when real estate agents go over the line

Luxury Real EstateAlthough not listed in this year’s Careercast’s annual Top 10 Most Stressful Jobs, “real estate agent” has been included in previous years’ lists. Supposedly, real estate is one of those industries where “frequent or difficult interactions with the public or clients” along with high levels of stress may also be responsible for high levels of depression, as described by Wulsin, Alterman, Bushnell, Li, & Shen in their 2014 study (Prevalence rates for depression by industry: A claims database analysis. Soc Psychiatry Psychiatric Epidemiology, 49,1805-1821). Results suggested that the real estate industry has the second highest rate of depression, second only to bus drivers and transit workers. Certainly to be included in such lists is not an achievement. However, it may explain the erratic behavior of the few agents who are willing to go over the line to gain an edge over their competitors; such as in this recent account…

In their November 2nd Miami Herald article (Secret tapes, blackmail threat: Luxe real-estate rivalry turns nasty in Miami; miamiherald.com), David Ovalle and Nicholas Nehamas gives us insight to the highly competitive Miami uber-luxury real estate market. What seems to be the plot of a TV crime drama is the real life story that will soon conclude in a court room. Having pleaded not guilty, a middle aged real estate agent is now awaiting trial for “felony extortion, resisting arrest with violence and attempting to deprive an officer of his weapon.”

The story’s main characters are the agent duo known as “the Jills” and Kevin Tomlinson. The Jills have been recognized as being a top producing team in Miami’s luxury real estate market for some time. Tomlinson is no slouch either. He has also been recognized as a top Miami luxury agent, and in the past served on the board for the Miami Association of Realtors®. And although Ovalle and Nehamas’ report suggested that the Jills garnered jealousy from other agents; others have also questioned their business practices.

At the heart of the matter was the allegation that the Jills hid expired listings so the properties would not be solicited from their competition. The allegation is that MLS listing data (such as address, city, and neighborhood) were changed to “hide” expired listings. In an attempt to end the practice, Tomlinson filed a complaint of listing manipulation in April of this year. And that’s when things got interesting.

Rather than waiting for the ethics complaint to process through the system, Tomlinson allegedly asked the Jills on several occasions for large sums of money (up to $800,000), to rescind the complaint. Tomlinson supposedly also threatened to go public if they didn’t pay up.

The combination of high end real estate, allegations of unethical behavior, extortion claims, a police sting operation, may already be the basis for a night’s entertainment. However, the ending sounds like a “take down” scene from Hawaii Five-0: no one expected that Tomlinson would be also charged for going for a policeman’s gun while charged for resisting arrest.

Although the public details may seem incriminating, it appears that there’s more to the story; and maybe each is a “villain protagonist.” Many in the Miami real estate community have rallied around Tomlinson, and some “have petitioned the Miami Association of Realtors® to take ‘disciplinary action of the highest severity’ against the Jills.” For the thrilling account details, please read Ovalle and Nehamas’ story at (miamiherald.com/news/local/community/miami-dade/miami-beach/article42178872.html).

Original published at https://dankrell.com/blog/2015/11/05/when-real-estate-agents-go-over-the-line-to-gain-edge/

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Due diligence when buying a home

Due Diligence
Trust and Verify

If you’re a home buyer who’s ready to jump into the housing market this spring, you’ve probably begun searching to see what’s on the market. You may have already met a real estate agent or two; and if you’ve haven’t yet talked with a mortgage lender for a prequalification, it’s probably high on your priority list. Exercise due diligence throughout the home buying process.

Before you know it, you’ve selected an agent, mortgage lender, and title attorney to assist you. Then you find yourself searching for homes. Guess what? You’re well into in the process of buying a home! But before you put the buying process on cruise control, how much trust should you put into the professionals helping you?

Exercise your due diligence when buying a home.

