Disputes with real estate agents are more common than those in the industry like to admit, though the disputes are typically minor and the reasons can be widely diverse. Most disputes are over strategy – how to go about achieving the client’s goals. The agent may be reluctant to implement strategy desired by the client because he considers the actions illegal, unethical or simply ineffective. The client may believe the agent is not being aggressive enough in their efforts to negotiate the best possible terms in a deal or disagrees with how the property is being marketed.
The first of my several disputes with real estate agents occurred early in my career. My first job in real estate was as a mortgage broker with a large, franchised real estate office in San Diego. I arranged a purchase loan for a buyer’s first home and shared her excitement on the day escrow closed. When the escrow officer sent out an email informing me and the agents representing the buyer and seller that the deed had been recorded (transaction was completed), I waited an hour for the buyer’s agent to inform the buyer and then called to congratulate her. To my surprise, she was distraught.
Escrow closed on a Friday and her family planned to travel from Los Angeles the next morning to help her paint and clean the entire interior of the house. She wanted the paint dry before new carpet was installed and new kitchen appliances were delivered on Monday. Her move-in schedule was tight and her agent had just dropped a nuclear bomb on her plans.
“My agent,” she said, “just now informed me that I own the house, but I can’t move in for three days.”
Her purchase contract said possession of the home changed hands at 5:00pm on the day escrow closed, standard wording in many home purchase contracts. I looked at my watch, it was about 6:30pm. Her agent had just told her there is a custom in real estate that gives the seller three days to move out after the sale is done. I told her no such custom exists and that only the purchase contract determines when a buyer takes possession. I suggested she contact her agent and demand the keys immediately.
Ten minutes later, her agent called me.
“Why are you advising my client on real estate matters?!” he demanded angrily.
“You and I have the same license, pal,” I told him. “Your client has the right to seek real estate advice wherever she wants. She also has the right to seek the advice of an attorney on this matter, which I will recommend she do.” His attempt to intimidate me and his client didn’t work.
There were at least two disputes in this situation. One was a legal dispute over possession of the property. The other was an ethical dispute regarding the buyer’s agent fabricating a local custom to deceive the buyer (I’ll leave it to the lawyers to determine if this would also have been a legal dispute). Fortunately, a mutually-agreeable resolution was reached and the buyer decided not to take any action against her agent – she just wanted him gone.
Why did the agent make up the story about the 3 day delay in taking possession? The seller’s agent had forgotten to negotiate the delay in the purchase agreement as he had promised the sellers. Both the buyer’s and seller’s agents worked in the same real estate office, so the buyer’s agent was attempting to cover up a mistake made by a co-worker, another reason why I recommend never entering into dual agency transactions.
What options do buyers and sellers have to settle disputes with real estate agents? I’ll say up front that consumers who believe they have suffered a loss of any type should consider speaking with an attorney. If they want to consider alternatives to legal action, here are other methods that can be used to resolve disputes with agents.
Talk It Out With The Agent
Some disputes are simply a result of miscommunication between agent and client. Review the situation carefully with the agent to determine if there is an actual dispute or only a misunderstanding.
Contact The Agent’s Supervisor
Many agents work under the supervision of a team leader, sales manager or employing broker. Contact the first line supervisor and if nothing is resolved, go up the chain until you reach the owner of the real estate office.
Contact The Local REALTOR® Association
Most real estate agents are a REALTOR®, though not all. Being a REALTOR® is not a requirement to hold a real estate license. A REALTOR® is a member of the National Associations of REALTORS®, which hears complaints from consumers at its local offices when violations of the Association’s Code Of Ethics may have occurred. Most local associations provide a complaint submission form on their web site or offer a phone number to call to get the process started.
For more about the difference between a REALTOR® and a “realtor”, see my article Realtor or REALTOR®, What’s In a Name?
Contact The State Licensing Agency
Still don’t want to consult with an attorney but think an agent is acting unethically or illegally? Contact the licensing agency within the state where the agent conducts business. Most have an easy way to submit consumer complaints regarding disputes with real estate agents online or via telephone and are very responsive.
Consult With An Attorney
Consulting with an attorney is sometimes the best first step to get a complete rundown of your options. It can also be the last stop if you’ve exhausted all other means of resolving a complaint. Even if your listing agreement or buyer’s representative agreement calls for arbitration, consult with an attorney before entering into any type of dispute proceeding.
A note regarding local customs – there are many local customs in real estate and they don’t mean diddly squat unless they are mandated by law or incorporated into the purchase agreement in writing. For example, some areas have a custom regarding who pays for which closing costs. You might even see a purchase offer where the buyer’s agent has entered “Per County Custom” in the section where closing costs are allocated between buyer and seller. I always recommend that my sellers either reject those offers until the costs are specifically allocated or return a counter offer with the allocation in it.
Have questions about resolving disputes with real estate agents or other real estate-related topics? Drop me a line!
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