Friday was a lousy day for me. It ended with the flooded house I'll tell you about someday. It started with yet another house that is on the market, but not really.

This one is not a foreclosure or a short sale. It is merely a house where the absentee landlord is sick of being a landlord. It’s fully occupied. The agent gave me the lockbox code and confirmed the showing. She told me to knock on the doors. She didn’t call the tenants.

My client and I met some lovely tenants. They were polite and the apartments were clean. They spoke only Spanish. They didn’t laugh at my accent, but then again, I am not sure they understood what I was saying, either.

Sam Schneiderman, Broker-owner of Greater Boston Home Team continues his Monday series.

The first time it happened, I was in a home with a couple and their child. The wife seemed nervous about something. When she was able to distance herself from her husband and son, she turned to me and nervously asked; “Is their any way that we can find out if this house is haunted”?

Maybe there are supernatural spirits, and maybe there aren’t, but that really isn’t relevant when a buyer-client wants to know. As far as I am concerned, there is no such thing as a silly question from a client. After all, I wouldn’t want them to be haunted by their decision even if the supernatural did not manifest itself.

What do you do with a concern like that?
Buyers should discuss any concerns with their buyer’s agent. If you are not represented, ask the seller. In Massachusetts, you have the legal right to know about any material facts that would affect your decision to purchase property. You can ask other questions, but the seller or agent may not necessarily be obligated to answer. If the seller does not answer your questions, you might rethink whether the property and seller are a good fit for you,

Buyers and their agents may consider investigating further and perhaps having a special clause to address concerns. For instance, “this offer is subject to the buyer’s satisfactory inspection for the presence of supernatural spirits.” (Consult with an attorney for exact language.)

Mary wrote:

Like JGC, I wish regulators would look more closely at short sales. My suspicion is that not only are some brokers not submitting all offers, they are in collusion with the seller to sell the property to a relative or friend (a not "at arm's length" buyer). I have buyers putting in very good offers on short sales who are not getting the properties, and watching the properties sell for less than their bid. Where are the regulators?

There are a lot of accusations in what Mary wrote above. She’s not the only one. I also got this email from another commenter and blog-buddy of mine:

Rona, I’ve heard tales of people taking out cash loans on credit cards and cars in order to appear in dire straits and qualify for a short sale. If a savvy person knows the rules, I could see it working in this business/banking climate.
They'd be short selling it to someone they know as cheaply as possible, then renting it back. The idea is also to buy back after some time. Works well with tight knit ethnic groups. I think this is happening more where similar, although arms length, deals are common. Say, CA, FL, NV, AZ.

So, here’s the scam:
1. Get behind in your bills, so you can prove that you can’t keep the house that has depreciated below to loan amount.
2. Make a case for a short sale with your lender.
3. Go through the motions of selling on the open market with a crooked agent. Have the agent send only the low Offer of your confederate to the lender.
4. Once you sell to your not-arm’s-length partner, rent it back from him/her or buy it back at a later date.
(I have, in the past, run into agents who don’t present Offers. But, I can’t prove it is happening now, or for this reason, based on my experience in the marketplace. I am experiencing the inability to see properties, which may be a symptom of the same disease.)

Readers, I don’t recommend that you try this for a number of practical reasons that go beyond the obvious moral reason: it is stealing and bank fraud. You go to jail if you are caught; it’s a nice jail (Devons or Danbury), but it is still jail.

Welcome back to Attorney Richard D. Vetstein. Today, he looks at the wild world of short sales to tell buyers what they can expect...

A short sale is special type of real estate transaction between a homeowner, his mortgage holder, and a third party buyer. In a short sale, the homeowner’s mortgage company agrees to take less than what is owed on the outstanding mortgage, thereby being left “short.” In some but not all cases, the lender will agree to wipe out the entire debt. Many people believe that short sales offer bargain basement prices, but lenders will do their best to get as close to fair market value as possible so as to minimize their loss.

Short sales are a unique type of transaction and far different from the typical transaction between parties of equal bargaining power. Likewise, the legal aspects of a short sale are unique.

Well, melontherightcoast nailed it that sellers would hire more productive listing agents if they had to pay them by the hour. The real estate commission system pays agents for results. That gives consumers no motivation to get results, since the agent’s time is “free” until there is success. That, mel thinks, leads to hopeless listings that are there to “test the market.” Problem one: unmotivated sellers.

The next question was how can consumers avoid self-serving agents – the ones who get results at the expense of the consumer? The commission system rewards agents who treat ‘em and street ‘em -- in other words, push consumers into selling low or buying high. Problem two: self-serving agents.

I can help you with problem two. Consumers do themselves no favor by hiring the first agent who is “nice” at an open house. As Sam put it “…most people put more effort into finding a hairdresser or mechanic than they invest in finding their real estate agent.” That, dear readers, is why consumers are bad.

