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FRIGHTENING / Held Hostage by your Discount Broker Listing Agreement

I read an article this week --- that is of serious concern to all that represent sellers and those that consider themselves listing agents AND to everyone that may sell their home in the future. I know we have discussed - at length - the virtues of using real estate companies that are reputable, honest and hold themselves accountable and with the utmost integrity. And, we have emphasized the value of getting to know the agent/broker that will represent YOU in the sale of your largest financial asset.

But some, no matter what, will continue to shop price.

What is frightening to me is what can and does happen when sellers or consumers try to save dollars without sound advice from experts in their local market. They are seduced by what they think is a low fee and a quick sale. They are lulled into the sensability that they have control of their destiny in an area that requires a FULL TIME, experienced & local real estate agent.

This has happened in the stock market in the recent past, when buyers tried to make FAST MONEY listening to virtual pundits that gave "stock tips" and the layperson took their 401K money and gambled it on individual stocks and the possibility of short term gains. When seasoned investment advisors reminded these gamblers that this is a high stakes game that could draw you in and make you lose, those risk takers went on the internet to buy and sell themselves based on NO STRATEGY and with advice from radio,tv, and internet blog personalities. Most lost. And lost big time.

Now, thousands are being held hostage by a discount & primarily virtual discount brokerage firm...in which case, many homeowners did not even meet their agent/broker face-to-face AND NOW their listing agreements are being sold to other brokers/agent companies that they never met --- WITH NO CHOICE --- but to accept the new company and agent terms.

While it is easy to sit back and say, " I told you so" or " You get what you pay for..." doesn't this whole scenario sound FRIGHTENING to anyone else?

Foxtons listings sold

Categories: New Jersey Real Estate , Housing Bubble
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From the Star Ledger:

Bankruptcy judge clears sale of listings held by Foxtons

More than 3,400 New Jersey real estate listings that had been in limbo since the discount brokerage filed for bankruptcy protection last month will be sold to another brokerage, a federal judge in Trenton ruled yesterday.
The New Jersey listings were bought by Rahway-based Maplewood Homes for $100,000. Hundreds more Foxtons listings in New York were sold to Fillmore Real Estate, a Brooklyn-based brokerage, for $110,000. The proceeds of the sale will be used to pay Foxtons creditors.
Maplewood Homes, started by Lakewood investor and developer Glen Fishman, is the same firm that recently bailed out another victim of the housing market slowdown, Kara Homes, an East Brunswick-based homebuilder that filed for bankruptcy last year.
During yesterday's hearing, Joseph DePasquale, an attorney representing Maplewood Homes, said the developer had formed a joint venture with Century 21 Atlantic Realty, a brokerage based in Roselle Park, to service the Foxtons listings.
Michael Holt, an attorney who represents Foxtons in the bankruptcy case, said Century 21 and Fillmore real estate agents could start contacting Foxtons homeowners as soon as Monday.
The judge's decision means Foxtons customers who signed three- or six-month contracts with Foxtons will now become customers of Century 21 Atlantic or Fillmore under the same terms, including a discounted commission of 4 percent.
Judge Michael Kaplan said homeowners are free to cancel their contracts at any time, but would be prohibited from listing with another agency for the length of their Foxtons contract, and would also be bound by any cancellation clauses.
More than 30 homeowners sent letters to the bankruptcy court objecting to the sale of the listings to another brokerage and asking the judge to void their contracts because Foxtons had not performed its contractual duties.

Posted by Pamela STETSON on 10/31/2007 10:47 AM

Comments (9)

This post has been included in New Jersey Information Bergen County, NJ Information

9 Comments on FRIGHTENING / Held Hostage by your Discount Broker Listing Agreement

So sorry Pamela.

I just can't muster up any sympathy for home sellers who believe that my services have no value.

Why hasn't 60 minutes featured this debacke like the Redfin feature???

10/31/2007 10:57 AM

by Lenn Harley, Homefinders.com, MD & VA Real Estate

Hi Pamela,

I have heard some awful stories from clients that do not know the real estate business and then hire a low service company to sell their home. There are a few sayings that come to mind. You get what you pay for & If it sounds to good to be true .......................

10/31/2007 10:58 AM

by Janet Asman (RE/MAX Integrity)

Hello Lenn --- On one hand, I cannot agree more...yet on the other, this type of story is buried deep below the radar screen AND most importantly, the homeowner is suffering.... thanks reading and for your comments.

10/31/2007 11:16 AM

by Pamela STETSON (Abbott & Caserta Realtors)

Hey Jane --- I know, I know...but sometimes it seems like " I told you so " is not enough! Live and learn...thanks for your comments.

