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February 23, 2009
Real Estate Agents Ethics
We are in the process of negotiating a Brownstone in Bedstuy and the process recently came to a standstill. I'm getting a really sketchy vibe because of some of the things that have happened. It should be noted that the agent is acting as a dual agent (which is our own fault i guess).. The first thing was the fact that there were a bunch of things that showed up in the inspection that the RE Agent should have known about due to a previous inspection last year. Mainly about 80 grand in additional renovation costs. Then there were all sorts of renovation costs that he disputed, not because they weren't valid, but because they would be able to be put off for a year or two. Examples are a 30 y.o. steam boiler that was providing both heat and hot water, plumbing, etc. Then when we put in a revised offer, he contacted our mortgage broker directly to ask him to run the loan at 10k higher, "just to show us that it would only constitute $50 more a month. The last straw was that we made an offer with a sellers concession, which he presented to the seller by tacking the concession on to our offer, making the offer about 35 grand more, despite numerous emails outlining this. Any one of these could be seen as an honest mistake, but the house has been on the market for a year and the RE agent seems a bit desperate to get it done with already. The last sticking point on the concession seems extra underhanded as it appears that he was hoping we wouldnt notice until we were in contract. Is this normal for NY real estate agents? Am I being sensitive? The kicker was that after all of this, he emails me to ask if he can send the inspection report we paid for on to another buyer. WTF?
Comments
It's ugly but alas fairly normal.
It will be interesting to see whether this sharkery gets worse or better as the market keeps shifting.
Posted by: vanburenproud at February 23, 2009 11:19 AM
If the RE agent is really getting desperate to get it done with, then he should be working on the owner to be flexible and make concessions. You've got most of the bargaining leverage. The house has been on the market for a year, during which time the value has been dropping, and will continue to drop in the near future. Hold firm in negotiations and have a good RE attorney ready to review contracts. If this deal doesn't happen there will be plenty of other opportunities.
Posted by: Bklnite at February 23, 2009 11:39 AM
Disabuse yourself of the notion that the realtor is acting as a dual agent. Realtor is not your agent. Realtor is seller's agent. You do not have an agent here unless you insert one into the [process. But there is no need to add another person and more potential for miscommunication in this loop.
Send a clarifying email to the realtor. Spell out again very specifically the exact nature of your offer and where you think the realtor may have "misconstrued" previous communications. Make clear that you will only have written negotiations from now on so that your position is clear, and ask that your written offer and any further communications be carried in writing, unaltered, to the seller. Keep good records of all your communications.
I disagree with the notion that it is par for the course for realtors to alter buyers' offers unilaterally. And it can come to no good when you go to contract and you and seller realize that you each have a different understanding of the agreement.
In the end, how much of this BS you put up with will depend upon how badly you want the house. That bit about sending the report along is just to let you know that there is another buyer (this may be a bluff) in an attempt to get you to play along with the realtor's shenanigans.
Posted by: slopefarm at February 23, 2009 11:43 AM
"he contacted our mortgage broker directly to ask him to run the loan at 10k higher"
What part of this can be remotely construed as an honest mistake?
Posted by: jasetheace at February 23, 2009 12:00 PM
"he contacted our mortgage broker directly to ask him to run the loan at 10k higher"
What part of this can be remotely construed as an honest mistake?
Posted by: jasetheace at February 23, 2009 12:01 PM
Well that one was straight sketchiness. "Misunderstanding" the concession or "overlooking" the need for a complete plumbing upgrade might be construed as mistakes. Contacting our mortgage broker was a huge red flag. Also, there was a point that he basically stated that we would see how much of a loan we were qualified for and that would determine "what we could get fixed on the house" basically implying that the 50 to 80 grand of repairs that would come up in the first year or so where really none of the sellers responsibility. It really sucks because we're down the 850 for the inspection, but I guess thats better than buying and finding out that these repairs where necessary.
