Every licensed real estate agent or broker in California must put their clients’ needs before their own. They have what’s called a fiduciary responsibility, which means they are legally required to do what is in the best interest of the client. If an agent or broker puts their own needs above their clients’ needs, they can (and should) lose their license.
When a real estate agent represents a buyer, it is the agent’s job to find appropriate properties for the buyer to see, and once the buyer decides to make an offer, the agent is responsible for negotiating a purchase agreement favorable to the buyer with regard to price, terms, any repair work, etc. When an agent represents a seller, it is the agent’s job to attract qualified buyers and to assure that all offers are presented to the seller, and then to negotiate a purchase agreement favorable to the seller.
Just like in every industry, real estate has some unscrupulous characters. One way unethical agents try to game the system so they can make more money is to neglect certain offers that come in on a listing they hold so they can get the commission that comes with representing both the sellers and the buyers in a single transaction.
Here’s what happens. The unscrupulous agent (we’ll call him the “shyster”) has a listing and an ethical real estate agent has buyers who want to make an offer. The ethical agent calls the shyster and says, can we come over this afternoon to present an offer? The shyster says, “Um, the seller is really busy today. Let’s meet this Friday.” By the time Friday rolls around, the shyster has pushed through an offer from clients he represents, so he calls the ethical agent and says, “Gee, I’m really sorry, but the house already sold.”
Recently, I heard about just such a shyster right here in Ukiah. This guy neglected to present a good offer from another agent, which is both unethical and illegal. Instead, the shyster presented an offer from buyers he represented, even though it wasn’t as good as the offer from the other agent’s buyers, because the shyster wanted commission from both sides of the sale. His offer fell through and the buyers represented by the ethical agent were able to buy the house.
Unless a seller specifically says, “I don’t want to see any offers for less than $500,000,” (or whatever their threshold is) then the seller’s agent must present all offers unless they are patently frivolous, like, “Hey, I’ll give you five bucks for your million-dollar house.” This is true even after an offer has been accepted and an active escrow is underway. Until the transaction closes and ownership changes hands, all offers must be presented.
You may notice that some real estate agents are also Realtors. This means they belong to a professional association that requires a higher standard of ethics. At Realty World Selzer Realty, any time we receive a complaint, we investigate and would immediately dismiss anyone who did not adhere to the National Association of Realtors’ code of ethics.
We live in a small town. Word gets around. I tell my Realtors that if they suspect foul play, they should call the sellers after an escrow closes and ask why the seller didn’t accept their offer. If the seller says, “What offer?!” it is reportable to the Department of Real Estate. If you are a seller who discovers you did not have an opportunity to choose from all the offers on the table, visit dre.ca.gov and report the incident. Let’s get the bad actors out of the business.
If you have questions about getting into real estate, please contact me at email@example.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery. Dick Selzer is a real estate broker who has been in the business for more than 40 years.