Under SC Code 40-57-370 a real estate agent is required to provide a meaningful explanation of agency at the first practical opportunity when the conversation turns substantive.
The substantive contact factor is the final link to correctly delivering a meaningful explanation of agency. So when does the conversation turn substantive? What does the statute say? And, how does this play into your explanation of agency?
In this episode we continue our review of the statute and learn how and when you must deliver your meaningful explanation of agency. You will learn how to do this the correct way which should help you convince more consumers to enter into agency with you.
Also, in my Quick Take I discuss what the the release of Bill Cosby and why it happened, Gary's Good News Only!
Enjoy and PLEASE TELL OTHER REAL ESTATE AGENTS ABOUT THIS PODCAST!!!!
Gary
Gary serves on the South Carolina Real Estate Commission as a Commissioner. The opinions expressed herein are his opinions and are not necessarily the opinions of the SC Real Estate Commission. This podcast is not to be considered legal advice. Please consult an attorney in your jurisdiction for applicable legal advice germane to your issue.
Under SC Code 40-57-370 a real estate agent is required to provide a meaningful explanation of agency at the first practical opportunity when the conversation turns substantive.
The substantive contact factor is the final link to correctly delivering a meaningful explanation of agency. So when does the conversation turn substantive? What does the statute say? And, how does this play into your explanation of agency?
In this episode we continue our review of the statute and learn how and when you must deliver your meaningful explanation of agency. You will learn how to do this the correct way which should help you convince more consumers to enter into agency with you.
Also, in my Quick Take I discuss what the the release of Bill Cosby and why it happened, Gary's Good News Only!
Enjoy and PLEASE TELL OTHER REAL ESTATE AGENTS ABOUT THIS PODCAST!!!!
Gary
Gary serves on the South Carolina Real Estate Commission as a Commissioner. The opinions expressed herein are his opinions and are not necessarily the opinions of the SC Real Estate Commission. This podcast is not to be considered legal advice. Please consult an attorney in your jurisdiction for applicable legal advice germane to your issue.
Gary Becker in South Carolina's only podcast dedicated to the real estate agents. Craig Welcome back everyone to another episode edition dirt I am you're often irreverent and very opinionated, but rarely wrong host Gary patron, and I am coming to you from Blair Cato in downtown soda city, aka the capital city, aka the one and only Columbia, South Carolina. In fact, the best Columbia in the United States. Sorry about that, Missouri. Well, this week, I will finish up our walk through 40 dash 57 370. And what is required of you and explaining agency. You know, two weeks ago, I discussed what was a meaningful explanation of agency and the seven key words that you needed to use and your explanation. And hopefully in those two weeks, you have sat down, and really thought out what those words mean to you and how you can use those to explain agency and you've actually worked on that a little bit. Now, last week, we went through the requirement on doing your meaningful explanation at the first practical opportunity. So once you perfected that meaningful explanation, you then had to deliver that explanation to your consumer at the first practical opportunity. So we talked about what that meant, and whether or not there was a trigger event that required this first practical opportunity to come into play. And also got a little bit into things that you aren't supposed to do. Until you have that client relationship, aka you can't provide client services, such as advocating for your consumer or giving advice or giving counsel. Now, if you miss either one of those episodes on agency, you can go back and listen to those episodes, or for that matter, any other episode audition dirt and you know, we've covered phenomenal topics such as escalation clauses and wholesaling and things of that nature. But we've also covered some other issues a little bit more direct to specific matters, such as how to properly put names on a contract, how to get the proper person to be able to sign those contracts, what to do and it matter where you have a consumer that's been divorced and the transaction. So there's a lot of good podcast back there. I would love for you guys to go back and look at if you want to go back and listen to some of those podcasts. You can find those on any podcast platform by simply searching for addition dirt, you can also go to Blair cato.com and click on our podcast link and all of the 30 I think we're 3536 podcasts will show up. If you have a topic that you would like for me to consider to use in this show. If you please email me at Gary at Blair Cato calm, I'd love to see what you'd like us to cover. Now, also today, I'm going to go over the case against the cause Bill Cosby aka Big Fat Albert. As you probably heard, the Pennsylvania Supreme Court released Bill Cosby on July 1, who much uproar. So today I'm going to tell you what happened from a legal standpoint, I'm not really going to get into whether or not he was guilty or not. Unfortunately, it looks like he probably was and looks like he probably was a serial rapist at that. But what I will do is I want to talk about the conviction and why it was overturned, because there's a lot of legal stuff in there