It's that time of year again, Mercury is in Retrograde! Bringing about those time-eating traffic jams, snafus related to communication, computers and technology that just doesn't seem to be wired right, and a tendency to forget that which we already know, are just some of the many annoyances that occur during this period of September 7 to 29.
Funnily enough, that doesnt appear to be all that's happening! Now as a local agent, I get calls all the time from clients or potential clients, complaining about the market, the buyers, the sellers, etc, but rarely do I get a call like one which I received yesterday.
Now let me preface this by saying first and foremost, all I did was listen - all I am legally allowed to do is listen. I did not comment, advise (except to say to the caller, speak to your attorney) or offer any solutions whatsoever. Although, I wish I could have done so and in fact, my blood is still boiling from this conversation!
Let me back up! A few weeks ago I received a call from a family looking to sell their lovely home in Chatsworth*; it is in a desirable neighborhood and tract and because they were not upside-down, an easy and fast sales potential for me. I was excited to say the least as I am tired of the sad stories associated with short pays, although I have no qualms handling them, the sadness associated with them can be a little rough.
I digress.
So I met with them and was pretty confident I had the listing; both of the sellers were present (a newly married husband and husband, cute as can be!) and we all had a lot in common, they loved my "style" as well as what I was offering to do to get their home sold.
Needless to say, I was STUNNED when I received the call that I did not get the listing and instead they had gone with another agent; I asked why, although at this point I didn't really care - was choking back tears, thus not wanting to be the one doing the talking - I just wanted to take the pressure off myself for a moment, gather my composure (I am typically not quite so emotional but I am sure a lot of you agents will agree with me that in these times, a blow can be hard to take!), and I proceeded to take a few, albeit silent, deep breaths! Ahhhh breathe.............
What I heard next rocked my socks off; the agent they chose was charging them a flat fee of $1,700 to sell their home! WHAT THE (you can fill in your own blanks here)?????
Seriously? Seriously? Seriously!
What an INSULT to those of us busting our bums to get some business! I informed the seller that I cannot nor will I be able to beat that! But, I warned them, be careful as you typically get what you pay for.
My words have haunted them for weeks.......
The home came on the market approximately $150,000 LESS than TODAY's current market value - and $150,000 less than I would have listed it for - now I of course planned to show it right away as I had a few buyers looking for steals within that area. I figured the agent who listed it was trying to get a ton of offers and create a frenzy as well as sell it as quickly as possible because we all know you cannot afford to sell homes for that cheap and have them linger on the market for months on end!
However, as you know, there was NO WAY a buyer who was looking in this price range could afford to go up $150,000! So the seller was for sure going to lose money........by the time I got to the home the property's price had increased twice - going up about $50,000 - and as I later found out, all without the seller's knowledge or acknowledgment. They were never told the price changed/increased nor did they sign anything advising them of the increase or give verbal or written permission for the increase. Hmmmm.....
You get what you pay for.
So, let's fast-forward a few weeks and the phone call I mentioned above that I received. The owners have now of course realized they are in jeopardy and are seriously regretting their decision. What can they do? My advice? Simple - call your attorney as I cannot interfere with another agents contract - but I can certainly listen!
And listen I did; I am shocked, appalled, embarrassed, angry and frustrated and the only way I can relieve some of this frustration is to write about it!
First of all, the agent does not have a fully-executed listing agreement; nowhere on the contract does it state the address of the property nor the APN. Only one seller signed, which in the state of CA is okay for list, but must be signed by all parties prior to the close. Neither did the seller EVER receive a copy of their listing agreement until they asked for it yesterday (yes, this resulted in a second phone call to me.....).
The BIGGEST issue I have, though, is that the agent changed the commission! Yes, I said it - yes, the agent changed the commission - so instead of $1,700 it now reads $3,700 (the 1 was changed to a 3) AND the agent is charging them a referral fee of 27%! WHAT THE (you can fill in the blank here)???? No, the agent did NOT have the seller initial these changes (the original contract was typed but the changes are handwritten) nor did the seller have any idea until they received their escrow instructions in the mail (and they did get a call from the agent prior to receiving them stating that they will notice a change on the escrow instructions but just ignore it). HUH??? The agent also changed the selling agents commission from 2.5% to 3%, again, making this change AFTER the seller signed the listing agreement! However, on the MLS it shows the commission at 2.5%! Can you say, funny business?Oh, just slightly!
The owner told me they asked him about the commission change; he said that it has ALWAYS been on the MLS at 3% (which is not true as it is listed at 2.5%) and that the selling agent agreed to give up .5% because the selling agent "doesn't know how to do anything" and the listing agent is "having to do all the work" (ya, I bet it takes a lot of hard work to figure out the best way to commit all sorts of fraud....) The agent then went on to tell the sellers that this is an agreement between agents and the seller doesn't need to know the details nor is it any of their business or concern. So, it's none of their concern that their agent is fraudulently obtaining more money? Their agent is jeopardizing a purchase? Nope, guess it's none of their concern!
Okay, so wait a minute; when I add up all these numbers the seller has just rattled off to me, the commission now actually exceeds 6%!! WOW! The seller went from signing a contract at a discounted rate of $1,700 and is now paying more than 6%!
UNBELIEVABLE! And this agent is allowed to walk the streets, taking business from you and I. Charming thought, isnt it?
And yet, sadly, there's more!
