How to Handle Lying, Unethical REALTORS®

I recently wrote a blog post about...

• A house I just sold that was in horrible disrepair
• The worst listing agent I've ever encountered.

These were both part of the same post and transaction.

This story is real, but extremely unusual. I'm writing it for educational purposes, for both real estate professionals and for consumer knowledge.

(This paragraph has been added, since apparently some commenters thought I wasn't clear enough in my first draft.) My reason for leaving this post open for the public to read is NOT to draw attention to bad agents, but to show that it is very rare to find an agent this bad (which should be pretty obvious since this is my first time encountering an ordeal like this one), and to disclose some details on what they already know, but this time they're getting the added benefit of what the rules are in these circumstances. And I want the public to learn how to communicate exactly what they expect from their agent, and possibly even get it in writing. This will avoid a lot of future problems.

I mentioned that I would soon be writing a post with details about the listing agent (sans his real name). But I don't know if I'll ever get to that point, since new problems just keep arising. I just discovered he had the nerve to short my commission check. I was pretty sick with some sort of virus for over a week, so today I finally went to pickup the HUD-1 (closing statement) and check. Surprise, surprise. My commission check is short.

Thankfully, the way the transaction transpired, right from the start I suspected things would get worse, so I took extensive notes, kept every e-mail, and most importantly, I printed the MLS listing sheet which has the commission amount on it. (Another addition: our Board of REALTORS® can see every time the commission is changed in the MLS, plus if the Association requests a copy of the listing agreement, the listing broker is required to supply it to them. So having a copy of the MLS printout was important for my own records, and my brokers, but not necessary for me to get the correct amount of my commission.)

Now, to go over some overall pertinent facts, and some details about the transaction.

We're supposed to work for the client. So we should show them every property that meets their criteria. Unfortunately, many agents are not diligent in putting the clients' needs before their own, and instead, decide to show only the properties THEY want to show... the ones that meet THEIR needs.

The purpose of this post is also to educate people both in and outside of the real estate industry of...

1. The unethical behavior of some real estate agents
   
2. The likelihood that there are many *things you may not know about your agent when you hire them, regardless of their time in the industry, or experience level, and this even includes top producers. But if you're in the business long enough, or if you buy and sell enough real estate, you'll eventually run across a real estate agent that completely violates the law, the REALTOR® Code of Ethics, and even what's best for their clients.
3. The way our Code of Ethics and (Multiple Listing Service) MLS rules call for some situations to be handled.

So, to start from the very beginning, I had a buyer who found my web site 3 years ago, but had several properties to sell before moving to Florida... Fast forward to now, when her last house finally sold, and we're standing in the house (in the Daytona Beach area) she is most interested in buying.

While we were in the house, my buyer started asking a lot of questions which only the listing agent could answer, so I gave him a call. (Now bear in mind. This is a top producing agent... I'm afraid this post is going to make you think twice before you ever again assume that "top producer" is synonymous with "best service" or even "most knowledgeable", *although any level of agent can be this negligent.) It turned out that this agent had never even been inside the house, although it was on the market for 2 years. (That could be a whole other blog post.) So when my buyers asked why the house had not sold, we discussed the most obvious reason, which was the horrible condition of the house, and the listing agent and I discussed several things, although I wasn't really getting any answers. Now, it is completely against the law to "price fix", which is why all commissions are negotiable. So, although there are many brokerages and REALTORS® who will not list properties below a certain percentage, the sellers still have the right to attempt a negotiation of the commission. And real estate agents, their clients and potential clients are free to negotiate commissions amongst themselves. However, since there are laws against price fixing, REALTORS® from differing real estate brokerages should avoid discussing anything even remotely along the lines of what their "usual commission" might be.

One exception I've seen is when when a REALTOR® from another brokerage attaches an addendum to a contract, requesting a higher commission for themselves, than what is being offered in the MLS. I've never known this scenario to be taken up on a legal level, so if you're a REALTOR® who has knowledge of any legal proceedings under these circumstances, I'm curious to know of any court or panel rulings. As far as I know, it seems to be a grey area.

Edit:

1. In the comments, several agents from different states have indicated that using the commission request forms is common practice in their areas. I personally have only gotten a few over the years.
   
2. Another comment addressed the fact that the MLS data sheet has the clause that the information on it is "not warranted" and that only the contract is legally binding. That is true for the contractual agreement between the buyer and seller. But the commission is not part of that contract. In my edit at the bottom of this page, I mentioned that our commissions are not on our contracts. In our area, it's considered unprofessional to involve the buyer and seller in any problems between the agents. AND, in the classes that are offered at our REALTOR® Association, we're specifically instructed to NOT have any reference to the commission on our contracts. The contracts are an agreement between the buyer and the seller. The only reference to the real estate brokerages is to state which brokerages are involved.
   
3. Our MLS rules state that the commission that is placed in the MLS is the amount that must be paid. And I've already spoken with our REALTOR® Association about this particular transaction. They know what days this agent made MLS changes to the commission. I already know that I'll receive my full commission. Now back to the original post.)
   

My buyers knew that this house had been on the market for 2 years, and even to the naked eye, it obviously needed a LOT of help. And they wanted some more specific answers. So I asked the listing agent for his opinion on why the house had not sold yet, and several other questions my buyers were asking. (They were standing right in front of me, continuing to ask more questions.) It didn't take long to realize this agent had never been in the house. At some point in the conversation, as the listing agent's answers grew shorter and shorter, in his attempt to get me off the phone, I mentioned to this listing agent, the conversation that I had previously had with my buyers about all the possible reasons why a house may not sell. But during this part of the conversation the listing agent suddenly asked what commission was on the MLS printout. When I told him the amount, he told me that was wrong, and then told me the correct commission amount, which was a full percentage point higher. He also said he would have it corrected in the MLS, immediately, which he did.