that I think might give you a different opinion of him getting released. And then secondly, I want to have another installment of Gary's good news omen. Before I begin, please do me a favor and tell three real estate agents that are not in your market about this show. I want to continue to grow it beyond the Midlands and the Upstate, we have great growth in those two areas. And as I mentioned before, we are getting a lot of downloads in Seattle area Denver area, Cleveland, Atlanta, Charleston. So we are starting to pick up in other areas, we'd love to keep this thing going even to a bigger level. But because of your wonderful support, we are now over 13,000 downloads and I greatly appreciate all of your support. Now on to our show, under 4057 370. This statute holds that after the first practical opportunity after substantive contact, a licensee shall provide a meaningful explanation of broker relationships in real estate transactions. And this relationship that they also require you to discuss is the relationships offered by the farm explanation of customer Client Services. And the disclosure of brokerage relationship form, the form is very important, you might only use the form that has been promulgated by the South Carolina real estate commission. So do not change the form do not give them another form. The only form you can give them is the one that has been created by the South Carolina real estate commission and you may not adapt that or change that in any form or fashion. So now that we have discussed and we know what a meaningful explanation of agency is it hopefully you'll have spent some time developing that. And we know also what the first practical opportunity is we now need to look at what is substantive content. Remember, agency is never presumed in South Carolina, I want to hammer that point home. In fact, the statute goes one farther and says that payment and even a promise of payment to a real estate brokerage firm does not determine whether or not an agency relationship is established. Until you have a written agreement in hand signed by the consumer. You may not provide any client services, I cannot stress that enough, you may not advise you may not counsel, you may not advocate for any consumer, those are Client Services. And I think that's where a lot of agents step over this line. And they start advising, they start canceling counseling before they have Client Services. So please do not do that at all. Now, let's look at the definition per the statute. Unlike first practical opportunity, the statute actually does define what a substantive contact is, it defines first substantive contact as contact in which the discussion or dialogue between the consumer and the associated licensee moves from casual introductory talk to a meaningful conversation regarding the selling or buying motives of the seller or the buyer. Financial qualifications are other confidential information that, if disclosed, could harm the consumers bargaining position. As we break this down, the first thing you have to understand, in 2017, the statute 4057 was rewritten. And in that statute, it was the first time that they ever change your duty of confidentiality. Prior to 2017, you had only a duty of confidentiality to your client. And that duty of confidentiality was sacrosanct, you could not violate it was during your representation. And it was even after your representation, if they fired, you terminated you in any way, they'll just ended it or even if you completed it, that duty of confidentiality survived, it is the one duty that is absolute and 100% survives your representation. Prior to 2017, you had no duty to the consumer, in terms of confidentiality, whatever you learn from your consumer, if your consumer Why is it there and blabber off to you at an open house or on the telephone, whatever information you learn from that consumer, you could later use that from your client. And often people argue you had a duty of disclosure to your client anyway. So because they blabbered you had to go tell your your client, so in a situation where you're sitting in an open house, and the consumer walked in prior to 2017. And it was stupidly say like we've looked at 200 houses and this is the only house that the both of us agree on, you know this, I can't believe how cheap This house is, we would we would have paid more than this. Once your conduct consumer told you all that information, you could immediately go back to your client, when an offer came in and said these people said there's only house a light and they thought you underpriced it. So let's let's counter offer a much higher today, you may not do that, in 2017, the law changed and you have a limited duty of confidentiality to all consumers. So when they provide you any confidential information that if disclosed could harm their bargaining position, you must keep that information confidential. So in the situation I just mentioned, you can't discuss that with your client, which does make it very difficult for you. Because when your client asks, How should I counter this offer, and you already know, they would pay more for this house than they have offered? How do you handle that? And that's one of those situations where I think you have to back away and say, let me have my broker step in here and help you with that. Because I am privy to some confidential information from the consumer that I can't share with you. That is a very harsh rule, I get it. But it is a fair rule. And it is a needed rule. So understand when you've learned confidential information, you must not share