Professional Misconduct by Realtor? (Part 1 of 2)

[Porsche-O-Phile]

Good morning all. As some of you may know, I've been watching the residential housing market here in Southern California for some time, mostly waiting for a point of opportunity where prices might drop to a point approaching semi-affordability for a person born into this world (such as myself) without the luxury of a multi-million-dollar trust fund. As the much-discussed "bubble" has continued to deflate, I've been looking around and poking my nose into various areas of the market to see if there are any decent deals to be had. Recently I did find what I considered to be a fairly decent deal worthy of looking into/pursuing further, which has turned into a bit of a fiasco. I seek the wisdom, guidance and direction of ye Pelican experts on this situation, which I will summarize below (addresses & names changed due to pending possible legal action):

Sorry if this is sort of long:

About two months ago, the wife and I were looking into the possibility of relocating to another city where I had a job offer I was interested in. As part of investigating and researching this, we talked with a few realtors and lenders in that area and explained our situation and were pre-approved for a loan. We met with a realtor there (who we'll call "Mike") explaining that we were first-time buyers, we'd be new to the area and we'd be interested in buying IF (big if) there was a decent enough deal in order to avoid renting for a year, then looking and possibly having to move twice (I rank moving right up there with root canals and smashing myself in the nuts with a tack hammer repeatedly on my "Activities I Most Loathe" list). Even so, I make it very clear that there's no urgency, no pressure and I'll be perfectly fine with renting if the prices of the market are still too hot to handle, and that we've got no problem with walking away from any potential deal at any time. Mike is cool with this, understands and says he'll respect our wishes and decision even if it means he doesn't get a commission out of it. Good. We're on the same wavelength.

Wife and I figured this was a good idea - if we were going to bother of going through all the hassle of relocating to a new city and taking new jobs, it might be worth looking into taking advantage of the recent dip in the market, right? Well, to make a long story short, this thing with the new job didn't end up going exactly the way I wanted and I pulled the plug on it shortly after the New Year - opting instead to join up with another firm I'd been talking to occasionally here in my current city (Long Beach). It was a better deal and has been working out very well. Anyway, I called up Mike after making the decision to quit my old job and start with this new place locally to explain my decision. I told Mike we appreciated his efforts to date (he had shown us several properties) but unfortunately we would not be moving there and as such, we no longer required his services. He understood but did offer to hook us up with a referral here in Long Beach with another realtor, in case we were interested in looking for a place up here. I said sure, we'd already gone through all the B.S. of getting pre-approved and what-not. . . Made sense to look, right? Right. So a few weeks ago I get a call from another realtor here in town, who we shall call "John" for sake of this story.

Right from the get-go, I am somewhat unimpressed with John. Whereas Mike was a fairly good listener and concerned with giving us lots of choices, John asked very few questions about our needs and had a pushy "salesman" type personality that I found rather annoying. Where Mike was kind of laid-back and a bit quiet, John loves to talk ad nauseum about nothing, wasting lots of time and accomplishing very little. I dismissed my misgivings about his personality, figuring his lack of questions was likely due to the fact that Mike and he had already discussed our needs when Mike referred us to him, and he probably felt he had adequate information to go with. Okay. Fine and dandy. I swallowed my dislike for his personality for the time being and tried to simply "smile and nod" to his occasional diatribes. . .

Fast-forward to about two weeks ago.

About two weeks ago, I get a call from John at work. "Great", I think to myself, as I'm trying to get some stuff done that's semi-urgent that day, "here goes another half hour out of my life. . . Guess I'm staying until 7:30 tonight again". I sit down and, not having a beer or quaalude handy, try to simply be patient, put my best face on the situation, quietly continue to do whatever work I can scratch out while on the phone with him in the background, and listen to what I know is going to be another endless yammer about how there's "no bubble" in the market (and similar parroting of NAR/CAR bullet points), shameless self-promotion about how wonderful his services are and how he wants to do what's in the best interest of his clients and how he is working hard behind the scenes on our behest, blah, blah, blah. Aside from the usual blathering, he does (to his credit) mention that he's found a property that's the "deal of a lifetime" in our area that's priced well below market value and that I should drop everything I'm working on and rush right out and go look at it. John has gone into full-blown used-car-salesman mode and while I can tolerate someone that simply likes to talk a lot, I have an extremely short fuse for pushy salesmanship - and I begin pushing back in very short order, trying to nip this in the bud. After several attempts to coerce me to get up and drive right over there, I explain to him that I'm at work where (unlike some of us) I actually have some critical responsibilities that directly affect the survival of this firm and work to be done. I unfortunately don't have the luxury of toodling off on personal side-missions today as I have something that's hot and needs to go out the door - as in "today". Because of this, I'll likely not be able to meet with him or look at this place for a couple of days. He refuses to accept this. It goes right in one ear and out the other. He continues to spout off about how wonderful this deal is and how it won't stay listed for long, etc. I finally have to (literally) say "I'll try to meet with you the following evening - I'll let you know tomorrow if I can make it or not. I'm hanging up now". Click. Ten seconds later, my cell phone rings again. Guess who? I (wisely) don't answer it and go back to work.

