I really want to pick back up with disclosure mrs. Snell Chapman selling like a produce over week is chapter 7 disclosure is an agency issue because there are lots of things that we talk about with disclosure that sour around do we represent this person do we not represent this person and based on whether we do or don't represent them what do we open up what should we tell them what should we not tell them does that make sense Carrie right that's what this is part of agency so the first thing we have to differentiate and we talked about it yesterday but it's just automatic are we talking to a client or are we talking to a customer because what we disclose to them is going to be very different and you need to pay attention to that because that's all that's about five test questions right there they're gonna be about five test questions built around this idea of what do I tell my clients what do I tell my customers so clients who are they people that we want that we represent that we work for who are customers everybody else so people we don't represent and the rules for disclosure are going to be different because they're going to be things that we would tell our client that we do not tell our customer for example absolutely absolutely so let's talk about the treat our clients everything that's the easy answer if they're your client you tell them anything and everything you know that you could possibly impact their decisions everything anything you know that could possibly impact their decision making it's fair Union for a client if you know he represent the seller and you know the buyer is willing to pay more money would you tell your seller find that information yes absolutely because they're your client and you owe them that information so anything which could possibly impact the transaction from your client standpoint you tell them there are examples of thing to all the offers the who the potential buyers on any relationship you might have for those potential buyers what if the pilot is your cousins you tell your seller that you represent the seller and all that comes from your cousin should you tell the seller by the way this is my cousin yeah because they need the opportunity to weigh out well does he tell me that I should come down on my price because he thinks that's best for me it does we thinks is best for a scope they need to know that information even something as simple as this the intent of the buyer to resell the property for profit if I'm listening broker and I can an offer from an investor in the area who flips houses if was that face flip and flop what are the names of Christina and note yeah their marriage flopped but we know what those products on my flip or flipping and that fall but whatever their names are if do you know that they're behind the property and they intend to resell it for a profit that's what they did it right why would that the information you would have to tell your seller finds you representing of why should they know that why should that be their business it's probably going to be a little awkward Plus isn't it pretty much automatically understood and somebody's gonna buy your apartment and flip it that there's a potential to make money doing that so she can that be information your seller has in case they want to do it themselves you know if you know or you know if you know that an investor is targeted their property and is going to come in and potentially flip that property to make a profit on a ship you mention to them that's what they plan to do with those maybe they go wasn't shocked until where I make my money if I fix it up they should have the opportunity to ask that question and the only way they do is if you inform them that this buyer intends to equipment does that make sense so you owe them that terms another party might be willing to agree to the buyer is willing to pay more money the seller willing to reduce their price if you represent a party and you know information about the other party you disclose it okay any of those things basically anything again that can affect their decision making now that changes in dual-engine see if we go in the dual agency are there gonna be things on this screen which we would not tell our clients give me examples of some ones that you would not tell you're crying if you were in rural agency it's tough it's on here Trudy said time the other party I'd be willing to agree to everybody bring it out because the other party would also be your client wouldn't make so you couldn't disclose that what else the intent killer parties reason for engaging in the transaction you wouldn't disclose what else what else personal notice at all kept it always is other party other party other party right so basically any information about the other party you would not disclose even this intent of the other party to resell for profit because the other party also happens to be who your client and you can't do anything to harm your other client does that make sense to everybody so dual agency definitely changes the disclosure picture just like it takes away advice it takes away a lot of the disclosure obligations to your clients so these are just a question or an example of a test question you might see about this since Susan is a broker affiliate of Wolfpack Realty and I don't know why he worked there but he's representing a buyer Mary who's interested in one of the listings of her own firm which is true Susan is a burger affiliate of Wolfpack Realty she's representing a buyer Mary who is interested in one of the listings of her own firm what kind of an agency is that that is do or agency because you have one firm but to clients does that make sense but the buyer and the seller a representative there's only one firm in the picture circuit should inform Mary of the sellers need to sell quickly do a move out of state is that true or false that's a false statement because Mary I mean because Susan have represents not only Mary but also the seller right Susan is prohibited from informant Mary about the need of the have a quick sale is that a true statement has a true statement Susan must disclose in demolition she knows about marriage and the seller and other broker working with the seller true or false while Susan's your advise Mary to offer lower than list price because the seller needs to close quickly true or false so the only one concentrated Susan is prohibited from informant Mary about the need to have a quick sale that's a good example of a test question that centers around disclosure in a dual agency transaction now notice here's a thing in the question they don't say this is Google agency you got to get used to that they're going to expect you to recognize that it's dual agency based on the fact that there's only one real estate firm involved they'll never say Susan participated in a dual agency transaction that makes it too obvious for you at least in therapy okay well I'll go with that all right now the much bigger discussion because disclosing the clients is pretty easy it's out of everything I mentioned or agency but the much bigger