Posted by: byndcivilization at February 23, 2009 12:09 PM
From here forward, only communicate with the seller through your attorney.
Posted by: daveinbedstuy at February 23, 2009 12:16 PM
I agree with Dave...
Posted by: Amzi Hill at February 23, 2009 12:43 PM
Don't worry about the $850. Think of that $850 as an investment which could turn out to save you $50-80k, or more.
I had an inspection done on a building in November 07, cost me $1,500. The inspector found water in the walls, the rear wall buckling, facade issues in the front, etc. He found at least $250k worth of needed repairs. We negotiated and the seller wouldn't budge. So we didn't buy.
I consider the $1,500 inspection a worth wile expense. It saved me from buying a building that would have needed $250k of immediate renovations (and the building is still for sale).
Get a good attorney, have all communication go through your attorney, stand firm on your points, and don't be afraid to walk away, sometimes that's the best thing to do.
Good luck
Posted by: christopher at February 23, 2009 12:44 PM
This is where your lawyer comes in.
1) Definitely (definitely) instruct your mortgage broker to work with you and your lawyer and not the Realtor.
2) Your lawyer can advise you on this, but if you're still interested in the property go ahead and Pollyanna it and just "clarify" in writing, the "mistake" about the $35K.
3) You showed the inspection report to the Realtor? Way to show all your cards. He didn't pay for it, he has no right to see it. Especially since he is *not* representing you. Which is fairly normal in NYC but takes some clarity on your part. If he wants to send it to another prospective buyer, what I'd say is "sure, no problem, we just need to be reimbursed for that $850 we spent on it. Then you can show it to whomever you want." Pollyanna.
And ... in general, Realtors have a lot of advice about how to go about thinking through expenses. Usually the advice boils down to "stop worrying and buy." A Realtor is a salesperson. They sell things. They do not help you make wise financial decisions.
Posted by: serpentor at February 23, 2009 1:00 PM
Yeah, this whole thing has been a huge learning experience. We bought a place in Seattle, but NYC is a whole different beast. Oh well.
Posted by: byndcivilization at February 23, 2009 1:08 PM
I guess I don't understand much of OP's lament. Why is it such a red flag to contact the mortgage broker? It's not as if he can commit you to a higher loan. Stupid, maybe, because anybody with a calculator could recalc-ed the payment in seconds.
What's wrong with disputing renovation costs? You and I might (and probably will) have serious differences about what, when and how fixes need to be made, why shouldn't the agent be "conservative?" He might legitimately feel your renovation plans are unrealistic or over-expensive. I guess it depends on his attitude, but iae, you don't have to listen to him.
And why assume it's the seller's responsibility to fix things? That's a negotiating point, not a given. One can buy a house "as-is".
I suggest de-sensitizing yourself; the agent is not working for you.
Posted by: cmu at February 23, 2009 1:34 PM
If there is only one agent involved (1. he represents the seller and 2. you have been dealing with him without using an agent of your own) then yes, he is acting as a dual agent, despite what slopefarm says. Sounds like he disclosed this to you, which I think is required by law.
But the funny thing is that even when there are two agents involved, they BOTH work in the interest of the seller as well, neither of them for the buyer. The exception is if you as a potential homebuyer have retained a buyer's agent, in which you case you usually pay a flat fee for the work involved until a deal gets done. Very few 1st time buyers understand this, it seems.
Anyway, I would have burned rubber by now, and I would have laughed at the request to turn over the inspection report to another potential buyer. That's incredibly unprofessional and was likely done to get you "worried" about another buyer getting your place. Why are you in a hurry now anyway? Prices are only going in one direction these days...It might just be the best $850 you ever spent...
