Untitled

CONSUMER GUIDE

Index

1. Introduction ....................................2

2. Agents/Brokers/Brokerages ....................2

3. Agency .........................................3

4. Agency Disclosure ..............................3

5. Seller’s Agent ...................................4

6. Buyer’s Agent ..................................6

7. Dual Agent .....................................7

8. Preparing to Sell and Buy ......................8

9. Offers and Counter Offers .....................10

10. Purchase Agreement .......................... 14

11. Sale Pending .................................. 15

12. Closings .......................................18

13. Nebraska Real Estate Commission ............19

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1. Introduction

This guide is written to help home buyers and sellers who are

working with real estate agents understand the buying and sell-

ing process as well as agency relationships. It is not intended

as a substitute for the guidance of a real estate agent or legal

advice from an attorney in a real estate transaction.

Further information about the Nebraska Real Estate Commis-

sion, and consumer and community resources, can be found on

the Commission’s website: https://nrec.nebraska.gov/

2. Real Estate Agents/Real Estate

Brokers/Brokerages

Any agent assisting or offering to assist you with the sale or pur-

chase of a home must be a licensed real estate agent in the state

of Nebraska. All agents must either do business as a designat-

ed broker running their own company, or work for a designated

broker as an associate broker or salesperson. You do not have to

use a real estate agent, but an agent will use their resources

and experience to help you find a buyer or seller, provide the

disclosures and forms needed, and also guide you through

the steps necessary to complete a real estate transaction.

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You can verify licensure and look up disciplinary history of any

Nebraska licensee on the Nebraska Real Estate Commission’s

website at https://nrec.nebraska.gov/

3. Agency

A real estate agent working for you has a fiduciary duty to repre-

sent your best interest. They must also reduce all purchase of-

fers and counter offers to writing when requested to do so, and

present those offers to the other party to the sale, provide you

with an estimated closing cost statement when offers are writ-

ten and presented, and provide you with the forms and informa-

tion necessary to enter into and close a real estate transaction.

Not all agents work for you. For example, if you go to an open

house the host agent will likely be a seller’s agent. As a potential

buyer you should not disclose negotiating points, such as the

highest price you are willing to pay for the property, to anyone

but your own agent. Agents may work as Buyer’s, Seller’s, or

Dual Agents (representing both parties) in a transaction. If an

agent does not represent you, you are considered their custom-

er and not their client. A customer is not owed the fiduciary duty

of acting in the person’s best interest, or a duty of confidentiality,

but an agent treating you as a customer may not make misrep-

resentations or fail to disclose material facts related to a proper-

ty or transaction that are not otherwise disclosed and that the

agent is aware of.

4. Agency Disclosure

A real estate agent offering their services to you should provide

a written Agency Disclosure Form for you to sign before you

discuss your motivation for buying or selling, price you are will-

ing to accept or pay, or other significant information related to

your potential real estate transaction. The disclosure form will

state what type of agency they will provide if you move forward

with representation or a transaction. Agents can act as a buyer’s

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agent, seller’s agent, or dual agent, or you may be considered a

customer if you are a party to the transaction, but the agent is

not acting on your behalf.

If the agent does not represent you, they should indicate who

they represent on the form, for example, if you are an unrepre-

sented buyer talking to a seller’s agent, they should provide an

agency disclosure form to you indicating they are a seller’s agent,

and that you are an unrepresented customer in the transaction.

An agency disclosure is not a contract, and does not obligate

the client or customer signing it. The signing of the docu-

ment is only to record and acknowledge that the disclosure

was presented to you as required by law.

Limited Agency Under Nebraska agency law, buyer’s and

seller’s agents act as “limited agents.” They have a duty to

act in good faith on behalf of the client, but may not en-

ter into agreements or sign contracts on behalf of their

client. Agents should offer advice and expertise, but the

ultimate decision on matters related to the transaction,

sale price, and choosing closing service providers such

as banks, inspectors, and title companies, are ultimately

up to the client procuring the services, or buyer and seller

both if it is something that must be mutually agreed upon.