discussion is disclosure to customers to people we don't represent what do we disclose to these people we have a specific phrase or word vocabulary that we use to describe these items they are called material facts material facts are the items that we dispose to our customers not to clients but to customers now we also disclose material facts to class because that what do we tell our clients everything but material facts are in a special category of information with the material facts we dispose even to customers these are people we do not represent but we still owe them disclosure of these items now you to pay attention to these items because this is number one big just thing number two the quickest way to get yourself suited in the real world is to not disclose material facts on a transaction because you're obligated to here's what I want to tell you and it makes a lot of brokers uncomfortable to hear this no matter how long they've been in the business your client is going to hate you for this your client particularly your solar clients are going to want to punch you in the mouth for this because these things that you're disclosing are not good and for them almost always if it's a material fact it is harmful to them for the other side to know it guess what you've got to tell them anyway and that's what makes this so hard to deal with yes ma'am I'll give you bunches of example a bunch of examples of material facts this is only a long discussion here lots of examples okay and that's why it's so important to know exactly what is a material fact because these are going to be things that have been aback him in a perfect world you would never tell the other side because you're giving away something that's gonna harm your own client but the law says you have to are you with me on that alright so the first thing we need to know about material facts is what the rule says about them the rule in North Carolina is one of the strictest material fact disclosure rules in the country because it says that we not only have to disclose the material facts we know about but we have to disclose the material facts that is much more strict like for example I just I'm writing a class right now so if I don't finish it to teach in South Dakota I've been South Dakota for four days and October and one of the sections I'm teaching is on material black disclosure there the South Dakota law says that brokers must disclose facts that are material to the property of which they have actual knowledge so that means if I don't know I don't want I don't have to disclose that is not what the lower North Carolina says the law North Carolina says yes you have to disclose that as you know but you're also held responsible for things what that you sure to have Mountain what that means see you work this is what you could do in South Dakota and what is it what they're trying to avoid you doing in North Carolina if I go to meet with Trudy who's thinking about selling her house and I walk upstairs and I notice a water stain on the ceiling and I don't and and Trudy catches me looking at it and she starts to saying oh yeah we got and I and I go no don't you dare tell me that because if you tell me that I have to do what I have to tell any potential buyers and so don't you say another word see that's what I would do if I was in South Carolina cuz what South Dakota what is the South Dakota law say I have to disclose what what I know and if I can shut that mouth I don't know does that make sense in North Carolina I'm still held responsible for that in North Carolina I see the water stain it's not Trudy's job telling me it's my job to find out because what the law of North Carolina says is not only do I have to disclose what I know I have to disclose what I should have known and the argument is going to be you see a water state you should have known there was a lot a leak and therefore am I responsible for disclosing the leak absolutely you see the difference there it is a much broader more strict law yes sir correct and that's where the what you should have nine comes into you know comes into play what what the what the rule actually says is what would a reasonable and prudent agent have done in that situation so if they have been covered over and there was no visible sign of it you're not gonna be held responsible for that's a hidden defect but what you would be held responsible for and what they're trying to avoid it like I'll give you an example let's say there is an inch-wide crack in the foundation on the outside of the home is that something that if you were examining the property you would have and should have noticed yes well you list the house you never say anything about them the buyer buys the house and they find out later to hell and thirty thousand dollar foundation issue they sue you you're going to be held liable for that because a court of law in North Carolina is in a son because you're gonna say I think there was a foundation issue what's the response innovative but you should have because if you had bothered their little you would have seen that in tried back in the foundation and actually led you to very minimum to get somebody to come look at this and see if it was a problem and you should have been disclosed and after this fire and his fire has been harmed because you did is that does that make sense very erotic of course this yeah you know if it's hid and so this is being sort Angie's operation right if the crack is hidden away underneath the crawlspace so we probably gonna be held responsible for it no because that's not reasonable that a real estate broker would be able to find that sort of thing does that kind of answer your brushes now obviously it doesn't reach some gray area anytime you say something like sure to have known there's gonna be gray area there but we're really talking about obvious signs of things don't ignore very obvious signs of potential issues that's really what this boils down to yes ma'am what so yeah give me older for detail which I can see the crane sure well things that are having an inspection are you looking at an inspection report would you see the inspection report okay so I'm asking you have you seen the inspection report so then what would you have to do with any items that showed up on that inspection of course disclose that's exactly right okay so I'll use it your I'll carry on your example of an inspection report here's what you could not do in North Ghana if you were a listing broker and a buyer get an inspection on a property you had listed and they emailed you a copy of the report said here's what we found we have brokers it'll say how do I want to see that I don't have opened that other is that a reasonable defense in North Carolina no because the law says you're not responsible for it you know but what what you should have known it somebody emailed you a report where should you have done you should read the report so they don't have to give you down the record in hate for it so but if you do that there's a pain infection should you take bags and you know it bedtime you should take the extra step to at