When Agents Double-Deal by Ken Krell
It’s time, once again, to expose the Great Real Estate Rip-off. One of my students recently showed me a schedule of fees from a local real estate broker that was so outrageous and ridiculous that I must share it with you.
Before we get to the details of this shyster situation, let me give you an understanding about what you should expect from a real estate agent.
When you go to a real estate broker to see a property, you generally assume that you will dealt with fairly; the agent will show you some property and will tell you the truth about each one. If you want to make an offer, the agent will pull out his/her infamous “standard form” and fill it out (Years ago, I taught a course on how to “beat” the standard form).
As a fiduciary of the seller, the agent will practically machete you into signing that offer. Then, as we have discussed in previous articles over the years, the broker, although he/she is receiving a hefty brokerage fee (in many cases) from the seller, will try to hose you for “conveyancing fees” or “document storage fees” or other crazy stuff.
The “conveyancing fee” generally refers to assisting you in obtaining the mortgage and making sure that the terms of the contract are carried out to avoid settlement problems. In essence, the broker coordinates the necessary events required to reach settlement.
Many ethical brokers charge a pittance for this service, and it’s well worth paying if you don’t want to do the work. One of the East Coast’s finer agencies, for instance, historically has not charged for the service, since if it was not performed, no one would go to settlement. Others charge as much as $350 or more and do not disclose to the seller that they are being paid by the buyer as well. State regulators usually frown on such practices, since they can violate the licensing laws.
But many brokers say that the fee is reasonable. They say that they prepare the deed and mortgage, if necessary (in states where that is legal), and arrange settlement. Guess what! The title company has prepared every deed for me and my clients for years, and hasn’t charged a penny! Yet, one South Philadelphia broker has charged $125 for the deed alone!
A simple call to your title company is all it takes to arrange settlement. And furthermore, do you trust a real estate broker to prepare one of the most important legal documents regarding your home ownership rights? The state of New Jersey would pull an agent’s license if he/she were to prepare such documents. They are only to be prepared by attorneys in that state.
But the “buyer rip-off” scam goes much further than this. At least one agency actually has the gall to charge the buyer for preparing the offer. The fee for preparing or “reviewing” the agreement of sale (purchase contract), coordinating settlement, clearing title and sending a copy of the title report to the bank (which the title company does for free) is $100. And this is in addition to the “conveyancing” fee!
Of course, the agent has a fiduciary responsibility to the seller and must present the offer, but most buyers have no idea how to put it together, and they need the agent’s help. Without the agent’s help, they’ll pay for an attorney or another advisor. Traditionally, the agent has prepared the documentation at no charge.
Furthermore, that this agency says that they’ll “review” the contract is ridiculous. Whom do those folks represent? The other side! Do you want them to “review” your contract? That’s like having John McCain review Barak Obama’s latest speech.
The bottom line here is that the buyer must beware. Not just from the seller, but from real estate agents as well.
There are many good, fair, ethical agents out there. It’s a shame that a few bad apples can tarnish the reputation of one of the most important industries in the world.
Do you have any question or do you need more tips for real estate or strategies to impact your life? Then this site Ken Krell could help you what you want.
No comments:
Post a Comment