Follow Up: Do REALTORS® Owe Anything to Those Hit by Housing?

I try to help homeowners that are facing hard times in anyway I can. I provide them information so that they can try to lower their property taxes, provide information on who to speak to for loan modifications, sell their home if necessary as a short sale. I do not feel responsible for the current state of the Real Estate market.

I do not try to inflate property values nor am I involved in the Lending industry. Most of my buyers come to me after they are pre-approved by the Lender of their choice. I am looking forward to better times. I hope most can hang in there and keep their homes.

Yes, it is unfortunately true that way too many people in this industry truly are out only for themselves.  There are realtors who did, indeed, convince people to purchase homes they knew their clients could not afford.   However, they are not the majority of real estate professionals.  Like most everyone else in our profession, I am sick and tired of hearing how "overpaid, underworked and greedy" real estate agents and brokers are.

Most of the real estate professionals I am aquainted with, myself included, do put their clients' interests first and would never sell a home to people who could not afford the payments.  This just makes common sense.   Personally I have talked clients out of purchasing a home that would have been a real financial stretch for them...only to have them go to another agent who convinced them they could take on second jobs to pay the mortgage.   Yes, they have lost the home to foreclosure.

I think it's time we, as true real estate professionals, come out of the shadows of the "real estate unprofessionals" and start showing our true colors.   Only then will our "tarnished name" begin to shine again.

It's a real shame that news reporters are not educated on the issues they report on. If he was educated on the issue he would have known that not all states have the same laws regarding agency relationships. For instance, here in Arizona a buyer agent DOES NOT work for the seller at all. The fiduciary duty is with the buyer not the seller. And the commission earned by the buyer agent actually comes from the listing agent. The listing agent negotiates a commission when they list the house and then in turn offers a percentage of that commission to the buyer agent they bring in the offer.

Someone should also tell him that the commission is NOT the same when and IF that agent sells the house a second time. Values have drastically fallen! The commission that was earned on a house when it sold for $400,000 is obviously not the same as when that same house sells for $275,000.

I also think the guest could have done a MUCH better job answering the questions. I think he was given an opportunity to help educate the audience on the real facts and failed.

I always offer advice to my buyer clients to "not stretch yourself to the limit" when you are deciding how much to spend on your mortgate. But that's as far as I go. I let the mortgage broker look at their credit & debt to income ratios to determine how much they are approved for. I am a Realtor, I advise people on the value of a home and the market conditions. I negotiate on their behalf and navigate them through the paperwork. I DO NOT set their household budget or predict their financial future.

My comparison would be: if a customer buys a car and then later has it reposessed does the car salesman owe something to the customer? Did they make the customer buy the car? NO. If they happen to sell that same car again, should they discount their commission? NO.

Dawn - I just stopped by to read your follow up to the first story.  It just goes to show that you can't believe what you hear of read in the news.  Their business is just to get listeners.  I think right now this country would be better off if everyone just turned their tv sets off and just got on with business as usual.  Yes there were lots ot things that were wrong, but I strongly believe that the media made this situation so much worse.

I love how at the end he doesn't want to say his Realtor's name because that would be "free advertising"  which is essentially what pays his salary, yet he thinks Realtors should sell a house the second time for free.  I could just imagine how that transaction would go!  People always work really hard for nothing. 

I think it is fair to question whether Realtors hold some accountability in this mess -- but to suggest that short sales or foreclosures be handled for free is ridiculous.  They are 5 times the work for half the money!  Half the time you are doing community service when you take one on!

Dawn...thanks for raising my blood pressure! I agree that the CEO of Coldwell Banker certainly did not do the best job in defending our profession. He waffled way to much.

As Jason Crouch said, a surgeon certainly charges you twice.....and what a stupid thing to say anyway. House sold once, now in foreclosure, so we should not get paid? Probably work 10 times harder on a foreclosure than a regular transaction! I'm happy to say I NEVER, EVER, allowed any of my clients to ever take an adjustable rate mortgage. All my clients are still in their homes! Thank you!

Oh, I knew there was a reason I don't watch Fox News!