least ask what items were revealed you know and maybe not that maybe not request the actual reporter demand the report because they don't have to give you the report but you say you know I'd like to know if there were any items revealed so I can adequately disclose though you don't really know about Lee I don't really want to know but I have to know it's one of those things I liked it I supposed it I'm held responsible for it that's right if the seller has an innovation award under and so this is one of the reasons why I am a huge proponent as a listing broker in North Carolina of having an inspection ones there are a lot of people who don't know how have you done my own when I always had all that stuff to buy would be paying a little blah but here's my point if the buyer finds it after the fact there's a potential I might be held responsible for correct if I have an inspection report done and handed to the buyer and say did what we know about the property have I pretty much taking myself off the hook for having to worry about disclosure of material facts because I've given them all the possible information I could about the property so that they knew about it before they ever even made an offer and especially in this market because there's a thing in this market right now is that gonna steering buyer off no you could literally set the house on fire and funnelin and they're still making multiple offers on we're good they're so competitive right now they can't funding anything so you do an inspection on it you provided the inspection before they're like yeah what do we need to do now but at least you're covered does that make sense yes that's what you know nowhere should have 9/10 goes to right absolutely they're never going to have an inspection done anyway I'm really looking at more toward you know cover my own rear end type thing you know they get the information out there so I can't be presumably held responsible for failing to disclose of something yes sir Oh as part of my listing yep that's part of my list I've been I look list then I listen to property sir but we are selling it as is but as is means as it is right now I wouldn't miss the property where so wouldn't let me do an inspection I would just do something and that's fine that's right but as is doesn't cover the fact that you were supposed to tell them about the problems in advance see that's the thing you have to understand well we've crossed over material facts and about them anymore it's about what it's about all of us and what our responsibility is and that's the disconnect and that's why I say your clients are not gonna like this stuff the little won't you disclosing all this stuff well no I would never decide I'm not going to sell it based on the report I would decide I'm not going to list it they summer for a couple with the factors and so I'm saying you can't give buyers that report you know if my seller sitting you know seven eight you know the seller said to me you know no way you can't give buyers out he'll scare them to death my response would be well if you don't want to tell them we have this problem we have to correct this problem we have to fix it you know I'll give you a perfect example I haven't won here's ago we have the inspection report we have the inspection done and the inspector red-tagged the furnace they went in the crawlspace they did the cover off the furnace and they literally saw a hole this big and the heat exchanger just play they lose them and he's like they didn't say they're glued release falling apart it's got a hole let beginning which could create a carbon monoxide leak which could kill people and so he shut the gas off to the furnace and said this can't be operated and so I told the seller us and we for blood is the furniture and I'm not doing that I said what that's fine but then we have to tell buyers that they're gonna have to replace it we're not doing that either I said we're doing one of the two yes we are one of those two options has to happen and even when you're doing us a listen I will not list the property without even fixing this or disclosing it because that's what steak all requires me to it didn't require you to do anything that's what it requires completed it and so you have to make decision ultimately about whether the our union will have real estate broker liscus for you you know and so ultimately you can only been doing was replacing the furnace but you can create some tough conversations but here's the thing what's the worst case scenario barriers I learn it slide they take the rent a ghazal thing we don't tell anything the buyer buys it without an inspection they move man and the whole family dies of carbon monoxide poisoning of course it went after them and they should so you have to be real careful with that though is that making sense this idea now here's what you want to be careful on test don't go too far that's what y'all like to do on tests because I'm cautioning you so much about we do not have a responsibility to disclose all material facts because the truth is we can never know all material facts there are always going to be things that are going to be hidden from us not intentionally but they just didn't but like for example is there an electrical short in this life right here that's the right answer we have no idea we don't think there is because there's no obvious sign that there it's correct there's no smoke or there's no sparks the lights function and it goes on when you turn the switch on it goes off when you turn the switch off there's no obvious sign of a problem that doesn't mean there's not a problem there are you following me on that I would that would be held responsible arm burns the building down I'm gonna be all responsible for that because that's a hidden defect does that make sense heroes have to be very careful on test with these words like all workers must disclose all material facts that's not true brokers must expose all material facts that they know about or should have known about not hidden ones or ones that don't have obvious signs okay yes sir for closers before often before awful close they really matter that much before offer the buyer needs to know about it before they make an offer on the property alarm is reliability license no statute of limitations on these things so technically if they find out about him many years after the fact they could hold you responsible like in the case of you know marketing one of the common ones that goes on forever one of one of the big material facts is how many bedrooms a septic system perch for if somebody find out ten years later that you sold it to them as a full bedroom house and then they find out in septic system only purchased for three bed friends they can sue you for the loss in value of the additional bakery there's no lemon a notice you defend yourself in court and I that's it I mean you know they gotta make the argument that you should have known and you're gonna make the argument no I reasonably should have known and what I will tell you is the courts are pretty reasonable about what you should know and