It’s not to say that real estate agents, loan officers, home inspectors, or anyone else assisting your home purchase are not qualified.  But then again, some professionals are better than others. Buying a home is probably one of the biggest purchases you’ll make during your life. The saying “trust but verify” should be your mantra throughout the home buying process to ensure you exercise due diligence.

Have you verified the credentials of those you’ve hired?

Believe it or not, there are some who are doing business without the authorization of the corresponding licensing agency. And yet, some reasons given for not having a license may sound innocuous, such as forgetting about a license renewal deadline; other reasons may not seem as innocent (for example, licensed professionals from neighboring jurisdictions, DC or VA, attempt to do business locally where they are not licensed).

Professional licensing is a regulatory safeguard that provides consumers a pool of professionals that meet or exceed a minimum professional competency. Agencies such as the Maryland Real Estate Commission; Maryland Home Improvement Commission; Maryland Commission of Real Estate Appraisers, Appraisal Management Companies, and Home Inspectors; Office of the Commissioner of Financial Regulation; and the Maryland Insurance Administration offers an internet portal to verify a licensee’s status, check for disciplinary actions, and also explains how to file a complaint.

Although the MLS strives for accuracy in home listings, there are inaccuracies. The MLS provides guidelines and standards for home listing data.  However, exactness and truthfulness can vary because data input is performed by many agents and/or their staff. a disclaimer used by our local MLS prompts you to verify MLS listing information,

“Information is believed to be accurate, but should not be relied upon without verification. Accuracy of square footage, lot size, schools and other information is not guaranteed…”

Verify the schools are accurate.

You can verify schools by checking with the local school board. Our local school board has an online tool to check schools assigned to any county address. The tool is located here: Montgomery County Public Schools “School Assignment Tool” (gis.mcpsmd.org/SchoolAssignmentTool2/Index.xhtml).

Verify zoning, development and other information

You can verify zoning or development questions with your locality. Montgomery County allows you to check information online via Montgomery County Planning Department (montgomeryplanning.org).

Verify permits.

Sure the deck is beautiful and the basement is fully finished.  But how do you know that they were built to meet county code?  Maybe the home seller went with the lowest priced contractor who cut corners and did not pull a permit. Or worse, the seller did it themself to save paying a licensed contractor. Make sure any improvements and recent repairs have had the proper permitting! The permitting process certifies that repairs/renovations comply with building and zoning codes. Permitting ensures that houses are safe, structurally sound, and meet health standards. Permits can be checked by contacting your locality.  Montgomery County allows you to check most building permits online via Montgomery County Department of Permitting Services (permittingservices.montgomerycountymd.gov) “eServices” data search portal.

Most home buyers are familiar with basics of the home buying process. However, “trust and verify” can help identify and reduce hidden and obscure risks. Exercising your due diligence can make your home buying experience increasingly trouble free and more enjoyable.

By Dan Krell
© 2015

Original located at https://dankrell.com/blog/2015/01/16/trust-and-verify-home-buyer-due-diligence/

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Real estate professionals reputation

real estate professionals
Hire a Realtor (inforgraphic from keepingcurrentmatters.com)

Gallup (gallup.com) conducts a regular poll of ethics and honesty of various professions. Although the survey is not inclusive of all professions, many are covered in alternating years. Results from the 2013 survey ranked the top five professions as (along with their corresponding “Very High/High” rating) nurses (82%), pharmacists (70%), grade school teachers (70%), medical doctors (69%), and military officers (69%). At the bottom of the list we can find lobbyists (6%), members of congress (8%), car salespeople (9%), state office holders and advertising practitioners were tied at 14%, and lawyers and TV reporters were tied at 20%. Where do real estate professionals rank?

Real estate agents were included in the 2011 Gallup Ethics and Honesty survey, where they were rated with a 20% Very High/High rating; which would be toward the bottom of the list. The 20% rating is actually an improvement from the 17% rating given in 2008. Believe it or not, the 20% rating seems to be the highest rating achieved by real estate agents since the first time they appeared in the poll in 1977; and 2011 was the second time for such a rating (2005 was the first). Historically, the rating ranged from 13% to 19%; not surprisingly, the lowest ratings seem to coincide with housing market slowdowns.

