Tuesday, September 26, 2017

In my 25 years as an associate broker, I have been the business beneficiary of buyers, tenants and sellers who have experienced what they perceive to be less than satisfactory treatment by their former real estate agents. I have come to realize that the fault often lies with both parties. On the side of customers and clients, some problems have resulted from misunderstandings and ignorance of the constraints imposed upon agents by federal and state laws. But two of the constants on both sides are often a lack of trust and a failure to communicate. What follows are some common situations but by no means an exhaustive list. After all, we are dealing with people and they and we provide limitless opportunities for all sorts of experiences.

Let’s consider the sellers of co-ops and of real property. Many sellers refer to the listing contracts that they as brokerage clients are instructed to sign. Sellers complain that they were handed a contract and were told to sign it but had no idea that contract provisions are negotiable. (My response: Don’t sign a contract without first showing it to your attorney!) Sellers often discover after it is too late that the commission written into the contract is negotiable! Sellers have also told me that they resent that they must give the listing brokerage a six-month exclusive right to sell. They protest that they do not want to list for six months and they do not want to list their properties with only one brokerage. Yet, it was never explained to them that they could object to the six months and try to negotiate a lesser term and that the agent representing the brokerage should have told them that in New York State they may have their choice of open, exclusive, co-exclusive and exclusive right to sell listings. Some people prefer open listings that can be given to one or more brokerages, or exclusive or co-exclusive listings in which the seller is free to sell his property without obligation to the broker should the seller find a buyer without involvement of the broker. (In an exclusive-right-to-sell listing, the seller owes commission whether or not the broker participated in the sale.) Some sellers prefer not to sign a contract but to have a verbal listing instead. Moreover, some written contracts state that if the deal does not close due to the seller’s action then the brokerage is due the commission; if the buyer defaults and the seller keeps the down payment, then the brokerage is entitled to a percentage. But if this sounds greedy, the broker is entitled to a commission if the broker has in all good faith produced a ready, willing and able buyer and there was a meeting of the minds on the deal. Brokers do usually wait for the closing to be paid. In addition, the brokerage has presumably worked hard to find a buyer and has spent money on advertising. And, if the seller insists on too many changes in the listing contract then the brokerage may refuse to take the listing.

Agents also have complaints. Recently, a salesperson told me that she had gone to great pains to set up a series of appointments at a time requested by a prospective tenant. The tenant then requested a time change so the salesperson obligingly called all of the people with whom she had appointments and changed the times. Of course, the prospective tenant called again and said that she realized how difficult it was for the salesperson to change the times so she would keep the original time frame—so the poor salesperson had to change the appointments yet again!

One common agent complaint is about people who make appointments and don’t show up, or call to cancel or to postpone the appointment.

A serious fault on the part of prospective buyers and tenants is failure to disclose relevant financial and credit information. Without accurate information about credit history, income, assets, debts, employment, criminal history and anything else that the landlord or co-op board needs to know, you cannot be matched to the co-op or rental building for which you qualify. I take great pains to explain to customers that nothing is hidden anymore and all will be discovered by the co-op board and the landlord. Why waste time and money on the path to certain rejection? Tell your agent everything and either you will be matched to the correct situation or told up front that you cannot qualify.

Not only are buyers and tenants at fault here. In past years, I had experiences with two incompetent agents who pitched their “highly qualified” co-op buyers to me. The agents either lied or were too lazy or incompetent to ask the right questions, and although I asked for complete information it was not forthcoming. Thus, one buyer was rejected by the loan bank because her monthly expenses were too high and the other was rejected by the seller when we discovered that the buyers had failed to disclose a $400,000 mortgage on their two-family house and they could not afford the co-op plus the mortgage.

Another of my pet peeves is the agent who tells me (and customers and clients) that he/she is a “licensed agent” or fails, at the first contact with me (as required by law), to identify himself or herself as a licensee. In New York State, there are three kinds of licensed agent: broker, associate broker and salesperson. Usually, the person who says that he/she is an agent is trying to hide the fact that he or she is a salesperson, not a broker or associate broker. Note: There is no shame in being a salesperson!

Also, please note that Realtor is not a synonym for a real estate agent. “Realtor” is a federally trademarked name for licensed agents who choose to belong to the National Association of Realtors. Again, it is no reflection on an agent if he or she is not a Realtor.

