CO-BROKERING WITH OTHER BROKERS
ON WRAP-AROUND, COMMERCIAL,
AND OTHER COMPLEX DEALS

www.WashingtonAttorneyBroker.com/co-broker

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Rather than compete with other brokers, I prefer to co-broker with them. They take care of the yard signs, open houses, and showing houses to buyers. I take care of the complex paperwork.

Read the Buyer Broker Co-Broker Agreement
www.washingtonattorneybroker.com/buyer-broker-co-broker-agreement

Read the Listing Broker Co-Broker Agreement
www.washingtonattorneybroker.com/listing-broker-co-broker-agreement

Summary

Ideally, it is best to consult with an attorney when one is buying or selling property. Most buyers and sellers do not do that, or most wait until problems show up and they are in legal deep water.

Another way a buyer or seller can attorney review is for the broker to co-broker with another broker who is also an experience real estate lawyer. That describes me, James Robert Deal, both real estate attorney and managing broker.

Under my Buyer Broker Co-Brokerage Agreement or Listing Broker Co-Brokerage Agreement, I will co-broker with the Primary Buyer Broker. I will provide both legal and real estate services. I will assist both the Buyer or seller and the Primary Broker.

I can work on a flat fee basis, with my fee payable at closing. I can also work on an hourly basis, with fees paid as we go along.

To be most effective as a real estate transactional attorney, it is important to understand not only the letter of the real estate law but also the customs and rules of the real estate profession. That means that a real estate attorney can be a better real estate attorney if he or she is also a real estate broker.

As attorney, I can charge buyer, seller or broker by the hour. Or I can classify my work as broker work and charge a flat fee payable at closing.

Examples – When You Would Utilize These Co-Brokerage Agreement

Example: buyers, sellers, and brokers should use this agreement when the transaction clearly involves legal issues. Attorneys are expensive, and so buyers are reluctant to utilize their services. When buyers and sellers engage an attorney, they often do so too late in the process, when the damage is already done. Buyers and sellers often select attorneys who do not understand broker customs and rules.

Example: Buyers and sellers should employ an attorney-broker co-broker if seller financing, wrap-around provisions are involved. These transactions must be custom drafted.

Example: Buyer, seller, or broker would use this agreement when the Buyer and seller are entering into a lease with an option to purchase.

Example: Buyer, seller, or broker would use this agreement when the Buyer and seller are buying or selling commercial property or a business opportunity.

Example: Buyer, seller, or broker would use this agreement when the Buyer and seller are buying or selling on a short sale.

Example: Buyer, Seller, or broker would use this agreement when the Buyer and Seller want to do due diligence and avoid any potential for liability.

Example: Buyer or seller, or broker would use this agreement when the they want the feeling of security that comes from having legal review from beginning to end, with no fee until closing, for example when the buyer or seller acts as representative of a trust, corporation, or LLC.

Advantages to Brokers

Brokers earn their commissions by marketing property, not by writing legal documents.

Broker’s have errors and omissions insurance, but it may not cover them when they act outside the normal scope of brokerage, when they answer complex legal questions, or draft documents other than MLS attorney drafted and approved, fill in the blank forms.

Having an attorney on board from the beginning can help a broker secure a listing. Sellers will take a broker more seriously if the broker is part of a team that includes an experienced real estate attorney-broker. This is especially true for brokers who are new in the business.

And having an attorney-broker on board can help a broker to sleep easier at night.

Should You Involve a Lawyer? And When? And Which Lawyer?

Most residential deals close without a lawyer even looking at them. The MLS forms have improved greatly since the days of the one page contract.

Usually there are no problems. But there are always questions. And sometimes there are problems. Having a lawyer involved from the beginning can avoid problems, reduce tension, inspire confidence, and smooth out the process.

Most buyers do not get an attorney lined up in advance of sale. When something goes wrong, they seek out a lawyer in haste. It might be too late to undo the damage. The lawyer will charge a large fee just to get familiar and stay familiar with the transaction.

The Seller or Buyer might pick a lawyer who does not have sufficient experience in transactional real estate law. I took all of the real estate classes available back at the University of Washington Law School. My law school did not teach transactional real estate law, MLS forms, MLS rules, or broker customs. We discussed obscure rules which never come up, such as the Rule in Shelly’s Case or the Rule Against Perpetuities.

I can charge a flat fee payable at closing. Or I can charge for my work at $300 per hour to draft documents. The thing I do not like about charging by the hour is remembering to enter my time into Timeslips.

