In one of the first classes that I took as"?a new agent, the instructor said: "the minute that you are thinking about your commission, you are no longer thinking about your client". This is some of the best advice I have ever heard. We are so excited about a new business and the opportunity to close a transaction, however, a new agent learns that a significant portion of the buyers and sellers that we work with never complete a transaction with us. We are so eager to contract, however, we cannot ever do anything that would jeopardize our client. The July/August 2006 publication of Broker Agent News has a well written article called "The Prosperity Paradox" in which the author, Jay L. Abraham, says: "You need to make each person (and their family) you deal with feel special; because to you they must truly BE special and important. You must put as your higher causal purpose the commitment to seeing that their lives are improved because you are there for them, shepherding and guiding them through the transaction."

Enter mortgage fraud. It is defined as what occurs when one or more parties misrepresent facts in a real estate transaction to obtain mortgage financing. New agents have to learn to identify potentially problematic issues in a transaction in order to represent their client.

Last week, I had the pleasure of receiving an offer on a listing that has been on the market for nine months. Scary sentence! Reality for a new agent is that we don't always get the opportunity to sell new homes or resales in perfect condition in the perfect neighborhood. I have come to believe that God has it planned so that we cut on teeth on tough issues. In the long run, it will make us better agents!

Needless to say, I was estatic to have the opportunity to work with the family and the buyer on this deal! When I read the contract, my heart sank. I knew immediately that we were in trouble.

What were the warning signs?

• the offer price was $12,000 over the list price
• there was a special stipulation that the seller would pay $30,000 at closing to vendor of buyers choice

Now, before you start saying "so what", there is more.

• The Georgia contract has a space on page 6 of 7 for special stipulations. The section was blank
• The Georgia contract form has a box on page 7 of 7 (signature page) which is to be marked if there are additional stipulation pages in the contract. It was not marked.
• The special stipulation was documented on page "8", an additional page.

At first glance, one would think that a rookie had filled the form out an made a few silly mistakes. However, as we always do, we place a call to the other agent and lender and ask a few questions. I was told that page 8 was not supposed to be faxed to the lender, and, that a seller and buyer can enter into any agreement that they want to. I was told that this is perfectly legal and if I did not want to do the deal, he would take his business elsewhere. Hum.

And, both the agent and the lender said to me "well, this is not going on the HUD". I said to both, yes it is. After I began to breath again, I went to my broker and to the title attorney. They both said, "if it walks like a duck and quacks like a duck, it is a duck".

My client and I prepared a counteroffer in which we stipulated that repair money would be made available to vendors that provided an estimate to be reviewed by seller, and, in which both the attorney and lender were aware of the transaction.

Lessons learned:

1. Prepare your seller for the facts that although you are required to present all offers, it is your duty to assure that the transaction meets legal requirements.

2. Never be afraid to bring issues to your broker, business coach, attorney or mentor. It is better to ask questions and seek counsel than to try to close a deal that is questionable.

3. Know the danger signs : if all of the contract is not to be disclosed to the lender or attorney, there is a problem.

I am sure that "side deals" occur that are disclosed and have rationale. I recommend that any time there is any question, protect your client and yourself by seeking help!

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Have a great week,

Kendra