Buyers often do not realize that agents are in business to earn a living. Thus, the public often regards us as sources of free information, making demands on our time and expertise. Normally, I don’t mind this, with one exception: A buyer who has found a property with another brokerage asks me my opinion of a house that the buyer is thinking of purchasing. Not only the house, mind you, but could I also recommend a good attorney, home inspector and lending institution? I decline because I am not in business to help my competitors make deals, unless we are working on a deal together. Moreover, if I give information about a house (even if I know that it has serious faults), I could be accused of tortious interference in another agent’s sale. I don’t feel good about withholding information of this sort, but in truth it is up to the buyer to hire competent experts. So I explain this to the buyer and ask why he/she has not asked the agent with whom he/she is working. The answer is often that the buyer does not trust the agent, either because the agent represents the seller and/or because the agent is suspected of receiving a kickback or other consideration from the people he or she recommends.

Sellers have complained to me that they were “pressured” by agents into listing their properties for prices with which they did not agree. Be aware that it is your property, not the agent’s, so you are free to request that the agent try your price, at least at the outset. But don’t be so foolish as to discount the agent’s expertise and the comparable sales that he/she presents to you. If you suspect that the agent is lowballing the asking price, or urging you to accept a price that you think is less than you can get so that he or she can produce a quick sale, then confront the agent and ask for his or her rationale. Remember that the agent works for you and in New York State is supposed to put your interests before his/her own. But always remember that if your asking price is unrealistically high then the agent may not want to accept your listing because he or she will be wasting time and ad dollars on a losing proposition—this serves neither of you well.

Another common complaint by sellers is that the previous brokerage did not bring anyone to see the property. Instead of firing the brokerage, did the seller ask why no one came? Sometimes situations exist over which the agent has no control: the local economy has tanked, the property is overpriced (at the seller’s insistence!), the property is in an undesirable location, the property is in poor condition, the property taxes are too high etc.

A new brokerage opens in the area and is staffed by agents from who knows where. A few years ago, a nationally franchised brokerage opened in Riverdale and a competitor agent called to ask me if there is a Y in Riverdale! Don’t you just love agents who assure buyers and sellers that they know the area and can sell the products but who don’t have even the most basic information? Related to this is the agent who wants to appear to have all of the answers. One of my favorite cautionary tales is of the Manhattan agent who was asked by the co-op buyers for the apartment’s square footage. Wanting to appear knowledgeable, he threw out a guesstimate. After the closing, the couple called the carpet people to measure the apartment. Yes, there was a significant discrepancy—the couple sued, and guess who lost—the agent! (I don’t discuss square footage—I give the buyers the official building floor plan, I invite them to take their own measurements, and I tell them that their lending institution’s appraiser will provide them with a figure.)

Another problem is presented by tenants or buyers who have non-negotiable requirements but who will not agree to trade-offs if their requirements cannot be met because they don’t exist and/or are not within their budget. Then they complain that the agent could not find what they want!

One of my all-time favorites is the buyer who will not give me even a ballpark estimate of his or her budget. Of course, it’s fine to have one figure for a move-in condition property vs. another figure for a property that needs work. But please don’t tell me, “I don’t really know what my budget is. You know what I’m looking for. Just show me everything!” My response is, “Please get me a lender pre-approval letter that states the limits of your budget!”

Please don’t ask an agent to discuss an area’s racial, religious and ethnic composition or to discuss the desirability of one public school over another. Don’t ask us about crime in the area. We’re not allowed to discuss these items but there are other sources: the local police precinct, visits to local schools etc.

Finally, I must say that brokerage often involves dealing with people in stressful situations and this often gives rise to challenging events. All agents have their own war stories to tell. For example, at one of my co-op closings, the transfer agent asked the seller where was his wife, the co-owner, or her power of attorney? “Oh,” responded the husband. “She died about 10 years ago. I didn’t know I had to tell anyone. I just signed the contract with both our names. Does she really have to be here? I’m the only one living in the apartment.” (The closing was adjourned for a few hours so that the necessary documents could be provided.) Even better was an attorney’s instruction to the buyer to bring his checkbook to the closing. The buyer did so, but when it came time to write checks for the first month’s maintenance etc., it was discovered that no checks were in the checkbook. “But,” he said to his attorney, “you told me to bring my checkbook. You never said anything about bringing checks.”

As Art Linklater used to say, people are funny!

By Vivian J. Oleen

Vivian J. Oleen is an associate broker with Sopher


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