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Other than the fact that reality shows that it's mostly different. I can't tell you how many times I watched as a home inspector I recommended ended up finding all sorts of major things. You know what? I was disappointed that the house would have major problems, but not disappointed that the buyers were protected. Any broker who would recommend a bad home inspector will end up having problems down the line when the buyers end up with problems that should have been discovered during the inspection process.
And how exactly does recommending a lender or attorney end up being a conflict of interest? Don't you think it's in the best interest of the buyer client to actually get approved for a loan and also get excellent legal advice?
Real estate is a referral business and any broker making bad referrals won't stay in business over the long term. The far worse situation is having clients with no experience make their own decisions on who to hire and end up getting ripped off or having their transaction fall apart as a result of those bad choices. It's common sense to hire a professional who you can trust, then rely upon their experience to recommended other professionals that they've had experience with.
Other than the fact that reality shows that it's mostly different. I can't tell you how many times I watched as a home inspector I recommended ended up finding all sorts of major things. You know what? I was disappointed that the house would have major problems, but not disappointed that the buyers were protected. Any broker who would recommend a bad home inspector will end up having problems down the line when the buyers end up with problems that should have been discovered during the inspection process.
And how exactly does recommending a lender or attorney end up being a conflict of interest? Don't you think it's in the best interest of the buyer client to actually get approved for a loan and also get excellent legal advice?
Real estate is a referral business and any broker making bad referrals won't stay in business over the long term. The far worse situation is having clients with no experience make their own decisions on who to hire and end up getting ripped off or having their transaction fall apart as a result of those bad choices. It's common sense to hire a professional who you can trust, then rely upon their experience to recommended other professionals that they've had experience with.
^^^^This is all so obvious. I just want truth and quality service for my clients.
I have seen the closing attorneys who could not read the HUD, and the attorney who twice turned the lot 90 degrees in the description, and the paralegal (who does most of the work,) who is unhelpful, unresponsive, rude, and detached.
I want better for my clients.
Disclosure: My 1st recommended attorney keeps a bowl of Tootsie Roll pops in the lobby. I tap it ruthlessly. I don't really consider that a bribe for business.
I have seen the home inspector who cannot write a coherent sentence in his report, undermining the client's ability to understand or convey defects meaningfully, undermining the clients' negotiating position.
I have two inspectors on the blacklist who didn't want to crawl under houses if they are a bit difficult. One I never recommended again, and the other was chosen by a client.
The last two inspectors chosen by my clients gave a slobbering hard sales pitch on how great the house was to the client at the wrap up, apparently hoping to curry favor with me to get more business. If my guy ever does that, there will be a new guy, for sure.
I believe there is no better termite guy then the owner of the company I recommend, and I have faith in his guys too, or I would not recommend him.
I want a good inspection, without drama or emotion, and a clearly written report with helpful photos as needed.
I have a list of mortgage brokers who mislead clients routinely.
I recommend mortgage bankers who issue preapprovals and then close on the preapprovals they issue. It is a difficult world in lending, and hard to be perfect, but fail too many times or drop the ball carelessly, and I know another banker I can recommend.
I want truth, communication, and service for my clients. I don't care who delivers it. It is that simple.
No one can ever tell me what to do when my clients pick bozos like I refer to above.
Do I stand by, because they independently picked a bozo and I am off the hook for the mess, or do I speak up because they engaged me as a fiduciary?
Am I liable for opening a house for a known bozo they picked, and not speaking up? Or am I covered "technically" because of wording in the agency agreement that throws them under the bus for the choice of poor service?
I am sure that there are good agents (like Mike) out there and I wish I had found one, but here are my reasons for the statements that I made.
1. My agent did not help with the negotiations at all. I would have paid $10K more for the house if I had followed his recommendation for the offer price.
2. I hired my own inspector based on recommendations from friends, and he generated a detailed report. My agent tried to dismiss the report saying that since I paid the inspector money, he is obliged to point out a lot of issues and that he (the agent) did not find any grounds to demand anything from the sellers. I was able to get $2500 towards repairs and my agent did not help me with the negotiation at all.
3. During the initial walkthrough, we found out that the window treatments, which were included in the contract were missing. Also, the seller had removed the shower curtain rods, mailbox and broken a door while moving. They offered me a credit for $500, which the agent said was more than he expected. I have demanded that either items be replaced or a credit be given for $1000.00. Again, the agent does not want the best deal for me but instead leans towards not rocking the boat.