5. Seller’s Agent

In order to act as a seller’s agent assisting in the sale of a home,

the seller must enter into a written listing agreement between

the brokerage the agent works for and the seller (the seller’s

agent will typically be authorized to sign this form). The listing

agreement must state when the listing begins and ends, as well

as providing specific terms of compensation for the brokerage.

Compensation, often referred to as a “commission”, may be a

percentage of sale price, a flat fee, a mix of both, or other terms

as long as specifically stated and capable of being calculated

with certainty.

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Terms of compensation are negotiable between the parties.

Brokerages often have usual and customary fees. You are not

legally obligated to pay those fees, but the brokerage may or

may not choose to deviate from them in any negotiation that oc-

curs. Either party may walk away if a listing agreement has not

yet been entered into and choose to work with someone else if

terms cannot be agreed to.

Discuss methods of communication to be used with your seller’s

agent. Real estate transactions can move quickly, so be sure you

understand and agree on how informal communications with

regard to showings and transactions will occur to avoid delays

and mistakes--phone call, text, email, etc.

All parties with an interest in the property, such as husband and

wife, or heirs in an estate situation, should sign the listing agree-

ment, unless there is a legal document or court order such as

a power of attorney authorizing one party to act on the seller’s

behalf.

Your seller’s agent should make a good faith effort to assist you

in the sale of your property. You should discuss marketing efforts

and strategies prior to entering into a listing agreement and

make sure everyone is on the same page. Any specific require-

ments beyond a good faith effort and obligation may be stated

in writing in the listing agreement

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Once entered into, a listing agreement is a binding contract for

the term of the listing, so read all terms carefully, ask questions,

and seek the advice of an attorney if you want further clarifica-

tion.

When choosing the asking price for your home, you should also

consider the asking and sale prices of similar properties in the

area, your own motivation and timeline for selling, and your

agent’s advice. Your seller’s agent should assist you with mar-

keting your property, negotiating and writing counter-offers

and purchase agreements, providing estimated closing costs,

and other paperwork and aspects of the completion of any real

estate transaction entered into.

If you want to end a listing agreement early and the agent does

not agree to the termination you should always talk to an attor-

ney. Choosing to terminate a listing contract without the bro-

ker’s release may result in you still owing a commission on the

sale of the property.

6. Buyer’s Agent

A licensee may work on behalf of a potential buyer and act as a

buyer’s agent without a written agreement, though such agree-

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ments are permissible, they are not required. However, an agen-

cy disclosure form (see Section 4) indicating “buyer’s agent”

should be filled out and provided to the buyer prior to showing

houses or discussing the buyer’s motivation for buying or price

they are willing to pay for a property.

A buyer’s agent is customarily paid by a “split” of the commission

paid to the listing broker (seller’s agent) in the listing agreement.

Additional charges and fees are permissible, but if there is any

payment to the buyer’s agent required on the part of the buyer

it must be specifically agreed to in writing.

Discuss methods of communication to be used with your buy-

er’s agent. Real estate transactions can move quickly, so be sure

you understand and agree on how informal communications

with regard to showings and transactions will occur to avoid de-

lays and mistakes--phone call, text, email, etc.

Your buyer’s agent should assist you finding a home, negotiat-

ing and writing offers and purchase agreements, providing es-

timated closing costs and other paperwork and aspects of the

completion of any real estate transaction entered into.

7. Dual Agency

A Nebraska real estate licensee may represent both parties in a

real estate transaction. In order to establish dual agency a spe-

cific agreement consenting to the dual agency must be signed

by both the buyer(s) and the seller(s). A dual agent works as

both buyer’s and seller’s agent. They are required to withhold

confidential information on behalf of either client from parties

on the other side of the transaction.

If you are not comfortable with dual agency you may withhold

your consent and procure your own agent or represent your-

self if a buyer, or refuse to allow the dual agency if a seller who

has already entered into a listing agreement and not previously

agreed to allow dual agency to occur.

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8. Preparing to Sell and Buy

Sellers should strongly consider and discuss with their agent any

clean up or repairs needed on the property. Sellers may show

and sell their property in any condition they choose as long as

known defects are disclosed, but a quicker sale and/or higher

price will result from a neat and well maintained property.