should not have been you should not enough if it's an obvious sign and they can prove that there were obvious signs of it and you're probably gonna be Hillary strong although I should probably not me of course of course and there many people who are going to try to come me you know you should have told me that based on what you know what what were the signs that you say I mean because it's not about what I didn't tell them it's about what I didn't tell them and that also had signs where I should have told them you know why or example they move in the house a month later their HVAC system blows up then they say you should have told me the HVAC system was bad okay based on what every time I went in the house is 95 degrees outside 72 degrees inside what sign do I have that there's an obvious problem there's this there's no noise coming from the system it's functioning correctly if you see what I'm saying you would never be ill responsible for something like that because there's no obvious sign that there is a problem now if you went in and show the house and with 80 70 degrees in there is that an obvious sign or there's a big block of ice on the HVAC system outside I've got an obvious sign that something is potentially wrong and you should be good and people say to me all time well I'm not an HMAC person I can't tell them there's a problem with that system no but you can tell you suspect there's a problem with this system you disclose what you know does that make sense so if you suspect there is a problem you got two choices either have it investigated to determine exactly what the problem is or simply dispose I'm not certain what's going on but I believe there's a problem with the HVAC systems do an anxiety you wouldn't write do you have a record the buyer is trying to sell them most likely Changez it depends on the market like right now most sellers are not doing repairs those sellers are not fixing anything and the reason is they don't have to because the buyers are so ferociously competing that the buyers are willing to accept it without the prepares being made and but again the buyer still needs to have the advantage of in fact it's probably material package cause is probably more important right now than it ever has been in my career because we know in advance that most sellers are not gonna make repairs right now you know in the past you go under contract to buy out an inspection if they found out for example that the water heater was leaking it was very likely that the seller was going to replace the water heater because they didn't want the buyer to do what to back out the long way I wanted to take the clothes well right now you've got 15 other offers on the season you really care if this buyer backs out no you look at the buyer as disposable right well just like back we got three other you would have offered more money that you have why do we care what you do so take it or leave it but right there that that's where it becomes even more important whether you did your job about disclosures or not because that's exactly the buyer is going to start howling about well I never would have offered this if I had known that the wire here needed to be replaced so right there the balls back in your court did you do what you were supposed to do with disclosing it so now that comes back to where they're obvious signs of problems with the why are you following me on that okay take it off I'm kind of surprised we're not at the point where we're required to have an inspection if you use a real estate broker because here's the interesting thing our sellers required to disclose material facts no we when it's when it's just a behind the seller its caveat emptor right let the buyer beware this requirement to describe material facts falls on real-estate brokers so your theory there's a fizz bottle have to disclose anything they do not but if they hire a real estate broker all of a sudden these things become required disclosures so there's some negative trade off the hiring comes to engaging our services because now all of a sudden you as a seller open yourself up to Lisa stuff and there have been times and I've seen and I've sort of giggled you don't you're going to learn that there's a sellers disclosure state it's the most useless document in the world because they don't have to disclose anything on it they can check no representation they can literally plead the fifth on the thing all right you can say yes there's a problem though there's not a problem or didn't check no representation or generally speaking that you have no representation what does that mean probably something wrong most of them right you know come on but I haven't seen times where you look at HVAC so no representation so you know what I'll ask the broker though what's the problem with the HVAC system because I know they have to tell me the seller doesn't but the broker does are you with me on that ah so not all material facts with the reasonably no ones there's four categories of material facts so these are things that if they fall in these categories we have to disclose them to customers third parties they're one of the first ones are the most obvious ones the facts about the problems the roof leads the HVAC system is bad there's a crack in the foundation wall there's so much issues there's a pest infestation there's flooding just standing water in the crawlspace hole in the roof all those things fall under this category of facts the property itself these are the most obvious ones so I'm going to spend the least amount of time talking about these okay everybody good with me so anything any negative problem with the property itself is a material fact if you know it or you want should have Mehlman yep Norton for these things well you just again looking for obvious side so if I go in there and it spot I asking Peter the information and I don't say well I'm doing it but I'll say hey if I'm trying everything now realistically it's because I have a suspicion that there might be some problem with the air conditioning system so if I ask him to turn it down it's still hot by the time I leave I'm gonna say hey she said just I'm too can also do many problems with the air conditioning because it seems warming here still to me you see so I'm doing that investigate it's like I'm private investigating the plunge snooping right and I'm trying to see if there are things that I may potentially need to be disclosed and with the probably one of the first things I always ask the celery did it show me around the property and I start snapping pictures and asking questions about it because I am looking for potential material facts I give it's rude when I'm talking properly the first time and when I walk in a bedroom I'm open in every closet door and not only my open I'm open it and I'm believing it when I stand and talk to the seller for a minute and then I'm glanced back over I want to see the back doors where I left him because if I notice on one side of the house that every single one of them starts doing this number on his own they were done back here with me their open closet