Posted by: appoggiatura at February 23, 2009 1:42 PM
I think the red flag was that I heard that he had contacted my mortgage broker not from him beforehand, but from my mortgage broker when he wanted to confirm with me. I understand that it's not the seller's responsibility to fix things, but it does need to be factored into the price. I think i was just trying to give an overall background to the whole situation. The concession was the kicker, because not only does it seem like a weird way to present it (i.e. an offer that includes a concession is really that offer + 6%), and not only was i super explicit on what was in the offer and what the sellers take away would be, and not only did we have this problem on at least two occasions, but it also makes us look like jackasses to the seller which is super frustrating. It also looks like a convenient mistake that the agent hoped would slip through the lawyer. When we received the initial contracts on the offer, which we held off on signing until after the inspection, the same thing happened. The offer was the concession price, but without any concession. On the surface, it seems like all of this could be just mistakes, but it does seem a bit weird to "forget" all of this, take this quasi-bullying tone, and going behind our back to "show us the way". It all just seems a little sketchy. It sucks, because I initially had a good vibe about the guy and his bio indicates he's a good guy (affordable housing work, green housing, etc.).
Posted by: byndcivilization at February 23, 2009 1:46 PM
And yes, it might be the best 850 we ever spent, but it still sucks to loose the money, when the findings were the same as the initial inspection (which the agent supplied to us) and the repairs were no less urgent. I guess I just wanted reassurance that this was sketchy action. I do think all this talk of other buyers might be a bluff, and we really do like the house despite of all this, so if we do hear back from these people in the near future it helps to know that all of this stuff is not kosher. I wasn't aware that we could do the renegotiating through the lawyer and that is going to be super helpful if anything comes of it. Thanks everyone.
Posted by: byndcivilization at February 23, 2009 2:01 PM
I'm no RE lawyer but even if appoggiatura is right about the dual agent thing, no one really assumes it to be true for practical purposes. I agree with OP that the agent's actions are fishy. Agent was trying to extract data from your mortgage broker to persuade you to pay more money. Agent was tweaking the bargain without authority from you, etc.
One thought, though -- you are not entitled to a price reduction. It is merely a negotiating point, depending upon the market. Your ability to get the concession you want is dependent entirely on what someone else will pay for the house. Seller ought to factor into the equation that any other buyer is likely to demand the same concession, but it is not required.
That said, a lot of good advice above. Good luck and report back.
Posted by: slopefarm at February 23, 2009 2:16 PM
The inspection money was money well spent. NEVER trust an inspection report that the sellers agent gives you. Laugh at him/her and throw it back.
Do not allow the agent to use your inspection report without compensation.
Posted by: daveinbedstuy at February 23, 2009 2:22 PM
Let it be a lesson Real Estate agents are all parisites. They have sucked people's blood for years and now they can not stop.Wait until they come looking for you Don't be in a rush.
Posted by: hannible at February 23, 2009 2:32 PM
Given past experience, I have a right to be pretty bitter about the way the Brooklyn RE world works, but even I wouldn't go that far, H.
OP, DIBS is right. Money well spent. If the deal falls through, you will never know the headaches you were spared, but you were spared them. And if you proceed, it will be on your terms.
Posted by: slopefarm at February 23, 2009 2:38 PM
Christopher, curious, where was this house with the water in the walls?
Agent sounds pretty much par for the course, except for modifying your offer and being so pushy as to call your mortgage broker. Agent represents the seller. If the agent says otherwise, that could be illegal.
Posted by: mopar at February 23, 2009 2:39 PM
Think of it this way:
You're eventually going to buy a house. If you make a good choice when you purchase, you will live there happily for some time and hopefully, when it's time to sell (maybe 7 years or more down the line) you will make a profit on the sale.
Now, let's say you find another place three months from now, pay another $850 for an inspection and it turns out that only minor corrections/maintenance are needed, so you buy it. You've now spent $1700 on inspections but you got a place that's mostly trouble-free and surprise-free, and you'll almost certainly have to spend less on that house than the one above. Or at least you know what you are up against, so that you can budget accordingly. That $1700 will be way less than what you'd likely pay to fix a place you didn't bother to get inspected. And when you sell, you'll likely get that $1700 back and then some.