Following evening I (fortunately) have gotten my work done and get out at a reasonable time, pick up the wife and head over to this place to meet with John and look at it. Unit is a 2BR, 2BA top-floor condo unit with hardwood flooring, new appliances, balcony, 2 secure underground garage parking spaces, storage cabinets, cathedral ceilings with clerestory windows and a few other goodies. It's a good find, it has many things that appeal to me and overall I like it. The wife and I have some misgivings about the neighborhood (it's one of those. . . um. . . "English-as-a-second-language" kind of neighborhoods to put it nicely - where caucasians like us are a bit of a minority), but it seems acceptable. We tell him (after a lengthy hour-long speech about why we're making a terrible decision to not go running back to his office right then and there to make an offer) we'll discuss it, think about it, and get back to him. For the next two days I deliberately shut off my cell phone and the wife and I do in fact discuss it, attend a few more open houses in the area of other similar units to compare pricing and features and do some more research. I realize this is a gamble and delaying might cause us to lose the place, but frankly I don't care. It's a good deal, but we're under no pressure here, there's no urgency, we still have our current place (which we're renting, but are reasonably happy with) so who cares, right? Right. Finally, Monday I get another call from John, who is predictably and once again in "pushy salesman" mode wondering what we've decided regarding this condo. I tell him we've got some concerns, but nothing that would stand in the way of at least rolling the dice and making an offer. I make an appointment to meet with him that evening to put paperwork together in order to do this.



(Continued below due to size limit)

[Porsche-O-Phile]

(continued from my original post)



Here's the contentious part:

This property was originally listed at $290,000 plus 4% by the seller towards closing costs. According to the MLS listing, it had sat on the market for 83+ days at that price. Fine. No biggie. The reason it was (as John put it) supposedly the "deal of a lifetime", was because the seller (who is an agent himself, it turns out - we'll get to that) had decided to drop his price to $260,000 and pay 3% to cover closing costs. John tells us that this is because the seller (who we shall call "Ivan") is originally from Russia and wants to sell the property quickly in order to move back there with his family (when we looked at the property there were a few clues substantiating this story including some "CCCP" relics, some posters and photos, a couple of books written in Russian, etc.) "Okay", I'm thinking, "this really is a good situation - below market value, decent place with a lot of features we like, desperate seller. Good". I put together an offer that's aggressive, but not (IMO) "lowball" for $253,500, seller pays closing costs, seller pays property taxes through the end of 2007 and 1/2 of the condo HOA fees for the first year, and all appliances are included (he's moving to Russia, presumably without refrigerators and electric ranges in tow, right?) I realize (and expect) this will be countered on one or more of those points.

Yesterday, I get a call from John, saying that in fact our offer had been countered and that this guy Ivan had two other offers, so we better decide what to do quickly ("pushy salesman mode" again). I explain patiently for what must be the fifty-gazillionth time on the phone with him that there's no urgency here, if the property goes to someone else, it goes to someone else and it's not meant to be and ultimately I don't care. Undaunted, he summarizes the seller (Ivan's) "counter-offer":

$280,000 (note that this is $20,000 MORE than the listing price)
$5,000 towards closing costs (big red flag - I'll explain)
No appliances (some of the stuff is supposedly going to his son, who is now mysteriously not going to Russia but remaining in the U.S.A.)
No payment of property tax beyond the closing date (no biggie, I expected this but threw it in to see if we could get it)
No assistance with HOA fees (again, a "wish list" item and not a deal-breaker).

A bit bemused by this, I explain to John that Ivan can keep his counter-offer and we're not interested. I say this no less than a dozen times, but John keeps hounding and hounding and hounding, explaining that "it's still below his original listing price by $10,000!". I can feel my blood pressure rising as he persists with the salesman schit. Finally, unable to tolerate it any more, I take the phone call outside and start yelling - "I'm not interested at that price - what part of 'no' do you have a problem understanding?" Finally he "gets it". You can almost see the lightbulb flicker on. Or seems to. I tell him that out of fairness to my wife, I'll call her, tell her what he just told me regarding the counter-offer and see if she has anything to add other than "go pound sand", which I predict the reaction will be (like mine was). Fine. Call ends. I walk back inside, eager to get back to work.

