Real estate agents not allowed to write contracts or perform appraisals

In my last column, we talked about the important role that the real estate agent plays in guiding a purchase agreement through the treacherous period between the “meeting of the minds” and the closing table. That column sparked several reader responses. Here is the essence of their comments:

Q: You said the real estate agent often plays an active role in the preparation of the contract between the parties. Isn’t that illegal? I thought only licensed attorneys could prepare contractual agreements.

A: You are correct. in Georgia, only a licensed attorney can prepare written contracts. However, real estate brokers and their associated salespeople (we call them agents) are authorized to use forms prepared by attorneys, and can "fill in the blank" without crossing the line of practicing law.

The Georgia Association of Realtors Forms Committee has published a set of contract forms that covers almost every conceivable situation that might develop. In addition, most real estate firms have ongoing relationships with real estate attorneys who are willing to offer guidance and direction to ensure that written documents express the intent of the parties.

As a matter of practicality, I recommend that no buyer or seller sign any written agreement related to their real property without first having that document reviewed by their own attorney. There is simply too much at stake. I have seen, on occasion, agents cross the line and prepare special stipulations and addendums that simply were poorly written and ambiguous. In the world of real estate, that’s playing with fire.

Q: You mentioned a “Lead-Based Paint Disclosure form. What’s that all about?

A: Federal law now requires anyone who offers to sell or lease any home built before 1978 to 1) disclose any knowledge they have of lead hazards at the premises, and 2) present the prospective buyer or renter with a brochure called "Protect Your Family from Lead In Your Home." That same law prescribes the wording of the disclosure, and that document is now attached to all purchase or rental agreements.

You can download a free copy of these documents at

The purpose of the law is to minimize the hazard presented to buyers and renters from lead that may be contained in painted surfaces. Lead is toxic to humans, and is especially hazardous to children under seven and pregnant women. Lead-contaminated paint dust from renovations and repairs can be a serious problem in homes built before 1978.

Q: Did you suggest that it is appropriate for a realty agent to interfere with the appraisal process and attempt to artificially influence the valuation of the property?

A: I think you misunderstood my observation. The agent's role in the appraisal process is one of providing access to the interior of the property and supplying information to the appraiser so that a complete evaluation can be made.

An appraisal is not a permanent guarantee of value. Instead, it is a snapshot in time of the market situation as it existed on a particular day, based primarily on similar sales in the area and market trends identified by the appraiser. Appraisers are trained to use multiple approaches to valuation, each hopefully reinforcing the other.

However, recent sales and contract data are often slow in coming to the appraiser’s information source, being based on recorded deeds at the local courthouse. In contrast, real estate professionals often are aware of sales even before they occur, based on anticipated closings. This type of market information is extremely valuable to appraisers, who often rely on local agents as a source.

Q: You talked about the inspection as if it were required by Georgia law. Why can’t the agent perform the inspection instead of paying for another person to be involved?

A: Like a termite inspection, a professional home inspection is not required by Georgia law. And most agents will draw on their own knowledge of a home's systems and structure to assist their client or customer in evaluating the property. But when it comes time to make the purchase, most agents will recommend a professional home inspector be hired by the purchaser.

Even though some agents may have experience as builders or contractors, few have the trained eye that a veteran home inspector brings to the table. Inspectors are independent third parties and have no vested interest in the outcome of the inspection. A good inspector uses a clear protocol to perform a thorough and comprehensive evaluation of the real property being transferred.