doors or bedroom doors and and you walk away from them in 30 seconds later you the ghost closes it for you that's a sign of something what is that a sign of the Holy Ones done what if so which is not necessarily a material fact but is it a sign of a potential material fact like a foundation issue right and so those are the kinds of things you look for then you get the opposite problem you have to snatch them open because they all stick right that's also a sign of a settlement issue you know we've all had this experience if you walk through enough powder you walk across the floor and you're like whoa and I'm sorry you know you feel that drop in the full war all of a sudden you know that's a potential settlement issue and so therefore it's a potential material fact that you might have to disclose you know it's hotter it's cold up there and I've been on risking presentations when you can see your breath well maybe they just like it cold but ask them to turn the heat up while you're there so you can verify that it actually does work because those are the kinds of things that you would be held responsible for I just talked to an agent last week who got herself in the mist and she was calling me hoping I would like tell her the some magic words that were gonna get her out of trouble I said I'm it's time to break out your checkbook because she had a listing she listed the property how so well okay well instead they come on city water houses all well and the buyers you know have done an inspection from the property had a water inspection done and they found that the water has extremely high nitrate levels and it's unsafe for drinking and the property well that's problem is it not now that's not a problem that you'd go links but the real estate broker to be aware of I mean that's not the kind of material I mean how is she gonna know she's not carrying a nitrate test kit around in her pocket right and so and that's so this is I should relays the sort of man said that's a gimme that does not sound like something you need to worry about to me from a disclosure issue and then she said the thing that led me to start unraveling this story we're going to get the truth right cuz here's what she said I don't know why such a big deal anyway because they've got the one faucet where it's just fine bad girl how is there one faucet where it's just fine where's the water at that one faucet coming from and she's up Oh in the sink there's a special drinking water faucet on the kitchen sink I said no wait a minute hold you telling me that on the kitchen sink there's two faucets she said yeah I said why are they two faucets she said well one of them says drinking water I said it has a damn sticker on it and she said yeah I said then what does that tell you about the rest of the water in the house you can't what you think you need a bit slower than that door bottom as I want she's like well I didn't tell em I whoa you should have because it is it not a pretty odd thing to walk in and see two faucets on a sink and one be labeled drinking water the next question I admire what is the sludge coming out of the other faucets then and what it wasn't there was a filter it's actually at one faucet and it had been put there and and she and I said did you axis owners about it she said well idea once the buyers found the nitrate problem I said what the sellers say she said oh yeah when we had the house built they noticed that we couldn't get the certificate of occupancy because the water wasn't safe to drink without putting the water filter in so we just put one in for this sink and here that we use in the kitchen and that was exactly the buyers complaint the buyer said we brush our teeth and the bride was honest I and I think this as a parent of four lady pretty they said my dog's drink out of the toilet well guess what my new tune I got one who knows I flush before let's go water so you know that would be a concern out of energy and there are and that's the ward about their kids the kids are gonna drink out of the hose in the yard that if me you know all the all that water you have to be concerned about if your buyer that drugged us and I don't want them I be concerned about that too and the truth is there was a very obvious sign that you just ignored and she saw what I do doesn't break out your chequebook and she said wondered why I said one or two things needs to happen you need to need to reimburse these buyers for all the money they spent about buying this house and let them walk away oh you need to put a whole house water filtration system in here and get rid of the nitrate problem and you need to figure out which one makes them happy and I said how much does the filtration system she's at $12,000 I said how much does the buyers spend kind about his property she said $3,000 so here's what you do you offer them their money and she said well my sellers you're not gonna get I said I didn't say you already get this point the server's give them back you make the sellers fault you offer to give them their money back if they would like a walk away from the purchase she called me back the next day she said they still want to buy it I said lutely just bailed you out you did the right thing Bob because now down the road if they come back and try to hold her responsible all she's got to show is that email saying one listen I tried to fix it when I found out my mistake guys offered them their money back they chose to buy the property anyway is she also a mountain yes they bailed her out you see what I'm saying but she put herself in potentially bad situations she ignored a very obvious thing I said did you not think something weird about the second yeah but I didn't I didn't want to be rude mass law says you got to be rude ass I was they got to the democracy based on that filter that filter had to be put in and basically it had his clearly labeled as drinking water so that that was the only one that was used for consumption and apparently that was enough to get to see it yeah so there's a kind of in your uninterested so there's a second category mature facts because there's four categories this is facts relating to the property facts relating through property which could fit its value what it's solid for the guy affect its value so zoning is a material fact covenants could benefit what somebody G willing to pay for it yes so that's a material fact so he was really a serious question we have we have to disclose material facts that we know about or reasonably should have known about and I just heard that covenants were material facts what does that say to you the listing broker and the property's got permanence on it what should you be doing with the covenants giving them to any potential buyer before they do what before they make an offer on the property covenants our material value it makes sense come on future Rhodes would that be a material fact absolutely so you're obligated to inform buyers about the potential for future road development and obviously you can't inform them to better Road that nobody's even thought about but if the DoD's already got a