Now to make consumers better:

Melontherightcoast is this week’s “stray question” commenter. When discussing why agents do a poor job, mel asked about commissions. Yesterday, I wrote on agent commissions; mel mentioned broker office commission splits.

Another thought is that maybe what needs to be done away with is the real estate companies that take such a large cut of an agent's commission.

Here is a quick summary of broker-agent business practice:
An agent is the person you work with. That agent can either have a salesperson’s license or a broker’s license. The person running the office is the broker.

Brokers take a cut on everything an agent does. In exchange, the broker keeps the office going, provides leads and advertising, does ongoing supervision and is the legally responsible party to the seller or buyer client. Offices that have franchise advertising and support may be individually owned and operated, or can have corporate ownership with a managing broker. In those cases, the office also pays for the franchise services; this comes out of the agent’s commissions, one way or the other.

The broker-agent split varies from office to office and frequently is different from agents to agent within an office. Beginning agents pay a huge split to the broker who is supervising and training them. More experienced agents pay less. Some agents pay a desk fee, plus a lower commission.

Sometimes, I will give the off-topic comment some room to breathe here. Here’s one that needed some oxygen.
This one was inspired by my entry about how poor communication can leave a property sitting on the market. I wrote:

"If the property isn’t being shown, it isn’t going to sell. Period."

Melonrightcoast commented:

Rona,
Do you think that this would change if the pricing system for agents changed? I am curious what your opinion is about this. It seems to me that the current system tends to foster "bad" agents. I think if more agents refused listings that are priced too high and more sellers did their homework about the agent's competence, it would help get rid of the sellers that are not really interested in selling their home and the agents that are not doing a good job at marketing/selling their listings.
So instead of a %commission, sellers would pay a flat-fee to agents to list the property and then a flat-rate "bonus" once the place is sold. Ditto for the buyers agents, paid for by the buyer. As a buyer, I think that would go a long way to helping eliminate MY distrust of buyer's and seller's agents because it is in the agents' benefit to get the highest price, to the detriment of the buyer. And as a seller, I would have to be very serious about selling and I would be sure to check on my agent to make sure they have a very good sale history, etc before I paid them any money.

I have clients who are in the middle of a standoff. The sellers of a place they want to buy are under water. They will be bringing cash to closing to cover equity, plus fees. Needless to say, they bought a few years ago, had low equity to begin with, and don’t have piles in the bank to help them get out of this place. One of them has a great job offer on the West Coast. It is a really nice place. I wish they had gotten more enjoyment out of it before being tempted across the country.

This kind of problem makes my buyer-broker heart heavy. I have no joy in seeing someone so stuck in their real estate. But I also don’t want my clients paying top-dollar to mitigate their mistake. Thus, the standoff.

As most of you know, I am a person of sound self-esteem. That’s why I don’t take it personally when I don’t get calls back from other agents.

I remember when everyone in real estate had an answering machine. Yes, I am a dinosaur. The days of busy signals evolved into the age of voicemail and call interrupt – I mean -- call waiting. By the early 1990s, most agents had cell phones, but still used an office land line for business calls.

In the days of yore, the norm was that some offices had paid staff that did all the scheduling; some had agents doing required hours on the phone scheduling for everyone. Sometime in the past few years, a majority of agents began to either use MA PASS or do their own scheduling. A few offices still do their scheduling from their front desk. They are few and far between.

With a large number of agents who schedule for themselves comes a new set of protocols. Since agents use cell phones as the place to call, my scheduling calls interrupt business as well as social time. This gave rise, initially, to comments like “I’m driving, can you call back and leave a voice mail with your contact information and the time?” The next generation of this is “please email me your contact information and the time.”

Now, some appointments are wholly made by email. That works fine unless my initial email lands in their junk folder… (It happens.)

At the end of March, I asked my colleagues in the Massachusetts Association of Buyer’s Agents about what they are seeing with their buyer clients at the start of the spring market. I call these the “buyer agent eye view” of the market.

I am curious if buyers out shopping are running into what we see, too.
First, what I’m seeing:

My clients are frustrated. One told me: “I am so sick of having people at my office tell me that I should be able to buy anything I want at $20,000 below asking price. I can’t find anything decent to buy at any price!”
I have clients who are not abnormally picky who cannot find good properties to buy. On the other side of the coin, I am seeing prices dropping on less desirable properties, with compromised locations, in need of updating, or smaller houses and condos.

Because asking prices have a tenuous relationship with value, I don’t judge how well my buyers do based on asking price. I have clients who have been outbid. I have clients who are paying full price, and I have buyers who are negotiating well below asking price. It depends on the property. My recent experience is that some properties are winners and the rest are truly losers.

Economist Bill wrote:

One could argue that it should be a violation of the Realtors Code of Ethics for any Realtor to take on an overpriced listing, knowing full well that it will not sell unless the price substantially lowered.