Fair Housing Discrimination in housing on the basis of

race, color, national origin, religion, sex, disability or familial

status is prohibited in Nebraska. Covered entities generally

include residential property owners, property managers, re-

altors and multiple listing services. Unlawful housing prac-

tices generally include discrimination in the advertisement,

acquisition (showing, negotiating for or transmitting offers

for sale or rental), financing, or possession and enjoyment

(terms, conditions, privileges) of residential property. For

more on fair housing go to: https://nrec.nebraska.gov/legal/

fairhousing.html

The seller of a home is required to fill out a Seller Property Con-

dition Disclosure Statement, which your agent should pro-

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vide. The form is also available on the Commission’s website at:

https://nrec.nebraska.gov/pdf/forms/SPCD.pdf. The form is not a

warranty, but must accurately state the condition of the proper-

ty at the time of sale to the best of the seller’s knowledge. The

form should be filled out at or prior to the property going on the

market, and amended if any conditions change, or knowledge

of conditions change on the part of the seller prior to the sale.

Failure to disclose conditions or defects on the form (basement

leakage, air-conditioning does not work) may result in a contract

dispute if discovered prior to the sale, or liability for the seller if

discovered after.

Buyers should start by considering neighborhoods and price

ranges, as well as getting pre-qualified for financing (if not a cash

buyer) when looking for a home. If buyers already own a home

they plan to sell, they should prepare their own house for sale as

described above. Sellers are more likely to entertain an offer if

they know the buyer has the ability to complete the transaction.

Showings and Privacy Digital cameras and recording de-

vices are everywhere these days. In addition to removing

or limiting access to valuables, sellers should be aware that

buyers and agents may take pictures of their homes during

showings, and may even post those pictures to social me-

dia. If there are things they want to keep private they should

remove them or keep them out of sight. Buyers should be

aware that security cameras and listening devices are com-

mon in homes, and private discussions with their agent or

partners regarding negotiations or offers are best done off

property.

New Construction There are many benefits to buying ei-

ther a new or existing home, some obvious, some less so,

but too many to go into here. Buyers should note that buy-

ing a pre-constructed or spec home is similar in many ways

to buying a pre-owned home. Building a home, buying a

lot (the real estate transaction) and entering into a contract

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with a builder to construct a new home (a services contract)

is a much different process. Building a home will allow the

buyer to choose the floorplan, colors and finishes they want,

but it will also take a significant amount of time selecting

those options. The closing date will involve more variables,

including the weather, and material and labor availability. If

building a home, the buyer may work with their own buyer’s

agent, the builder’s agent, or the builder directly. Establish

in advance who you will work with to make sure the project

goes smoothly, and understand the other party’s role in the

transaction (do they represent the builder or you?). As with

a purchase agreement, make sure changes to the building

contract are agreed to in writing.

9. Offers and Counter Offers

Buyers should ask for a copy of the Seller Property Condition

Disclosure Statement prior to making an offer on a home, and

must be provided the form prior entering into a binding pur-

chase agreement.

In considering the purchase price in an offer, buyers should con-

sider the price of comparable properties, the current real estate

market (are similar homes selling quickly or slowly) and the ad-

vice of their real estate agent. Buyers should also consider, in ad-

dition to the sale price offered, whether they want to put contin-

gencies in the contract. A contingency is a condition that must

be met in order for the contract to be enforceable. Common

contingencies include buyers having their purchase be contin-

gent on the sale of their own property, the property purchased

appraising for at or above the offer made, or the purchase being

subject to the buyer being able to obtain financing. Contingen-

cies protect the buyer, but may make the contract less attractive

to the seller, as they create less certainty about the completion

of the sale.

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Personal Property A residential real estate purchase con-

tract is for the purchase of the house and the land it sits on,

but where does the home or real estate end and personal

property begin? Personal property such as furniture, potted

plants, etc., is not part of the sale unless specifically identi-

fied and included. Some items are easy to classify, central

heating and air conditioning is attached to the property in-

tegral to its use, is considered part of the real property, and

included in the sale. Other items may be more difficult, such

as an outdoor sound system with speakers mounted to the

ceiling, or window treatments and appliances. The most

common personal property items specifically included in

contracts are items like or refrigerator and stove, but buyers

should also think about other items, such as window treat-

ments, maybe a wall clock that seems to fit the spot perfect-

ly, identify those items that they want to have included in

the sale, and have them written into their offer or on a bill

of sale. Sellers may always counter offer if there are things

they want to take with them, or things they feel they need

additional compensation for.

