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Buying or Selling a Home/? violation of ethics by realtors

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Will attempt to be brief, however this is quite the story.  Had to sell my mother's home, we hired a "top agent" in her county. My mom's home needed painting, exterior interior, some peeling paint. We did not want to make repairs, price was adjusted. Realtor speculated that we could have structural deficiencies due to cracks in pool foundation/retention wall. Listing price adjusted taking in to account repairs that were obvious 89,900.  She indicated she doubted that home would be approved for VA/FHA loan, probably a handyman special. Home was listed, within 8 days interested buyer with pre-approved VA loan. Low ball offer, and asking for 4% closing cost. Rejected offer, told my realtor that home price had already been adjusted, was not inclined to provide closing cost. Buyer agreed to pay listing price, again asking for 4% closing cost. My realtor recommended to go ahead and do as it "was customary in today's market to assist with closing costs." I took her advice, regretfully.  Home was unoccupied as I had to move my mother out. Inspection done, buyer accepted them, I was not notified of results. Appraisal was done, identified peeling paint, instructed buyers agent needed to be repaired, she would do a second appraisal after said repairs. Few days later my realtor contacts me to inform me repairs were done. She states they never notified her. Peeling paint was supposedly repaired. Returned to my moms home a few days later, buyer had prepped the entire home for painting, had left tarps in room, left all his equipment in the garage, personal items in the home. To include using the refrigerator to chill his drinks. contacted my realtor, she said it was part of the contract she had written an addendum to the contract that we agreed that buyer would do up to $1000 repair.  I questioned did that mean buyer could move in and repair areas that were not appraiser stipulated repairs.  Bottom line, buyer's agent felt that they were working within what was stipulated in the contract. My agent allied with the buyer and said he was just enthusiastic about owning a home, went a little overboard.  I communicated this was disrespectful to my mothers home and they trespassed on to a property they did not own.  Sought legal counsel, he stated the language in the addendum was so vague it deprived me of legal recourse to do anything. I filed a complaint against both realtors with the county board, I have a hearing date next month.  I know  you do not have all the details, but would certainly appreciate any input and guidance. How can I best be prepared to go to this hearing - I am freaking out, I do not like confrontation and am quite nervous. I don't think I am being petty or trivial as both respondents are inferring.

Answer
Hi Vilma,
I apologize for the delay in responding.  Real estate has been incredibly busy and I have two family members with serious illnesses that I am caring for.

I am sorry to hear of your bad experience.

First, with an offer coming in so quickly on your home, I think you were wise to go ahead and pay the 4% in closing costs.

Not having seen your Contract and not knowing all your circumstances put me at a huge disadvantage, but I am making some comments below for you, none of which should be considered legal advice because I am not a licensed attorney.

I assume your listing agent was representing YOU and that your listing agreement spells this out.  That said, if your agent never notified you of the inspection results, this is very disturbing and I would think that was a Breach of Agency, which can be a very serious matter, especially if you incurred damages.  Here are a couple links where you can read up on Agency duties:
http://www.exclusivebuyersagents.com/duties.htm
http://www.ccim.com/cire-magazine/articles/breach-fiduciary-duty-and-lose-your-c
You can go to either Google or your favorite search engine and search for other sites, also.  The above two are ones I randomly selected.

As far as the buyer “moving in” and repairing areas not stipulated in the appraiser-required repairs, again, sounds like another breach of agency if you did not specifically authorize this.  If your agent stated to you that the purchasers never notified her that they were in the process of completing repairs, how did they gain access to the house to be able to do what they did?  And who let these purchasers in your mother’s house in order to do the work?  SOMEONE had to let them in or either give them a key.  If it was the agent for the Purchasers, you should have YOUR agent’s Broker-in-Charge address this with the Selling Agent’s broker.  As information, the Broker-in-Charge (BIC) of a real estate company is responsible for all actions and INACTIONS of all agents operating under him/her; and the buck stops with the BIC.  

Not having seen your contract, you need to demand that your agent’s BIC send you IN WRITING the specific language in your contract of sale that his/her agent claims allowed the buyers to do what they did.  When problems arise, your Contract of Sale is the document that normally governs, but not over and above laws relating to Agency.

On the matter of your Realtor saying that the addendum which was a part of your contract wherein you agreed that the buyer would (and could) himself do up to $1,000.00 of repairs, did you not get a copy of this addendum?  If not, another Agency breach.  Ask for it now, and insist that your agent point out to you IN WRITING the specific language in your Contract of Sale that allowed the buyers to do what they did.  Even if this language is in the Contract, if your agent never fully explained to you what would or could happen, this is negligence on her part – and also her BIC even though he may not have been actively involved at the time.  Bottom line, a BIC is always responsible for his/her agent’s actions.

If legal counsel you sought expressed the opinion that the addendum language was so vague that it left you with no legal recourse, this, again, should be another breach of agency.  I would suspect this same addendum could have also deprived the purchaser of rights to do what they did.  AGAIN,  HOW DID THE PURCHASER GAIN ACCESS TO YOUR MOTHER’S HOME IN ORDER TO MAKE REPAIRS?  And who allowed that access?

As additional information to you, an FHA or VA loan will not allow repairs to be made AFTER a closing; they must be made in advance of closing.  This is, I feel sure, the reasoning behind the repairs needing to be made prior to closing, but it sounds like the agents and BICs involved just did not do their job and inform you all along the way what you “may have” agreed to, and obtain your written consent prior to allowing obvious unrestricted access by the Purchaser.

I assume since you say you have a HEARING date next month with the Realtor County Board, that you have already been through the Grievance process which is required first before a Professional Standards Hearing is scheduled.  Regardless, you should insist that your Realtor and her Broker-in-Charge accompany you to this hearing and assist you in this matter.  You are also entitled to bring an attorney with you to the Professional Standards hearing, but you should let everyone involved know this up front.

To properly prepare for this Hearing, you should have cited SPECIFIC Articles (of the Realtor Code of Ethics) that you feel were violated.  Your agent’s BIC should become actively involved and assist you with this.  You can view the Realtor rules at http://www.realtor.org/mempolweb.nsf/pages/code

If closing occurs with no additional problems and you did not incur any damages (monetary or property), you probably do not have legal recourse in that respect against anyone.  However, I understand how you feel – that your trust was violated by your agent and her BIC not keeping you informed, and this is wrong any way you look at it.

You can also file a formal complaint with the Real Estate Commission in your State against both your agent and her BIC, along with the selling agent and his/her BIC if they allowed inappropriate access to make repairs without your specific consent.

I hope my comments above are helpful.  Feel free to write again if you have additional questions.
Regards,
Elizabeth

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liznarr

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I can answer questions relating to the purchase and/or sale of residential homes and land, including what a really good agent should be expected to do and/or not do; where to turn when problems occur; and questions regarding disclosure. I`m a Licensed Realtor in the Southeast since 1984 with designations of Broker, GRI, CRS, and CBR (Certified Buyer Representative). Current active and Life Member of Million Dollar Club, Certified by State Real Estate Commission to teach Pre-Licensing and Continuing Education courses, specializing in Agency. Currently serving on Grievance and Professional Standards Committees, and Education Committee in past.

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