While we are poking holes in the Realtor Code of Ethics, let’s don’t forget the old 3-10, which is hard to dispute.
Agents have a fiduciary duty to do what is best for the client. Listing agents who sell their properties without exposing them to the open market via the MLS would seem to be in direct violation here, but instead the practice is encouraged in offices around the country:
- Standard of Practice 3-10
The duty to cooperate established in Article 3 relates to the obligation to share information on listed property, and to make property available to other brokers for showing to prospective purchasers/tenants when it is in the best interests of sellers/landlords. (Adopted 1/11)
The Code of Ethics says listing agents are obligated to ‘make property available to other brokers’, which is also part of the agreement for agents to join the local Association of Realtors. I share my listings with you, and you share yours with me.
Of the NSDCC closed sales this year, 4% have a days-on-market of zero, which doesn’t automatically mean that they weren’t on the open market, but the vast majority have remarks like “sold before processing’, a blatant message that this listing wasn’t made available to other brokers.
Though only 4% are successful, I’d guess that 30% to 40% of all listings try some sort of ‘Coming Soon’ pre-market activity. And how many other deals are put together ahead of time by the listing agent, who then let the new listing sit on the MLS for a day or two just for posterity?
I don’t care which way the game is played, or if there are any rules at all – which, in reality, there aren’t any when commissions are on the line. I just wish N.A.R. would stop pushing how ethical agents are just because we have a Code of Ethics.
I’ve missed out on 2 properties that I would have liked to buy in the last 6 months. Both were short sales.
The first one the listing agent listed the property one night then marked it pending the next morning. They then waited 2 months hiding the property from other agents and telling them they were no longer accepting offers. After 2 months another agent in the same brokerage bought the property. Then magically after it sold the original listing agent relisted it in the MLS for 300k more than what his buddy in the brokerage bought it for.
On another property I had an agent call to put in an offer after 2 days on the MLS and the listing agent said not to bother because they were no longer accepting offers. (The listing agent never asked what I was willing to pay) Magically about a month later the property is relisted on the MLS for double what it sold for.
In both of these cases the Listing agent didn’t present all offers to the seller and/or steered the sale to the person they wanted or themselves. Completely unethical and illegal (if you’re willing to drag the agent through the court system by suing them.) The sad part is I could find this kind of deal happening DAILY in SoCal. I’ve tried reporting to the BRE and not only do they not care the BRE investigator told me that not presenting all offers to the seller is legal.
Here’s one thing I was surprised to discover about short sales. In a short sale situation the “homeowner” or more specifically the person that’s in default to the bank gets to make the decision on which offers to buy are presented to the bank. The reason for is because until the property goes through foreclosure the “homeowner” in default still technically owns the property.
Think about that. You have a person that’s probably pissed at the bank for taking their house making a decision on which buyers offer is the one they want to go forward with. Also this person is likely down on their luck and needs $$$. How easy would it be for the listing agent to bring in their own buyer (or even themself) + some cash under the table so the “owner” can give one last FU to the bank with a stupid offer to buy. The bank then needs to make the decision to call the seller out and run them out through the forclosure process or just take what they can get and move on.
obligatory viewing….
https://www.youtube.com/watch?v=xKGeHuln08A