More Transparency Can Clean Up Industry

Posted by urbandigs

Thu Feb 8th, 2007 01:06 PM

A: I recently had a realization as I was submitting a bid on behalf of a client and was told by the listing broker that a higher offer was submitted and that we had one chance to up our bid. I was told the offer was accepted already, but that no contracts were sent out so that my clients had one last chance to get the property; so we upped our bid and I had to advise my client on the hardest aspect of my job --> how high to go. And then it dawned on me. If there were only a one-stop site that has complete data on co-op and condo sales in Manhattan, only then will I be able to see whether or not the listing broker was being honest or unethical.

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A little over a week ago the NY Times had a story called, 'Agents of Angst', which went into detail on how real estate agents are a step below used car salesman in terms of reputation. Here is an excerpt:

A Harris poll conducted last year that ranked occupations in terms of prestige placed real estate brokers at the very bottom of a list of 23 professions. (Firefighters and doctors were at the top.)

To start with, brokers are salespeople, so buyers with suspicious minds would naturally suspect brokers of trying to sell them something they don't necessarily want or need. But brokers also admit that some real estate agents help to perpetuate stereotypes with classic bait-and-switch schemes and by putting their own desires to close a deal over a client's best interests. The fact that brokers themselves sometimes find it hard to trust one another only compounds the level of suspicion in real estate.
Yea yea yea.. I know all of this. Which is one of the reasons I started blogging in the first place so potential clients have a window into how I work, think, view the markets, and treat clients. But how could it get better?

MAKE REAL ESTATE TRANSACTIONS COMPLETELY TRANSPARENT!

Think about it. If an agent knew in advance that the actual price of the property would eventually be made public and be accessible to anyone with internet access, than how could they get away with unethical behavior when the deal is closed? The situation would in essence change the playing field, I would think, as agents could now be accused of unethical behavior or not observing their fiduciary responsibilities to their client (the seller) and risk losing their license and credibility in the field. Well, assuming they have credibility.

For example, consider this situation in a world where ALL transaction data is made public within a week of closing:

Sally Seller Broker is hired to market property at $500,000 ---> Buyer Broker Bob submits a bid of $465,000 on behalf of their client ---> Sally Seller Broker receives bid of $455,000 from a direct client with NO buyer broker ---> Sally Seller Broker ONLY submits direct client's bid to seller ---> Deal closes for 455,000

Although the deal is now closed and Buyer Broker Bob can't do anything to reverse it, he will be able to see very clearly that Sally Seller Broker acted in their OWN best interests and never disclosed a competing bid to their client, the seller. Sally Seller Broker was acting this way to ensure a higher commission for herself; and the seller never had a clue. But Buyer Broker Bob does and can now contact REBNY, DOS Licensing Services, MEDIA outlets and perhaps even the seller if he kept proof of the bid being submitted before any contract was signed.

Perhaps if Sally Seller Broker knew in advance that unethical behavior (that caused this industry to get such a bad reputation in the first place) would be easily revealed at the close of the deal, they would be less likey to commit such acts and more likely to behave ethically and in their clients best interests. Which is all we can strive for.

SITES TRYING TO HELP

Streeteasy.com - One of my favorite NYC real estate aggregators and search engine. I use it quite often for my own clients and find it very useful. Recent upgrades in services offered allow you to pay $10/mth for access to comparable sales data collected.

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ACRIS System - City provided Automated City Register Information System. Has co-op sales and is free to use. Need to know LOT/BLOCK # or NAME of buyer. Cannot enter building address.

PropertyShark.com - All purpose building/unit data resource. Co-op comps listed by date after you go in and select a neighborhood.

UrbanDigs Says: Its hard being an honest salesman! But hopefully help is on the way. By making real estate transactions completely transaparent, brokers, buyers, and sellers will be able to tell whether or not their higher offer was ever submitted to the seller by the hired listing broker. Should you find that the deal did in fact close for a sizeable amount UNDER what your client's bid was, and you know for a fact that your bid was submitted BEFORE any offer was accepted and contract signed, well then you now have a complaint to file against the unethical party involved as long as you have the records to prove it. Hopefully this new world of transparency that is soon to be upon us will help CLEAN UP this industry of some sorts of foul play via the realization that it won't be so easy to get away with anymore!

Now that my client's bid of $1.7M is in, its just a waiting game to hear whether it was accepted or not. Should it not be accepted, I certainly will keep my eyes open to what this apt eventually sold for by looking it up on public records. Only then will I know what we were up against and whether or not there really was another higher bid submitted!

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