The 4-D's in Real Estate
In a comment I left on a recent post, I mentioned the 4-D's of real estate, which I use in my daily practice.
I was inspired to write an article about the 4-D's . . . so, without further, or much ado, here are the 4-D's in real estate:
Disclose: This is the Cardinal Rule of Real Estate: DISCLOSE. So for that reason, it's placed in the No. 1 slot on the 4-D's in real estate. Here are a few disclosures:
- Condition of the property
- Agency relationship
- FSBO listings -- how to handle them with buyer clients
- How compensation is made to the broker both in listing, and in selling
- Federal, state and local
- Market conditions
- Terms and conditions of a purchase and sale contract
- and more . . . and so much more . . . OMIGOSH, there is so much more
NOTE: When a bonafide fiduciary relationship is created between agent and client (under a listing agreement or a buyer rep agreement) FULL DISCLOSURE to the principal becomes the real estate agent's fiduciary duty!
Here's a dose of enlightment:
Real estate agents have no agency relationship DUTIES to consumers
Real estate agent have no agency relationship DUTIES to the general public
Real estate agents have no agency relationship DUTIES to anyone self-representing
NOTE: Disclosure is also made within the contractual forms, "disclosure" pamphlets, etc. that we may use in our real estate practice. Disclosure can take many forms, literally and figuratively. Real estate agents need to keep current on disclosures and what that may mean to principals, and non-principals, alike.
NOTE: Disclosure isn't always found in forms, contracts, etc. Disclosure can be made when we advice the client / potential client, AKA customer / general public how we practice real estate. Disclosure can be made individually and on an individual basis.
Discuss: The discussion is second and makes sense to the 4-D progression. Once the real estate agent has disclosed whatever it is they need to be disclosing, then the 2nd D occurs.
DISCUSS! If you notice you cant' spell the word "discuss" without "US".
Now is the time to include the principal, the client, the customer, the consumer -- whomever -- into the conversation! Get them involved. Get their resolve!
Discussion should not be a one-sided event, in other words. And the time for discussion is after the disclosure is made.
Decide: It's not up to us to decide. Although you can't spell the word "decide" without the "I" -- it's not the real estate agent's decision. It's the clients who will decide. It's the principals who will decide. It may be the consumer who decides to list. It may be the client who decides what the purchase price they will offer, etc.
Under contract, either a listing agreement or a buyer's rep agreement, we are under FIDUCIARY DUTY to act in the best interests of . . . ourselves?
Yeah, that's the sure fire way to get a code of ethics complaint filed.
After disclosure is made, when discussion has occured . . . then it's up to someone other than ourself to make that great decide
NOTE: Real estate agents can make decesions, don't get me wrong. We can decide not to take a listing. We can decide not to work with a particular buyer . . . if we are in compliant with fair housing rules.
When we are under a contract, then it becomes our fiduciary duty to represent the client. To serve their needs and to place their best interests above our own. And under contract (either a listing contract, or a buyer rep agreement) is when our clients make the decisions, and it's our duty to OBEY. And yes, "obey" is a fiduciary duty of the real estate agent. The decisions made are done by the principals, by the clients . . . and we can only disclose and discuss -- but the client decides.
Document: Documentation is so very important. And how you document the decisions your clients make, after disclosure, discussion and decision is predicated by what is actually decided.
- Reduction is list price
- "Limited" Agency
- Purchase and sales contract
- and more . . . so much more . . . OMIGOSH so much more.
For those who think real estate is easy . . . think again!
However, knowing the 4-D's should help you in your real estate practice.