I'm now going to jump forward, past all the extraneous drama that accompanied every single day of this transaction; since I'm still mentally exhausted from dealing with this agent; and relay what happened this morning, when I discovered that my commission check was short. Knowing how condescending and difficult this agent was, I was not looking forward to calling him, but hey, his brokerage owed me money. So I made the call and told him my check was short. He then said it was not short, because when I showed the house, the commission was lower. So I reminded him that he told me that was a mistake and that I had the corrected version of the MLS printout! His next excuse was to demand why I was calling a full week after closing about this. I then had to inform him that I had been sick and had not left the house in 9 days. His next response was that it was on the HUD-1 and I signed off on it. So I now informed him that I had not signed anything since the entire closing for both the seller and buyer had been a mail-away. The title company goes over the numbers with the buyers and sellers. I only get involved at this point if there's a problem with my client's numbers. This is the first time in 8 years that I've ever had a commission problem.  He then repeated everything again. At some point I told him that everything he had to say was irrelevant because the MLS rules are very specific. Whatever the MLS states is the commission to the selling brokerage, is the amount they're required to pay. His final statement was that he was going to contact the title company and let them sort it out. My final statement was to not bother calling them. I'd be going through the proper channels by contacting the Board of REALTORS®. I then called my manager, made photocopies of everything for her, and now she or our broker will be handling it with his broker. It may end up in mediation or arbitration through the Daytona Beach REALTOR® Association. But I know without a doubt that I'll receive the remainder of the commission that he tried to take from me. All of his reasons and excuses are completely irrelevant because the rules are crystal clear. Whatever commission is stated in the MLS is the amount that has to be paid. Oh, and when I checked again I discovered the commission had been changed a 3rd time, to a 3rd amount.

You can read more about the house itself in my post titled "Would You Buy This House?" and a follow-up post titled "Real Estate Takes A Moment of Mourning".

Edit: Find out the result of my commission check shortage!

Learn more about REALTORS®, real estate and the Code of Ethics

View Daytona Beach area listing MLS videos

Additions after some of the comments.... ( There are other edits within the actual post as well.)

• This entire closing was a mail-away. Neither the buyer nor the seller actually attended a closing. I've left out big chunks of this experience. But I need to address the MLS printout. Having the copy was good for my records. But the Board of REALTORS® can always go in the back door and see every change that was made, and on what date. So I'm completely covered on the commission issue.  And along those lines, disagreements over commission are not done in conjunction with a contract. That would be highly unprofessional! If I knew the commission was wrong before closing. I still would have closed on time, then addressed this issue after the fact, without involving my buyer. It would be handled by the brokers or through arbitration.
  

• As for anti-trust issues... Be sure to read the entire post as a whole. Don't take one line out of context. I worked very hard at conveying what I've observed, while at the same time letting it be known that I DO NOT condone or participate in the many indiscretions I've observed over the years. I obviously was selling this house, regardless of the commission that was originally posted in the MLS. It just happened to be a mistake, according to the listing agent; and it was then raised. And the irony is, if he had ever just admitted to any of his mistakes, or apologized for his condescending attitude, and asked me to reduce my commission, I probably would have done so! But he remained a bully to the very end.
  

• Also, I repeatedly stated that all commissions are negotiable and that price fixing is illegal. While I do have copies of the MLS printouts forall the commission changes,it's unnecessary because the Board has back-door access to all changes that have been made. And they can call the listing office and get a copy of the listing agreement as well.

• And I've intentionally left this post open for the public to read. Nobody is naive enough to think that a single profession on earth is without problems behind the scenes. My intention is to make people aware that things are not always what they seem. And to encourage them to do their research.

• I should also add that in the last 8 years that I've been strictly selling real estate full-time, this is the first time I've ever had an experience this bad. It's very rare that I encounter a truly incompetent or dishonest agent. But this time I got both. And I think the public should be aware that although this is extremely rare, everything that happened in this transaction, is a possibility, and steps can be taken to be informed and prepared.

• Lastly, all it takes is for someone to flip through a few pages of my blog to know that this type of post is extremely rare for me to write! This was NOT an ordinary transaction. But that is what makes it both interesting as well as hard to believe. Even in the midst of all this, it all had a surreal feeling to it.
  

Truth is still stranger than fiction.  =)

Due to so many differing responses from different states where things are handled differently, this post was edited twice on 9-28-08. I hope I have everything clarified better now. To be honest, I had a lot of difficulty writing this post because I wanted to keep the facts straight, but at the same time not violate our Code of Ethics, or licensing laws. That is why some things were repeated so many times, and why I cannot, under any circumstances give out a name. However, one amusing thing that happened during this transaction was when I was at the REALTOR® Association one day and mentioned this agents' name, and the ladies at the Association informed me that they had their own name for him! I can't even repeat it, but it rhymed with his real name and was pretty hilarious. But how bad is your reputation, when the people who work at the Board of REALTORS® have received so many complaints about you that they have given you a very nasty nickname!?!

Regardless, I guess the original post may have had a more harsh tone to it. I guess I was still working through my thoughts, and the fact that I was treated so harshly. But my objective is really just  to find a way to tell the events in a way that provided information to both real estate professionals, and the public, in an educational manner.