The “Very High/High” rating used to compare consumer opinion of professions may be a little misleading. The 20% “Very High/High” rating in ethics and honesty could lead one to believe that agents are generally viewed negatively. However, in 2011 the “Low/Very Low” rating was 22%; while the 57% “Average” rating may be more indicative of consumers’ opinion of real estate professionals ethics – which is indifference.

The National Association of Realtors® has for years tried to influence public opinion of Realtors® and the industry (not all real estate agents are Realtors®; Realtors® are members of the NAR), by publicly promoting the high ethical standards by which Realtors® are held. Many are unaware that a code of ethics was adopted in 1913 by the association (which was then called the National Association of Real Estate Boards), and has since strived to instill and maintain a high level of integrity in the field.

With such emphasis on ethics, you might expect that public opinion would be much higher. Unfortunately, the limited research on consumer perception of ethics is mixed at best. And according to one study, consumers consider price, quality, and value more important than ethical criteria in purchase behavior (The myth of the ethical consumer – do ethics matter in purchase behaviour? The Journal of Consumer Marketing. 2001;18(7),560-577.)

The reality may be that consumers are not necessarily concerned about ethical behavior or honesty when hiring real estate professionals; which may be why the NAR has decided to add a compulsory dimension of “value” for practitioners so as to increase public opinion of the industry. In an effort to increase professionalism standards, the NAR recently approved an “aspirational” Code of Excellence. A report on the November 10th NAR Board of Directors meeting stated (realtor.org):

“The goal is to raise the practice of real estate measurably through increased training in the competencies that consumers value. These competencies include the stewardship of property listing data, privacy and security of consumer information, advocacy of property rights, community involvement, and technology.”

NAR President Steve Brown was quoted to say, “This is the first step in a process for the continuing improvement of our profession…”

Original located at: https://dankrell.com/blog/2014/12/18/changing-the-publics-opinion-of-real-estate-professionals/

© Dan Krell
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Private, pocket listings surge during housing recovery

luxury real estateThe recovering housing market has brought to light the controversial practice of the pocket listing. Although pocket listings are more common in the upper bracket and luxury real estate market, pocket listings tend to increase during hot markets when there are few available listings and increased home buyer competition.

by Dan Krell © 2013

Sometimes called “off-market” listings, or “private” listings, the pocket listing is a home sale that is not openly marketed in the multiple list service. The listing is kept “quiet” and is only known to the listing agent and/or broker who typically market the home to a select network of contacts and clients.

Pocket listings are common among the utra-wealthy because of privacy concerns; anonymity is an often cited reason for a home seller to choose to have a pocket listing, typically because the seller has some celebrity status. Private listings may also be promoted as a way to limit home viewings to those who are financially qualified to purchase the home; the focused buyer pool reduces the number of showings, which may be less disruptive to the seller’s daily schedule.

However, critics of pocket listings often point to MLS concerns, dual agency issues, and housing laws as reasons to be wary of the practice. Agents are not the only ones who have access to an MLS listing; MLS listings are often syndicated throughout the internet and available for anyone with internet access to see. Clearly, one of the obvious issues of a pocket listing is the reduction of marketing exposure that is lost from not having an MLS entry. Another issue that arises from a pocket listing is that it skews home sale and price data that appraisers use for valuations.

Consumer Advocates in American Real Estate (caare.org) cites the possibility of dual agency (where the buyer and seller’s agent is from the same real estate company) as a major concern for pocket listings. Because dual agents do not act exclusively in the interests of either the seller or buyer, the possibility of a conflict of interest may arise. Additionally, CAARE states that a seller who agrees to a pocket listing may exclude 70% or more of qualified buyers who are actively searching for homes.

