Expert: Todd C. Menard - 9/27/2009

Question
I have a bid in for a house for $220k.I had a apparisal done and it came in at $220k My lender I am using did a random appraisal and said the house was only worth $200.which I am contesting because my realtor told me that the sellers realtor said the seller would not sell at that price. In the mean time I emailed the seller and she was unaware of the appraisal for $200k. I believe that 1) the sellers realtor never told the seller and 2) my realtor lied to me because after I called her she told me that the sellers realtor did tell the seller. If she didn't tell the seller than why would my realtor tell me the seller sais she would sell at that price. I am tired of the realtor game and I am now going to talk to the seller directly. Is there anything wrong with this?

Answer
Hello Dennis - I am a proponent of expertise in the real estate field as well as the methods used in representation as it relates to Standards of Practice and the clients best interest. As you have just experienced, in this market, appraisal standards, and HVCC, are causing significant problems in the marketplace for sellers and buyer alike. In fairness, there are also problems with professionalism at every level... from national to state and local government to banks, corporations, small businesses. Investors/homeowners/borrowers are taking advantage of anti-deficiency statutes and the state of the economy short selling homes that have dropped in value. There are also some real estate agents that fall into this category lacking professionalism as you described. Although, you might benefit by seeking first to understand the entire picture as it is difficult to determine who did or said what when we weren't in the room or on the line at the time. Could it be possible the listing agent did tell your agent certain things and now since you are going direct... and the listing agent will double their income as a result... the listing agent is telling you something different since there is a financial benefit. Understanding compensation, the seller makes a written agreement with the listing broker for service at a total amount of compensation, then the listing broker through an MLS participation agreement makes a standing offer of compensation to the procuring party (the party which brings the buyer). So, if you elect not to use your agent the listing agent will financially benefit since THEY do not have to pay YOUR agent. Since the seller already made a written agreement with the listing broker your negotiation is irrelevant to the standing contract. Also, 'procuring cause' indicates that even though you are not being represented by the agent who initially made you aware of the property (Internet search Black's Law definition of 'Procuring Cause' for more information) the procuring agent can arbitrate with the listing agent for their compensation as the procuring cause. So ultimately, you lose representation as well as receive no additional benefit financially (such as a price reduction) other than what the seller would have done if you had your own representation. To get the best representation for your money (what the seller previously contracted to pay for) I recommend that you speak to your current agents 'designated broker'. This person is the responsible party at the firm at which your agent works. You can express your lack of satisfaction with this individual and in most cases will be referred to another agent in the firm if you are unwilling to come to an agreement or unwilling to allow the original agent to remain your representative. In addition, the designated broker typically makes inquiry throughout the transaction process to ensure you are being appropriately represented regardless of which agent assists you. This way you will continue to have personal representation paid for by the listing firm throughout the transaction process looking out for your best interests. In addition, the listing agent cannot provide you with full-fiduciary representation, rather the agent would represent BOTH the seller and you. This is similar to an attorney representing BOTH the defendant and the Plaintiff in the same case! Even though in real estate 'dual representation' is practiced, you may desire to also Internet search that term and see for yourself the 'limited' representation you will receive should you elect this type of service. I recommend seeking legal advice from an attorney with real estate specialty to determine the legal issues related to dual representation in your state before you enter into such a written agreement with the listing agent. Typical issues relate to negotiation, representation, disclosure of pertinent information and property condition, and more. Back to the Appraisal issue - All finance companies desire to have their own appraisal. If the 'opinion' of value at the time of appraisal is less than you or your representation anticipates it is possible to ask for an 'adjustment' and or provide 'additional sources' of comparable value to help validate your challenge. The loan officer/originator typically desires the property value to be at least the sales price as much as do you. They should be considered an ambassador of your prime objective as well. Talk to your loan officer and talk to the designated broker about the appraisal issue and you should find appropriate representation for all the issues discussed here. If it provides any comfort, you are not alone as appraisal issues are a typical transaction nuance of real estate today. Please remember I am not an attorney so this is not to be considered legal advice, rather it is real estate information that any experienced REALTOR should be able to provide. I hope you feel my reply has afforded you some additional options to promote your purchase endeavor and provide additional avenues for your appraisal dilemma. If you need additional information please reply.  - Todd Menard