When I charge a flat fee payable at closing, I usually make more money. Although sometimes the deal falls apart and I make nothing.

That’s good for both attorney and client. If I make more money, I can afford to spend more time looking at all details of the transaction – from the very beginning to the very end – ahead of time instead of in reaction to a problem which has arisen.

Getting a lawyer lined up in advance is like having insurance – just in case the worst happens.

With quick decisions being made, even ordinary sales are getting more complex. Brokers generally appreciate it when their clients engage an attorney, especially one who understands MLS rules and broker customs.

According to the Washington Supreme Court the sale of real estate is the practice of law. Google for Cultum v. Heritage House Realtors, Inc., 103 Wn.2d 623, 1985. The sale of real estate by real estate brokers is “the authorized practice of law by non-attorneys”.

So  brokers are  limited practice lawyers, like escrow officers. But both escrow officers and brokers must stick with standard, attorney-approved, fill-in-the-blank forms.

For a person who is both a broker and an attorney, it is completely appropriate for him to accept his payment at closing as a real estate commission instead of taking payment as a legal fee.

I am also a broker. If I am compensated by receiving part of the commission as a real broker, it is equally appropriate.

If I am being compensated as a broker with a commission, this does not necessarily reduce the primary broker’s commission. My commission can be separate and in addition to the regular commission.

And Why James Robert Deal, Attorney-Broker?

I am a managing broker, so I also know the MLS rules and broker customs. I have written, reviewed, or closed hundreds of real estate transactions. I ran an escrow department in my law office. Then I ran a mortgage company for five years. I do only commercial loans. I have handled tax-deferred exchanges, foreclosures, and bankruptcies. My wife is a broker and assists me. I am an experienced landlord.

In modern real estate, brokers work in teams. As an ancillary co-broker I will be working as part of a buying or selling team which includes the Primary Buyer Broker and me as Attorney-Broker.

From the Buyer’s or Seller’s point of view a co-brokerage arrangement eliminates the hot flashes that come when they receive an attorney invoice for a huge sum. Buyers generally prefer to pay at the end of the process for a job well done than to pay by the hour for work which may not result in a job well done.

From my point of view, this arrangement is advantageous because it eliminates the inefficiency of having to bill by the hour. Under this arrangement, the Seller or Buyer and the Primary Broker will feel free to use more of my time, as much time as needed, whereas when I bill by the hour, buyers and brokers are hesitant to call me when they should. I will stay better informed regarding the transaction. When I am paid a flat fee at closing, I generally collect a larger fee than when I work by the hour. This means I can afford to put more time into advising the buyer or  seller and the primary buyer broker. I can deliver a better service than if I work on an hourly basis. And frankly, I enjoy the process more.

Services to be Provided

As ancillary co-broker, I agree to perform the following work:

I agree to assist the Buyer and the Primary Buyer Broker in obtaining the best price possible.

I agree to provide comprehensive legal review of all documents involved in this transaction, to advise the buyer and the Primary Buyer Broker regarding legal issues, and to respond and communicate with the seller’s lawyer if the seller has one.

I agree to review and advise the Buyer or seller regarding the purchase agreement, the title report, the Form 17 property condition disclosure, all offers and counter offers, all inspection documents, and all closing documents. I will follow the transaction all the way through from initial signing to closing.

I agree to draft all offers and counter-offers.

I agree to review and advise the Buyer or seller regarding the purchase agreement, the title report, the Form 17 property condition disclosure, all offers and counter offers, all inspection documents, and all closing documents. I will follow the transaction all the way through from initial signing to closing.

I will assist with multiple offer situations. My commitment extends to all legal issues directly related to this listing and sale. I am available on weekends for  items that cannot wait until Monday .

However, I am not agreeing herein to appear in any suits, arbitrations, or mediations. If conflicts arise, I will try to help resolve them without litigation. If litigation does arise, I will help the Buyer select a litigation attorney and help the litigation attorney to gather needed information.

I will work for Buyers with the assumption that they want to buy. If a Buyer decides to back out of a purchase agreement after signing it, the Buyer will have to retain another attorney to help the Buyer do that.

eXp Realty carries errors and omissions insurance which covers me as a real estate broker. I carry errors and omissions on my own which covers my work as an attorney.

Read the Buyer Broker Co-Broker Agreement
www.washingtonattorneybroker.com/buyer-broker-co-broker-agreement

Read the Listing Broker Co-Broker Agreement
www.washingtonattorneybroker.com/listing-broker-co-broker-agreement

 

 

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