Agent-Owned Property Transactions

1. Agent-Owned Property Transactions Legal Presentation - March 2007

2. Changes under New E&O Insurance Policy • New policy provides coverage for all sales of residential property provided the 4 transaction requirements are met. • New policy does not differentiate between the agent’s dwelling residence and the agent’s investment property. • No coverage for commercial property. • No coverage for lease property.

3. Transaction Requirements for All Listings of Agent-Owned Residential property Per E&O Policy • Seller’s Disclosure Notice • Home Warranty • Inspection • Standard TAR Contract OR Contract drafted by attorney

4. Additional Listing Requirements • Listing Agreement • Special Provisions must identify seller as RE salesperson affiliated with GK • Agreement for Sale of GK Agent’s Residential Property – confirms: • Seller will not show the property, hold open houses, market or advertise the property • Seller will refer all questions from buyers/agents to listing agent • Seller will not negotiate directly with buyers/agents

5. Qualification for Listing Side Commission Waiver • 1) Has worked at GK at least one year; and • 2) Made at least $45,000.00 in the twelve months preceding the transaction; and • 3) Use of benefit limited to once per twelve months.

6. Requirements for Listing Side Commission Waiver • Listing Side Commission Waiver and Indemnity Agreement – signed by GK seller/agent and GK management • Agent must pay at least 1% to the listing agent, plus $500 processing fee to GK. Total commission on the TAR Listing Agreement should be “4% plus $500.”

7. Listing Side Commission Waiver and Indemnity Agreement • GK waives listing side commission if seller/agent: • complies with transaction requirements • indemnifies GK for any non-covered losses • Seller/agent must pay • 1% to listing agent • 3% to coop agent • $ 500 to GK for administrative fee

8. Potential Buyer Conflicts • If Buyer has Buyer’s Rep Agreement with Agent/seller: • Buyers Rep Agreement must be amended to exclude this property • Buyer must be referred to another GK agent who will enter Buyer Rep Agreement for this property only • If Buyer is not represented by Agent/seller: • Buyer should be referred to another GK agent and should sign Buyer’s Rep Agreement or Non-Representation Agreement

9. Purchases of Property by Agent • E&O insurance DOES NOT provide coverage to GK for purchases of property by agent. • GK will waive the 3% buying-side commission if: • Agent/buyer meets qualifications • Agent/buyer agrees to indemnify GK for any losses related to this transaction

10. Buying-Side Commission Waiver • Qualification: • Has worked at GK at least six months; and • Use of benefit limited to two times per twelve months. • Transaction Requirements: • Special Provisions must read “Buyer, (Agent name), is a licensed Texas real estate salesperson/broker affiliated with Greenwood King Properties.” • GK must be identified as Buyer’s broker

11. Buying Side Commission Waiver and Indemnity Agreement • GK waives buy-side 3% commission – agent/buyer can use this for their benefit • Agent/buyer indemnifies GK for losses arising from this transaction • Agent/buyer pays GK $500 processing fee

12. GK Commission Waiver • Shows third parties that GK will not be claiming 3% commission on this transaction • Not required, but will be provided upon request by agent/buyer