Realtors are easy targets.  In many people's eyes we are right there with used car salesmen.  Plus it is a housing crises so they figure we must take some blame. How about all those bonuses at Freddie Mac and Fannie Mae?  Didn't Mr. Obama make a killing in the up real estate market?  I'm sure he was just lucky.

Dawn,  Thanks for this discussion!  It has been educational and eye-opening, having entered the business just at the "bubble" was starting to burst.

Simon:  I love that term - VICTOCRAT!  I'd never heard it before, and I think it is absolutely eloquent!!!

I have not figured out where people get the notion that Realtors are at fault for this crisis. When someone comes to me asking me to help them buy a home, I am never privy to the details of their loans. I know from the bank yes or no if they qualify for a loan. At best I know great credit or no way credt. But rarely have I known thier interest rate, and never thier monthly payments or any of that. I may assist them in locating different lenders to get a better loan program to fit thier needs, or if they say the interest is too high I can send them to a different lender. But I NEVER ask the details of thier personal financing. EVER. I leave that to the bank.Do you? I mean really, how many Realtors know that much? I would love some feedback on this one.

Once I know it is a go, I work dogedly to get them what they can afford, based on what thier lender tells me in the pre-approval latter. So I can't figure out where people get the notion that we as Realtors are liable, therefore should work for free.

We work for free all the time, especially right now. When homes stay on the market beyond our contracts and the sellers pull out on us because it didn't sell. Or when we drive people all over creation with a Pre-Approval in hand and then after an offer the rules change and the pre-approval is no longer good. I could go on...

And who says we only work for the seller??????? Not in my state of NC. We work for which ever side we are representing. If I work with a buyer I am never doing anyting for the seller unless my buyer directs me to. I am a buyers agent for the most part, and I have a fiduciary responsibility to that person only.

The public has a long way to go in order to really 'get' what we do and how we get paid. And that includes the media. Maybe we should all be blogging in our own hometown newpapers about this issue, rather than preaching to the choir..But hopefully the public really does look at Active Rain. And we can hopefully make a difference here as well.

Thanks for a great post that stirred a lot of writing! I love it.

Dawn there are agents, loan officers, appraisers & attorneys who all worked together here in Georgia who went to jail, no passing go, no $200.  I'm not throwing off MY industry mind you.  Most of us are honest and would not "get into bed" so to speak with a corrupt group.  But having seen the results of some of the corrupt agents first hand... there are those in this industry who bear some of the blame.  If a client told an agent... this will be my second home and committed loan fraud by taking out a loan saying it would be his primary the agent had a responsibility to report this and not just look the other way.  I saw that a lot.  I've also seen agent participate in 1031 exchange contracts on vacation homes when ummm they KNOW they do not qualify.  Maybe you are blameless and maybe I am, but all agents are not.  I'm not saying they caused it, I'm saying some of them were participants in sales that should have never taken place and they knew it at the time.

I think Brian Sullivan does not know what he is talking about. I think 6% commissions for a realtor in today's market is reasonable. Especially if you are dealing with short sale listing, that takes 13 months to close, received about 15 offers; have to send short sale package to the lenders several times, numerous phone calls from agents, buyers and endless hours over the phone negotiating with the lender to get short sale approval. In my case Short sale was approve 6 times moreover; I had to deal with all kind of liens on the property.

Brent - Commissions actually do rise during tough times... the agents that can get it done get paid more. 

Great discussion. I stopped watching news ages ago just for this exact reason. Reporting news has seemed to have gone the way of a soap opera. I have enough drama in my life already LOL.

Wow, nothing like getting a bunch of Realtors mad. Leslie Stahl did a butcher job on us several months ago on 60 minutes no less. Sadly, many consumers think that what ever they see on TV is true. The CB guy didn't help too much either.

Dawn, Excellent article and excellent rebuttal on your part. And I thought Jason made an excellent analogy with a surgeon who has to operate twice on the same problem. That says it all. Congrats on the well deserved feature.