I call my wife, who's off at lunch with a friend and not likely to answer her phone. Whatever. I leave a message and that's that. I figure I'll hear from her when I hear from her - no biggie. We'll discuss it then. As I'm getting back to working, I think about this some more and start to get a bit more and more annoyed by this "counter-offer" tactic. I know that Ivan is an agent (while we were being shown his place, I noticed a stack of business cards on his counter, so I snagged one when John wasn't looking, just in case I wanted to go directly to the seller). I also questioned whether John and Ivan knew one another (they both work in the residential real estate market in Long Beach - it can't be all that big of a world, can it?) while we were reading all the disclosure information doing the paperwork for our offer. John cut that discussion off right then and there, along with my question about whether Ivan might be low-listing his price since he doesn't have to pay a realtor a commission, since he's acting as his own listing agent. . .



My question to you guys (and gals) out there with more experience in these matters than I is whether or not there's been any professional misconduct here - either on the part of Ivan or John. I can't PROVE collusion here, nor can I prove these two guys even know each other. They work for different companies and may very well not. However, I most certainly CAN prove that the listed price was $260,000 and was countered by a price higher than that - with many more caveats and conditions. I can prove that the original listing mentioned "3%" towards costs and that the counter was $5,000, with the seller choosing the title and escrow service. (caution: conspiracy theory) My suspicion is since Ivan was an agent, he could work out a deal with a title and/or escrow company to hike up their price for services so that the closing costs would have been much higher than $5,000 (putting us on the hook for the difference), and then kicking back a percentage to him. I can't prove it, but I have a feeling that's certainly not unbelievable. I suspect that this $260,000 listing price was simply to get "foot traffic", multiple offers and (hopefully, from Ivan's point of view) a bidding war in a down-turning market. While I can on one hand respect the tactic, on another, it smacks of "bait-and-switch", which to my knowledge is illegal and may place his agent's license at risk (I'm checking).

Advice? (Obviously we're not buying this place and I'm "firing" John today and finding someone else).

[Dantilla]

Just walk away. Don't waste any energy worrying about it. There is no strong case, you just simply couldn't get a buyer and seller to agree on a price. That's what usually happens when looking at real estate.

You will most likely end up looking at 20 properties before you buy one.

Put your efforts into the next one. Not the last one.

[nota]

just like used cars
the dealers never have the best deals
private sellors are the way to go
you save 6% at the start
and the chance of a FSBO under pricing
is far higher then a pro agent
why people use agents is beyond me
but fools still go to used car dealers too

6% x 300k is a nice used Porsche
would you pay your car to get a agents ''help''

[KFC911]

Originally posted by Dantilla
Just walk away. Don't waste any energy worrying about it...

Yep...

[David]

Sounds like a realter you need to stay away from.

In a hot market, I don't think it's uncommon for there to be offers over the list price, but since it was on the market so long it doesn't seem like there'd be any over list offers.

[Big Ed]

I'm a real estate broker on the East Coast. I have several thoughts on this situation which I'll try to get out before the thread is littered with the usual "all Realtors are crooks" and "anyone who uses a Realtor is a fool" responses that are sure to follow:

1. John is a bad match for you. You don't like nor respect him. As such, I'd suggest moving forward that you work with someone else.

2. I don't think you specified if John is acting as the listing agent or as a buyer's agent in this transaction. The distinction is important, because if he's working for the seller than he is negotiating on the SELLERS behalf, and not yours. It certainly sounds like this is the case.

If so, he has a fiduciary responsibility to the seller to get him the highest possible price for the property and furthermore to within the law follow the seller's wishes.

If he has declared as a buyer's agent working on your behalf, and if he truly is in cahoots with the seller, then there is misconduct. However, this can be hard to prove.

My thoughts are still the same, you don't trust this guy, so don't work with him.

3. As far as bait and switch goes...there's nothing prohibiting that. A seller can refuse any offer presented to them, doesn't matter if it is full ask price, no contingencies, cash sale, closing tomorrow...seller can always accept or reject any offer THEY see fit.

Now, it doesn't sound like a wise move to do this as it surely will piss off many prospective buyers, but it isn't illegal. And it may very well be true if this is truly a great deal, that it has generated multiple offers including some greater than ask price. Very rare in today's market, but not impossible.

