISE - POWER HOUSE FILL IN THE 26. DTPA Key
BLANK
1. communication 27. disclosing
2. mistakes 28. consistency
3. transmitting 29. conclusion
4. counselors 30. low
5. newsfeeds 31. achieve
6. smartphone 32. continuing education
7. (1) long-term, (2) intermediate-term, 33. objections

(3) short-term
34. acquire an interest
8. writing
35. problem solver
9. persistence
10. high
11. organized
12. write down
301

Notes
302

Bibliography

BIBLIOGRAPHY
Champions School of Real Estate. (2013). Law of Agency. Houston, TX: Champions School of
Real Estate.
Champions School of Real Estate. (2012). Principles I. Houston, TX: Champions School of Real
Estate.
Champions School of Real Estate. (2013). Principles II. Houston, TX: Champions School of Real
Estate.
Champions School of Real Estate. (2010). Marketing 1 Houston, TX: Champions School of Real
Estate.
Champions School of Real Estate. (2016). Brokerage Houston, TX: Champions School of Real
Estate.
Champions School of Real Estate. (2015). Real Estate Finance Houston, TX: Champions School
of Real Estate.
Bibliography
304

General Test Information

Champions School of Real Estate Provider #0005
INSTRUCTIONS FOR COMPLETING COURSES WITH CHAMPIONS SCHOOL OF REAL ESTATE
Thank you for choosing to be a Champion! When you enrolled in your courses, you chose between
Correspondence-Online, Home-Study Correspondence or Classroom courses. On the pages to
follow, you will find instructions to complete your courses based on the method you chose.
1. Read the required textbook.

For Correspondence-Online: You courses are to be completed online. The textbook can
be downloaded by logging into www.championsschool.com using your email address and
password. Click on “My Classes” then click on the class you’d like to begin. Under the course
information, you will see the “Materials” section. Click “View” to download the book. You
may save this to your computer. Some textbooks are not available online and require pickup
or delivery via mail.
For Home-Study Correspondence: You will need to either pick up the book(s) from any of
our campuses or have it mailed to you before you get ready to begin your course(s).
For Classroom: You can choose to pick up the textbook at any time before the day of the
class or we can mail it to you. Textbook material will be reviewed in the classroom.
2. Complete the required chapter quizzes.
For non-elective CE courses, all chapter quizzes must be passed before moving on to the
General course exam.
Test
Information For Correspondence-Online: Your chapter quizzes will be completed online. Once you
have logged in to your account, click on the course name you wish to begin and click on
the “Start” button under Chapter Quizzes. For non-elective CE courses, you will have one
chapter quiz for each chapter of the course you are taking. You must pass each chapter quiz
before moving on to the next chapter’s quiz. Upon passing all of the course chapter quizzes,
you will be allowed to access the course exam.
For Home-Study Correspondence: Your chapter quizzes will be completed at a campus.
Most textbooks will have the required chapter quizzes in the textbook after each chapter. If
the chapter quizzes are not included in the textbook, they will be included in a stapled packet
for you. Once you have read the entire book, go to the nearest campus to start your chapter
quizzes. It is recommended that you circle your chapter quiz answers in the textbook so you
can fill out your scantron sheet when you arrive at the campus. For non-elective CE courses,
you must pass each chapter quiz before moving on to the next chapter’s quiz. Upon passing
all of the course’s chapter quizzes, you will be allowed to take the course final exam.
Classroom: Chapter quizzes are to be completed as the student progresses through the
instructor-led portion of the course.
- more -
306
3. Take the course exam.
For Correspondence-Online: You cannot begin your exam until the number of hours the
course is approved for has been exceeded. Courses of twelve hours or more, you cannot begin
your exam within 24 hours of registering for the course. After you have passed your quiz-
zes, you may begin the exam. The exam is in ten question increments. Once you answer a
set of ten questions and submit your answers, you CANNOT go back to them after you click
“Continue.”
Upon completion of the exam, your exam results will post when finished. If you pass, you
will be given the rationales behind the correct answers to the questions you missed. For
non-elective CE courses, if you fail the exam a second time you must re-take the course.
Questions regarding course content or materials should be directed to Instructor@Cham-
pionsSchool.com.
For Home-Study Correspondence: Once your chapter quizzes are graded, you can take
your exam at any one of our campuses at the following times:
8 a.m. - 5 p.m. Monday - Friday
8 a.m. - 4 p.m. Saturday
Your exam will be administered in one of our correspondence testing centers or as detailed
in the entry for Location 8 on the following page.
For Classroom: An exam is not a requirement for the classroom course. For non-elective General
CE courses, students must take the promulgated exam independently prior to the instructor Test
Information
reviewing the correct answers.
4. Course Reporting.
For Correspondence-Online: When you complete and pass your course exam, the distance
education reporting form (DERF) will be available online for you to sign. Once signed
the form will be automatically emailed to you. This form is for your records showing your
completion of the course. We will electronically report your course completions to the Texas
Real Estate Commission (TREC) within 24-48 hours of your course completion. You must
remember to pay your renewal fee once your courses have been reported to the Texas Real
Estate Commission.
For Home-Study Correspondence: Upon passing the course exam, we will electronically
report your course completions to the Texas Real Estate Commission (TREC) within 24-48
hours of your course completion. You must remember to pay your renewal fee once your
courses have been reported to the Texas Real Estate Commission.
For Classroom: Upon attending all of the required hours for the course and signing the
continuing education completion roster, your hours will be electronically reported to the
Texas Real Estate Commission (TREC) within 1 to 2 days of your course completion. If
you do not sign the completion roster and verify your license number, your hours will not be
reported.
- more -
307
FINAL EXAM PROCTORING INFORMATION:
The student must have achieved a 70% or above on the Final Exam to receive the Course Completion
Certificate from Champions School of Real Estate. All course final examinations are closed book
and closed notes. Once complete, please scan the following page and email it to Support@
ChampionsSchool.com.
Approved Test Proctoring Locations:
Location 1 Champions Austin Campus Initials