that. This also would go to certain situations such as if you sat down with a consumer and asked them when they were listing their house, what do they want to list their house for? And when the consumer tells you Well, I would like to list this house for 200 grand, but I'd be willing to take 190, you now have confidential information that could be harmful to that consumers bargaining position. So if you do not sign this seller up as a client, and later down the road, you've have a buyer who wants to put an offer in this house, and they're offering one offer 200 grand, can you go to them and say, Well, I know for a fact this guy will take one Nani answer's no, that is confidential information you learn from consumer that would harm their bargaining position. So again, you may have to bring in a broker or a team member or another agent to help them figure out the best price to offer. Again, I recognize it's harsh, but it's fair. And it's ethical. And so that's what that's part of the statutes for so understand that first and foremost. Now let's break down this actual roadmap here that they gave us and that's why I like this statute because they actually give you a roadmap and they actually define the terms and tell you when and what. So when is when is a substantive contact when the customer starts talking about their motives one or their qualifications number two, or they're confidential in information that can harm your position number three, any of those three reasons, you basically have to move in to discuss agency. So think about this, it's when the conversation turns from your basic everyday conversation to basically the business at hand. The second, your consumer starts talking about anything in my opinion related to real estate, what kind of house they want to buy, what size they want to buy, what neighborhood they want to be in how much they would be willing to pay, how they just sold their house, and now they have this amount of money in their pocket. Anything related to do with real estate, basically, is Mooji into business talk. But the good thing about the statute also tells you that small talk or casual conversation is allowed. Now we all know what small talk is. That's the conversations we have How you doing, how's the weather, when you meet a client, you don't second you sit and sit down with them and say, Hey, my name is Gary, let me start trying to sell you real estate. The first thing you do is you're having casual conversation, because you're trying to establish what trust people trust people more after they have gotten to know them a little bit better. So if you're sales pitches to sit down and say my name is Gary, what size house do you want? What are you looking for in real estate, you're probably not going to be doing very well in selling real estate. Before you can sell anything. You have to establish trust with your client before you can get your client to sign agency with you. You have to establish trust, casual conversation is necessary. The statute recognizes that casual conversation is necessary, do your casual conversation, get to know your consumer. But the second year consumer says Well, I'm looking to buy 3000 square feet, I'm looking to move into vertaa green neighborhood, I'm looking to buy a four bedroom house or we just sold our house and we netted 100 grand once they start giving you this information, that's the point where you're going to say, you know what, john, before we discuss what you're looking for in a house, and what's your financial ability to pay is I am required by law to disclose to you agency. See, I've now furthered my trust in that cuz that consumer hasn't made because I've already established little bit of small talk, let them know who I am as a person. And now I've told them, I'm required by law to do something. And I'm doing it. When you find yourself in those situations, as we all do, where the conversation is either dragging or the conversation won't end, this roadmap will also help you. So when you're in that conversation, and you're ready to get down to business, and you've had your casual conversation, you've been talking about their 17 cats or whatever you can say you know what, before we start talking about business, or before we start talking about your real estate needs and what you're looking for in a house, I am required by law to disclose agency, easy transition, or if you have the person who just won't shut up. And that's all they want to do is keep telling you about their 17 cats and you don't work want to hear any more about it. soon as there's a pause in the conversation, you can say, well, that's great, I really enjoy talking about your cat. Now before we start talking about your real estate needs or your financial ability to pay or whatever. However you want to say that I am required by law to disclose agency, this statute actually gives you the roadmap to kind of be rude and not necessarily be rude. But it kind of gives you the ability to cut off the conversation and move to what you want to move to which is selling some real estate. It's very clear, small talks, fine, do your small talk. But before you start getting into business, go into your explanation of agency. And remember the other key word and this here is it you must do this is not a This isn't a an idea, or we suggest it is you must give the meaningful explanation of agency. So this is an absolute requirement that you cannot ignore. And I think this is great for you, as I mentioned earlier, because I think this will help you with your transition. Think about how simple it is when the