Common Mistakes for New Real Estate Agents
From legal advice, to hard money loans, binder deposits and even an on-time escrow closing. Poor time management and other mistakes can be avoided.
While all real estate agents learn at the beginning that giving legal and financial advice is a big no, no in our industry, it is also good to note that some conversations could be misconstrued as financial or legal advice. When in doubt, the key is to always recommend a homeowner or a buyer to consider adopting legal advice from a professional in their respective fields. Like a real estate attorney for example or a certified accountant.
“But if I’m a real estate agent who knows the laws, why can’t I guide the client on real estate legal advice” you ask? Without becoming a real estate attorney, you cannot provide legal advice.
There are many areas where a real estate associate or even a broker doesn’t have the legal authority to assist with. Mortgage documents and deeds for example are outside the scope of what a real estate professional can work with their client. We will delve into this a little further below.
Be very conscious about undertaking an action as legal advice. You don’t want to be the one setting a new precedence in real estate law or through other administrative avenues. There are many more common errors a sales associate could make like some of the following:
- In a purchase contract, don’t label hard money as a cash deal. A hard money loan is still a loan, it’s simply a riskier loan, which tends to come at a higher interest rate.
- Don’t forget to hand your Broker the Binder deposit in time. This can get you on the HOT seat, we’ll explain why further below.
- Social media presents common marketing mistakes, such as when marketing material doesn’t include your Broker’s firm name. This is common and simple but it’s still a mistake.
- Remember to speak with your Broker and have them review your first ten deals to make sure you aren’t making any common mistakes.
- Time management is essential when you need to acquire multiple reports like appraisal, inspection, survey, etc. Plan ahead so you can meet your deadline.
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Hard Money Loans: A Loan Is Still A Loan
As hard as it may seem, (pun intended) a hard money loan is still a loan. Whether it’s a hard money loan, conventional, FHA, VA, you name it! It’s still a loan. When you are preparing a purchase contract for a hard money loan, the common mistake you should avoid is electing to put it down as a cash offer. Equally, you never use a proof of funds because it is still a loan, you need to get a pre-approval letter, preferably with conditions listed prior to closing of escrow.
When you select the cash offer in the purchase contract, you are automatically waiving the financing contingency. Since there is no financing with a cash offer, there is no reason to have a contingency based on the ability to get funded. If the hard money lender later decides not to fund the deal, you could be stuck with the losses. The initial binder deposit made by the buyer could be in jeopardy and your buyer could come after you for that balance.
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Binder Deposit is Late
Giving your broker a binder deposit past the 24-hour period is asking for trouble. This is very well stated in the learning manuals. Furthermore, if you’re broker and their team is booked with contracts and deadlines, the last thing they need is your last-minute request to delay them further. As an agent you already know your Broker has 3 days to make the deposit from the moment, they receive it from you, (Excluding weekends and holidays) your deadline shouldn’t cut into theirs.
Another binder deposit mistake is as follows. Make sure that if you have an offer with a split binder deposit, where the buyer pays one portion upfront and the second deposit 10 days later (as an example), that you as an agent, schedule that in your calendar so that you don’t forget the remaining balance for the binder deposit. There have been any cases where a sales associate has forgotten to follow up and collect the 2nd half of a binder deposit. This could leave the Brokerage firm at liability for the deposit not collected should the buyer back out of the purchase deal.
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Marketing Today is Vast, Keep a Keen eye on your Materials
A good rule of thumb is to put your Broker on a pedestal as it relates to your marketing materials. A common mistake agents do when they’re managing a team is to place their “team name” on top in their marketing materials such as business cards with big bold letters instead of their Broker’s firm name.
This can give the wrong message to a potential customer or client that the team’s name is the Broker’s name. This is against administrative rules and can easily get you cited for your first warning at least. Just remember the pedestal rule in your marketing material and you should be good to go!
Taking off the Ground too Quickly When You Still Need Oversight
In some cases, some real estate associates get very excited, and they take off the ground running. Looking for every deal they can get and any contract they can sign. This can lead some of them to very costly mistakes for both themselves and their Brokers. Don’t be the one to have to payout when you’re looking to get paid. Take your time and advise your Broker that you have a deal you’d like them or a supervisor to review for QC (Quality Control).
Be humble in your methods and in your ability to ask for help. Your Broker doesn’t want you to fail. You’re more valuable to him or her as a successful agent who knows what they are doing and avoids all possible pitfalls.
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Time Management Gets you to Escrow Faster
One of the many mistake’s agents have in the beginning is time management. As you have to acquire an inspection with possible repairs, maybe a survey and a plethora of other documents, you need to start early in the game. Remember that it can take one to two weeks to get an appraisal. Inspectors tend to be available more frequently depending on your source.
All of this takes time, you don’t want to call one after the other’s work order is completed. Get all the orders lined up back-to-back and have them all visit the property for their respective inspections in the same week, if possible, with the exception of the appraisal, which could come last, once the lender orders it.
You’ll thank us later for following these recommendation.
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KASHMIRI REALTY & PROPERTY MANAGEMENT
Marisol Kashmiri, BROKER/REALTOR© in the Jacksonville, FL location (904) 551-4955 (Office)