This guy (Brian Sullivan?) has made some really DUMB assumptions about real estate agents.  In my state (Oregon) we have really specific agency laws and disclosures that clearly state where the fiduciary responsibility is (I'm not sure the newscaster even know what that means...)... we don't just represent the seller, even if that is the original source of compensation.  It is very clear.  He should do some research before he puts his foot in his mouth again. 

Last time I checked, Adults sign contracts...we real estate professionals don't make anybody do anything...  I can't say how many times I've told a buyer "nobody wants to be house poor..." Let's make sure you're comfortable with what you get, even if you can qualify for more..."

We don't make buyers pay more for a house than it's worth.  We also don't get to tell seller's what to do (what offers to take, which to pass).  We advise based on what we know.  We don't have crystal balls to tell us that there's going to be a a market correction.  Yes, some economists predicted it and yes, some did not.  The market has changed.  Many sectors have changed. 

Regarding getting paid for selling the same house twice.  Hmmmm, in an up market, if we sold the same house twice we'd get paid and that would be ok and that's because the seller is making money on it? In a down market, we could sell the same house twice and we shouldn't get paid for it.  Funny, last time I checked, I'm running a business.  My expenses don't change if I am selling the house in either an up or down market.  So what's the difference?  The reality is, I've been in this business a long time... My expenses haven't gone down, they've gone up.  The expectations of the consumer have gone up and the potential for liability have gone up.  The commission rate for my office has not (gone up). 

As Jim Gillespie said, commissions are negotiable, that's not something that's "fixed" in the industry nor should it be.  Each company sets it's own policy (at least in Oregon)  Any one with any experience in real estate knows this...  (ref: Sherman anti-trust regarding price fixing, an illegal practice)

This guy is so busy talking he can't even let his guest get a word in edgewise.  One has to wonder does he really care or is he just enchanted with the sound of his own voice?

If he's so eager to place blame, maybe he should look at what the responsible (sic) media has contributed to the Henny Penny, sky is falling, fear that the American Public is experiencing.  Responsible reporting? HA!

There are a number of factors that have created this mess:

• a hot market (in the words of Billy Joel "We didn't start the fire, No we didn't light it but we tried to fight it")
• low interest rates
• available (maybe too available) money
• public greed (come on, really, when in the history of real estate has it been considered a short term investment by anyone but the most savy investors?)
• television shows that demonstrated how easy it was to flip a house (but didnt' tell anyone about the back story and/or the short term capital gains)
• over-building
• loose (stupid) loan programs (why didn't we learn in the 80's can you spell negative amortization...)
• a basic turn over of prudent lending practices. It used to be a three legged stool:
  •  character (which also meant good credit);
  • capacity (which meant the ability to repay--like income)
  • and collateral. 
    • If any of the legs were missing, the loan didn't go.  During the boom, one or two of the legs were not important... my experience is, one leg missing, you fall down, two legs missing....  Add to that the out and out fraud that buyers perpetrated when buying to flip (a good number of flippers took owner occupied loans and then didn't move in--shock why are we bailing them out?)  Flipping for many, many people was really a pyramid scheme.  Remember those?

Interesting that we saw the end of a huge buying frenzy (of everything, not just real estate),  job losses, out sourcing, high gas prices, fraud and ineptitude in other arenas add those all to the real estate situation and yea, it's a mess.  It wasn't made over night and it won't be fixed overnight.

Being negative and pointing fingers at hard working, honest people is not going to fix it.  Going to work every day, doing the best you can and being honest is going to help.  If everyone did it, it would help a lot.

As Americans have done in the past... we need to pull together.

Loud mouth media people are not interested in fixing it, they are interested in making it "interesting" so they can sell ad spots.  Maybe we should not buy the products associated with those programs...  Hmmmm.  I wonder if  the advertisers would get the message?

Maybe they would blame the media for their economic downturn...

Whew, thanks for letting me get that off my chest.  Fairly pent up...  Thanks for listening

Trying to make any person or group hated by another is big business. Maybe we should start a campaign saying news reporters make way to much, heck they are only working 1 hour a day. 5pm-6pm Monday through Friday. (Lets pay them $100 a week - Heck how hard is it to read a TelePrompTer)

I bet they would argue with that real quick wouldn't they!