4. Title/escrow company conspiracy theory regarding kick backs: I'm sure this does happen, but anyone who participates is a fool. It's a Federal offense.

Bottom line, from your descriptio of the situation I can't say with certainty whether or not John is a crook or has misbehaved. However, it's clear that you don't like/respect him; isn't that enough motivation to move on?

[RANDY P]

It's being loaded up to maximize commission and sales profit. A realtor (even a buying agent) has loyalty to other agents, (this weird fraternal / brotherly thing they all have - *********s) 1st, and you the buyer 2nd, nevermind what the buyer's contract states.

I'd have the agent supply comps to prove value, then when he chokes, call his broker and insist on another agent. They do in fact have a fiduciary responsibility to represent your best interests, not work in cohoots with the selling agent to "high-gross" you, the buyer.

rjp

[berettafan]

None of it matters. You want to pay 'x' for the house and he will or won't take it. It's all just dollars. Worrying over how much $$ goes to closing, taxes, etc. (as opposed to looking at the bottom line) is amatuer hour and by doing so you have inadvertently told both realtors that you fail to understand the concept of the 'bottom line'. This has the effect of encouraging the little bastards to play games with the HUD1 in an effort to get you to pay more than you think you are paying.

Find the house you want, offer the price you are willing to pay and be done with it. KNOW your bottom line (ie get a preliminary HUD1 and make sure it jives with the deal you struck) and don't worry about the rest.

Remember, your cash + loan amount and what ends up in your escrow account is ALL it comes down to. Get some HUD1's from homeowner friends and study them so you can be an educated homebuyer.

[berettafan]

Oh and 'title companies' vs. local attorneys is the WORST thing that has happened to real estate transactions. You are absolutely correct to be leary of a seller chosen title co when the seller is a realtor.

Collusion there is not to be suspected, it's to be EXPECTED. If the title company is a point of contention you can pretty much expect you're getting screwed in some fashion. Closing costs (we're talking about fees to do the closing documents, file deeds, do title searches, etc.) should be consistent and easily predicted and you need to know what they will be up front. This comes back to getting a preliminary HUD1 and reviewing it BEFORE you close.

[john70t]

If you've signed an "exclusivity agreement" with Mike or John(transferable), then he can sue for fees on any properties purchased through another Realtor within that time period. Be careful.....
I also read an artical mentioning that in some cases Realtors were even claiming commision on sales that they mentioned in passing(claiming an oral referal contract), and with the market in lean times the more unscrupulous ones will find any excuse to earn a buck.

If John hasn't signed a "Buyers Agent" contract, anything you tell him about your motivations and economics can be passed on and used by the seller, such is the system: legal but not moral.

If he has broken any other rules in the process, such as steering you to a certain neighborhood because of race, or made any unproven claims as to the condition of the house (!!!!),etc... then there might be grounds for retribution through the NAR/etc., and John would certainly want to break all contact with you.

Collusion will be hard to prove unless there is a third party/seller involved...

[RANDY P]

Good advice.

easiest way is to negotiate for the home purchase itself assuming NO concessions are needed - ( the lowest price possible) then after that is determined, ask for closing costs to be covered then added into the original purchase price - use the GFE from your Loan Officer as a guideline for amount of seller concessions you will need - using this method is how to determine the "bottom line" mentioned.

as of Title and Escrow, make sure they aren't billing you for the seller's portions of the deal...
rjp

Originally posted by berettafan
None of it matters. You want to pay 'x' for the house and he will or won't take it. It's all just dollars. Worrying over how much $$ goes to closing, taxes, etc. (as opposed to looking at the bottom line) is amatuer hour and by doing so you have inadvertently told both realtors that you fail to understand the concept of the 'bottom line'. This has the effect of encouraging the little bastards to play games with the HUD1 in an effort to get you to pay more than you think you are paying.

Find the house you want, offer the price you are willing to pay and be done with it. KNOW your bottom line (ie get a preliminary HUD1 and make sure it jives with the deal you struck) and don't worry about the rest.

Remember, your cash + loan amount and what ends up in your escrow account is ALL it comes down to. Get some HUD1's from homeowner friends and study them so you can be an educated homebuyer.

[Porsche-O-Phile]

Thanks again. To my knowledge, we did not enter into any kind of exclusivity agreement, but I'll triple-check all my paperwork. I'm fairly certain nobody broke any rules regarding profiling on the basis of race/color/creed/whatever - John was fairly professional in this regard, mostly he was just an absolute pain in the ass to deal with and I strongly resented his "used car salesman" tactics. If there's nothing in the rules about "bait-and-switch" being illegal, I figure it's just better to drop it and move on. Just I was told by someone close to me who I trust that bait and switch tactics ARE in fact illegal (but they could be incorrect on this matter. . .)