A recent Maryland Real Estate Commission newsletter (The Commission Check; Summer/Fall 2013), reprinted an article from the August 2013 ARELLO® Boundaries discussing pocket listings, that stated; “pocket listings may run afoul of federal fair housing laws that not only prohibit readily apparent or intentional housing discrimination against protected classes, but also practices that have a “discriminatory effect” that “… actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces, or perpetuates segregated housing patterns because of race, color, religion, sex, handicap, familial status, or national origin…”

Unbeknownst to some home sellers, their home sale may be marketed as a pocket listing during the period between the signing of listing paperwork and when the home is entered into the MLS. Although this time is often used to prepare a home for sale; it may also be privately marketed by the listing.

Although the National Association of Realtors® has “not defined what constitutes a pocket listing, nor do they have an official policy regarding the practice” (“What is a Pocket Listing”; Realtor Magazine, May 2013); potential housing law issues and ethical concerns of pocket listings should be addressed with your real estate agent/broker.

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Disclaimer.  This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice.  Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction.  This article was originally published the week of October 28, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Dual agency debate continues; revealing results from recent real estate research

by Dan Krell © 2013
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home salesUnderstanding representation in a real estate transaction can sometimes be tricky. You might think, after all, “If I work with a real estate agent, they represent me.” Not so fast; understanding whom real estate agents represent can be confusing in some situations, most notable is the concept of dual agency.

Maryland, like many other jurisdictions around the country, allows for dual agency. “The possibility of dual agency,” as described on the Maryland Real Estate Commission website (www.dllr.state.md.us/license/mrec/mrecrep.shtml), “…arises when the buyer’s agent and the seller’s agent both work for the same real estate company, and the buyer is interested in property listed by that company. The real estate broker or the broker’s designee, is called the “dual agent.” Dual agents do not act exclusively in the interests of either the seller or buyer, and therefore cannot give undivided loyalty to either party. There may be a conflict of interest because the interests of the seller and buyer may be different or adverse” [emphasis added].

Dual agency has been widely debated since its inception. And as the industry rapidly transforms, the issue is likely to continue to be a hot topic; for example, as real estate teams have become more prevalent in the marketplace, many argue that the potential for conflicts of interest in dual agency transactions becomes increasingly significant.

In his February 2010 Agbeat.com article (February 16, 2010; The Age Old Dual Agency in Real Estate Debate), Patrick Flynn states that although dual agency is legal in many jurisdictions, “…dual Agency is the ultimate no win scenario. Even if all parties agree in writing (and if you explained the likely pitfalls and risks to both parties…they never would agree) you simply cannot perform your prescribed duties…

He continues to say that although there is potential for damage and irreparable harm to those involved in a dual agency transaction, most of these transactions close “without a hitch;” and the agent’s attention moves from common sense and integrity to the “little devil” on their shoulder that tells them, “Look at all the money you made!

Recent research, investigating whether dual agency transactions are a result of agent incentives (e.g., money) or efficiency, suggests that the issue deserves further investigation to understand (among other things) the effects of dual agency, potential for conflicts, and to determine if buyers and sellers are poorly informed. Regardless, Brastow & Waller conclude in their 2013 study (Dual agency representation: Incentive conflicts or efficiencies? The Journal of Real Estate Research, 35(2), 199-222) that dual agency is more likely to occur at the beginning and end of a listing contract. When a dual agency sale occurs at the beginning of a listing, they conclude that it is a result of agent incentive and results in an efficient quick sale. However, when a dual agency sale occurs at the end of a listing contract it is usually due to agent incentive (e.g., avoiding loss of sale) and the home is more likely to sell for less.

Locally, the Maryland Real Estate Commission requires that real estate licensees, who are assisting you, provide disclosures describing agency relationships (including dual agency) “at the time of the first scheduled face to face contact with you.” Your agent can assist you in understanding dual agency, when it occurs, the potential issues of dual agency, as well as what should happen if you decide to not agree to dual agency.

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Disclaimer.  This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice.  Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction.  This article was originally published the week of September 9, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.