I asked if I could sign the lease right away, but the owner’s agent told mine that we had to wait until the following week. This, I learned too late, is a common ploy used by some brokers: If a property finds a buyer or renter right away, the agent accepts the offer. The owner is elated. But then the agent stalls on the actual signing, waiting for a higher offer.
“I can’t tell you how many times I have heard that story,” said Jim Gricar, general sales manager at Houlihan Lawrence, which was not the agency with which I dealt. While most ethics complaints are resolved by the local brokerage, Mr. Gricar handles the thornier issues.
When I expressed concern about the delay in signing the lease, the owner’s agent — whom I never met nor spoke with — informed my agent that there was nothing to worry about; the house was mine. That afternoon, I notified the owners of the cottage where my son and I were living that we would vacate in about six weeks, a relief for all involved.
The following morning the owner’s agent called my agent to say that someone had offered $200 more for the house.
“So?” I replied.
Ignoring the previous day’s agreement, the owner’s agent told my agent that I was welcome to make a counter offer. My agent told the owner’s agent that this was not a nice thing to do. But when I raised objections, my agent told me, “An agent’s job is to get the highest price for the client.”
If I wanted to make another offer, fine; if not, the house would go to the highest bidder. For $200, we had been thrown off a cliff.
I was beyond furious. We were six weeks from being homeless — I would not break my word to my current landlords — in a very tight rental market. I had little choice but to instruct my agent to enter the bidding, and wound up paying $4,000 a month, or $9,600 more over a two-year lease.
I spoke with another agent from the same agency and was told the same thing — essentially that nothing is final until the contract is signed. It was my fault; I should have known.
Then I sent a letter to the chief executive of the brokerage house. He did not respond.
Over the next few weeks, I sought out nearly 20 agents and other real estate professionals for their opinions. Virtually all acknowledged that I had been treated unethically, if not contemptibly. But basically it always came down to this: Unless an agreement is in writing, “you have the house” doesn’t necessarily mean you have the house.
As Mr. Gricar, of Houlihan Lawrence, said: “The agent’s job is to get the highest price in the least amount of time — but it also requires that agents are fair and open with all parties.”
So what did I learn from my ordeal?
Rule No. 1: Insist on getting an agreement in writing, even if it’s only on the palm of your hand. (Just don’t forget to photograph it before touching the steering wheel.) Signing something other than the lease may not be legally binding, but it supports your case if you make a formal complaint to local or state authorities.
“You are incredibly vulnerable when looking for a home, and your life is in the hands of an agent, somebody you have just met,” said Jim Jermanok, a writer, director and producer for film and television who has moved three times in the past 10 years and now lives in Queens. “In one case, I had a bad feeling that the agent was working for the commission, not for me, by continually steering me to properties that were above my budget — and it turned out to be true, so I found someone else.”
Most real estate agents undergo ethics training throughout their careers. In New York State, it is part of the initial licensing curriculum as well as the mandatory continuing education. Large firms like Houlihan Lawrence, Century 21, Weichert, Douglas Elliman and others hold periodic in-house training sessions for new and veteran agents.
And to be sure, most real estate agents are honest. Nonetheless, the home hunting process is so fraught with anxiety and second-guessing, it’s no wonder the profession is held in relatively low esteem. A 2014 Harris Poll on the prestige in which various occupations are held in the United States found that “real estate broker/agent is the profession with the highest percentage of adults considering it to have less prestige (73 percent), with 50 percent feeling it does not have that much prestige and 24 percent believing it has no prestige at all.” And a 2015 survey by the National Association of Realtors found that only 67 percent of clients said they would “definitely” recommend their agent to others.
But if you find yourself dealing with an agent who is less than ethical, as I did, what are your options?
I looked up the code of ethics established by the National Association of Realtors, an advocacy and educational organization with 1.1 million members. (There are an estimated two million real estate agents in the United States. The association makes a distinction between a Realtor with an uppercase R and a real estate agent with a lowercase R. A Realtor is a real estate professional who is member of the organization and subscribes to its code of ethics.) The association is not an enforcement body; that is generally the purview of local real estate associations or the state.
Nevertheless, its code of ethics is nothing if not comprehensive. You could probably close the deal on a beachfront condo in the time it takes to digest the dense 8,000-word document, which bears more than a passing resemblance to the Articles of Confederation, ratified by the 13 original states in 1781.
It begins: “Under all is the land. Upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization.”
Fortunately, I found what I was looking for under the first of 17 articles.
“When representing a buyer, seller, landlord, tenant or other client as an agent, Realtors pledge themselves to protect and promote the interests of their client,” it reads. “This obligation to the client is primary, but it does not relieve Realtors of their obligation to treat all parties honestly.”
I did not feel I had been treated honestly, but again, I had nothing in writing.
