Property Grunt

Sunday, January 28, 2007

Douchebag Brokers

The New York Times sheds some light on douchebag brokers and boy did this give me flashbacks.

For instance.

Erik Serras, a sales agent at Pari Passu Realty in Manhattan, said another agent recently stood outside an open house that Mr. Serras was holding just to hand out his business card. “It was the equivalent of ambulance chasing, and it sheds a negative light on the industry on the whole,” he said. “There are just too many untrained agents out there doing things that are unethical and unprofessional, and once a client is exposed to that, the damage is done because it’s easy for people to generalize.”

I also had a similar experience.

And we do have our trust issues.

To start with, brokers are salespeople, so buyers with suspicious minds would naturally suspect brokers of trying to sell them something they don’t necessarily want or need. But brokers also admit that some real estate agents help to perpetuate stereotypes with classic bait-and-switch schemes and by putting their own desires to close a deal over a client’s best interests. The fact that brokers themselves sometimes find it hard to trust one another only compounds the level of suspicion in real estate.

Real estate brokerage is akin to the X-Files. Trust no one. Brokers also have trust issues with buyers and sellers. I remember one instance where I was accompaning another agent for a showing. When we got to the apartment, his key wasn't working. We had no idea why and the appointment had to be cancelled. Later on I heard from the agent some horrible news. For whatever reason the seller was dissatisfied with the exclusive agent and switched her services to another broker and changed the locks. Of course she didn't bother letting the original broker know. Perhaps she thought that brokers were soulless beasts who didn't deserve any consideration.

I have been in many a situation where I have ran around town showing apartments to buyers and then one day I get an email stating their thanks for my services but then telling me to f**k off because they found something else on their own. I have a policy of taking responsibility for my mistakes and unfortunately I made many. But in these instances where I got f**ked, I worked my ass off for these people and gave the best possible service. I am not saying that the grievances the people in the article are not meritorius, all I am saying is that what goes around, comes around.

Another instance when a broker might appear to be evasive is at an open house. When brokers hold open houses, they represent the sellers, but they also routinely use the events as an opportunity to pick up other clients. So if a potential buyer walks in and doesn’t seem right for that particular apartment, the broker can offer to help the buyer find something else. But under the unwritten rules of the game, the broker does not have to disclose whether there are any other open houses in the same building, particularly if the events are being held by competing firms. These kinds of situations can easily lead to mistrust on the part of sellers and buyers alike.

Any broker who does this is an idiot. If the open house takes place in a doorman building, the first thing the customer is going to ask is there any other open houses taking place. What a good broker will do is make that visitor their own buyer then tell that buyer about the open houses in the building and have them sign in as their broker. I have never tried that but I am not surprised if brokers have done it.

Sometimes, even when a transaction provides a happy ending for everyone, a buyer can still be left with lingering doubts about the broker and his or her motives.

Take Rob and Lauren Mank, who are now happily living in an Upper West Side apartment they bought last year. Mr. Mank said they had no qualms about their agent, a buyers’ broker, until final negotiations, when she pushed them to offer the full asking price, which would have meant raising their bid by $45,000. They ultimately went up by $35,000 and got the apartment because two competing buyers did not raise their bids.

“I felt like it was very high pressure and her loyalty to us was compromised by her desire to do the deal,” he said. “It left us with a bad taste.”

But Ms. Mank said she didn’t believe there was any malice involved and noted that without a crystal ball, there is no way of knowing if they could have gotten the apartment for less.

“Maybe you’re always going to want to blame someone for some infraction because you’re always going to feel taken advantage of in some way,” she said. “It’s a delicate and intimate situation because it’s your home and it’s your finances — the whole thing is just so fraught.”

What may have happened was that the buyer's broker found out the other competing bids were staying firm on their offers and that a window of opportunity existed for her buyer to get an accepted offer. Or a deal was made between the two brokers. Who knows?

Managers at real estate agencies say that the only way to minimize misunderstandings is to train new agents to be highly professional and to establish and enforce industry standards. To that end, the Real Estate Board of New York has established a list of 17 resolutions aimed at addressing ethical questions in residential real estate.

The resolutions cover issues as basic as the definition of an “exclusive” and the need to have backup brokers available when the exclusive broker is not available. They also try to cut down on typical broker squabbles by declaring it improper to foist a business card on someone else’s client and asserting that brokers should give co-brokers and their customers at least 20 minutes’ grace time if they’re late for an appointment.

Diane Ramirez, the president of Halstead Property and a governor of the real estate board, said, “Some of these things may seem silly, but it creates a framework of proper decorum.”

The board and its policies have evolved to make it clearer that “we are an industry that works for our sellers and buyers, and that should be our primary goal,” Ms. Ramirez said. “That’s the only way to dispel the distrust that comes in, not because it’s earned but because of what our reputation may have been.”

The real estate board also has an ethics committee that handles complaints filed by brokers against other brokers. Stephen Kliegerman, Halstead’s executive director for development marketing and a former chairman of the ethics committee, said the committee handles only a handful of cases each year, but he added that most complaints do not get to the board because agency managers tend to resolve complaints among themselves.

One of the biggest current complaints involves brokers who post listings on their Web sites for the exclusive properties of other brokers. “They’ll advertise a property they don’t represent, or sometimes the property doesn’t even exist,” Mr. Kliegerman said. “So when the buyer calls, it’s a bait-and-switch — the broker knows nothing about the property and winds up trying to take them to something completely different.”

He said the ethics committee is developing a new resolution to deal with the problem. “This kind of thing happens daily, and it taints the consumer’s impression of the entire broker community,” he said.

There are only three requirements to become an agent which are 45 hours of classes and two tests. That's it. When an agent is hired by a brokerage it is usually through networking or the brokerage is a mill where they suck up as many agents as possible and through attrition they weed out the weak ones.

Currently real estate brokerage is one of the few industries, at least in New York, where background checks are not conducted on new agents, which is ironic considering the fact that agents are privy to very sensitive information on buyers and sellers. It is not just enough to have more training but to have a system set up so that it scares off the douchebags from entering the field in the first place.

If you you want to make a real effort to weed out the undesireables then you need to beef up standards. Make the tests harder and require brokerages to be more accountable for their agents and add more stringent standards for their agents to adhere to. Unfortunately these changes will only occur when a complete fubar occurs in the industry and brokerages need to take action in order to avoid any intervention from the government.

There is only one sin you can committment in brokerage is not closing deals. I have seen brokers throw tantrums and threaten others in their office but they have gotten away with it because the enormous amount of money they bring to the company. Even with new standards and accountability it all comes down to money.