Family sues Firm in Agent Death

[BoBromhal]

I meant a profit center for the Realtor/brokerage

Which I don't expect to happen. It would be interesting if the NAR decreed a "policy" of obtaining background checks, or copies of valid ID's. Would all brokerages quickly adopt this? Would it be a unique advantage for a smaller brokerage, especially one who isn't a member of NAR, to advertise "We won't require ID!!"

By the way, on the flip side, in NC at least we licensed agents have to report any criminal violations of misdemeanor or above ( I believe it is; traffic tickets no, DWI yes) to the Real Estate Commission, or we'll definitely get in trouble - like loss of license.

[oldtrader]

Originally Posted by I love boots.

Out of curiosity when someone signs on to your firm or Brandons do you tell them up front that commercial listings aren't acceptable? Or that if a new agent brings one it it will be someone elses listing or they will have to go elsewhere? I would be on board with how you do this as long as everyone knows it and I'm sure Brandons former agent didn't. Wouldn't this be fair?

It does prove the point I was trying to make. Simply that when pressured by a broker it takes about 5 minutes to find another one.

Again you think you are qualified to sell all kinds of real estate. If you look at laws of agency, if you are not qualified to handle that type of transaction, you are not to attempt to list or sell the property.

You show that you think any agent is qualified to handle commercial property. Does the agent, understand commercial zoning and permitted uses in a certain part of the city. Does the agent know, how to do a financial analysis on the property, for a buyer to buy the property and lease it out. Do you know what expenses are going to be included for a property, and know if they are all included in a statement signed by the seller, or if some big expenses are left off. Do you know what expenses are tax deductible, and what ones are capitalized expenses and added to the base price (amount the owner has invested in the property and not tax deductible the year spent. Often a seller will leave half of expenses off, and as an agent you had better know if they are not included and make sure they are. Sell the property with half the normal expenses not showing, and you set yourself and your broker up for one heck of a law suite, and you will lose.

It is for those reasons, residential brokers usually do not accept commercial listings by there staff, when they nor someone in the office do not know all those answers.

And this is just the tip of the iceberg so to speak of problems caused by a house salesman/woman trying to list and sell commercial property without training in that field.

This is why intelligent brokers, that are not commercial specialists nor have one on staff, will not accept his agents listing property they are not trained and qualified to handle. It is agents like you, that get themselves and their agencies into trouble which can be a serious as big money settlements, and loss of licenses, when the agent lists property outside of their expertise.

When listing and selling homes, knowledge needed to handle commercial property, is not needed. But when you step up commercial, large residential rental properties, farms and ranches, as an example you are working in a different world, and need specialized training to handle those transactions. There are analysis packages the banks are going to want you to prepare before they will consider financing.

My first day in the business, I sold my first 2 year old upscale apartment house, to a former co-worker. My 4th day in the business, I sold the identical one next door. The next week I worked, I exchanged a 16 unit 3 year old upper middle income apartment house for the down payment on a 160 acre irrigated farm. Everyone of them, I had to do a full projected financial analysis on that particular property, using data provided by the owners, to use in the analysis. Could you do this, to satisfy accountants. Do you know the average expenses in relation to income that are going to be looked at to see if you have prepared a proper analysis. I have seen agents come to me to hire me to prepare these statements, and I was paid half of the office commission to do so.

I have had some of the top brokers in town, who had family owned income property they needed to sell to clear an estate, come to me and list the property with me because it was out of their expertise. Single family homes and developing they and their salespeople were tops in town. But when you went into commercial real estate they did not know what they were doing.

In all my years in the business, I only sold 6 homes as personal residences to help friends, but I have sold as many as 14 homes in one day to investors as rentals. 13 were in a 13 unit to be built subdivision, where a long time Broker and a small builder needed to pre-sell 5 of them, to get development and construction money. I sold them to investors at a discounted price, in one afternoon with 1 buying 5, and no one bought less than 2, all used as rentals. In addition an owner had offered me another home at a discount for an immediate sale at a good price, and I sold that to an investor for a total of 14 in 2.5 hours on the telephone sight unseen.

