Discount Broker = Caveat Emptor
March 31, 2008
I was hanging out in my office today, talking to one of my colleagues about a short sale listing we’re working on. Another colleague wanders in and says, “Hey, a woman just called in on floor, and she wants to know what’s up with your listing on Peace Drive. She said she put in an offer but hasn’t heard anything back.”
I was a bit nonplussed by that. Wait wait - I’ve got a confession. This is the very first time I have ever used the word nonplussed . I must be getting old!
But anyway, there I was, all nonplussed and all, but I finally managed to say, “Really? I called every agent who put an offer in and let them know that we had accepted another offer!” To which my colleague replied that well, this lady hadn’t heard anything, but that she’d been using a discount broker up in San Francisco.
Ahh. Gotcha. I know who her agent is. This is the guy who sent me an offer, and after I received it, I called him to let him know I’d be e-mailing him a “multiple offer disclosure” which I would need to have him get his client to sign and return to me by the end of the next business day, along with what his client’s “highest and best” offer might be.
At the end of the next business day, I hadn’t received back his signed disclosure, so I called him up. “Hey, I didn’t get back your signed multiple offer disclosure!” I told him. “Oh, I never got it!” he said. Hmm. Well, that’s possible, we all know that e-mail isn’t 100% reliable, but even so, you think he would have followed up with me when he didn’t receive it. “No problem,” I said, “I’ll send it right now.” Which I did - I sent it to the very same e-mail address I’d sent it the day before, because my e-mail program auto-completed the e-mail address for me. “Got it,” he said. We agreed he’d get his buyer to sign it that day and get it back to me. I got his cell phone number from him so that I’d be able to stay in good communication with him.
By 9 PM, I hadn’t received anything back from him, so I called his cell. No answer, so I left a message. I called the next morning at 9 AM on his cell phone - no answer, I left a message. I called again in the early afternoon, this time on his office phone, and left a message, still wanting to get back the multiple-offer disclosure, even though we were past the deadline.
By the next morning, the seller had accepted another person’s offer. Later that afternoon, I called up all the agents who had submitted offers, and I let this agent know that a different buyer’s offer had been accepted, but thanks for putting his offer in. Again, he didn’t answer, and he never called back.
Well, it looks like he never called his client back, either. I guess this guy figures his being a “discount broker” allows him to cut some corners on his fiduciary responsibility to his clients. I don’t think that the Department of Real Estate would look at it that way.
I’m not saying there’s anything wrong with being a discount broker. I myself offer discounts to my clients, through my Buyer’s Reward Program. When a buyer does participate in my Buyer’s Reward Program, do I work any less hard for them? No, of course not. I don’t believe the amount of compensation an agent receives should reflect the amount of diligence that is employed during the real estate transaction. I am sure there are many discount brokers out there who work just as hard for their clients as I do, whether I’m rebating a portion of my commission or not.
I think the lesson here is not necessarily that you should avoid discount Realtors. I think there are two lessons here - one is an axiom we’ve all heard a thousand times: you get what you pay for. Another is this: don’t be penny wise and pound foolish by entrusting one of the biggest financial transactions of your life to someone who hasn’t earned your trust.
Profound, I know. But sometimes we all fail to see the forest for the trees. Ever the optimist, I feel that every dark cloud does indeed have a silver lining. It may work out such that my colleague, who is not a discount broker and who works very hard to fulfill his responsibilities to his clients, will pick up a new one as a result of this other broker’s negligence. I’ll say Ommmmmmmm to that!
Posted by SantaCruzBroker at 7:52pm
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Fiduciary Responsibility - Get the Picture?
January 21, 2008
I had a pretty busy weekend showing property. That’s a good sign, I think - there’s a different class of buyer out there now, the kind of folks who were sitting on the sidelines in ‘04 and ‘05, who thought the market was too high and that the values couldn’t be sustained, and they should wait a bit. Well, the waiting for many of these people, it seems, has come to an end. Sure, the market is still in the tank for the most part, but some keen people out there recognize this as being a great time to buy.
I spent a good number of hours on Sunday driving around, looking at low-end properties. There’s a lot of low-end real estate out there these days, and a lot of it happens to be (surprise) short sale and REO listings. There were a lot of properties on our list (a good dozen, which is a fair number to see on a property tour). Now, you’d think that in a market like this, where there’s so much competition in the low-end of the market, that the listing agent would pull out all the stops to get potential buyers in to sell the homes, right? You’d think.
When you’re out looking at properties, naturally you get to talking, and my client was telling me a bit about how he’d chosen the homes we were seeing today. And he said something which isn’t surprising at all, but is noteworthy: “I just skipped over all the ones that didn’t have pictures.”
The fact that he said that isn’t really surprising, not to me, anyway. Most people are like that. What IS surprising is that there are so many listings out there that have no pictures. Not even a single exterior shot. Nothing. Now, I can appreciate that many of these homes are not exactly beauties - but a lot of buyers aren’t expecting them to be, when they’re looking at the bottom of the market. However, if there’s no pictures at all, and many listings DO have pictures, and you have so many to choose from - which are you going to look at first? The ones where you have at least a bit of an idea what the house is like, visually.
What really gets me is that sometimes, there are no pictures and no remarks. Or, sometimes the remarks will be so brief and uninformative as to be useless, like for example: “Nice 3bd 2ba home.” Yeah, that’s really gonna lure in the buyers, especially when there’s so many of them with so many properties to choose from.
Out here in California, every real estate licensee has a fiduciary responsibility to their clients. As part of that fiduciary responsibility, agents must exercise “reasonable care and diligence” as they do the work for their clients. To quote from the California Department of Real Estate Summer 2007 Bulletin, the following is among the fiduciary duties imposed on California Real Estate licensees:
To diligently exercise reasonable care, diligence and skill in representing a client and in the performance of the responsibilities of the agency relationship. By reason of his or her licensure, a real estate agent is deemed to have specialized and professional expertise, knowledge and skill in real estate related matters superior to that of the average person.
I’m not a lawyer, so I will admit that I am not qualified to give any kind of legal opinion about whether or not omitting photographs and remarks from the MLS falls below the level of “reasonable care and diligence.” It does seem reasonable to me, though, that if you want to sell a property in today’s market, that you at least put up a picture and some remarks that would make a buyer at least want to drive by.
While I’m on the subject, I just have to wonder: how is it that sellers let their agents market their properties like this? Do sellers not even hop on the MLS and take a look to see how their home is being marketed to the 87% (or whatever) of the buying public that shops for real estate primarily on the Internet? Sheesh.
Well, that’s enough vitriol for one blog entry. Thanks for letting me vent!
Posted by SantaCruzBroker at 10:23am
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