The Closing date should also be considered in the offer. A cash

sale will probably work with a sooner closing date than a prop-

erty purchase subject to inspection, appraisal and financing

contingencies, which can take a considerable amount of time

to complete.

Offers for the purchase of real estate generally contain a provi-

sion for an earnest money deposit or down payment. There is no

set amount or percentage for such deposits, but they typically

range from $500 on up, and may tend to rise proportionately

to purchase price. If a deal falls through because of an unmet

contingency, the buyer will generally be entitled to receive their

earnest deposit back. If the buyer backs out, but is still obligated

to purchase, they may not be entitled to the earnest money. In

practice, real estate purchases are often complicated, and both

buyer and seller may feel that, according to the terms of the con-

tract, they are entitled to the earnest money. In such cases, a

split of the deposit may be negotiated. If parties cannot agree

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to the release of the deposit, the deposit should be held until an

agreement is reached, or the matter goes to court or arbitration.

Electronic Contracts and Disclosures An increasingly

common practice for brokerages, financial institutions, and

other service providers, is to use electronic documents for

contracts and disclosures associated with a real estate trans-

action. Electronic documents, contracts and signatures are

legal and enforceable. You should retain copies of all such

documents, and ask your agent or service provider for paper

copies for your records if you are uncomfortable with keep-

ing digital records. Review electronic documents and dis-

closures the same way you would a paper document, don’t

just skip from signing box to signing box. Ask your agent

any questions you may have about the documents. They

may not have all the answers, but if they don’t, they should

be able to refer you to someone who does. Closing compa-

nies will generally provide paper copies of the various closing

documents, including purchase contracts, mortgage docu-

ments, disclosures and closing statements, at the real estate

closing. Retain a copy of these documents for your records.

Buyers will often have an inspection period written into the

contract, giving them the right to rescind the contract after

the inspection reports are received, or if inspection issues arise.

Common inspections include whole house, roof, heating and air,

also referred to as HVAC, and termite. If structural issues are sus-

pected, the buyer may want to get a structural engineer’s report.

Inspection periods are typically short for the benefit of both par-

ties who will not have to be tied up in a transaction that will not

close for a long period of time.

Home Inspectors are not licensed or regulated by the Ne-

braska Real Estate Commission or any other state or local

government agencies. A home inspection requirement is

a common provision in residential purchase contracts. A

home inspector, who does a whole house inspection, is not

CONSUMER GUIDE

necessarily an expert in roofing, foundations, plumbing or

electric. If a home inspector identifies a significant issue it

is prudent to follow up with an inspection and/or estimate

from a licensed contractor with expertise in the repair need-

ed. Consult your agent or friends and relatives who have re-

cently purchased a home for recommendations on a trust-

worthy and competent inspector.

The offer should also address how other costs such as closing

costs, inspections, and repairs needed pursuant to inspection re-

ports, will be addressed.

Lastly, the offer should have a specific expiration date and time.

The expiration should specifically state a time, often as soon as

the day the offer is made, or the day after.

If the seller is represented by an agent with an exclusive listing

agreement, the offer should always be presented to the seller’s

agent, who will then present the offer to the seller. The seller

will have an opportunity to accept the offer, reject the offer, or

counter-offer. If the seller does not accept an offer or counter

offer before it expires, it is considered to be rejected. A seller is

not required to accept any offer, even if it is at full asking price

with no contingencies (although rejecting such an offer may re-

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quire paying their agent a commission for bringing in a ready,

able and willing buyer). All aspects of an offer are negotiable

and must be agreed to in writing by all parties to the transaction.

The seller should review all aspects of the offer and negotiate,

counter offer, or reject those that do not meet their require-

ments. A counter offer should also have an expiration or time

limit for acceptance.

