Often at cocktail parties, gatherings with family, friends, or client’s, 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 every one of these is a problem that exists today, the biggest problems by far are problems created by agents.
I’d like to start by stating that there are hundreds, perhaps thousands of highly qualified, very involved agents that do a fantastic job for their clients. They understand the process, home valuation, legal and contract issues and perform every facet in a competent and responsible manner.
These problem areas do not involve the good agents, and as in most profession’s, the problems are caused by the 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
- Failure to communicate
Low ball pricing is a relative new ploy where homes are listed for extremely low prices, often less than 50% of value. The seller is fully expecting 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 auction’s to sell homes, as our office has performed a number of them. Where I have an issue is that nowhere in any of the marketing or listing information is this indicated or disclosed. Buyers are drawn to the home because of the extremely low price only to get disappointed when they arrive. This is identical to bait and switch tactics found at used car lots. Recently we had a client very excited to make an offer on a condo in Morgan Hill that was 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 to buy 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 3 voice mails and one email for the listing agent on a commercial property in Morgan Hill, and still haven’t heard back. Another agents voice mail 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. When calling the 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. There is no reason to settle for someone who lacks integrity and treats one of your largest investments in a cavalier or potentially dishonest manner.