4. The attorney did not put a liquidated damages clause in the contract, which would have provided me with additional protection in case of a breach of contract.
Obviously, this agent will not be getting any recommendations from me, but will be getting a bad review on Trulia and Angie's list. Curiously, never seen any bad reviews on Trulia for agents.
Here are my thoughts on the whole "agent making recommendations" thing. For me it just seems like the "safer" path is to pick my own attorney and inspector. I do see a bit of a conflict of interest so I choose to remove that from the equation.
This doesn't mean I don't trust my agent. And it certainly doesn't mean I think anyone who they recommend will automatically not have my best interest in mind. And if I found myself in a situation where I had no way of figuring out the best option I would most likely utilize a recommendation.
I am sure that there are good agents (like Mike) out there and I wish I had found one, but here are my reasons for the statements that I made.
1. My agent did not help with the negotiations at all. I would have paid $10K more for the house if I had followed his recommendation for the offer price.
2. I hired my own inspector based on recommendations from friends, and he generated a detailed report. My agent tried to dismiss the report saying that since I paid the inspector money, he is obliged to point out a lot of issues and that he (the agent) did not find any grounds to demand anything from the sellers. I was able to get $2500 towards repairs and my agent did not help me with the negotiation at all.
3. During the initial walkthrough, we found out that the window treatments, which were included in the contract were missing. Also, the seller had removed the shower curtain rods, mailbox and broken a door while moving. They offered me a credit for $500, which the agent said was more than he expected. I have demanded that either items be replaced or a credit be given for $1000.00. Again, the agent does not want the best deal for me but instead leans towards not rocking the boat.
4. The attorney did not put a liquidated damages clause in the contract, which would have provided me with additional protection in case of a breach of contract.
Obviously, this agent will not be getting any recommendations from me, but will be getting a bad review on Trulia and Angie's list. Curiously, never seen any bad reviews on Trulia for agents.
Basic common sense:
1) Use your agent for what he does best. Negotiations, transaction management, looking for trouble, providing market data, finding out how the seller might be a problem, or an opportunity.
2) Assemble a team of pros, none of whom are involved with each other, but each of whom get independent rave reviews. This is not your real estate agent's job, it is yours. The typical real estate agent has a vested interest in closing the deal. And human nature dictates that over time, referrals will go to those ancillary professionals who do not repeatedly cause problems. Well guess what? Buying a home is too big an investment to want to avoid problems. You actually want problems. Up front while there is still time and power to address them.
3) Stay away from known pitfalls with built-in ethical conflicts such as dual agency.
4) Trust? Trust is for your spouse and your best friend. Real estate transactions are about verification. As Ronald Reagan always said: "Doveryai no Proveryai". Trust, but verify.
5) While your buyer's agent should be protecting your interests, many don't do that very well. Or at all. Let's face it, turnover in the real estate industry is a frequent laughing point. You often don't know what you are dealing with as far as real experience or intelligence. Your agent might have started 6 weeks ago. And you are going to unilaterally confer trust in this individual to handle one of the biggest transactions of your life? I wouldn't. There are NO CONTROLS in the real estate industry to monitor or enforce ethical conduct, until there has already been a breach. There are a series of lofty pronouncements and goals that we are exposed to for an office meeting or continuing ed course once or twice every few years. Day to day? Ethics are in the eye of the beholder and often that eye is myopic. Buyer beware.
Other than the fact that reality shows that it's mostly different. I can't tell you how many times I watched as a home inspector I recommended ended up finding all sorts of major things. You know what? I was disappointed that the house would have major problems, but not disappointed that the buyers were protected. Any broker who would recommend a bad home inspector will end up having problems down the line when the buyers end up with problems that should have been discovered during the inspection process.
Not saying the agent would intentionally recommend a “bad” inspector. Regardless of the agents intentions (good or bad), the inspector who is referred business may feel an obligation (conscious or unconscious) to please their referral source. This is a conflict of interest.
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And how exactly does recommending a lender or attorney end up being a conflict of interest? Don't you think it's in the best interest of the buyer client to actually get approved for a loan and also get excellent legal advice?
I dont think a lender is a major conflict of interest. Ditto for the attorney who’s sole job is closing. But if your talking about a RE attorney who is backstopping the the whole process, there is a major conflict of interest. What if there is a legal issue b/t client and agent. I know this is unthinkable, but what if? An agent referred lawyer doesnt guarantee “excellent legal advice”.
