What I learned in Real Estate this week - 10/25/15

Real Estate Broker/Owner with Zion Realty

Real estate has enough complications between contract disputes, low-ball appraisals, restrictive lending standards, and emotional client reactions. As business professionals we shouldn't be making it even more difficult on each other. We're in the trenches together. Our responsibilities are to the public in which we serve and to that, we are charged with holding ourselves to the highest standards of best practices according to the by-laws that govern our industry. 

When we negotiate a successful listing agreement the terms and conditions agreed upon are spelled out in the listing contract between the seller and their agent representative. I took on a listing a few weeks ago from a seller who was not willing to pay a full 3% buyer broker commission. He purchased his home at the height of the real estate market and is still slightly underwater in his home value as compared to what is owned on the property.

He has been using the home as a rental property ever since the economic recession in hopes that the value would increase to the point of him being neutral but that time has not yet come and he simply wants to be done with this failed investment. He estimates that even at the current list price he will still need to come to the closing table with extra cash out of pocket to get a deal done but at this point it's something he is willing to do. 

The home is at a desirable price point, gets steady showings, and has even had one offer fall through already due to a lack of agreement on repairs. I received the following email from an agent a few days ago regarding this property:


Hi Nicole,

I have a Buyer that would probably be a good fit for your listing.

I'd like to show it... if you and your Seller would like to raise the Co-­Broke to 3%.

Please let me know in writing if your Seller and you can accommodate the request.


As a real estate agent I immediately had warning bells go off in my mind as I read this email. We are working for the good of the public. How does putting a realtors compensation as a reason for keeping a viable option off the table for the buyer, serve the good of the public? How does approaching a seller who has dealt with the financial hardship of a 10 year underwater investment serve the good of the public? Our market is sprinkled with homes that offer different Co-Broke fees due to the varying needs of sellers. Throughout this year I have taken buyers to view homes that offered both full and slightly reduced commissions. My buyers went through and carefully considered each home and made their decision without any foreknowledge of my compensation as their representative. I never discuss with my buyer what my commission will be regardless of what home they end up purchasing. 

The content of the email I received seemed to step outside of the National Association of Realtors Code of Ethics.  Article One states that Realtors have a responsibility to protect and promote their clients interests while treating all parties honestly.  Are you really promoting your clients best interest if you upset the seller with your request for more pay and risk the seller being offended to the point of not wanting to work with your buyers offer as a result? Is it treating your client fairly if you keep this home "off the list of homes to show" even though it may be the best fit for your buyer? Are we treating all parties fairly if a sellers home is omitted from being presented to your buyer over your want for additional monetary gain?  I do understand as agents we work hard for our compensation. I fight to preserve our industry the same as anyone, however, I also understand we ultimately work for the public. Our job is to protect and serve them with their needs. In a market flooded with homeowners who have withstood years in a home that has long since outgrown their needs, do we ask them to continue to suffer until we can earn half a percent more? I certainly hope not.

The other concern I had upon reading this email pertains to the National Association of Realtors Code of Ethics and Standards of Practice Article 16.  This Article states that Realtors acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an offer to purchase/lease to attempt to modify the listing brokers offer of compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing brokers agreement to modify the offer to compensation.  This agents request to have his commission raised in order to simply show his client the home seemed to cross the line in both Article 16 as well as our local Multiple Listing Service agreement which reiterates Article 16 of the code of ethics.

So, what did I learn in real estate this week? I learned that when you copy and paste Article 16 of the Code of Ethics, along with a copy of your local Multiple Listing Service agreement highlighting the portion that references Artilce 16, it quickly silences an unwelcomed conversation. I also learned that if you kindly let the sender of the email know there is a legal hotline through the department of real estate that will help clarify any additional questions they may have it results in your listing being shown by that same agent 3 hours later with no further correspondence on the subject. I learned that education can spare debate. Rather than spending time arguing with the agent who sent me that email, I simply recalled and shared the portion of the law that was being violated and hit send.

If you or someone you know are interested in purchasing or selling property in Gilbert, Arizona or the East Valley then contact us at ZionRealtyAZ.com. We know real estate and we know the law. We will represent you with the highest level of professionalism. 