[john70t]

Put "goodbye" in writing, and move on. Life's too short to deal with this person.
Oh, it might not hurt to send a certified description of all the preceedings to the NAR just in case his behavior actually hurts someone economically in the future. Why support the bad?

[rammstein]

Walk away.

[therotman]

Originally posted by Porsche-O-Phile
Thanks again. To my knowledge, we did not enter into any kind of exclusivity agreement, but I'll triple-check all my paperwork. I'm fairly certain nobody broke any rules regarding profiling on the basis of race/color/creed/whatever - John was fairly professional in this regard, mostly he was just an absolute pain in the ass to deal with and I strongly resented his "used car salesman" tactics. If there's nothing in the rules about "bait-and-switch" being illegal, I figure it's just better to drop it and move on. Just I was told by someone close to me who I trust that bait and switch tactics ARE in fact illegal (but they could be incorrect on this matter. . .)

Bait and switch in regards to your loan is illegal, but this is not it. In regards to the purchase price the seller has the right to refuse any offer. If they really received two offers they probably are just looking to see if they can get anything more out of either one of you, and if you both reject they can always let your realtor know they changed their mind.


If you really want to do something you can file a complaint with the DRE. If they are really both working against you the proof will arrive after they get a few complaints.


The only reason to ask for the seller to pay closing costs is if you do not have and money to bring in. If they pay Closing costs you are paying property taxes on that credit for the entire time you own that property. Just have them lower the purchase price instead.

Oh, and on the CA Purchase Contract it allows you as the buyer to specify who the title company is, it's just normal practice in So. CA. to put "Seller Choice" so next time you pick.

[legion]

Originally posted by rammstein
Walk away.

I'd say run, don't walk.

In my area, the owner of the biggest realty office is our state senator. They get away with some pretty unethical stuff because no one is willing to go up against the richest and most politically connected guy in town. All of the local realtors that have been around longer than a year know each other. They scratch each other's backs.

The counter offer is BS based on what your realtor told you to get you to bite.

Run, don't walk.

[azasadny]

Originally posted by Dantilla
Just walk away. Don't waste any energy worrying about it. There is no strong case, you just simply couldn't get a buyer and seller to agree on a price. That's what usually happens when looking at real estate.

You will most likely end up looking at 20 properties before you buy one.

Put your efforts into the next one. Not the last one.

+1

[Porsche-O-Phile]

Formally indicated this morning that I'm no longer interested in the property and am rejecting the "counter-offer". I also fired "John's" ass.

Met with another woman this afternoon at lunch - she seems much more receptive to stuff, much more willing to listen to our needs and much more laid back about the process. Came highly recommended, so hopefully that works out. I've also got one of my wife's friends offering to help and a gal who we spoke to briefly at one of the open houses we went to sending me a bunch of comps. Hehe. Nice to be loved I guess.

I have no doubt we can do just as well, if not better - with no games, no pressure and no B.S. It's much more of a buyer's market than even I realized from the sound of it. The mere fact that there were a bunch of realtors sitting around this past weekend in open houses in $250k to $300k condos instead of the usual $1.2M to $2.5M houses only leads me to believe that the market has definitely softened. 18 months ago, you'd never have caught these people "wasting their time" with such properties.

The times they are-a-changin'. Only going to get better too, methinks.

[SLO-BOB]

Originally posted by Porsche-O-Phile
Formally indicated this morning that I'm no longer interested in the property and am rejecting the "counter-offer". I also fired "John's" ass.

Wise move. My apologies to realtors who contribute to this forum. I'm sure you're the exception but......

....the sooner you understand that realtors are slime, the better off you'll be. They are much worse than used car salesmen. I've had repeated dealings with them in my 4 house history and I hate every one of them. You are wise to walk away from this particular jack-ass as some are worse than others. You don't really have a case, nor is it worth the time to pursue it as you lost nothing. I, in fact have sued a realtor who was in collusion with another realtor, a buyer, and a home inspector. I wanted their license, but I settled for $10k.

I would avoid signing on with a realtor. Check listings and do the open house thing. Make an offer to the listing realtor as they will be more motivated to do the high pressure salesman bit on the seller because they stand to get the full commision rather than splitting it with another broker. The downside is you don't have someone out there looking for you, but the upside is no annoying calls at the office.