10/31/2007 11:17 AM

by Pamela STETSON (Abbott & Caserta Realtors)

Having practiced real estate law for almost 30 years, and having a brokers license in two states, I think I can honestly say that most real estate brokers aren't worth 1/10 of what they claim to be worth. 6%? Why? Because that is what they have always gotten? Tell me what it is that you do that is worth 6% of a listing? What hourly rate do you think you are worth that would equate to $6,000 per $100,000 of this listing? $18,000 for a $300,000 listing..... $42,0000 on a $700,000 listing.... $60,000 on a $1 Million dollar listing? Come on, tell me what exactly you do that is worth that much money? What do you do that is worth a year's wages for many families?

Brokers, for the most part, write up a listing, put it in the MLS and sit back and wait for an offer to come in. Then they tell the homeowner how hard they worked and laugh all the way to the bank. Sorry, but that isn't working hard for your money.

Open houses is a means of prospecting for new clients. "Oh, this house doesn't suit you? Here is my card, tell me what you are looking for and let me help you find it! I can find the perfect house for you, what is your name? do you have a house to sell? I can help with that too"

I have a house to sell. Convince me that you are worth what you want? Tell me what it is that you are going to do to earn tens of thousands of my dollars?

I certainly don't fault anyone who tries to sell a house without the aid of a high priced broker.

11/04/2007 12:01 PM

by Wes Grady (C. Wesley Grady, Esq.)

Thanks for your comments Wes.

I am a professional that is worth every penny of what I charge for the sale of my listings. Sale is the key word here. I market and sell homes. There may have been a time when a home --- just sold with little or no effort or experience just by listing it on the mls. That, is no longer the case.

First, like any business, I design an individual marketing plan based on the seller's needs. An open house is simply a marketing tactic --- not a marketing plan. Each plan is different depending upon the seller's goals. And, based upon the individual home in a particular location. I am available to my clients 7 days a week (not just 9 to 5 ) and I do not charge by the hour for consultations ( like lawyers) nor do I charge for faxes/fedex, cell or phone calls,mileage or other admin functions. I pay for all the tactics within the marketing plan. In addition to the sale of the home, I oversee negotiations, home inspections and town inspections. I interface between the lawyers, town, title company, banks, etc. I also take a very big risk. I do all of this for FREE because I don't get paid unless the home does SELL. And, I offer an unconditional marketing guarantee that states if my seller is not happy, they can be released from the contract with me.

Doctors, lawyers, bankers (and heck even mechanics) all charge a fee - upfront - regardless of whether their plan or prescription works. I only get paid if the home sells. And, this depends on whether the seller agrees to the contract. Wow. Not many "professionals" would work all those hours for those terms & conditions and offer an unconditional guarantee.

And, as my blog had originally pointed out....those who entered contracts with this particular discount broker were held hostage by the court because even though the broker went bankrupt...they were not released from their contract SO their homes...stood in LIMBO and Not available for sale. What a shame! I guess you get what you pay for....

11/04/2007 12:39 PM

by Pamela STETSON (Abbott & Caserta Realtors)

Actually, it was my post and your comment to my post.

You are asuming, again, limited effort. My marketing plans and sales...speak for themselves. And, none of my clients were ever bankrupt. They have all had great legal, financial and real estate advice.

And, you should practice what you preach...identify yourself and start your own blog instead of just commenting on others....Perhaps others will feel free to add their own editorial...and you will create your own following...Good luck!

11/04/2007 06:14 PM

by Pamela STETSON (Abbott & Caserta Realtors)

I thought I had identified myself. My name is Wes Grady, I am an attorney in New York and have been for the past 28 years. My primary area of practice is in Real Estate.

But, I can see that you are upset that I ask a difficult question, so I will bow out and leave you to your blog.

11/04/2007 07:30 PM

by Wes Grady (C. Wesley Grady, Esq.)

LOL ... it takes more than a blog comment to do that!

After all... I have been very successful in many a business handling multi-million dollar ad / pr campaigns for multi-nationals to running my own business practices. All , while being a full time MOM! You have very specific opinions and should have your own blog... instead of just commenting on others and your identity is BLANK page on Active Rain since...their is no bio, face, location, or details...so... anyone can give a name and have no id behind it...(that is what I meant).

So stand and be counted --- go forth and write your own blog! I am sure you will find an audience that agrees with you...

11/07/2007 09:34 AM

by Pamela STETSON (Abbott & Caserta Realtors)

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