The counter offer the agent sent to the buyer states that all contingencies are; for those of you who may not know what this means, it simply means come day 17 (or whatever day they agreed upon) the buyer doesn't have to sign a contingency release form - they are just released at the contracted time! HUH?
According to CAR and the DRE: The term "active removal" used when talking about a contingency means that a party must do something to remove a contingency. Typically this means removing the contingency in writing. For "passive removal" of a contingency, the party need do nothing and the contingency is automatically removed with the passage of time.
HOWEVER, The RPA-CA as well as all the other C.A.R. purchase contracts require active removal of the buyer's contingencies.
So, in other-words, the seller signed this but it isn't even acknowledged or VALID in the state of CA! What this means for the seller is that the buyer can essentially have all of their contingencies in place, walk the day of closing, with ZERO repercussions! How scary is that?
And this agent is walking around taking business from you and I (yep, I said it again!)!!!!!!!
For those of you shrugging your shoulders or not feeling as outraged as I am, let me point out a few facts here (and forgive me my emotion, but I am very frustrated by this chain of events and more frustrated that I lost the listing due to fraud!).
I am acknowledging the errors to the best of my abilities and from state-to-state, these errors may be erroneous:
1. Ideally, an enforceable real estate purchase contract should include the identity of the parties, clear description of the property being sold, the price, the terms of payment, and the time for performance; their listing agreement contained none of these items, with the exception of the fraudulently adjusted commission. There are no seller names, address, etc.
2. A contract is valid only if the parties voluntarily consent to its creation. If a party to a contract can prove that his or her consent was not freely given, the contract can be avoided (is voidable). Consent is not freely given when it is obtained through fraud, mistake, or as a result of duress or undue influence imposed by the other party.
3. State of CA only allows for active removal of contingencies; the RPA-CA as well as all the other C.A.R. purchase contracts require active removal of the buyer's contingencies.
4. Now the issue as to the seller paying a referral fee to the listing agent isnt covered in the DRE or CAR rules or laws and is an ethical issue. However, if anyone does have info on this I would be curious to see it. Those of us who have ethical practices know this is wrong - why would the seller pay a referral fee when the agent wasnt referred first of all, and secondly - and most importantly - ANY referral fee of this nature (which I am not describing due to the nature and protection of all involved) is strictly the agents fee to pay, not the sellers.
5. 10176. The commissioner may suspend or revoke a RE license if the licensee is guilty of the following: Obtaining a signature of a prospective purchaser to an agreement without having first obtained the written authorization of the owner of the property. Demonstrated negligence or incompetence in performing any act for which he or she is required to hold a license. Engaged in any other conduct which constitutes fraud or dishonest dealing. Ya, there's this in spades.............
6. An agent has a duty to disclose to his/her client all material facts in a transaction unless it is disclosed to and approved by the client. Per NAR Code of Ethics: When entering into listing contracts, REALTORS® must advise sellers/landlords of: the REALTOR®'s company policies regarding cooperation and the amount(s) of any compensation that will be offered to subagents, buyer/tenant agents, and/or brokers acting in legally recognized non-agency capacities. Article 6
REALTORS® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client's knowledge and consent. REALTORS®, for the protection of all parties, shall assure whenever possible that all agreements related to real estate transactions including, but not limited to, listing and representation agreements, purchase contracts, and leases are in writing in clear and understandable language expressing the specific terms, conditions, obligations and commitments of the parties. A copy of each agreement shall be furnished to each party to such agreements upon their signing or initialing. REALTORS® shall not offer for sale/lease or advertise property without authority. When acting as listing brokers or as subagents, REALTORS® shall not quote a price different from that agreed upon with the seller/landlord.
Yes, I am upset, angry, mad, frustrated but ultimately, I am not affected by this accept guilty by association - agents like this give all agents a bad rap. When agents make these decisions, they affect ALL of us. These choices leave a bad taste in the mouth of the consumer - ultimately, we all just look bad.
What can we do? Nothing. The seller has a decision to make and it isn't an easy one, that's for sure. In my opinion, I am sure their attorney will advise them to either continue on and cut their losses or fight for their home back and lose their buyer. The issue at hand though, is the seller isn't truly free to re-list their home with another agent, unless the current agent agrees to this in writing; his fraudulent behavior will ultimately go unpunished because the seller needs to sell and most likely will not want to rock the boat. Or their attorney can call the agent, threaten everything under the Sun, and we can hope that he quietly walks away and goes back under the rock from under which he crawled.
I again want to stress here that although difficult, all I did was listen. I wanted to yell, laugh, cry and mostly just scream I TOLD YOU SO, YOU GET WHAT YOU PAY FOR - but I held my tongue because, although not fair at times, I have to.
If the seller chooses to share more information with me, I will keep you updated on what happens next - I, too, am curious.
But ultimately, there is only ONE winner here - the rest of us lose. The winner is this agent, who signed a contract for $1,700 and ended up making more than 3% - and yes, he obtained his commission fraudulently, but he's in a contract, he is protected by the law - and the home owner is just plain old out of luck!
Don't get me wrong - I know there are "ways" the seller can most likely get out of the listing agreement - but what of the buyer? The seller signed a purchase agreement - even though they do not have a legal listing agreement, accepting the offer is as good as saying you agree - even though they never got a copy of it, signing the purchase contract says they did.
What a mess!
I wish I could blame this on Mercury in Retrograde but I can't.
*changed to protect identities.............cuz you know who you are!
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