13801 Ranch Road 620 N., Suite 100 Date
Austin, TX 78717
(512) 244-3545 (phone)
Location 2 Champions Dallas North Campus Initials

3721 Mapleshade Lane Date
Plano, TX 75075
(972) 867-4100 (phone)
Location 3 Champions Fort Worth Campus Initials

6324 Waverly Way, Suite 100 Date
Fort Worth, TX 76116
(214) 687-0000 (phone)
Location 4 Champions Houston North Campus Initials

General
Test 7302 N Grand Parkway W Date
Information Spring, TX 77379
(281) 893-4484 (phone)
Location 5 Champions Houston Galleria Campus Initials

1001 West Loop South, Suite 205 Date
Houston, TX 77027
(713) 629-4543 (phone)
Location 6 Champions Houston West Campus Initials

738 Highway 6 South, Suite 150 Date
Houston, TX 77079
(281) 496-7386 (phone)
Location 7 Champions San Antonio Campus Initials

10000 San Pedro, Suite 100 Date
San Antonio, TX 78216
(210) 349-7600 (phone)
LOCATIONS 8-9: PROCTOR MUST FILL OUT THE FOLLOWING PAGE AND RETURN TO CHAMPIONS.
Location 8 The following are examples of acceptable third party proctors: (A) employees at
official testing or learning/tutoring centers; (B)librarians at a school, university,
or public library; (C) college or university administrators, faculty, or academic
advisors; (D) clergy who are affiliated with a specific temple, synagogue, mosque,
or church; and (E) educational officers of a military installation or correctional
facility
Location 9 Certified Notary (must sign name, print name, notary number and stamp.)
308
Proctor Instructions
This page to be filled out by Proctor (Please Print)
Student’s Name:__________________________________________Course #:____________
Course Name:____________________________________Registration Date:____________
Grade: Pass Fail %___________ Date of Final:________________
Proctor/Notary Signature:____________________________________________________
Proctor or Notary Name:______________________________________________________
Proctor or Notary Signature:____________________________________________________
Institution Name:_____________________________________________________________
Address_____________________________________________________________________
City______________________________ State______________ Zip____________________
Phone____________________________ Fax_______________________________________
General
Email______________________________________________________________________ Test
Information
Notary ID Number (if applicable):________________________________________________
Notary, Please Stamp Here (if applicable):
I, _________________________________________, destroyed the final exam on____________ .
(or)
I, __________________________________________, will mail the original back to Champions

within 24 hours.
Thank you for choosing Champions School of Real Estate.
www.ChampionsSchool.com
309
Notes
260