Yes you are right, with your license you can list any type of real estate. But an intelligent broker, is going to make sure you do not list property you have not training and experience listing, due to the dangers of being sued, if you make any mistakes, which are almost inevitable if you do not have experience in that field

[I love boots.]

OK. Several of you say that the license we are given gives us no preparation to sell commercial property, yet is is a license to do so. If you are right I think that is messed up.

[Brandon Hoffman]

Originally Posted by I love boots.

OK. Several of you say that the license we are given gives us no preparation to sell commercial property, yet is is a license to do so. If you are right I think that is messed up.

Correct assessment with the first sentence. I don't entirely agree but don't entirely disagree with your second sentence.

It goes both ways, don't think the evil REC out to get agents or that they are singling out residential specialists. Many commercial companies don't let their agents handle residential and aren't even members of the local MLS so they'll just refer homes to residential agents.

Commercial is an entirely different beast. If you've never sold a true commercial property you won't understand. I have partnered with a commercial agent and sold some including a complicated sale where a Wal-Mart was built and that's how I know I'm not qualified by myself to take on a complicated commercial deal. I lack experience in the process and details. It's complicated and different in many, many ways than a residential sale. They are also advertised primarily though costar/loopnet which is kind of like a national commercial only MLS rather than through a local MLS. The first disservice most residential agents would do the seller is not list it on loopnet because they aren't members if they even know about it (my agent was not a member so right off the bat we'd have lacked proper advertising for the above referenced commercial property. I'm not a member and it's far more expensive than MLS. The second disservice they would do is the process and due diligence, even the commission structure, is different than residential.

So the agent liability would come in that if an agent botched a commercial deal because they didn't have specific experience and specific commercial training. And often we aren't talking about a 100k home. These can be million/multimillion dollar screw ups and the client is looking for someone to blame and someone to cover their loss. In addition to being on the hook for large amounts of money and law suits the REC frowns upon agents taking on business they aren't really qualified to handle so their license might get suspended or revoked as well. This is one the most common law suits against agents - the agent taking on a sale they weren't qualified for and making a costly mistake.

Trust me, this isn't a situation where the big bad REC or big bad BIC is trying to take business from agents. It's protecting agents from themselves and protecting the public from dishonest agents that may want to "fudge" their experience. I would hate to see an agent sued or have their license stripped because they weren't properly guided by their BIC.

[BoBromhal]

Originally Posted by I love boots.

OK. Several of you say that the license we are given gives us no preparation to sell commercial property, yet is is a license to do so. If you are right I think that is messed up.

I believe, as I've said in this thread, that an agent who gains experience and expertise in both facets can certainly handle both facets. It's the quality of your representation that becomes an issue. Both for how well your client gets representation but also your liability as the agent.

[JONOV]

Originally Posted by I love boots.

OK. Several of you say that the license we are given gives us no preparation to sell commercial property, yet is is a license to do so. If you are right I think that is messed up.

(In General) just because something doesn't carry an administrative or criminal penalty, doesn't mean that it liberates you from liability.

A close friend is a licensed plumber. He is legally allowed to apply for a septic permit, and install a septic tank in NC. He has the backhoe needed to dig the hole. He knows how to hook up the pipes. He knows how to lay the leach field.

If you called him and said, "I need a new septic tank," He would refer you to someone else, because he doesn't have the expertise needed with regards to the soil types and everything else involved in designing one, and doesn't want to get called onto the carpet about one that goes wrong. The profit from the single, rare transaction is prohibitive to the risk involved (in his mind.)

Presumably, if a broker is willing to turn away business, the risk must be high enough that its not worth messing with. I don't get the idea he was referring to a four unit apartment building or raw land as opposed to a SFH or residential lot.