Ethical/Legal Question
I have a rental property out of state. The property manager is also a real estate agent. The property manager has been managing this property for 7 years. The property manager does an adequate job, no more, no less.
I am moving across the country and don't want to contiue managing a property via long distance. I told the property manager/real estate agent that if she found any investors or possible buyers that had an offer, feel free to start some negotiating. I gave here my asking price.
She calls me and says that she has a possible investor. She aks me the lowest I will go on price so that she can continue negotiations without having to call me with each offer to get a counter offer. Should she be doing this? Isn't it her job to get as much as she can, and if there are any questions in price, give me a call?
Second, she asked that if she can get more then my lowest asking price, can she keep it as a bonus. Am I crazy, or does this border on an ethical/legal problem. I'm not sure if she is stupid, or thinking she dupe me.
If anyone has an opinion, please let me know. And if there is an association of realtors or someone I can call to report/or ask about this, let me know.
Thanks again for any help with this situation. Maybe I'm just seeing a problem where there isn't one.
I'm not quoting RE law but her obligation is to present you with ALL offers. Her asking you your lowest price is a violation of her fiduciary responsibility to you, imho. IT is possible, that she just doesn't get it but.... She should submit every offer to you so you can accept or counter. coming to a contract on property is like playing poker, you never show your hand during the game.
In addition do you have a listing agreemnt with this realtor ? Did you invest some time to locate comp's for the property & area on your own thru the web or mls ?
Tom B. <IMG SRC="images/forum/smilies/icon_rolleyes.gif"> [ Edited by roztom on Date 06/03/2003 ]
Thanks for the quick response. I was still a little agitated when I wrote my post. But atleast I'm not the only one that see's something unusual about the situation.
Thanks again for the quick response. Any more responses are definitely welcome.
I think that this individual is quite unethical. You are the seller and as such, she will be working for whatever commission that you have agreed to. That should be her only motivation. The more she gets for you the more she gets paid. She shouldn't be taking the difference! Then she has no motivation to get you the highest price. Granted she was manaing your property already but I would say get someone else to represent you.
In response to checking comps. Honestly I hadn't really checked comps. I know the market in the area for renting, buying, and selling....but I didn't check comps in this case.
I was really just trying to get a feel for the market through my asking price. I know the price is reasonable in that area. Not a low asking price, not a high asking price, somewhere in the mid range.
I actually have 4 years left on the mortgage, I'm not in any hurry to sale the place, it rents great. I'm going to be investing in the northwest when I move to that area in about two months, so I'm looking at my options of getting rid of the place I have on the east coast. I don't want to deal with long distant property managing, I prefer to do it myself.
Thanks yet again
I could spend hours telling stories about folks that profess to be professional car salespeople. The easiest way to deal with this 8 watt bulb is to tell her that the initial price you gave her was too low but that if she gets an offer, you'd better see it. Then tell her that if she gets more than that price, she will get a bonus... let's see, 7% of xxx.00 - Broker's split equals
Good Luck,
Shawn(OH)
Quote:
On 2003-06-03 20:47, RJKon wrote:
I have a rental property out of state. The property manager is also a real estate agent. The property manager has been managing this property for 7 years. The property manager does an adequate job, no more, no less.
I am moving across the country and don't want to contiue managing a property via long distance. I told the property manager/real estate agent that if she found any investors or possible buyers that had an offer, feel free to start some negotiating. I gave here my asking price.
She calls me and says that she has a possible investor. She aks me the lowest I will go on price so that she can continue negotiations without having to call me with each offer to get a counter offer. Should she be doing this? Isn't it her job to get as much as she can, and if there are any questions in price, give me a call?
Second, she asked that if she can get more then my lowest asking price, can she keep it as a bonus. Am I crazy, or does this border on an ethical/legal problem. I'm not sure if she is stupid, or thinking she dupe me.
If anyone has an opinion, please let me know. And if there is an association of realtors or someone I can call to report/or ask about this, let me know.
Thanks again for any help with this situation. Maybe I'm just seeing a problem where there isn't one.
A: Have you signed a listing agreement with this agent? If not, I would suggest calling a few other real estate agents and get a market analysis done to determine the highest listing price that could bring in realistic offers.
Second, the agent has not committed any ethical violations by asking if he/she can keep the excess over the listing amount as a bonus. However, it does make you wonder who's interests is being advanced here .. your's or the agent's?
I think the agent has shown his/her's true colors. If it were my property, I would be looking for a new listing agent and a new property manager (if you decide not to sell the property). I wonder if the agent was "pocketing the difference" on the rent that he/she was collecting for the past 7 years. You may want to audit the management account by comparing the rental agreements with the rent collections history.
As far as an ethical violation, you would have to find out if the agent is a realtor and then find out of the local realtor's association has any ethical rules to see if one has been violated.
As far as a legal violation, since the agent asked you to keep the difference, he/she has not violated any fiduciary duties (yet) ... there would be no violation if you consented to his/her request.
Some posters here are well intentioned by their advice, but they misunderstand what is a fiduciary duty. You would want to check your state agency law on this issue (not real estate law as one poster suggested).
Hope that helps,
Taxjunkie
I think you should contact a few other real e
Hmmmm...as a Former Realtor in MI...let me offer my 2 cents worth of knowledge on this topic...