set plan with a map that shows you where the thing is going to be located do you think that's something you ought to be given to a potential buyer yes no question no question about it and again these are not things that your seller is going to want to dispose because they could harm their negotiating position obviously you tell a buyer hey 540 is the median front yard here are they gonna be willing to pay more or less for the property yes but it's still material cat I'm gonna get to kick achieve this one your clients really hate now this one your buyers made much more than your sellers the ability of my client to close to complete the transaction if I represent a buyer and they want to make an offer on a property and I will keep them and say have you pump joy here you can't afford this well we just wanted to offer and see what we can give it forward now I'm obligated to present that offer no mistake I'm saying you cannot kill that client I'm not going to submit that off who do you work for the client because they want you to submit the offer you something y'all what are you also going to tell the seller as you submit the offer me here's my client Oliver they cannot afford to purchase it now is your buyer gonna want to say that no but you have to and here's how I know you can't afford it I see when the qualified for this is $300,000 or more they're qualified for and they told me they don't have any cash they can't possibly close and that's what I'm gonna tell yourself cuz I'm obligated to it seem god it seems like you just say we're not submitting this but you can't be though you have to submit it what else I said now I'm gonna tell them in advance and say listen I don't submit it normative but I'm also going to tell them you can't afford so wanna just not waste all our time but if they want you to you have to so the listing agent yeah you have to be that one they can't close they can't afford it yeah I would just simply say to my knowledge they don't qualify for this map so why not you know there's their offer to my knowledge they don't qualify do I require in the Bayern no but the seller mind the seller might ask for that well and you as a buyer's agent could easily have that as a requirement before you would work with a client to make a great amount I'm you know I only work with clients who I know are approved so you know we and honestly I don't recommend you ever work with a buyer until you know they're approved anyway what are you doing I mean look at the - you know they can afford to buy the thing aren't you just kind of like wasting everybody's time yours there's that I mean with this balance they don't know what they qualify for they don't know what they can afford they haven't had that conversation with somebody that they really they're guessing you know so I think that's a reasonable thing not like it may be hey there's a good way to present here's how I presented device I say listen the last thing I want to do is waste your time I do not want to show you $300,000 houses when you only qualify for $250,000 by the same token I don't want to show you $300,000 houses if you find out you qualify for a $400,000 house and that's what you'd rather be in you either way we've wasted your time so there's no way you can buy a house without working through the qualification process that's just all you can get that out of the way so we're looking at the right thing from the very beginning that's the way I would present it for Obama all right everybody deal with this what about from the solar side who the seller had an inability to close what if we find a title issue who's hanging in the middle to your clothes what would you have to do not a critical until they need have to notify what the other side that you can't work in close and close okay everybody good on that that's a third category material fact and then the last word anything that's of special importance to a buyer basically a buyer can make anything that's not already a material fact in material fact by simply saying this is important to me you know for example how that buyers for me say before say I did not want to subject up I don't want to be on the second accessible you've had nightmare experience with them before and I don't want one now personally I think that's kind of a silly outlook given how many properties it eliminates that's not my problem today every buyer have a right to say that absolutely now normally a septic tank is not a material fact there only be a material fact yes it was an issue with them same UK does that make sense very erotic but because they specifically made that of importance to them it just became a material price so now every probably I show um I need you to disclose whether than I have septic tank because they made that a special point of importance for them they can do that so they're ready doing these categories material acts all right make sure you disclosing all material facts that you know about or reasonably should have known about there are couple things that the state says our material facts just because they're there even if there's not a problem with them they're material facts polyethylene pipes are an example of this polyethylene is a type of plastic that was very popular in the early to mid 80s for plumbing supply pipes it has been shown over time to fail this looked this is what it looks like it is a great plastic not alright plastic is probably butylene but that if you see great glass that you should suspect that it probably is poly butylene and the same go with Carolina says that's a material fact whether it's currently leaking or not it will and so therefore with you if the house has probably be Tulane and probably has Paul doodling you disclose that just the material back yes then is there certainly they stopped using poly butylene in 1992-1993 ish somewhere around there for the most part you can just open the crawlspace Gordon glance under sometimes you can just stop looking on the sinks like you can look under the Saints and see where it comes out of the wall and see how it's stuck you know it's stubbed out if you see that gray hard plastic it's probably poly butylene because most PBC would be white in color and then pegs is a flexible plastic you know which is the more the more common currently you see that mostly currently it's a text copper has fallen out of favor not because it's bad it's actually still the best but because of cost copper is exceptionally expensive yeah an older home that's plumbing copper that's a good thing you know but most of them now in pumping pits even though some of your high-end homes you see in some high-end custom builders plumb with chakra now and used cast-iron drain pipes because they're quieter and you know more reliable at least cast-iron drop drainings not necessarily the more horizontal drains they'll use PVC for but how many of you've ever flush the toilet upstairs if you can hear the water running down the wall right you know so in high-end homes they don't want that so they've gone back to putting cast-iron draining products on the walls because cast iron is very