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Michigan Limited Service Agreement Law causes real estate forms change

By Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375

Managing Real Estate Broker with Flexit Realty "Flexible Home Selling Solutions"

May 02, 2008 09:55 AM

The Michigan legislature from time to time makes changes to how Realtors do business and how we represent ourselves to our clients.

Unfortunately many times these changes are the direct result of someone cheating or misrepresenting themselves to a client. Changes in the lending laws and getting lenders licensed is a one of the most recent examples of legal displeasure by the legislature. They are still working on the final drafts of some sweeping changes.

The Limited Service Agreement as it is call or Bill No. 4417 will become effective on July 1, 2008. Who will this bill affect? Based on the language it will affect everyone anyway Realtors....the disclosure forms that we currently use will have to be modified to add specific language to identify your agency relationship with sellers and buyers. One of the check marks will indicate if you are a _____ Seller's Agent - Limited Service Agreement and for Buyers the same check box will identify ______ Buyer's Agents - Limited Service Agreement.

So what does this mean? If you check that you have a Limited Service Agreement in place your buyer or seller has willingly reduced the number of services you provide. Why would a seller or buyer do this?

This may be specifically directed at the Flat Fee, For Sale By Owner or a Real Estate Brokerage that does not provide many services. If the Limited Service Agreement is not signed...what ever you advertise is going to be what you have to provide...websites are advertising. So clients have another document that more clearly or is to supposed to more clearly identify the services they can expect from broker and licensee representation.

How many of you have Limited Service Laws in your state? Do they work in your state? How many in Michigan have even read the new law....it is only a month away from being required! log

If you live in Michigan and are thinking of selling or your listing has expired and you still want to sell....go to our Website: www.FlexItRealty.com download over 30 Free Reports that could save you Thousands in you next real estate transaction. Call Gary White for a confidential personal consultation Toll Free: 877-667-4699

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Barry Bridges

Barry Bridges Weichert Realtors Bridges & Co. - Smith Mountain Lake, VA

Lake professional

We have limited service in Virginia but it is very new so it will take time to tell. there is one good thing already though and that is it has to be listed in the MLS so that the other agents have warning.

As you are in Michigan maybe you can answer this. Do you have agents who are mortgage brokers and write deals and supply mortgage to the same client? I was sure I had seen that on a blog and can't find it now.

May 02, 2008 10:19 AM

Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375

Flexit Realty "Flexible Home Selling Solutions" - Grand Rapids, MI

Real Estate Services You can Trust!

Hi Barry, you are correct a mortgage broker can also be a licensed Realtor in Michigan. I am not sure that is a good thing. I did it for awhile my self and found the liability a bit more than I wanted to place myself into.

Since our law has not taken effect yet people are still wondering what to do with the disclosure forms. I have already put the new forms into play with my agents. They seem to understand and have a better understanding of agency because the new forms cause discussion. Thanks for the comments Barry.

May 02, 2008 10:24 AM

Keith Perry

Coldwell Banker - Hiram, GA

REALTOR - West Metro Atlanta

Hi Gary, not here and hope it stays that way.

May 02, 2008 12:38 PM

Teri Eckholm

Boardman Realty - White Bear Lake, MN

REALTOR Serving Mpls/St Paul North & East Metro

Hi Gary--there is limited service in MN...Facilitators. I don't know how well it works. I know it helps FSBOs get their listings in the MLS but I stick with full service as my cornerstone.

May 02, 2008 01:52 PM

Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375

Flexit Realty "Flexible Home Selling Solutions" - Grand Rapids, MI

Real Estate Services You can Trust!

Hi Keith & Robin, it will make it's rounds like most of these issues they get started and legislators need a bill to attach their name to for election time! Most times these bills do not have the research to make them effective and accomplish the goals they were intended to do. Thanks for the comments guys. Hope all is well and you landed that contract!

May 03, 2008 04:06 AM

Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375

Flexit Realty "Flexible Home Selling Solutions" - Grand Rapids, MI

Real Estate Services You can Trust!

Hi Teri, the way the new limited service law is written for us we will have to have it as part of our agency disclosures, as an option. It would be simple if we only needed to disclose if it applied. Thanks for the comments Teri.

May 03, 2008 04:08 AM

Kris Wales

Keller Williams Realty - Lakeside Market Center - Macomb, MI

Real Estate Blog & Homes for Sale search site, Macomb County MI

It's about darned tootin time they did this. So many brokers were giving limited service and not fully informing clients in writing what/how/when they were limiting what their responsibilities are. For example: Recently presented an offer for my buyer client to a home owner without the listing broker present. Why? It wasn't part of the service. Poor sellers. I had to say several times "I represent the buyer. I represent the buyer. I represent the buyer." By the end of the presentation they finally got it - they paid for marketing services and nothing else.

May 04, 2008 10:36 PM

Rob Jacobs

Short sale pathways - Rockwood, MI

Short Sale Specialist

Isn't it ironic that they are now implementing this law regarding a segment of our industry that was all the hype four years ago? You remember the good old days when homes were selling and limited service comanies were the big buzz word. We have 3 years left with our current governor. Does that mean the foreclosure epidemic will be addressed here in Michigan during the next administration?

This was probably a necessary change but Lansng needs to wake up and address the real problems that are happening now. Where's the legislation requiring lenders to actually make an effort to control the default and foreclosures. What are they doing to stop the fraudulant activities that are happening now?! Everything that I have seen coming out of our capital addresses issue from yesterday. Its very discouraging to say the least.

May 06, 2008 02:47 PM

Gita Bantwal

RE/MAX Centre Realtors - Warwick, PA

REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Good post. Sometimes consumers have no idea about agency and what limited service agents do.

May 06, 2008 10:44 PM

Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375

Flexit Realty "Flexible Home Selling Solutions" - Grand Rapids, MI

Real Estate Services You can Trust!

Hi Kris, I have to agree....I do not mind sellers requesting limited service but paying for it and getting limited in it's place is a travisty along with an ethical violation...which in many areas seems the norm. Thanks for your comments Kris.

May 07, 2008 02:24 AM

Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375

Flexit Realty "Flexible Home Selling Solutions" - Grand Rapids, MI

Real Estate Services You can Trust!

Hi Rob, we have some issues that need to be addressed, I think that is putting it mildly. I heard that the next issue on the docket is going to be limiting real estate commissions...that was not to stir the pot it is simply an issue that is coming. The legislature is addressing limiting the lender fees below 1% of the loan and the next issue is dealing with allowable real estate commissions. Thanks for the comments Rob.

May 07, 2008 02:27 AM

Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375

Flexit Realty "Flexible Home Selling Solutions" - Grand Rapids, MI

Real Estate Services You can Trust!

Hi Gita, I do not have any concerns about the new disclosure. I think we should have had this a long time ago. Thanks for the comments Gita.

May 07, 2008 02:28 AM