consumer is sitting before you whether they come to your office, where you go to their house conversation goes from caught from casual conversation, they start mentioning something about a house or their desires, you can simply use the transition that I just gave you. You know, john, before we talk about your real estate needs, I'm required to disclose agency. I don't think anybody has any trouble with those situations. But we do have a couple other situations we have to talk about. But when we talk about substantive contacts, how about emails, or dm or DMS? How about text messages? How about phone calls? Is it now to the level of having to do a meaningful explanation of agency where you have the first practical opportunity which we talked about in there. So let's talk about how substantive contact relates to practical opportunity that would rise to the level of having to give me the full explanation. So if somebody emails you and send you an email and says, Hey, I saw that you have a son in Spring Valley neighborhood, is that house still for sale? Okay, well, that's perhaps not to the point that is rise to that level because I can give me information that's readily available to the public without creating any agency relationships or getting Client Services. So you're probably okay there, but When they start emailing and going, Hey, I just sold my house, I'm looking for a 3000 square foot four bedroom house, my wife and I would like to spend about 300 grand on it. Can you help me? Now at that point, you are in doing meaningful conversation. We are now in the business conversation. So how do you handle that with an email because it is a substantial contact subject of contact. And now I have to decide what is my first practical opportunity now to disclose agency. But here's the good news, I think it's very easy, because if you will look at Section D, it says if the first substantive contact occurs over the telephone or other electronics means including the internet and electronic email, and acknowledgement of receipt of a disclosure brokers relationship form may be sent via electronic means, including the internet and a lot electronic mail. Now, it doesn't specifically talk about agency explanations. But if I can send this via electronic means, it would stand to reason that if I'm getting an email, or a text or a phone call, should be able to email my explanation of agency to the consumer. And that should, in my opinion, comply with what I would recommend when you are getting emails and they're asking questions is, why not? If you've already done what I told you to, which was to sit down and write out a meaningful explanation of agency, why not create that as a document, maybe make it look pretty or whatever? And then whenever you're getting an email about your property, email that and say, Hey, while I'm answering your question, take a look at my agency disclosure. So what you've done now is you've captured this client, this client is no longer looking around the internet and other properties are reading your agency disclosure while you're responding to their question. Same thing with a text. I mean, quite frankly, what I would suggest, if you have a website, why don't you talk to your IT guy about putting it on your website as a hidden link, like for Blair Cato, we could have a Blair cato.com slash agents agency, and no one would be able to see that link, unless they knew it was there, this doesn't come up as a landing page on your website. If you give that link, though, it could be a landing page. So what you could do on a text or a on a on an email is you can send that out and say, Hey, take a look at this link real quick. Now, I think you still would have a duty once you sit down face to face with a client to go over that agency agreement to make sure they understand it, and further, make sure that you've comply with the law. And the same thing applies on the telephone, when somebody calls you and they start asking you all kinds of questions, and they start blabbering about things are looking for and doing, I still think you have that same duty. And I think that is a practical opportunity to give that agency disclosure on the telephone. Now, perhaps it doesn't have to be a full length agency disclosure in terms of we're getting into all the special duties and so forth. But I do believe at a minimum, you have the duty to at least talk about how you're required by law to disclose agency. And we're going to talk about relationships and things of that nature and that they have a duty of confidentiality, anything they say again, they could be used later that they need to be careful. So they because you don't want to have that situation where they're concerned with the phone, I think you just go ahead and go into it as the best you can. But I do believe you have a duty to do it there. Now that brings us to the last topics are what about open houses and fizz bows? Because a lot of times you as an agent may be seeing an open house or remodel home and somebody will come in and say hey, this beautiful house, how much is it? I believe you can answer all those questions as a side agent that are readily available to the public. But you do also have to remind that consumer when they start blabbering about agency, so when the consumer comes in and starts talking about their real estate motos or all the houses, they've looked at basically anything about why they're buying or what they're looking to buy, I do believe at that point, you need to say, hey, before you go any further, I am required by law to disclose agency to you, and