10. Purchase Agreement

All contracts for the sale of real estate must be in writing and

signed by all parties to be valid and enforceable. Your agent

should make sure that not only are the main provisions regard-

ing sale price and closing date in the agreement, but also that

any agreements regarding repairs or contingencies are stated in

writing and agreed to by all parties in the purchase agreement,

or an addendum to the purchase agreement. If the closing date

changes, which is not uncommon, it must also be agreed to in

writing.

Husband and Wife are both considered to have an inter-

est in their primary residence by Nebraska law, even if ac-

quired prior to the marriage or by inheritance. The signature

of both sellers, husband and wife are needed for to create

a valid purchase agreement unless there is a power of at-

torney or some other legal document giving one party the

authority to act on behalf of the other, or a power of attorney

or guardianship allowing some other party to act on behalf

of all the owners.

The copy of the signed purchase agreement should be provided

to all parties to the transaction after execution.

Should you wish to back out of a purchase agreement and the

other party does not agree, we recommend that you talk to an

attorney before making any final decisions.

CONSUMER GUIDE

11. Sale Pending, the time Between

Contract and Closing

You have just entered into a purchase agreement, and are tak-

ing a deep breath after house hunting or house showing, nego-

tiations, and paper review. Often the level of activity from the

time of the search or selling does not slow down at all, as in-

spections, repairs made due to inspection results, financing and

other activities must still be completed. The original purchase

agreement may have to be amended or clarified as the buyer

and seller work through the process. While neither party is ob-

ligated to change or agree to anything, being reasonable and

considering how the other party would feel about the situation

will usually help in furthering negotiations and successfully clos-

ing the transaction.

Phishing Schemes and E-mail Fraud

Efforts on behalf of scammers are pervasive in real estate and

other industries, and any expectation of efforts to stop the

scams being entirely successful are probably somewhere in

realm of very optimistic to totally unrealistic. However, we

can make every effort to ensure that these efforts to defraud

are not successful.

There have been cases of the entire purchase price of a

home being routed to an overseas, fraudulent account.

The most common scams involve an email, a text or

phone call soliciting account information or personal in-

formation from members of the public involved in pend-

ing real estate transactions.

Scams, ransomware, wire fraud and hacks are usually

achieved via email. They may be fake email addresses with

a letter or two changed in a name, or an actual hack into an

agent or firm’s email system, using the actual email address

of an agent or other party involved in the transaction. Treat

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such solicitations with extreme caution, and please remem-

ber the general cyber safety rules as well, do not open suspi-

cious attachments or links.

Never give out account information, routing numbers, or

other personal information such as social security numbers

based upon unsolicited electronic communication, if in any

doubt pick up the phone and call the number provided by

your agent, loan officer, title company, etc. in prior corre-

spondence, don’t call the number provided in the email.

Talk to your agent or someone you have met through the

sales process and confirm authenticity of any communi-

cation before following up on any suspicious requests.

If negotiations break down and one party or the other does not

want to complete the transaction, they should always seek a

signed release of the contract and mutual settlement or release

of the earnest deposit. If the other party will not agree to a re-

lease, the Nebraska Real Estate Commission strongly suggests

seeking the advice of an attorney before deciding to “walk away”

from a contract.

Financing Frequently a person who purchases a home

needs to borrow the money for the purchase. Usually this

will be arranged by a note and mortgage or by a note and

deed of trust.

When the buyer gets a loan, the property is used as col-

lateral, or security for the loan. The buyer will give a mort-

gage or deed of trust and sign a promissory note. Upon clos-

ing, the buyer, as mentioned earlier, receives a deed from

the seller and becomes the legal owner of the property.

Through the mortgage or deed to trust the buyer promises

to do certain things, i.e. make the payments, keep the prop-

erty insured, etc., and also gives the lender the right to fore-

close and take possession of the property if he or she does

not fulfill the terms of the mortgage or deed of trust.

CONSUMER GUIDE

What should be taken into consideration when you are

looking for financing in the purchase of your home? The fol-

lowing should be considered:

1. Interest Rate of the Loan—many lending companies al-

low you to “lock in” on a rate if you feel you are getting a very

favorable rate, or the rates are likely to go up.

