Often at parties or gatherings with family, friends or clients, a question I get asked is, “What’s the biggest problem in real estate?”
The expected answer might be the foreclosure crisis, difficulty in getting financing, uncertainty of appraisals, lack of homes available or perhaps issues related to short sales or loan modifications.
Although these are problems, the biggest problem by far are problems created by agents.
There are hundreds, perhaps thousands of highly qualified, involved agents who do a fantastic job. They understand the process, home valuation, legal and contract issues and perform every facet in a competent and responsible manner.
As in most professions, the problems are caused by a handful of unprofessional agents that ruin the reputations of Realtors everywhere.
I’ve had numerous discussions with other agents regarding these issues, and have complained to the Multiple Listing Service and to the local board with no avail.
The issues are low ball pricing, shotgun offers and failure to communicate.
Low ball pricing is a relatively new ploy where homes are listed for extremely low prices, often less than 50 percent of value. The seller expects multiple offers resulting in elevating the price back to full market value. They schedule a limited open house and either employ a silent auction or bid system that buyers must comply with.
I’m not opposed to using auctions to sell homes. Where I have an issue is that nowhere in any of the marketing or listing information is this indicated or disclosed. Buyers drawn to the home because of the price are disappointed when they arrive. Recently we had a client excited to make an offer on a condo in Morgan Hill listed for $100,000. Once all the bids were in, the home sold for $230,000, right at market. Although the seller got what they wanted, there were 25-30 buyers that were very disappointed.
Many of us are members of the National Association of Realtors. That membership requires us to adhere to a “Code of Ethics.” Article 2 of the code of ethics states “refrain from exaggeration, mis-representation or concealment of pertinent facts related to property or transactions.”
Low ball pricing clearly violates Article 2, and makes us all look like liars and crooks.
Shotgun offers are when a Realtor makes simultaneous offers on behalf of one client on multiple properties. Great idea if the buyer actually wants ALL of the homes, but this is never the case. The buyer submits multiple offers waiting to see how the sellers respond. Once they get a response they like, they abandon the other offers and seldom inform the seller, or the seller’s agent.
The Code of Ethics, Article 1 states “protect and promote their clients’ interests while treating all parties honestly.”
Article 3 states “cooperate with other real estate professionals to advance their clients’ best interests.”
You can easily see how shotgun offers violates both article’s one and three.
Failure to communicate is a personal pet peeve. When you hire a Realtor, you should expect them to market your property effectively and respond in a timely manner to all who inquire. An agent cannot honor Article 1 or 3 of the Code of Ethics if they don’t answer their phone or respond to messages or emails in a timely manner.
Just last week, I left three voicemails and one email for the listing agent on a commercial property in Morgan Hill, and still haven’t heard back. Another agent’s voicemail stated, “I am too busy to take calls. The best way to reach me is by email.” I would like to say these are isolated occurrences, but it is very common.
Realtors have a fiduciary duty to their clients, and failing to respond to all potential buyers or other agents on their behalf is a violation of that duty.
Clients should interview potential agents and if an agent is willing to violate the Code of Ethics, what else might they violate?
Request a list of references. Ask references, ask how responsive the agent is, how easy they are to reach and how well they handled the transaction and honored their fiduciary duty to the client.
Excellent agents are available. Don’t settle for someone who lacks integrity and treats one of your largest investments in a cavalier or potentially dishonest manner.