then go into your quick explanation of agency. But I don't believe you can let a consumer walk into a model home and open house and sit there and have these open conversations about how large of a house they're looking for how much they're looking to spend, why they're looking to buy, how much they liked the house or so forth without having that that agency discussion. Same thing on a listing agreement. Whether you get the listing agreement or not, you are required when the conversation turns substantive, to give the explanation, meaningful explanation of agency. So when you sit down to talk to somebody about whether or not you're going to list their house, you have a duty at that time to go ahead and discuss these things with agencies. You know, listing agreements shouldn't be a very big concern of it, it should be very easy to do. But you definitely need to understand that when you don't get the listing that anything you learn from that meeting may not be used later on, in a couple of things that one of my good friends is a real estate agent Renee, as mentioned to me is that it could be considered as I agree that telling them how much you would list a house for what you thought the house could sell for is perhaps giving advice to that consumer and so you may be breaching that duty and going over from customer service to client service. So you got to be real careful about that. And I do think it's also important as she and I've discussed as well is to go ahead and That consumer know that keep what your what you won't. Quiet, don't tell me I don't need to know what your best number will be. Because that just puts everybody in a bad position that if I don't get your offer, I'll get your listing and I bring you an offer that you will later claim that I knew this and I use it against you. So it's just best for them not to tell you what their bottom number is ever. And then lastly, you have fizz bows. And those are also difficult situations, because a lot of times, you will be asked to go and preview a fizbo. And of course, the sellers anxious or excited, you're there, but they're not represented and they don't understand the rules and the regulations. And so when you go to preview a fizbo for your consumer, even though you're not going to represent that fizbo perhaps I still think you owe them a duty of telling them about agency because that conversation will without doubt turn substantive regarding their financial needs, their motives for selling, or what is going on in terms of all the information they tell you could certainly be damaging to them. I think it's imperative that when you preview a fizbo, or you're going to talk to a fizbo about potentially listing the property that soon as you get through the conversation, the small talk that you immediately go into your explanation of agency, it just safer for you, because later down the line, if your buyer comes to buy that property, you don't want that fizbo complaining, saying well, you learned information and you clearly shared it. Alright, so I think that now covers all of your duties as it relates to 4057 370. What you should know by now is how to do a meaningful explanation of agencies in the seven key words. You should also know that after small talk when things turn to business, you must deliver your well thought out speech on agency, you should also know that it is what it is first practical opportunity is when you are required to do this disclosure. And finally, you should know that if you present perfect this, like you perfect your listing presentation, that it should result in transitioning more consumers from customers to clients. But that is not something you can spend five minutes on, you must think this out, you must plan it and you must practice it to perfect it. You simply cannot we agency. So go home, spend some time on it. And please reach out to me let me know if I'm wrong. I don't believe I am. I think this is a well proven idea. Don't believe me? Go prove me wrong. But I believe you will get more out of this and you think and now one of my quick point. Thinking the most so many things. So let's talk about Fat Albert, the cause Dr. Huxtable Well, our however, you know, and remember Bill Cosby, he was America's debt. Unfortunately, he seems to be a rather bad person. And I'm not here to discuss his innocence or his guilt, he may very well be guilty of being a serial rapist, I don't know, the evidence looks very bad. So it's probably likely that he is guilty of what he's been accused of. But what I do know is that the fourth and fifth amendments are not just here for the pure and the innocent. In fact, due process and the right not to self incriminate are for everyone, even the most evil people, and is for good reason. Because it protects everyone from your government lying, cheating, and using deceit to put you in jail, whether you're innocent or guilty, there must be rules, there must be procedures that even the government must comply with. Otherwise, we allow our government to decide whether we're innocent or guilty, and we let them stack the deck against us anyway, they want to it was a miscarriage of justice. He was put in jail. I'm sorry. It's an unpopular thing to say. And it's not I'm saying this because he was in his and again, I don't think he's innocent. I think he's probably guilty. But he should be in prison for raping these young ladies, if that's in fact what he did. But it's a miscarriage of justice, because the government did not follow the most basic rules and processes that are available to you and me and everyone else. They simply