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The far worse situation is having clients with no experience make their own decisions on who to hire and end up getting ripped off or having their transaction fall apart as a result of those bad choices.
And who is supposed to help these poor, ignorant rookies pick an agent who will not rip them off or have their transaction fall apart?
Last edited by RE Skeptic; 06-07-2013 at 09:41 PM..
Reason: typo
Not saying the agent would intentionally recommend a “bad” inspector. Regardless of the agents intentions (good or bad), the inspector who is referred business may feel an obligation (conscious or unconscious) to please their referral source. This is a conflict of interest.
Your problem is you assume that pleasing the agent means getting the sale closed at any cost. So very wrong. When I am representing a buyer, what I want from the inspector is a fill & complete inspection that finds any & all issues, and that does not minimize or blow out of proportion any of those issues. Pointing out the mold spot he sees on the wallboard behind the furnace and recommending a mold test is a good thing. Giving a 15 minute diatribe on the possible toxicity of molds and frightening the buyer so badly that they can't possibly buy the house is not a good thing.
I am much less likely to recommend an inspector who MISSES an issue in my client's inspection than one who finds issues that "rock the boat."
You are doing the right thing by following through on your commitment. You had plenty of legitimate times to pull out of this thing. Now is not the time. I would put personal honor first and close, so as not to screw the sellers, who have made important plans based on you doing what you said you would. You liked the house enough to buy it. Concentrate on what you liked and forget the negatives.
"I would put personal honor first and close, so as not to screw the sellers". Gee, Wouldn't it be wonderful if the world worked that way, let alone the R.E. market. And I'm pretty sure every agent on the planet would tell every seller, & every buyer, to "go thru with the deal". If the buyer gets a bad deal, who's stuck? The buyer. Not the agents, not the home inspectors, not the mortgage brokers, etc., they've already got their "cut".
Ultimately, it's business, period. And any buyer who gets into a bad deal on a house they don't really want, but goes thru with it, b/c of their "personal honor", is a dam*n fool IMO, & should ask: are the sellers, agents, home inspectors, all doing everything out of "personal honor"??? I've never seen sellers worry about the welfare of the buyers. Buying or selling R.E. is like going into a shark tank, only w/o one of those underwater cages, & deals fall thru all the time.
Also, I know that at least in Mass., & FL, sellers don't just get to automatically keep the buyer's deposit if the buyer reneges. It's far from "cut & dried". If the buyer disputes it, it can get into a legal dispute, possibly with most of the deposit $$ going to legal fees, so the sellers don't wind up with much anyway.
"I would put personal honor first and close, so as not to screw the sellers". Gee, Wouldn't it be wonderful if the world worked that way, let alone the R.E. market. And I'm pretty sure every agent on the planet would tell every seller, & every buyer, to "go thru with the deal". If the buyer gets a bad deal, who's stuck? The buyer. Not the agents, not the home inspectors, not the mortgage brokers, etc., they've already got their "cut".
Ultimately, it's business, period. And any buyer who gets into a bad deal on a house they don't really want, but goes thru with it, b/c of their "personal honor", is a dam*n fool IMO, & should ask: are the sellers, agents, home inspectors, all doing everything out of "personal honor"??? I've never seen sellers worry about the welfare of the buyers. Buying or selling R.E. is like going into a shark tank, only w/o one of those underwater cages, & deals fall thru all the time.
Also, I know that at least in Mass., & FL, sellers don't just get to automatically keep the buyer's deposit if the buyer reneges. It's far from "cut & dried". If the buyer disputes it, it can get into a legal dispute, possibly with most of the deposit $$ going to legal fees, so the sellers don't wind up with much anyway.
I don't accept your ethics. I don't accept your view of the world. I don't accept that business and honor are separate entities. I don't accept your premises, your assumptions, or your conclusions. And I would not want to have you as a seller or buyer based on your view of life and business.
A real esate deal is the result of weeks and months of consideration, analysis, inspection, and introspection. There are many legitimate avenues to escape a deal that doesn't make sense. There are many different times during the contract when you may question the deal, or yourself, and legitimately make a graceful exit that doesn't screw everyone around you based on idle whimsy. Once you get to the walk through, and after you have signed your name and honor to a contract that causes others to depend on you and your word, you do one thing: you CLOSE. Period. If you don't like the house on day 90 of 91, then close and re-list it on day 92. Pay for your own mistake, do not charge it to those around you who acted rationally and did what they said they would.
Capitalism and honor. Perfect together. That's the way we do things.
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