Common MREC and KREC Audit Write-Ups 2015

Here at Better Homes and Gardens Real Estate Kansas City Homes, we hold our agents to a higher standard of professionalism.  Because of this, our contracts and listings tend to be more complete and correct according to the MREC and KREC guidelines.  However, our corporate office recently pulled records from the last two audits and compiled a list of common write-ups.  They are listed below.

common_mrec_krec_audit_write_ups_2015

 Where do fines go?

MREC- to education coffer & legislature watches

KREC- to state general fund

 What files get audited?

ALL pending files + a sampling of closed and listing files

 Common Audit Write-Ups in Missouri & Kansas

  • Contract not fully signed
  • Earnest money
    • Deposited late with no Amendment
    • Contract did not name escrow agent

earnest

  • Agency relationships disclosed in contract but no Exclusive Right To Sell or Exclusive Buyer Agency Contracts in files
  • Agency disclosure incomplete (one side not check-marked)
  • Fixed commission not considered when checking ‘Brokers are compensated by’ box (a buyer’s fixed commission is considered compensation)

agency

  • Expired Exclusive Right To Sell or Buyer Agency Contracts – be sure to extend thru closing*
  • MO files must include authorized price reduction forms/requests (listings)
  • Agent name(s) not completed in the Designated Agency box of Exclusive Right To Sell or Buyer Agency

designated agency

  • HUD, Builder, or REO real estate sale contracts – their own special contracts do not include Agency. Must use Add’l Discl Mandated By Law covering Radon, Sexual Predator & Agency w/ offer.
    • Buyer signs same date as offer is written
    • Seller, esp if HUD, may or may not sign Not sure of MREC stance on this- could still generate fine.
    • Listing agent should still sign/date even if Seller refuses
  • When a corporation takes over a listing, new listing paperwork is not provided with contract (REO or Relo)— If the seller name on the contract is a Corp., the listing agreement should be with the Corp
    • If they send one of their own, which does not include agency options & check-boxes as contained in our Exclusive Right To Sell, an Addendum to Listing Agrmt is required for the Corp to sign.  These are available in our Forms Drawer.
    • This is a HUGE audit issue
  • Kansas properties- 3rd Party Receipt missing
    • Required when it’s a BHG listing and EM is held elsewhere
    • Or when it’s a FSBO, we have buyer and EM is held by title co
  • Fixed commission collected but not agreed to in Exclusive Right To Sell or Exclusive Buyer Agency Contract or Fixed Comm Letter
  • MREC requires initials & date by ALL parties on any changes on any forms*
  • MREC requires Signatures/dates of ALL Sellers & Buyers on HUD
  • Price on the HUD needs to match the price in the file (any price change Amendments are required)*

Agency Disclosures to watch:

FSBO Contracts:

  • List side discl: Designated Buyers Agent (& Seller not represented, if desired)
  • Sell side discl: Designated Buyers Agent

fsbo

Non-represented Buyer Contracts (where BHG is listing agent & no other agent is involved):

  • List side discl: Designated Sellers Agent
  • Sell side discl: Designated Sellers Agent (& Buyer not represented, if desired)

unrepresented buyer

Contract Extensions & Cancellations

If a contract has gone past it’s agreed upon Close Date, the pending file needs an Amendment extending the close date or a Cancellation immediately.

 

Almost all of these items will be caught on your Need Sheets, so be sure to turn in all the requested documents from your Need Sheets as soon as possible.  DO NOT WAIT UNTIL AFTER CLOSING.  If your pending file is audited and some of these items are missing, you will be fined.

*These items are not usually caught on your Need Sheets, and any documentation is your responsibility to turn in.

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