violated the Constitution of the United States. And as tough as that is, I get it. I understand people don't like it. But it's not there just for the good guys, because most good guys aren't before the court. So let's talk about the background real quick about the cause. In case you don't know 2004 this incident happens between he and this young lady. A year later, the district attorney Bruce Castor decides there was no evidence to convict him. It's been over a year since it happened. There was no physical evidence and circumstantial evidence. In fact, she didn't even tell anybody for a full year. Again, it doesn't mean it didn't happen. It just he did not believe there was enough evidence there to convict him. He felt the only way that he could convict Cosby was if Cosby somehow screws up and admits it. But the Fifth Amendment means that Bill Cosby nor you have to testify against yourself in a criminal matter. You cannot be compelled to sit up there on the stand and testify against yourself. It's up to you, you can always invoke the Fifth Amendment. But in this case, the district attorney Kaster promises that he's not going to prosecute Cosby because he has no evidence to go against him. But what he does is he wants a, as he said, a semblance of justice for these victims. And he felt the best way for them to have some justice was to make it where Cosby could talk in a civil case in testimony and depositions. And thus he could be sued for his actions. And that's essentially what happens, because the prosecutor had taken off the prospect of him going to jail and being prosecuted. Cosby no longer can plead the fifth amendment, protect himself against self incrimination. Therefore, he has to testify in the civil cases. And that's what he does. He never admits that he does anything wrong. But he does say that he did by Quaaludes and alcohol, because he was going to party with his young lady and eventually have sex with the testimony looks extremely shady, mind you, and that he was up to no good. But he's trostle allege that all of this was consensual, and it wasn't anything but that there was and it was nothing but that the deposition is taken, it is agreed upon that it is going to be sealed from public view or use. Well, a new da comes to town cuts the deal off unseals, the testimony that had been agreed to upon being sealed, and then uses his very testimony to convict him, despite the promises from the state that he wasn't going to be convicted, which now made him not able to use his fifth amendment rights. So they basically tricked him into waiving his fifth amendment rights, even though any sane person never would have if they had a chance of being convicted. Well, that's not cool. They set him up and didn't allow them due process. And as bad as a person as he may be, he is still entitled The same due process that you and I are entitled to. And in the end, he got convicted largely from this sale testimony. While Cosby may be guilty as hell and again, I think he probably is, we simply couldn't allow the government to trick people into giving up their constitutional rights of due process and not self incrimination. If they can do it to Bill Cosby, who was a powerful man, a powerful celebrity and a very rich person, they can do it to you very easily. We do not allow convictions by the media, we do not allow convictions by public opinion, we do not allow convictions must be by rules, and they must be applied to everyone fairly across the board and not by the role of the mob. That is not justice. And again, there's a great chance he's guilty, but we simply can't convict people anyway we won't to beating confessions out of them or whatnot. We have to have rules. So while we may not be happy that Bill Cosby aka Fat Albert, aka Dr. Huck's might be a serial rapist and got away with it. Justice was in fact done here. Because the state cannot disregard the rules and trick people into testifying against themselves. Unfortunately, it probably was the correct route. And that's simply my take love to know what you think. Let me know at Gary at Blair cato.com. Second, so many things. Now want to get is good news only. This one's gonna be very short today because I did run out of time on those two hot topics I wanted to finish today so we wouldn't have to do a fourth episode on agency. We'll just do one quick one today. CNBC says epic home shortage may finally be starting to lift a surprise number of new listings hit our market in June. And what the article says the new listings increased 5.5% year over year and 10.9% compared with may according to realtor.com. among the nation's largest cities. 10 markets with the highest new listing increased post gains of 20% or more from a year ago. I said the unexpected new supply chain is certainly welcome news for homebuyers, many who have been sidelined these building wars. But the market still extremely lean. We are still down 43.1% year over year at the end of May representing 415,000 fewer homes on sale on a typical day in June. That's however an improvement from the more than 50% decline March, April and May new listings again, were higher but still well below our pre pandemic. Certainly good news, and maybe we're finally starting to see the end of some of this. And that's very quick good news for everybody enjoyed our show and doing the series on agency. And I hope you'll all have a good weekend. If everybody would please like, share, subscribe, and please give us five stars because of course five stars would be the only appropriate rating for this wonderful thanks Have a great weekend.