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Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

I do recall back when taking the Principe's course that this was one of the points discussed extensively.  That agent can request an increase in the rate of pay only if done before the listing has been shown.  If they had shown the listing first and then made the request it would have been an ethics violation.  What she should have done is worded it a bit better.

Oct 25, 2015 12:04 PM #1
Donna Foerster
HomeSmart Realty Group - Parker, CO
Metro Denver Real Estate Assistant

Great idea to share what you've learned in Real Estate this week. That's what I love about ActiveRain, we learn from each other!

Oct 25, 2015 01:17 PM #2
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC


Thanks for sharing What You Learned in Real Estate This Week 0f 10-25-15.

Good luck and success.

Lou Ludwig

Oct 25, 2015 01:27 PM #3
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Nicole I think our friend Ed Silva  is correct on this...needless to say to me it is more a Fiduciary Violation, if he has a buyer than he should not be looking what the commission is to determine if he would present the property...just sayin, ENdre

Oct 25, 2015 02:09 PM #4
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Nicole. Hopefully the request to raise the commission rate isn't something very common. Pretty selfish on the part of the agent.

Make it a great week!

Oct 25, 2015 08:05 PM #5
James Dray
Fathom Realty - Bentonville, AR
Exceptional Agents, Outstanding Results

Good morning Nicole.  Had it happen to me several years ago.  I just can't see why an agent would do this but they are out there.

Oct 25, 2015 08:37 PM #6
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Ed - There are several points that are possibly in violation against the code of ethics here, although I understand what you're saying. This agent is putting themselves ahead of their clients needs which is in direct violation of Article 1. 

Donna- Thanks Donna. I learn something new every day here. 

Lou - Thanks for stopping by Lou.

Endre - I'm still of the opinion that this is a direct violation of Article 1. I do see what you and Ed are saying however. 

Joe - I haven't had an agent do that in a very, very long time. It shouldn't be done at all.

James - I ignored his first email but he sent me two others and then had the nerve to ask me what I was making on the deal. 

Oct 26, 2015 01:21 AM #7
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Wow Nicole Doty,  I can not believe he ask what you are making on the deal.  Unreal.

Oct 26, 2015 01:59 AM #8
Paul S. Henderson, REALTOR®, CRS
RE/MAX Northwest. - Tacoma, WA
Tacoma Washington Agent/Broker & Market Authority!

A good fit for every one but the greedy agent. Not that persons finest hour Nicole Doty - Gilbert Real Estate Expert 

Oct 26, 2015 02:37 AM #9
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Will - They also asked me if I would be willing to reduce my commission. I didn't even respond.

Paul - If the home is potentially a good fit then show your client. We are there for them. 

Oct 26, 2015 02:54 AM #10
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

If commission rate is important to this buyer agent, he could request his buyer to pay the difference, instead of the seller. Since the bubble, I know not all homeowners have the equity yet to sell, though they would like to.  

Oct 26, 2015 02:59 AM #11
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

I know that is an agent that you are not too eager to do a deal with. I hope you will let us know how it turns out and if he will actually show it.

Oct 26, 2015 03:11 AM #12
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Nicole - you certainly handled that one very well.  And compromising ethics should always be off the table.

Oct 26, 2015 04:35 AM #13
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Hi Nicole, even if it was not a violation, our goal should be to assist our buyers and sellers, look at for their best interest, commission is not part of that. 

Oct 26, 2015 05:12 AM #14
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Pamela - I was thinking the same thing when I got that email.

Debbie - There are literally hundreds of agents around here and I've never had the displeasure of working with this one yet. 

Grant - At best he was walking a dangerous line. 

Beth - I still say he was in direct violation of Article one by putting his commission over his clients best interests. 

Oct 26, 2015 08:23 AM #15
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

Good for you. As a member of the local board Grievance committee I am so familiar with the Code!  I wonder how many other less knowledgeable Realtors this agent has stiffed. Well done!

Oct 27, 2015 03:54 AM #16
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Nicole Doty - Gilbert Real Estate Expert

Broker/Owner of Zion Realty ZionRealtyAZ.com
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