So my advice is, no matter what, don't skip the inspection for any potential purchase! Think of it as a necessary nuisance and part of the overall cost of buying a house or a building. Also, learn more about what to look for yourself - there are scores of books available and sites online that will help you eliminate houses with obvious major problems that don't require an expert to steer you away. Good luck!
Posted by: appoggiatura at February 23, 2009 2:52 PM
Think of it this way:
You're eventually going to buy a house. If you make a good choice when you purchase, you will live there happily for some time and hopefully, when it's time to sell (maybe 7 years or more down the line) you will make a profit on the sale.
Now, let's say you find another place three months from now, pay another $850 for an inspection and it turns out that only minor corrections/maintenance are needed, so you buy it. You've now spent $1700 on inspections but you got a place that's mostly trouble-free and surprise-free, and you'll almost certainly have to spend less on that house than the one above. Or at least you know what you are up against, so that you can budget accordingly. That $1700 will be way less than what you'd likely pay to fix a place you didn't bother to get inspected. And when you sell, you'll likely get that $1700 back and then some.
So my advice is, no matter what, don't skip the inspection for any potential purchase! Think of it as a necessary nuisance and part of the overall cost of buying a house or a building. Also, learn more about what to look for yourself - there are scores of books available and sites online that will help you eliminate houses with obvious major problems that don't require an expert to steer you away. Good luck!
Posted by: appoggiatura at February 23, 2009 2:52 PM
Think of it this way:
You're eventually going to buy a house. If you make a good choice when you purchase, you will live there happily for some time and hopefully, when it's time to sell (maybe 7 years or more down the line) you will make a profit on the sale.
Now, let's say you find another place three months from now, pay another $850 for an inspection and it turns out that only minor corrections/maintenance are needed, so you buy it. You've now spent $1700 on inspections but you got a place that's mostly trouble-free and surprise-free, and you'll almost certainly have to spend less on that house than the one above. Or at least you know what you are up against, so that you can budget accordingly. That $1700 will be way less than what you'd likely pay to fix a place you didn't bother to get inspected. And when you sell, you'll likely get that $1700 back and then some.
So my advice is, no matter what, don't skip the inspection for any potential purchase! Think of it as a necessary nuisance and part of the overall cost of buying a house or a building. Also, learn more about what to look for yourself - there are scores of books available and sites online that will help you eliminate houses with obvious major problems that don't require an expert to steer you away. Good luck!
Posted by: appoggiatura at February 23, 2009 2:52 PM
Think of it this way:
You're eventually going to buy a house. If you make a good choice when you purchase, you will live there happily for some time and hopefully, when it's time to sell (maybe 7 years or more down the line) you will make a profit on the sale.
Now, let's say you find another place three months from now, pay another $850 for an inspection and it turns out that only minor corrections/maintenance are needed, so you buy it. You've now spent $1700 on inspections but you got a place that's mostly trouble-free and surprise-free, and you'll almost certainly have to spend less on that house than the one above. Or at least you know what you are up against, so that you can budget accordingly. That $1700 will be way less than what you'd likely pay to fix a place you didn't bother to get inspected. And when you sell, you'll likely get that $1700 back and then some.
So my advice is, no matter what, don't skip the inspection for any potential purchase! Think of it as a necessary nuisance and part of the overall cost of buying a house or a building. Also, learn more about what to look for yourself - there are scores of books available and sites online that will help you eliminate houses with obvious major problems that don't require an expert to steer you away. Good luck!
Posted by: appoggiatura at February 23, 2009 2:52 PM
In our failed purchase (see my history for that saga if you must) we had the agent sending emails to the tune of "I am BOTH SIDES of this deal." when we (on our lawyer's good advice) started directing her to her client for answers. So I have a hard time imagining that it is illegal for her to claim to represent us. Among other issues, her client was preparing to stiff her on a short sale. We weren't able to determine to our satisfaction that we wouldn't be on the hook to her, though finally the whole thing fell apart (they couldn't afford the short sale either) so we never got to test that.