quiet you don't hear that water falling sound and the laws yes yes if your honor well you have copper you know then on the water it can deteriorate the copper it can leach when it deals out of the copper and that sort of thing so well water is much more harsh on anything because you know you don't know what the mineral contents won't be so well water tends to exacerbate any kind of any kind of problems another thing that the state says it's always a material fact is something called synthetic stucco if you stucco is like when you don't see wood siding you know if y'all see siding up sometimes you see a black finish that you're usually stuck oh it's a concrete finish and she's got some kind of a texture to it it's kind of rough feeling you see it on a lot of commercial buildings for example well most stucco you see in North Carolina is of a synthetic variety it's fake real stuff though is not a problem real stucco is a concrete finish on top of concrete so the building is constructed out of like concrete block for example and then they put a decorative finish on the outside of it that's real stucco no problem there whatsoever the problem is some people like the look of stuff over they don't want the expense of building the structure out of concrete so they build a wood structure and then they put this little skim coat of concrete on the outside of it because it's pretty the problem with that is you get cracks and that stuccoed over time and water gets inside those cracks and what kind of wall is behind there wood and then water gets trapped behind there and it becomes this big cycle of rot wet rot wet and then when you file it off you see something that looks like this or much worse yeah so if this and so here's what I always tell agents if you want to know that stupid stuff though as far as disclosing it on a transaction all you're going to do is walk up and do this if it sounds like the drum like it's Hollow that's a synthetic stuff go alone if you hit that and no noise comes back you got a sore hand that's a real stucco wall because that's concrete and you don't have anything to worry about that suppose this is not common in our area thankfully on residential properties it is really common on commercial properties on residential we don't see much stuff like commission governor's without their their graduate things that are not material facts these are going to show up on it says but there's a lot of people make the assumption that they are material facts but they're not the presence of a registered sex offender is not a material fact now let's talk about what it means when we say something is not a material fact this is not an old off switch it's not you know material that kind of disclosed not a material fact never disclosed until fact expose not a material fact never disclosed yes material fact disclose not a material fact means it's your option whether you disclose or not I am NOT saying you cannot disclose the presence of a registered sex offender I'm saying you don't have to there's a difference there does that make sense now let's talk about why you might not want to anything that's not a material fact you're not required to disclose but if you choose to you are required to be accurate so when you make an optional disclosure you are putting more responsibility on your shoulders but you're basically taking something that you didn't have any responsibility for and now you're taking responsibility for it being accurate does that make sense for us so I would stay away from this if I were you if somebody asked me if there were sex offenders nearby I would simply point them to the sex offender registry and let them look for themselves because it's not something I'm required to disclose does that make sense just kind of don't put something on your shoulders that you don't have to because what if you give them the wrong information then you're responsible for that incorrect information so be aware of that everybody good only out of it this is not a material fact okay those are things that are not material facts we probably stigmatize properties the house is haunted that it's not a material fact whether it is or not you don't have to tell I don't know how you tell me or know anyway someone died in the property that is not a material fact it might be something you want to know it might be something your buyer doesn't want to know but it's not a material fact even if somebody committed suicide in the property even if somebody was murdered in the property that is not a material fact I actually did an article about this recently about three years ago the piece of land in Chicago that John Wayne Gacy 's House was on at one point in time not something y'all are young and government John Wayne Gacy is a very famous serial killer he owned a construction company and we finally got caught they found that he had what was it like 30 some corpses buried under his house and the crawlspace so the property was literally a graveyard where all these people were buried and the city tore the house down but the land state bacon four years of use years well that land was resold about three years ago and there was a big debate about whether or not because the city did not disclose to the buyer of the property that there have been criminal activity on the property on the city's response elsewhere we don't have to because it's not what it's not material fact it's not material fact who they have disclosed that they had warranted yes but they did not have to do is assign material facts so all of these things are just what we call stigmatized property they are not required disclosures you can't disclose them but be very careful make sure your if you choose it everybody hurry up with that good all right let's do this I want you to take your phone out we're gonna do a little game here on something called cook food now don't put in this quiz number that's on here because it's going to be a different quiz number but take your phone out or computer or whatever you got and you're gonna go to that web address up there complete dot I T I'm gonna leave it up there and I'm gonna try to get it loaded up over here and it'll probably actually to create a little user ID yeah I'll get you the game in in just a second let me get in you gained and it changes for whatever reason it's not supposed to all right your game pan is one 308 or 95 also monkey well it's giving you random nicknames by the way like fuzzy go the names of them came I'll protect the guilty all right every six at the end the rest of you perfect seven not working [Music] [Music] you are reeling this that's not you know this you are redrawing yes and the password is Pam school capital P capital S was main pressure book library thank ya okay I don't even follow along the questions well what we got all right so you're just going to read the question and you're going to answer it give you four choices on each one the five questions total well that's your number one which of the following most likely we just got as a material fact in North Carolina when taking a listening so which of the following