In North Carolina, real estate broker's have broker's licenses. These licenses only allow the broker to "broker" a sale representing one or both of the parties to the transaction. The law is explicit in saying that this license does not cover practicing law, performing appraisals or completing home inspections . . .you get the drift, it only covers practicing real estate. The laws however expect the broker to be knowledgeable on all these aspects of the transaction; many times holding the broker LIABLE.
But this is where brokers, brokers and great brokers are separated. I tend to count myself as a great broker . . . humbly of course :).
The law requires this knowledge and the law actually has your best interest in mind. Just because we are not licensed in these fields do not mean that we should not have an overview concept of the different aspects of the real estate transaction. If we did not, how are we able to close the deal? Best yet, Why did they hire us!!!!
Great brokers must have knowledge of the following and of course know competent individuals with the property licenses or credentials to take it a bit further for the transaction.
I came up with a list in about 5 minutes of the areas where I have been forced to be educated in after practicing real estate for the past 14 years:
1. Local Codes and Ordinances - Brokers are asked questions all the time concerning can I do this or can I not do this? A broker must be able to readily refer to the local ordinances (many times posted on the web) to help the consumer answer these questions.
2. State & National Laws - Take for example, the now in effect Dodd-Frank Act. It actually has some reforms to a common financing option - owner financing. If a broker had no knowledge of this, the borker would mislead many clients from the beginning and even worse possibly break US Law.
3. Real Estate Law in General - Remember the old saying "one to buy, two to sell"? Yeah, that is basic martial law concerning real estate. Another example, in North Carolina, even though the attorney prepares the closing statement, the broker is liable for it. How can a broker be liable safely if they have no knowledge??? Exactly, better have some knowledge!
4. Contract Law - We are taught the five essential elements of a contract, we are taught due diligence, we are taught options and rights of first refusal . . . all contract law. Now again, a broker can't practice law or draft an agreement from scratch, but a great broker must have knowledge of it!!
5. Home Inspections - We all recommend home inspections, it's just the smart thing to do. But could you imagine a broker not having a clue of what the home inspector was looking for, how to read the report or ask for clarity from the inspector?? Yeah, a great broker has to know a little about this too.
6. Appraisal Standards - Most if not all transactions involve an appraisal. A great broker must stay current on appraisal laws, standards and practices to aid in the overall transaction. If I have no knowledge of how appraisals work how can I ask the buyer to purchase one (when there is no bank involved)?
7. Land Use Approvals - A great broker understands at least an overview of the process of gaining building permits, septic permits, etc. Brokers are the first person asked by the buyer what do I have to do to build? Not to mention, listing a home and exploring if there were any non permitted additions added to the property that a broker must disclose.
8. Insurance Principles for Area - Brokers can not write insurance nor should brokers answer technical insurance questions. Although a great broker must understand the overview of flood insurance for example. A great broker also has an insurance agent readily available to answer those questions that require a license.
9. Surveying - Properties ideally should be surveyed before list and of course before closing. A real estate broker must be able to read surveys effectively enough to find issues and problems with the property . . .I must disclose anything that should have been reasonably known!!
10. Pest Control/WDIR - Many types of loans require a WDIR (wood destroying insect report). A great broker knows this, knows where the pest company will be looking and some knowledge of what to do when the termites are found. A great broker should also know about the area's native pests (water bugs, spiders, etc.) to assist their clients.
11. Neighborhood Historian - A great broker is like a storyteller when it comes to his area. Could you imagine a great broker selling a home that historically floods?? No, a great broker would remember this and advise the buyers of such!! Plus many people are history junkies (I know I am) and just love to hear stories of yesterday!
12. Technology - Could you imagine a great broker not being able to navigate the internet in their daily work, not being able to communicate via email, text or skype, not being able to search their MLS looking for a property? No, a great broker could never work in that way, a great broker should be comfortable and confident with technology!
13. Photography - Many brokers take their own photos for their listings and that is fine! Some hire photographers and that is okay too! The point is a great broker whether pressing the shutter button or writing the check understands what makes a good real estate photo & how to show the essence of the property being sold.
14. Local Vendors/Professionals - Many buyers are out of town, can you imagine a great broker not being able to introduce their client to several local attorneys or mortgage bankers? A good broker must know the area service providers that offer extraordinary service.
15. Negotiating - Last but not least . .A great broker has to be able to understand BOTH sides of the deal and how to fulfill each person's desires in the deal . . to actually get a deal!!! More importantly, a good broker understands that negotiations can be FRIENDLY while still doing a superb job for your client.
Again, I came up with this list in about 5 minutes (finding the icons took longer). Can you think of any to add to the list? Feel free to comment or share!
This knowledge is what separates great brokers from the other brokers!
Chris Rackley, President 910.328.5211- Lewis Realty Associates, Inc. - Surf City North Carolina