Index

Index
A
ABR (Accredited Buyer Representation) ..........................................................................271
A-I-D-A .................................................................................................................................133
Amendment to Buyer/Tenant Representation Agreement (TXR-1505) .........................98
Artificial Intelligence (AI) ...................................................................................................261
Augmented Reality (AR) .....................................................................................................260
B
Blog ........................................................................................................................................251
Budget ......................................................................................................................................20
Buyer’s Book ............................................................................................................................99
Buyer’s Representation Agreement (BRA) ....................................................................82, 85
C
Canons of Professional Ethics and Conduct .....................................................................173
Certificate of Eligibility ..........................................................................................................80
Closing ...................................................................................................................................226
Closing Disclosure (CD) ....................................................................227, 231, 232, 233, 234
Code of Ethics of the National Association of REALTORS® ......................... 188, 265, 266
Index Cold Calling ............................................................................................................................27
Commission ............................................................................................................................92
Comparative Market Analysis (CMA) ..............................................................................132
Competence ............................................................................................................................50
Consumer Protection Notice (CN 1-3) ............................................................ 174, 178, 259
Conventional loans ................................................................................................................80
Counteroffer ..................................................................................................................207, 208
COVID-19 .............................................................................................................................255
D
Dead Files ................................................................................................................................27
Deceptive Trade Practices Act (DTPA) .............................................................................184
Department of Veterans Affairs (VA) ..................................................................................80
Designations ..................................................................................................................275, 276
E
Earnest Money ..............................................................................................................205, 211
Economic Farm ......................................................................................................................24
Elements of a Listing Agreement .......................................................................................129
Errors and Omissions Insurance (E&O) ...........................................................................186
Escrow ....................................................................................................................................226
Ethics ......................................................................................................................................188
Exclusive Agency ..................................................................................................................130
312 Exclusive Right to Sell ..................................................................................................131, 134
F
Facebook .......................................................................................................245, 251, 252, 256
Fair Housing ..................................................................................................................130, 162
Farming Techniques ...............................................................................................................24
Federal Housing Administration (FHA) .............................................................................80
Fiduciary ................................................................................................................................173
G
General Information and Notice to a Buyer (TXR-1506) .......................................102, 103
Geographic Farm ....................................................................................................................24
Goal Setting .............................................................................................................................48
Intermediate-Goals ..............................................................................................................48
Long-Term Goals .................................................................................................................48
Short-Term Goals ................................................................................................................48
Google Analytics ..................................................................................................................264
Grievance Panel ....................................................................................................................188
GRI (Graduate REALTOR® Institute) ................................................................................271
H
Hot Buttons .............................................................................................................................14
I
Information About Brokerage Services (IABS 1-0) ......... 78, 82, 84, 87, 94, 129, 135, 162 Index
Instagram ......................................................................................................251, 253, 254, 256
Integrity .................................................................................................................................174
Intermediary ................................................................................................130, 135, 154, 156
Intermediate Goals .................................................................................................................48
L
LinkedIn ......................................................................................................................, 251, 256
Listing Agreement ...................................................................................88, 90, 129, 131, 156
Long-Term Goals ...................................................................................................................48
M
Market Area ............................................................................................................................14
Marketing Plan .......................................................................................................................18
Mentor ...................................................................................................................................272
Mission Statement ..................................................................................................................63
Morals ....................................................................................................................................171
Multiple Listing Service (MLS) .99, 132, 133, 138, 140, 144, 150, 152, 154, 164, 166, 246
N
Name Recognition ..................................................................................................................12
National Association of REALTORS® (NAR) ..................................188, 275, 276, 277, 280
Negotiation ......................................................................................................................40, 208
313

Net Listings ...........................................................................................................................131
Niche Market ..........................................................................................................................29
O
Offers .....................................................................................................205, 206, 207, 208, 209
Acceptance ..................................................................................................................207, 209
Rejection .....................................................................................................................207, 208
One to Four Family Residential Contract (Resale) (TREC NO. 20-15) ........................217
Open Listing ..........................................................................................................................130
P
Pathways to Professionalism ...............................................................................................189
Pinterest .................................................................................................................................256
PITI .........................................................................................................................................79
Pricing Objections ................................................................................................................140
Procuring Cause ...................................................................................................................130
Lawsuits ...............................................................................................................................130
of Sale ..................................................................................................................................130
Promulgated Contracts ........................................................................................................227
Prospecting ..................................................................................................................63, 68, 77
Public Marketing ..................................................................................................................150
Q
Index
Qualified ................................................................................................................................275
Qualifying ................................................................................................................................78
R
REALTOR® ...................................................................................................265, 277, 278, 280
Referral ..............................................................................................................................39, 68
Reprimand .............................................................................................................................188
Residential Buyer/Tenant Representation Agreement (TXR-1501) ................................89
Revocation .............................................................................................................................188
Rules of the Commission ....................................................................................................171
S
Sample CheckList (Residential Transaction) ....................................................................214
Self-Awareness ........................................................................................................................68
Seller’s Disclosure Notice .............................................................................................111, 126
Seller’s Invitation to Buyer to Submit New Offer (TXR-1926) ...............................118, 119
Senate Bill 489 .......................................................................................................................136
Short-Term Goals ...................................................................................................................48
Showing .................................................................................................................................100
Social Media ......................................................................................................... 251, 254, 264
Subagency ..............................................................................................................................136
Substantive Discussion ..........................................................................................................86
314