most likely describes a material fact in North Carolina when taking holistic grid would be foundation issues where many interior doors will not close blue would be missing insulation in a far corner of the attic gold would be a slowly leaking hidden crawlspace pipe where green would be an electrical issue later a deal by renovation work which one is most likely to be considered a material fact looks like everybody's answered there we go so the good answer is red foundation issues where many interior doors will not close and a couple of you chose gold here's what's wrong with golden survey slowly leaking his crawlspace pipe remember we're not required to disclose all material facts were required to disclose those that we know about or that what we should have known about does that make sense for everybody and if it's hidden there's no reasonable way we shouldn't have known about it okay let's see you did the test on that one classy new to ever that is is that quickness to answer that one correctly which is true the license is showing a buyer client one of her firm's own listings which is true of a licensee who is showing a buyer client one of her firms only listings written by upon should be told why the seller is selling food the buyer should not be told any personal entering about the south no the seller should be told the buyer client needs a quick purchase or drain the buyer client is owed all confidential information about the seller which one would be true of the licenses showing a buyer client one of her firm's own listings all right blue is correct and the most of you got pulled on that one the virus should not be told any personal information about the seller why is that what kind of agency we talking about here this is dual agency it says a buyer client writes that we're client means we represent the buyer and if we're showing one of our firms on listings then we also represented the seller and so therefore no personal information about either one should make it back to the other that makes sense they're like okay good all right glass can do is start out front ugly especially working concern where do the following should I listen agent disclosed to a buyer represented by another firm which of the following share a listing agent disclosed to a buyer represented by another firm read at a registered sex offender list lives just down the street food the seller wants to sell because they need to pay tuition no a neighbor plans to build townhouses next door which are ugly or green that the seller would accept fifteen thousand dollars less than the list price most of you got it right it is gold the neighborhood plans to build sound lines next door which are looking green through some of the for loop which of the following Trinity a listing agent who does a listing agent represent the seller disposed to a buyer who's represented by another firm so what should you tell somebody you don't represent about somebody you do represent so green you would definitely not tell them that the seller would take one less money okay and you don't tell them the red one the sex offender because it's not a what it's not a material fact the only one of these which is actually a material fact and it's not because they're ugly it's just that they plan to build what next or townhomes that is something that could impact the value of the property and therefore is a material fact and so it must be disclosed we have down our alright maiik sable has taken the classy meat must have got that one wrong because they fell back in the pack here and exclusive buyer's agent knows that their buyer can't get along what should they do an exclusive buyer's agent knows that that buyer can't get along what should they do grid inform about apparel offers can be presented on their behalf would advise sellers not to accept offers from this buyer gold present offers up a half a buyer without mention of the loan or green and form any sellers or listing agents of the buyer time status so what should we tell the seller about our buyers you can't get along there we go most of you guys right and for many sellers or listing agents of the buyers long status a couple of you said present the offer without any mention alone remember the ability of your client to close is a what it is a material fact so it must be disclosed to the other side read inform the buyer that hello offers can be presented you're not there mama you know I'm telling what they can and can't do and you still present the offer from their behalf because they're your balls blue and my sellers not good except I always was fired but here's what's wrong with that the word advise you don't advise the seller because you don't represent the seller right you don't tell them you shouldn't accept this offer and you simply say my client can't close on this contract and let them decide whether or not they should accept the offer okay so Green is the correct one they're believing the next one is a long one which of the following statements is most accurate regarding material fact disclosure in North Carolina we read brokers must always disclose all material facts blue sellers must disclose all reasonably known material facts though brokers must disclose all known material facts or green brokers must disclose all reasonably known material facts which statement is most accurate in North Carolina whoa look at the split green is the correct answer brokers must disclose all reasonably known material facts red is the one I cautioned you not to be too hard remember and then funny I can tell you exactly something you still do it anyway right we don't disclose all material facts why not because we don't yet know a little about all of them they're always going to be ones that are hidden or unknowable or you know there's just no sign of them so it's not all now become what you put those roses must disclose all a no material fact that's not strict enough see red is too strict it's like the free bed right red is too strict Gold is not strict enough because those just said we always tell what we know the truth is we tell what we know plus what we were sure that none and the closest to that is the green over there the green over there they're tricky material five questions are tricky makes them tough all right so we'll see who the the winner was here also monkey took the lead on the last questions around without a here's our winner and with bold of and maggots able quotes I like it matter so whoever also monkey was you don't want to I was going to ask the class for whoever won but he didn't want it so you know that's not that's not all right y'all we're doing that I think it's childish but it's fun that's you know it's fun to be something like that to kind of break it up a little bit alright so we've got one last section to cover here well I would say a quick glass break and we'll come back and we're going to talk about misrepresentation and omission which does tend to throw folks for a loser so let's come back if you say like five minutes passed and that would give us enough time to finish this representation of this okay