Agent2Agent in Palo Alto>Question Details

John Souerbry, Real Estate Pro in Palo Alto, CA

Do you give buyers advice on property vesting?

Asked by John Souerbry, Palo Alto, CA Sun Jan 29, 2012

A lawyer I sell estate properties for recently told me that his firm is representing a home buyer who is seeking damages from a local broker. The buyer took the (bad) advice of his agent regarding how to vest the purchase and it ended up costing him extra in taxes a few years later. The buyer's claim is that the agent gave unqualified legal advice (practicing law without a license).
I know that understanding vesting options is a big part of the legal education of brokers and agents, but I've been told since I was initially licensed that we aren't supposed to give our clients advice on how to vest their property, we are supposed to recommend they speak with tax and estate specialists.
When I brought this up at the morning meeting of real estate derelicts at the local coffee hangout, most of them (licensed agents) said they recommend vesting options to clients all the time.
This was specifically preached against in the Big Franchise Office where I started my career.
Do you do this?

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Answers

16
Not only with Vesting, but many other questions as well,
there is a fine line between giving the Clients "possibilities" and giving them "advice".
Way back when, my Broken taught us to keep a log when we talk to Clients and write things like this down.
The wording is everything, and the documentation, when we could end up in court.
If the Realtor had written in his log; "Client asked about Vesting; recommended talking to Tax man or Attorney." then he would have been covered.
2 votes Thank Flag Link Sun Jan 29, 2012
Thanks all - I very much appreciate your comments and ideas. But another question, why would anyone suggest that a client use a title document to decide on vesting? Vesting decisions start with estate and tax planning, which usually starts with a consult with an estate attorney and a tax guy/gal, not a title person. Why would you not point a client at an estate attorney and a tax pro? That appears to be the point of the law suit that I mentioned in my original question.
1 vote Thank Flag Link Sun Jan 29, 2012
I always tell them to consult an attorney/tax person etc to make sure they understand the ramifications of their vesting decision.
0 votes Thank Flag Link Sun Mar 11, 2012
As a professional real estate consultant, it is my responsibility to ensure that my clients connect to the other team of professionals as appropriate. I do not pretend to be an attorney, etc.--- my advice always: seek the advice of a real estate attorney for their own protection of their valuable investment.
0 votes Thank Flag Link Sun Mar 11, 2012
always, always suggest they talk to a Real Estate Attorney, estate planning professional and a CPA.
0 votes Thank Flag Link Sun Mar 11, 2012
Hi John,

It's common mistake we RE agents go beyond, but I don't vest my client for their property investment as
learned from RE regal conference. I always suggest to get advise from their Real Estate Attorney.

Thanks

Paul Kim / Coldwell Banker Los Altos , CA
0 votes Thank Flag Link Mon Jan 30, 2012
Hello John:
It is always best to mention to your buyer that you can not give legal advice on how to handle vesting and ask them to consult with a real estate attorney.
Buyers see us understanding the difference because we are in working in the industry but they need to realize we are not the real estate attorney looking at the legal implications in their case. Therefore, we can only explain each title vesting definition but can not hep them make the selection for them.
Thank you for posting the question, John
Victoria Always, REALTOR
0 votes Thank Flag Link Mon Jan 30, 2012
I explain the different options, and use examples of why some clients have used different options but I never advise them to choose any of the options in particular. As a loan officer I always make the point of asking the client which one do they think fits you, but I never advise a specific course of action.
0 votes Thank Flag Link Mon Jan 30, 2012
I never give advice as to vesting as that is best left up to their accountant or lawyer. It can only lead to problems if you give advice outside what a real estate agent is considered an expert in.

Gary Kurtz
Alain Pinel Menlo park
0 votes Thank Flag Link Mon Jan 30, 2012
Title gives them the options. If they are married and it is primary residence and they ask what other people do I tell them most people do community property with right of survivorship. Any other type of transaction I stay out of.
Web Reference: http://www.marcymoyer.com
0 votes Thank Flag Link Sun Jan 29, 2012
No. When I meet with my buyers during the buyer consultation & before looking at homes I give them a flier with the types of vesting and I direct them to my website under Buyer resources and to check with their attorney and accountant.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Sun Jan 29, 2012
Being a Realtor I am not allowed to give vesting advice so I don't. I direct them to a wonderful web-site that makes understanding vesting easy. If they want tax advice or how it relates to vesting I refer them to a good CPA.

Title advice: http://www.SteveManzo.com
Web Reference: http://www.laura4homes.com
0 votes Thank Flag Link Sun Jan 29, 2012
Hey John!

How are you doing? And what a great question...

My answer, under no circumstances are we EVER to give advice to any client regarding property vesting for their home. When asked I do not provide advice. In fact, I let the title company do all of the "talking" on this point, and most of the time, the escrow officers will provide a sheet to help explain this topic to the buyers.

However, I do very much do this....I will tell someone about 5 days prior to our hitting the closing table that they should speak with their legal and tax professional about how to vest the property. I let them know that I am prohibited from giving this advice, and that because this can affect their taxes and/or ownership, they need to consult with professionals prior to getting to escrow. Most of them do exactly as I ask, and by the time we get to title, they already have the answer.

So that's what I do. I know I could make "couched" recommendations (you know, "It it were my home...blah blah blah" or "in my opinion only, I'd vest it like blah blah"), but it's just too risky. So, no, I never make that decision for anyone and I never make any recommendations. I do, however, prepare buyers for the question, and make sure they get the answer before we get to title.

But that's my take...

Grace Morioka
Area Pro Realty-People's Choice
0 votes Thank Flag Link Sun Jan 29, 2012
John,

When someone asks me this question I tell them that they need to speak to their accountant to find out how best to vest for their particular tax situation, for the very reason you bring up here.
0 votes Thank Flag Link Sun Jan 29, 2012
Most Title Companies have excellent fliers describing each of the methods of holding Title and expanations of the implications of each choice. I always give a copy of this but absolutely no advice as to which should be chosen. I suggest that if they cannot decide from the reading of this document they should consult an Attorney.
0 votes Thank Flag Link Sun Jan 29, 2012
crazy story buyers should look into the investment they are seeking and run numbers not rely on a realtor.
0 votes Thank Flag Link Sun Jan 29, 2012
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