Someone once wrote (here, I think) rather aptly that brokers actually represent themselves. Kind of true. They are people, and like any people, some are lambs and pushovers and some are bloodsuckers and most are somewhere reasonable in between.
We had family outside New York trying to talk us through the process and they were all flummoxed by the quagmire that is NYC real estate. It is a different beast, and not one you want to dance with without a lawyer.
Posted by: serpentor at February 23, 2009 2:59 PM
I guess that's really the crux of this post. We have been through both sides of the process in Seattle and this is so incredibly different. Because of all the other things understanding the magnitude of difference in NYC taxes and closing costs to understanding how to navigate a non-credit union loan to realizing that there really aren't that many buyers agents, I wasn't sure how much of all of this trouble to chalk up to legitimate differences in the process and how much really was shadiness. As for inspections, I think you would really have to be absolutely insane to buy a house without one. When we bought our last place, we found stuff in the inspection and it helped in negotiating, but we still bought the house so it didn't hurt so bad to do it. I know its good in the long run, but that doesn't make an $850 with no immediate gain easier to part with. I do wonder how much of general seller's unrealisticness is self inflicted and how much is being fueled by input from RE agents.
Posted by: byndcivilization at February 23, 2009 3:15 PM
I agree with serpentor -- agents are loyal to the fee. It is actually surprising that the agent here would make the deal screwier than it need be, and risk it not going through, just to gain a few bucks on the sale price. Weird.
Posted by: slopefarm at February 23, 2009 3:44 PM
I moved from SF to here 7 years ago and also found the process here medieval (I assume Seattle is like SF with no lawyers, everything in escrow and no closing.) That said, while I had lots of stories to dine out on all the shenanigans I went through, I pretty much went with the flow (but didn't enjoy it ;)). So as I said before, not worth sweating the small stuff and worrying about what agents and others are mouthing off. Sometimes they think they're being helpful in telling you the worst case scenario, sometimes the other way.
Posted by: cmu at February 23, 2009 4:29 PM
BTW, we sent our inspection to the seller via the agent. Was helpful in the negotiations. It helped both the agent and seller to be more realistic. (The seller had never lived in the house, so wouldn't know about some of the problems.) And why wouldn't we want them to see it?
Posted by: mopar at February 23, 2009 6:43 PM
RE people don't work for sellers. They don't work for buyers either. They work for themselves, and some (yours sounds like one them) will do anything to get their fee.
If you think he did something illegal or unethical, you can report him to REBNY.
I agree with many comments above: communicate only in writing and always via your lawyer. Your $850 is money spent that is potentially buying you a lot of money saved (who knows how much really the repairs would cost, in my experience inspectors have very conservative estimates) and time... which in this case can only work in your favor.
If you really like the house and want to get it, be firm on your offer and be ready to walk. Prices are moving in your favor.
Posted by: Ray at February 23, 2009 10:13 PM
mopar,
The house I was referring to was just off Columbia Street, not far from the docks in the Red Hook vicinity (or I think "Cobble Hill South" as realtors are now calling it ;) )
Posted by: christopher at February 24, 2009 11:04 AM
Put your foot down! Be assertive. You have to because no one is representing you. The agent you mention is representing the SELLER. How could he possibly represent both sides? As they say, buyer beware.
Posted by: load07 at February 24, 2009 5:50 PM
Thanks, Christopher.
Also, the sellers can require a copy of the termite report, which is part of the inspection.
Posted by: mopar at February 24, 2009 6:11 PM
Hello Byndcivilization..
You are doing great job man..It really seems a good program you are starting..Real Estate Home Inspection is a technical and complex field that demands a professional approach.
I appreciate your work...
http://www.Equityinspection.com
Posted by: jhnsmith978 at November 12, 2009 2:39 PM
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