T
Texas Real Estate Commission (TREC) ...........................................171, 173, 176, 188, 205
Texas Real Estate License Act (TRELA) ....................................................... 85, 86, 156, 171
Texas REALTORS® .......................................................................................................131, 146
Texas REALTORS® Exclusive Right To Sell Listing Agreement .....................................134
TikTok ....................................................................................................................................256
Transaction ............................................................................................................................211
TRID Rule .............................................................................................................................232
Twitter ...........................................................................................................245, 251, 254, 256
V
Values Statements ...................................................................................................................63
Virtual Reality (VR) .............................................................................................................260
Y
Yelp .......................................................................................................................................245
YouTube .........................................................................................................................251, 254
Z
Zillow .....................................................................................................................................246
Index
315

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TX 21 06 17 - Powerhouse - Training

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Power House Training

Champions School of Real Estate® www.ChampionsSchool.com

Visit www.ChampionsSchool.com for more information on real estate, mortgage, appraisal,

Visit www.ChampionsBusinessEtiquette.com for more information on the CSRE Success Through

Introduction to Power House...................................................................................11

Why Market Yourself?........................................................................................... 12

The Power Presentation Book............................................................................... 22

The Zero Cost Approach...................................................................................... 22

Minimum Cost Approach.................................................................................... 23

Choosing Your Farm Area...................................................................................... 24

Talk to Other Agents About Their Marketing Activities..................................... 36 Table of

The Art of Negotiation........................................................................................... 40

The Successful Sales Agent....................................................................................41

CHAPTER 2: GOAL SETTING AND YOUR BUSINESS PLAN..........................................................45

Setting Your Goals..................................................................................................47

Introduction to Financial Goals...............................................................................55

Setting Financial Goals.........................................................................................55

Financial Goals Exercise.......................................................................................59

Personal Business Planning ................................................................................. 64

CHAPTER 3: WORKING WITH BUYERS............................................................................................. 75

Servicing the Buyer................................................................................................. 77

Prospecting for Buyers.......................................................................................... 77

Qualifying the Buyer............................................................................................ 78 III

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Real World Scenario - Income Ratios.................................................................. 81

Working with Internet Buyers........................................................................ 83

Essentials of a Buyer’s Representation Agreement.................................................. 84

Agent’s Duties to Customers.......................................................................... 85

Information About Brokerage Services................................................................. 86

Selecting Properties To Be Shown.......................................................................... 99

The Buyer’s Book ................................................................................................. 99

Showing Property............................................................................................... 100

Facts Buyers Want to Know About a Property..............................................101

Exercising Due Diligence for Your Buyers..........................................................109

Real World Scenario - Problem Clients.............................................................112

How Buyers Process Information..................................................................113

Working with a Reluctant Buyer...................................................................113

Signs Of Problem Clients ...................................................................................113

Ways to Release Your Buyer Without Burning Bridges......................................114

Working with Buyers - Sales Agent Safety ........................................................114

Developing a Winning Offer.................................................................................117

Presenting a Buyer’s Offer...................................................................................117

Texas REALTORS® Seller’s Invitation to Buyer to Submit New Offer...............118

CHAPTER 4: WORKING WITH SELLERS..........................................................................................123

The Listing Process............................................................................................... 125

Setting the Appointment.................................................................................... 125

Elements of a listing Agreement........................................................................ 129

Types of Listing Agreements.............................................................................. 130

Multiple Listing Services.....................................................................................132

Real World Scenario - The Jones Family ............................................................137

Case Study - CMA.............................................................................................141

Your Sellers Accept a Contract............................................................................167

CHAPTER 5: THE PROFESSIONAL CODES OF ETHICS................................................................. 169 Table of

Federal and State Law Relating To Conduct.........................................................172

Canons of Professional Ethics and Conduct........................................................173

Minimum Ethical Standards.................................................................................179

Activity - Real Ethical Dilemmas in Real Estate................................................180

Deceptive Trade Practices Consumer Protection Act............................................184

Professional Codes of Ethics..................................................................................188

Ethics and Business Principles for New REALTORS®......................................190

NAR® Code of Ethics and Standards of Practice..................................................193

CHAPTER 6: THE TRANSACTION PROCESS AND CLOSING......................................................203

• Learn contract law

• Learn how to present an offer, an inspection, and bad news

• Learn how to negotiate

• Learn to budget, pay taxes, and pay your bills

• Learn about the foreclosure process, short sales, etc.

• Learn about restricted vs. non-restricted properties

• Learn about selling an estate through the trustee