1. Is this person a Broker or a Sales Associate?...IF she is a Broker...she has probably not violated any Realtor Ethics or State Laws by asking for a bonus (although like others have said...Why ask since she has been "profiting" from you for years???...IF it was me..I would just be thankful for the listing and the contacts I will make meeting potential buyers and other investors)...Conversely, if she is a Sales Associate, she MAY be in the PROCESS (Since she hasnt actually collected any money yet) of breaking what I believe is state law in every state...the law stating a Sales Associate can only get paid any monies for the sale of a listed property by his/her Broker....in other words, the money has to pass through her Brokers hands before she can get paid...she CAN NOT take payment from you directly for the sale of Real Estate (Different for her management company, that has nothing to do with SELLING Real Estate.)
2. That being said...as others have stated...is the property actually listed??...Until you have a listing agreement, you are under no obligation to pay her anything (As she is under no obligation to market the property). Make it all legal...Get a listing agreement with whomever you choose to have represent your interest and spell out what fees you will pay in that agreement and upon what set of circumstances....ei...(For illustration purposes only) you'll pay 7% at full price, 6% at less than full...or something to that affect...with the understand that if another Realty company brings a buyer, YOUR agency will negoiate with that company and pay them from whatever you pay (usually 50/50 or 3.5% each @ Full Price and 3% each at less than full in my iilustration).
3. Further, I am lol at her asking you "What is your lowest price"...Even though legally your listing agent can not tell anyone that price BEFORE they make and offer (or after for that matter) Never, I mean NEVER tell ANYONE that upfront...I dont know...I believe in the goodness of humans but...I believe in the $Dollar bill too...Almost assuredly..THATS what the offer will come in at.....and then...will you trust that you received the best price for your property??.... UNLESS...you ABSOLUTELY KNOW and TRUST the Realtor...never do that....Simply tell them..(What they already know they are OBLIGATED to do anyway)..."Bring me ALL offers. PERIOD". Ask yourself...what does she mean "So I wont have to call you with every offer"???...is she "WORKING" for you or not???... Work implys.....oh I dont know.....uhhh...WORK!
4. There most certainly is a Local Realtor Association in every area that handles complaints regarding Realtors and ethics...to find the one in your area, simply call another Realty office and ask for the name and number of the association or call NAR (National Association of Realtors) and ask them (better option)
I hope I have added a little to the topic and Good Luck with your ventures
[ Edited by TSeaWell on Date 06/04/2003 ] [ Edited by TSeaWell on Date 06/04/2003 ]
Thanks TSeaWell. Wonderful post...
clear2close
[addsig]
Quote:Second, she asked that if she can get more then my lowest asking price, can she keep it as a bonus. Am I crazy, or does this border on an ethical/legal problem. I'm not sure if she is stupid, or thinking she dupe me.
What this agent is exploring is a variation of a Net Listing Agreement. In a net agreement, the sales agent agrees to accept anything over and above your minimum price as her commission.
I don't know if net listing agreements are illegal. If you entered into this type of agreement, you would always wonder if the agent received a valid offer that met your minimum price, but failed to present it to you because she would not get any commission. On the other hand, you don't want to lose a lot of potential profit if the agent receives an offer significantly higher than your minimum price.
It appears that this agent is being somewhat creative as well, because it seems that she is asking for a Net Listing Agreement plus a guaranteed commission paid from your minimum sale price -- a nice double dip.
Instead, if you really want to sell, why not offer to sell this property to this agent as a FSBO (no commission), then let her resell the property (as an owner/agent) for whatever profit she can get.
Where on the east coast is this property located? If you have been using a professional property manager all this time anyway, why does moving further out of the area change your relationship with the property manager, if it is already long distance? Maybe you just need to consider changing your property management. If the property is near my market area, I will refer you to the professional property management companies I use for my out of state rental property.[ Edited by DaveT on Date 06/04/2003 ]
So many great responses. Where to begin....
First, thanks for all the information, from one and all. I know a little about the business....but what is that old saying, knowledge is power, but half knowledge is dangerous...or something like that. I would say I'm in the half knowledge, or atleast the cautious knowledge mode. You all are giving me more insight then you can know.
As far as any legal/binding agreements. I have none with her at this time, other then a property management agreement. So I am free...as I have already done, to say a big NO to her knowing my lowest price, and then keeping anything over that. As one post put it, and I agree, maybe she is being creative. Well, if she is, she went about being creative in the wrong way.
Anyway, I think I'm dragging this out farther then necessary. All posts were very well recieved by me. Thanks for everything all.
As for the property, its a single family home in the Fayetteville, NC area. If there is a recommended property manager in the area, or if someone in that area wants to chat about the property, let me know. You can either post it, or email me at **Please See My Profile**
Thanks again everyone, looking forward to future posts.
Thank you clear2close...
I am going to send you a Private message with my email address...I will be getting my lisence again as soon as I move to GA in July....I'd like to stay in touch if thats ok with you...
TSeaWell,
Sounds great. Please do.
clear2close
[addsig]
As a person who got his liscense in NJ. It is the responsiblity of the Agent to always look out for the best interest of their client. If you did sign the listing agreement, they must bring you all offers and basically try and get you the best deal for your property.
It really seems if the agent is trying to make some side cash here.
-John