In my 20 years plus in the business training CID Personnel in methods of determining deception, NOWHERE have I seen more areas with opportunities to mislead the public than when it comes to Real Estate transactions. There are good people in every profession, in fact I know several Excellent Realtors who adhere to the highest standards. I also have had the unfortunate experience of meeting several real low life ones, you know the type, money hungry crooks.
The following is a prime example of how the public is being duped due to unethical , although legal, people in the business of Real Estate. This one comes from the state of
There is an ad on the web by the VIRTUAL REAL ESTATE STORE (referred to as Broker) who offers 1% of the selling price to the buyer if they will let them (the broker), help them in securing a new home. They will charge the buyer (you) only 400.00 for their service and give you representation. All you have to do is accept and submit the buyers brokerage agreement and the 1 % Home Buyer Cash Back is yours and they will pay you a 1 % fee within 10 days of closing. If you buy a $ 150.000 house the broker will pay you your 1% which amounts to $ 1,500.00 Sound great. Ok here’s how this works, and it’s legal.
All Realtors work for the seller because some idiot thought and probably still thinks, that the seller pays the realtor fees thus laws were enacted that state clearly the seller rules. The buyers had no representation so in fairness, a majority of states have enacted laws that say the buyer is entitled to representation. I’m going to try to make this simple.
Now there are laws where , instead of the Realtor working for the seller, the buyer can make the broker a buyers rep by authorizing the agent to work for him ( the buyer). By officially signing the proper documents, the broker now works for you(the buyer) and the broker is only going to look out for your benefit and the broker is only going to charge you $400.00.for his service.
There is a stipulation, the broker can not show you houses that he (the broker) has listed because the broker now works for you and we all know that All realtors work for the seller. Now you figure it’s not such a good idea because if the broker works for you how can he show you listings that the broker has especially if the broker has a house that you like. No problem, the broker will now become a DUAL agent. Stay with me.
Now the broker works for the Buyer and the Seller. There are rules that are supposed (remember the 3 Q’s, apply them now) to be followed but from personal experience they are not. In fairness to you the reader I won’t go into the rules for the sake of simplicity. Where was I , Oh yeah. So now you have a relationship with the broker, he sends you information on houses that he thinks you may like. After a month or so you haven’t found your dream house because most of the listings sent to you on MLS were higher than you wanted to go or the prices exceed your qualifying status. So you and ma are driving around one balmy day and find a house that is perfect for you. You have been doing business with your broker only on the net and realize he can’t be contacted for information or help in writing the contract, you don’t want someone else to buy the property, so you and ma do the most logical thing. You call the realtor from the sign in the yard, the realtor shows you the property, you fall in love with it and you buy from the realtor who had it listed.
What a glorious day. You found the house of your dreams and it only cost you $ 400.00 , the fee you paid your other broker. Plus, the original broker owes you $ 1500.00. the 1% he promised you when you signed papers. Remember. Well, you didn’t buy the house from the original broker so you know you wont get the $1500.00 and all your out of pocket is$400.00 for the brokers services.
Your closing is set for Friday at 10 am. Thursday your new realtor calls and say’s we have a problem. Your old broker called the title company and told them he is your buyers rep and the title company wanted our company to pay your old broker his 3% commission (150,000 x 3% =$4500.00) and we cant pay it because there are other realtors involved and we cant afford it so you, the buyer, will have to pay it yourself. As you stare at each other, ma and pa, in total disbelief, you try desperately to try to figure out what is happening. (Stay tuned as it get a whole lot worse.)
Ok, remember that buyers rep agreement you signed. It states clearly and I quote from their web pages…
The advertisement reads
“EARN UP TO 1% OF THE SALES PRICE OF THE HOME YOU PURCHASE WITH VIRTUAL REAL ESTATE STORE.
Here’s how it works.
1. Completer the 1 % Cash Back Registration form below
2. Accept and submit the Buyer Brokerage Agreement and 1% Home Buyers Cash Back Rules.
3. Start your MLS search.
4. There are 5 more conditions that we don’t need to go into because number 2 on this list just got you in a world of trouble.
Now lets look at a paragraph of the buyer rep agreement you signed.
6. Commission. Broker shall seek to be paid a commission from the listing broker under a cooperative brokerage arrangement or from the seller if there is no listing broker. In the event the seller or listing broker does not pay Broker a commission , then Buyer shall pay Broker at time of closing , a commission of 3.0% of the purchase price of all real property in Georgia which Buyer purchases during the term of this ‘agreement whether or not the property has been identified to Buyer by Broker. In addition, If Buyer leases property or enters into a lease/purchase contract during this Agreement, and the landlord does not agree to pay Broker a leasing commission, buyer shall also pay Broker for the duration of the lease and any renewal of extension thereof a commission of 5% of each rental payment paid by Buyer to Landlord there under. There are a few more there fore’s and whereas but I think by now you are starting to realize what’s going on. Know what , it gets much much worse.
Litigation ensues, you spend thousands for attorneys, you cant back out of the contract or the seller will sue you as well, your wife is about to have a nervous breakdown and finally things get settled and the house is closed.
At the closing the title company paid the appraisers, lawyers, realtors fees, inspectors, and all of the needless costs that are on a HUD. They paid a lot of them from the sellers side of the settlement statement and some from the buyers side and gave the seller the remaining dollars left from the sales price of $150,000.00. of which the lender gives to you a bill of $ 150,000 to repay back in the form of a mortgage. Whoa, lets back that up, gave the seller the remaining dollars left from the sales price of $ 150,000.00 of which the lender gives to you, the buyer, to repay in the form of a mortgage.
You and only you are paying all the fees, including Realtor Fees and will do so for the next 10, 20 or 30 years. Know something else, you are paying interest on the commissions and all fees assessed you. Buyers pay all. Have a happy day.
Now how in the world can a seemingly intelligent couple possibly get themselves involved in such a scam. Its pretty easy for the unethical agents to hide the truth by flim flam fast talking. It’s done by use of the Agency representation
Home warranty Title policies Survey’s Realtor commissions Tips
Discount brokers Mortgage brokers Realtors Selling someone else’s home.
Transactional brokers Sellers agents Dual agents
Home inspectons PMI or MIP Buyers agents