Some years back, on a cross-country flight, I made the acquaintance of a person who was prominent in New York real estate. During our conversation, she described some of the sales techniques she had employed over the years to bump up interest in properties. When hosting an open house for an apartment, for example, she said she would create a sense of urgency and drum up competition by flooding the event with friends, acquaintances and co-workers.
Is this the natural extension of staging a house, only this time with people instead of flowers? Misrepresentation or savvy? No one was deliberately lied to, as I felt I had been with my rental.
As I was a resident of Westchester County, one avenue of appeal was the Hudson Gateway Association of Realtors, a trade group of 10,000 industry professionals in Westchester, Putnam, Rockland and Orange counties, and sections of the Bronx. Disputes are heard by a panel of three arbiters — all members. Penalties can include fines of up to $15,000 and revocation of membership. But for any number of reasons — because many issues are resolved at the local level, because the prospect of a complicated, drawn-out process is off-putting, and because many major cases are tried in civil court — few consumer complaints are filed.
Leon Cameron, Hudson Gateway’s director of legal services and professional standards administrator, said: “The numbers vary year to year. In 2016, year-to-date, there have been 10 requests to arbitrate filed and 34 ethics complaints filed. Arbitrations resolve monetary disputes and are typically broker-to-broker. Ethics complaints can be filed by Realtor members, nonmembers, or the public. Our membership takes the National Association of Realtors Code of Ethics seriously, and clearly very few members out of our total membership of nearly 10,000 are subject to ethics violations.”
I could also take my grievance to the New York Department of State’s Division of Licensing Services, which investigates real estate complaints. If violations are found, it can suspend or revoke a license and issue fines of $1,000 for each violation. But in 2015, there were relatively few actions taken: 98 fines, 35 revocations, 18 suspensions and 1 reprimand.
If I lived in Connecticut, I could have gone to the Department of Consumer Protection, which essentially acts as investigator, judge and jury, with subpoena power and the ability to impose fines and revoke licenses. Richard E. Maloney Jr., the director of the trade practices division, said the rules in the National Association of Realtors’ code of ethics are often vague and difficult to enforce.
“I kind of ignore those and go by statutes and regulations,” he said, referring to the state and federal laws that govern all sorts of fraud, negligence and breach of contract. Because this way his agency has subpoena power, he said, “a licensee can’t hide the facts.” Ninety cases were prosecuted in Connecticut last year.
In New Jersey, complaints are investigated by the Real Estate Commission, a division of the state Department of Banking and Insurance, composed of five brokers, two members of the public and one department employee, according to the department’s website. Details of individual hearings are accessible on the site.
That sort of transparency is one of the ways technology is revolutionizing the industry. But it’s also changing things in less positive ways.
As Sam Chandan, associate dean at New York University’s Schack Institute of Real Estate, observed: “We’ve seen a breakdown in the personal relationships between parties in real estate transactions.”
Whereas brokers and clients used to speak frequently and develop nuanced business relationships, he said, much communication today is through email and texting, which increases the chance of miscommunication. Moreover, he continued, the anonymity and power afforded by the web have emboldened some agents to play fast and loose with the facts — manipulating property postings, for example, and engaging in bait-and-switch tactics.
Even so, Dr. Chandan said, “There is no reason to believe that individuals in real estate are more or less ethical than in any other industry. The important thing we stress over and over is that in any business there is an ethical dimension to every decision you make.”
As for me, I have learned my lesson. I suppose I could appeal my case to the state licensing board. But the cottage is snug and my son and I are happy there. At the moment, I’m thinking that the best option may be never to move again.
Have a Complaint? Avenues of Redress
The most common complaints received by the state licensing boards for real estate brokers in New York, New Jersey and Connecticut include: misrepresenting a sales or rental situation (for example, saying that a property has numerous bidders when it does not to inflate the price); failing to disclose faults in a property; mishandling security deposits; encouraging clients to bid higher than necessary to close a deal; failing to perform contracted services, including required paperwork; withholding relevant information; attempting to sell someone else’s exclusive listing; and posting misleading or inaccurate information online.
If you have a ethics-related complaint, what are your options? You might start by contacting the National Association of Realtors, (800) 874-6500 or realtor.org. And in the Northeast, you could also try one of the following:
• The New York Department of State Division of Licensing Services, (518) 474-4429 or dos.ny.gov/licensing
• The New York State Association of Realtors, (518) 463-0300 or nysar.com
• The New Jersey Department of Banking and Insurance, (609) 292-7272 or nj.gov/dobi
• The New Jersey Association of Realtors, (609) 341-7100 or njrealtor.com
• The Connecticut Department of Consumer Protection, (860) 713-6100 or ct.gov/dcp
• The Connecticut Association of Realtors, (860) 290-6601 or ctrealtors.comContinue reading the main story
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