I have seen a number of homes where the Listing Agent sold the home to the Buyer and acted as a dual agent. No one can ethically represent both sides of a transaction of this magnitude, having inside knowledge of both parties. Lawyers can’t represent both parties in a law suit, so why should Realtors be able to do it? Any comments?

Thank you Bill. You bring up two important points. However, we’re not talking ethics here, we’re talking law. There are thousands of licensed agents out there that are not Realtors. All licensees are all bound by the law.

The seller’s agent’s job is clearly defined on the back of the Massachusetts Mandatory Licensee-Consumer Relationship Disclosure.

The agent must put the seller's interests first and negotiate for the best price and terms for their client, the seller.

I agree with Economist Bill. Agents who take an intentionally overpriced listing are not looking to get the best price for their client. I will remind you that the sellers have free will, which cuts both ways. Some sellers are flattered by such agents and accept the inflated price. Some sellers are told a real price, but insist on marketing their home for an inflated price in order to “test the market.”

The second issue, that of dual agency, is commonly misunderstood. Economist Bill doesn’t get it. Dual agency equals no agency. A dual agent is supposed to be a neutral party. The disclosure reads:

A dual agent shall be neutral with regard to any conflicting interest of the seller and buyer. Consequently a dual agent cannot satisfy fully the duties of loyalty, full disclosure, obedience to lawful instructions which is required of an exclusive seller or buyer agent. A dual agent does, however, still owe a duty of confidentiality of material information and accounting for funds.

Last Monday, Sam Schneiderman discussed what it was like to be a rookie Realtor in the 1980s. Back then they were all salespeople that worked for sellers. Real estate agency has come a long way since. If you look hard enough and ask the right questions, today you can find a new breed of experienced agent/advocates that practice with integrity. Sam continues his Monday series by taking a break from his personal story to offer some advice:

Last Monday’s blog responses indicated that many consumers don’t get what they expect from agents and that agents are frustrated, too. We aren’t going to change consumer or real estate practices overnight, but if you are a buyer or seller committed to finding an agent that will add value to your transaction, here’s some advice to help you connect with an agent that should live up to your expectations.

First, make a list of what you want from an agent. With list in hand, do your own research and also ask for referrals to find the right agent

Then, email chosen agents asking about their experience as a buyer or seller’s agent. See if they respond with useful information in a straightforward, non-pushy manner.

Next, call the ones that show promise and ask:
-do you work in real estate full time or part-time?
-how long have you have been practicing real estate full-time and how long part-time?
-how many transactions have you (not your company) closed in your career? How many transactions did you close last year? (Can you document that? An MLS printout is most reliable.)
-what should I expect from you if we work together. (Will that be in writing?)
-when will you will be available to work with me?
-what happens on your days off, vacations and other times that you are not available and I may need you?
-where does your business come from? (Confirm with references. The longer they’ve been in business and the more consumer oriented they are, the higher the percentage of referral business they should do.)
-can you explain how is real estate agency is practiced in your office?
-how and when will you advocate for me? Are there circumstances when you cannot advocate for me? (Will that be in writing?)
-do you require a written agreement to work with me? If so, for how long?
-how can I can get out of the agreement if I am unhappy?
-can you provide references so that I can talk with others about their experience with you?
-any other questions that are relevant to your particular circumstances.

Today, Sam Schneiderman continues his Monday series about his journey from real estate dummy to real estate maven. By the time I met Sam, he was a “real estate maven”. A maven is an expert with subject knowledge, experience, common sense and compassion. (Don’t get confused here -- he’s not the commenter on this blog by that goes by the name “RE maven” and Sam doesn’t work for Somerville’s Maven Realty.) Sam is the broker-owner of Greater Boston Home Team.
Here's Sam:

For the first year of my real estate career, I lived the old joke:

Q: What do you get when you educate a dummy?
A: An educated dummy.

Within a few years of renovating my small condo, I was searching for a larger home with my fiancé.

I decided that a real estate license would probably make me a better buyer, so I completed a simple 24-hour class, memorized definitions of terms like riparian and mineral rights, the square footage of an acre and other basics. I learned about listing agents and sub-agents that brought the buyer and shared commissions. I learned that sellers were the only clients entitled to an agent’s loyalty.

The only franchise in town offered advanced sales training. They taught me how to qualify buyers, get a phone number when someone called in and build urgency so people would buy and sell. I was amazed to learn that the predominant philosophy at the time seemed to be “buyers are liars and sellers are worse”, and that it was a sub-agent’s job to be in control of his buyers. (I found all of that that offensive and untrue.) I answered phones, got numbers and started to show homes. Aside from getting into homes and keeping a transaction on track, I was pretty useless- partly because of restrictive agency laws back then (seller agency only) but mostly due to lack of experience and supervision.

I was an educated dummy. After about 6 sales (more than most Realtors do in a year) I learned that real estate has less to do with property than people, but no one was talking about that yet. It was all about the seller and salesmanship. Buyers were customers who needed to behave properly or “their” so-called agents dropped them. That was real estate until the 21st Century.