The new Bank of America Realtor/Broker Listing Agent Certification (the “Certification”) has fostered some significant concern among real estate agents. The most common questions and our comments/responses are as follows:
1. Question: Does paragraph 1 of the Certification mean that Bank of America will not pay a commission. Answer: No! Bank of America never paid commissions to realtors. Bank of America merely authorizes Sellers to pay commissions to realtors. That will not change, and indeed Bank of America continues to approve commissions in the range of 5 to 6 percent, generally speaking. The provision is intended to make it clear that it is the Seller that pays commissions (which was always the case), and not bank of America. Yes, we agree that the provision could have been more artfully worded.
2. Question: What does Bank of America mean in Paragraph 3 when it refers to “competitive bids,” or “fair market value”, or “in spirit of seeking to maximize the seller price?” Answer: The provision is clearly designed to curb short term flipping. While this verbiage is subject to interpretation, it is our belief that a realtor should be careful to insure that the transaction is truly an arm’s length transaction, that the property has been marketed in a typical and prudent manner, that any offer be supported by a comparative market analysis, and that the realtor should perform some inquiry of the buyer’s motives for buying the property. If the buyer is acquiring the property with the goal of an immediate sale, that could create issues in connection with the satisfaction of this provision and other provisions in the Certification.
3. Question: Does Paragraph 5 prohibit the buyer from agreeing to sell the property before closing. Answer: No. However, it does require that the arrangement be disclosed to the lender, upon which the lender will obviously make inquiry as to why there is a higher offer for the purchase of the property. Again, this provision is designed to insure that the offer submitted for approval reflects the true value of the property. If the buyer already has plans to sell the property for a higher amount, that will be a problem.
4. Question: Can bank of America really hold a realtor liable criminally for a violation of these provisions. Answer: We are making due inquiry with the state attorney’s office to determine if a breach of the Certification (where it is not notarized and not being made under penalty of perjury), is a criminal act.
Again, we strongly advise any real estate professional to consult with legal counsel before executing this document. And keep in mind that due to the ambiguity of the language used by Bank of America, it is entirely possible that our opinions could differ from those of other real estate attorneys.