2. Term of the Loan—how long you have to pay the loan

back, usually in monthly installments. 30, 20 and 15 year

loans were once standard. Lending companies are often

more flexible with the term of the loan these days. Please

note that lower terms will result in higher payments, but of-

ten will carry a slightly lower interest rate, and also will result

in the buyer paying a much lower overall interest over the

term of the loan.

3. Acceleration Clause—generally a provision that allows

the finance company to legally collect the balance of the

loan or foreclose due to late payment or failure to maintain a

loan requirement such as homeowner’s insurance. It is im-

portant to review and understand the acceleration clauses

of any loan.

4. The Prepayment Clause -- this clause allows the loan

to be paid off before the end of the term of the loan. This

is usually necessary because very few people remain in the

house they have purchased for the full term of the loan.

Therefore, upon the sale of the property, they need to pay off

the loan before purchasing the next property. Lenders may

charge a penalty for prepaying the loan. Such clauses may

also allow the buyer to pay additional principle on the loan,

paying off the loan early, and reducing interest payments. It

is important for you to find out if the lender will charge this

prepayment penalty and under what conditions.

5. Escrow of Insurance and Taxes -- you will be required

by the lender to maintain insurance on the property as a

protection against loss. The property insurance premium

may be made part of the monthly payment. You may be

required to pre-pay the property taxes to the lender either in

lump sum or on a monthly basis as part of your payment to

the lender. In each case the money is held in escrow by the

lender and paid by them on the respective due date. This

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policy varies with the lender, and you should know ahead of

time which method will be used.

6. Down Payment—probably already discussed if you

have prequalified for a loan, most types of loans require the

buyer to pay a certain percentage of the purchase amount

in advance in order to secure the loan.

7. The Type of Loan -- real estate loans are categorized

into four general types: A) the VA (Department of Veterans

Affairs) loan guaranty program; B) the FHA (Federal Housing

Administration) insured loans; C) the RECD (Rural Econom-

ic and Community Development) direct and guaranteed

loans; and D) the conventional loan which is a loan not guar-

anteed or insured by a Federal or State agency.

It has become a more common practice for sellers to continue

to market their homes and accept back up offers on their homes

to be completed only if the first deal falls through. This practice

is legal as long as the existing purchase agreement is disclosed

to potential buyers. A seller may not legally break an existing

contract solely because a better back up offer has been made.

12. Real Estate Closings

Real Estate Closings are usually handled by a title insurance com-

pany. They may also be handled by a real estate broker, banking

institution, or attorney. The closing agent acts as escrow agent

for needed closing funds, will provide you with a closing state-

ment with the actual costs of closing and disbursement of funds,

and usually provide a physical office to sign the various closing

documents.

Your real estate agent is not required to be present at your real

estate closing, but the Nebraska Real Estate Commission con-

siders it a best practice consistent with the agent’s role as advi-

sor to the client.

CONSUMER GUIDE

Title insurance Companies are often used as closing agents

in residential real estate transactions. The title insurance

company reviews the County Register of Deeds office and

other relevant sources to make sure the seller owns and can

sell the property, as well as noting any recorded liens, ease-

ments, etc. that affect the title. The title insurance policy

protects you against defects to title if it is not as stated in

their description. They also act as closing agent, holding and

disbursing funds and providing the office where documents

are signed at closing.

Occupancy rights to the new property (moving in) will generally

occur on the day of closing as provided in the purchase agree-

ment, but other arrangements can be made for early or late oc-

cupancy. Always get such agreements in writing, signed by all

parties.

13. The Nebraska Real Estate

Commission

The Nebraska Real Estate Commission created this document,

and licenses and regulates real estate agents in the state of Ne-

braska. If you have questions about this guide, or feel a licensee

has acted inappropriately you may call the Commission at (402)

471-2004, or email us at [email protected].

The Commission has the authority to discipline agents if a vi-

olation of the Nebraska Real Estate License Act has occurred.

The Commission does not regulate the transaction, and cannot

award damages or enforce or revoke contracts. Such actions

must be pursued through the courts or arbitration if they cannot

be worked out through mutual agreement of the parties.

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Nebraska Real Estate Commission

P.O. Box 94667

Lincoln, Nebraska 68509-4667

https://nrec.nebraska.gov/