There's a Difference Between Helping and Steering

There's a Difference Between Helping and Steering

As real estate professionals we learn to find other professionals in necessary businesses to make our client's transactions flow smoother. It could be loan officers that we trust, lawyers that can handle closing properly, as well as inspectors and even tradespeople if repairs are needed.

We also need to be mindful to have a few of each to give clients options and to also keep ourselves out of trouble if a question of steering arises.

Steering

In real estate, steering refers to an agent who steers potential buyers to neighborhoods as a discriminatory measure. It also includes sending buyers or sellers to specific people, as there is some type of monetary kickback for the agent. All are illegal and could mean not only loss of license but also criminal charges to the agent.

Example #1 Steering to a Lender

I was working with a buyer that was looking for their first home. At the time, there were healthy incentives for first time buyers, here in Connecticut.

The buyer came with a pre-qualification letter from an online lender that had no physical presence here in Connecticut.  As we were doing our searches, I would ask if they were interested in saving money with their mortgage and even gave them a flyer that CHFA, Connecticut Housing Finance Authority, so they could read up.

They were insistent that they could get all from their online source and even said they had discussed it and were assured that they would be well taken care of.

We went through the process, they went to closing and as expected they received nothing in the way of an advantageous interest rate for first time buyers. When I later asked them why they were so insistent on using their lender and not one with a brick-and-mortar presence in the state, they said they were cautioned to not use anyone offered by their agent as they were just interested in helping the agent's friends.

Example #1 Steering to an Inspector

A crucial part of any purchase will be the home inspection. Once we have done enough sales, we get to appreciate that not all inspectors are equal and know which are fair and which tend to be self-promoters and want to impress with their knowledge to the extent that they can scare an already nervous client. I keep a few cards of inspectors that will do a good job.

With one buyer, they insisted they get someone on their own and wanted none of my recommendations. 

The day of the inspection, I waited along with the selling agent and the buyers to do the inspection.  Almost an hour later, their inspector shows up, and offers no explanation as to why he was late.

An hour later, which was short when doing a house of almost 2,500 sq ft, he is done, gives the buyer his bill and says he will send the report.

I hear nothing from the buyer regarding the report and all is proceeding to closing. The day of the walk through the buyer does a quick tour of the living area of the house, peeks into the basement and garage and goes to his lawyer's office.

A couple of days later I get an angry call and he's fuming as he went into the basement and on a wall that was blocked by the seller's possessions, there was mold. I was not surprised but I also had to remind the buyer that on that when we were looking at the house, I pointed out water stains near a door that came in from the outside and that they went across the floor towards that wall.

I also mentioned it to the inspector when he was doing his walk in the basement, but he ignored it.  The seller had moved out of state and all was closed so there was little recourse for the buyer. He also had never shared the report with me, so I don't know if the inspector wrote anything about the water stains.

The buyer wasn't satisfied and wrote a complaint to the state real estate board naming me and the listing agent as irresponsible and unprofessional.  I had to respond to the letter I got from the state board as did the other agent. However, the other agent was on the complaint review board so her being at the inspection and her reputation cleared both of us.

Summary

We all need to be mindful of not steering. When giving a recommendation never offer less than 2 and give good case for their recommendations. Insist that the client call all to satisfy any potential hesitation they may have.

There's a Difference Between Helping and Steering