Realtor Whistle-Blower . . . or Tattle Tale?

Pushing the Boundaries -- Literally

What do you do when you see another Realtor break the rules (or appear to)?

And if you do something, does that make you a whistle blower -- or a tattle tale?

Thankfully, the issue doesn't come up that often. But it does come up.

Here are the three most common situations where rule-breaking arises:

One. A home sells with virtually no market exposure, at a giveaway price -- and here's the kicker -- the Buyer's agent is the same as the home owner's (called "single agent dual agency" -- see, "That Sure Went Fast! (Too Fast??)".

Two. The Realtor "borrows" the MLS area number from an adjoining, more upscale part of town.

So, instead of entering the code that includes Powderhorn Park, the listing agent codes the listing for Kingfield, on the other (west) side of 35W.

Three. The listing agent flagrantly overstates a home's finished square feet (funny, the opposite never seems to happen).

"Tattling" or "Keeping it Honest?"

So, to repeat, what do you do?

My answer depends on a couple factors: do I have a client interested in -- or competing with -- the home in question?

Is the agent with Edina Realty?

If it is, I know who to call (their office manager -- or mine). And it matters more, because bad behavior by another Edina agent reflects on me personally.

Could there be a benign explanation?

For example, maybe the agent who was on both sides of the "fire sale" had express permission from their client to sell it, fast, at the best price they could get (but usually you do that loudly, not quietly -- otherwise how do you know it's the best price??).

And last but not least: how busy am I at the moment?

In general, I don't view it as my role to police other Realtors' behavior or business practices.

However, when such behavior harms my or my clients' interests, I see it as my obligation to do something.

As Martha Stewart would put it, "that a good thing."

P.S.: I suppose that the contrary argument would be that sleazy Realtors make ethical ones look good by comparison -- and therefore actually help the latter.

Did They Really "Give it Away?"

How to Tell if it's a "Fire Sale"

Realtors hear it all the time (often from neighbors or prospective Sellers protesting about the value of their home):

"Oh, they gave it away."

"The Smith house? That was a fire sale."

"They sold for way too little."

How to Tell

Whenever I hear the foregoing, I typically respond with the following three questions:

One. How long was the home on the market?

It's awfully hard to make the case that any given home sold too low once it's gotten a couple months -- or years -- of market exposure.

That's true even if the marketing has been, shall we say, lacklustre (see "Fire Sale" Factors, below)

Two. Did you see the inside?

It's surprising how many people who are convinced that a home sold for too little . . . have never been inside! Or, if they were, were last in 25 years ago.

It's pretty hard to assess the value of a home you really don't know very well (if at all). Which leads to . . .

Three. Did you inspect it?

I'm aware of several transactions where the ultimate selling price was at least partly explained by major issues uncovered during the inspection.

In one case, a slate roof that looked fine from the street . . . wasn't. Replacement cost: north of $30k.

True Fire Sales

Of course, none of the foregoing is to say that some homes do appear to sell for too little.

In fact, I'd (conservatively) estimate that as many as one-third of the homes on the market fail to maximize their selling price.

Here are the factors that I think are most responsible:

--Poor (or no) staging
--Poor (or no) marketing, including unflattering or out-of-season photos
--Initially overpriced, which leads to too-long market time, which ultimately leads to a discounted selling price
--Major discount due to minor deferred maintenance (I tell Sellers that every $1 in deferred repairs can easily subtract $3 from their selling price).
--Bank-owned property
--For Sale by Owner ("FSBO"): usual pattern is, from way-too-high, to, way-too-low
--Restrictive showing instructions: Buyers won't buy something they can't get in.
--Estate sale with out-of-town owners (sometimes, they don't have a clue; other times, they explicitly tell the listing agent that selling fast is more important than maximizing the price).

Plus, perhaps the biggest yellow flag of all: the home sold the first week (or day) it was on the market -- or even before it hit the market.

The Buyer's agent?

The same agent representing the Seller (called "single agent dual agency").

(Note: to really know if the price is below market . . . you (still) have to know both the home in question and the market.)