Bad Broker Behavior

David Goldsmith

All Powerful Moderator
Staff member
“Egregious”: Residential broker found guilty of fraud
The buying agent’s fraud was so bad, the jury determined, that they awarded punitive damages of $500,000 — a sum significantly greater than the price his client paid for the house.

“It was egregious, if I could use one word,” said Abraham Sandoval, the real estate attorney who brought the case and a licensed broker. “Especially when they’re supposed to represent the buyer as his fiduciary — you just don’t do that.”

In late July, an L.A. County jury agreed, finding the broker, Louis Teque, and Teque’s brokerage, Realty World Capero, liable for 10 different claims, including breach of fiduciary duty, breach of contract and fraud by intentional misrepresentation. In addition to the half-million punitive award — to be borne evenly between Teque and Realty World — the jury also awarded more than $100,000 in compensatory damages.

The defendants, who had already been disciplined by their local realtor association ahead of the trial, could still face further consequences, including a potential license revocation for Teque.

While the July special verdict amounted to a condemnation of one broker and his brokerage’s conduct — and a rare example of a brokerage being hit with a major financial penalty for exploiting the typically routine home buying process — the case also served as a broader indictment on nearly everyone involved in the deal. In addition to Teque and Realty World, the suit also named the previous home owners, the selling agent, the selling agent’s brokerage and the appraiser.

All of those defendants ended up settling, through their insurance companies, for a total of around $160,000, Sandoval said.

Teque and Realty World, who are contesting the amount of compensatory damages, did not respond to interview requests. But throughout the proceedings they maintained they did nothing wrong, denying knowledge of the home’s substantial damage and attempting to put the onus on the buyer for waiving voluntary inspections. A lawyer for the broker and brokerage also did not respond.

“I asked the jury to send a message that this is unacceptable,” Sandoval said. “The defense was trying to underplay what happened — ‘Oh this is not a big deal.’ In fact it is a big deal. My client has not been able to live in the house for four and a half years.”
House hunting

The saga dates to early 2018, when a 20-something small business owner named Jose Jimenez was looking for a home for his family.

But Jimenez, who had never bought a home, kept striking out: With Teque — who was also young but already had years of agent experience and had closed more than 100 sales — he had put offers on more than a dozen houses. They were all rejected.

Then Jimenez saw a listing on Redfin that caught his eye: an 1,100 square-foot, three-bedroom ranch-style house with wood floors and a large front yard at 2958 Oakwood Avenue in Lynwood, a working-class city in central L.A. County. The price was $345,000.

Jimenez shared the listing with Teque. The agent pushed his client to make an offer immediately for $380,000. “So u have a better chance of getting it,” he wrote on April 23, in a text exchange reviewed by TRD.

The following day Jimenez agreed to offer $370,000, a bid that his agent pushed him to “please sign ASAP!”

“Are we gonna have a chance to see [the] house,” Jimenez asked soon after.

“Yes,” his agent told him — but only once the offer was accepted.

Jimenez sent a $15,000 deposit, and Teque presented him with the paperwork from the selling agent, which included one red flag that might have been picked up by a veteran homebuyer or lawyer. The sellers had added a Section 1542 waiver, a kind of release form — not typically found in real estate transactions — under which the signer broadly agrees to give up future claims.

The deal closed on April 26, for $370,000, when Jimenez signed the purchase agreement. Yet he also unknowingly signed falsified documents — the evidence that would later become the crux of the fraud case.
Disclosure forms

In their Real Estate Transfer Disclosure Statement, a routine form that accompanies every residential sale, the sellers had noted various issues: The form had check marks noting “significant defects/malfunctions” to the interior walls, exterior walls, windows, driveways and walls/fences. The form also noted that repairs had been done without permits and were not in compliance with building codes.

Another sellers’ form, the Agent Visual Inspection Disclosure (AVID), noted even more problems, including repairs to the entry, living room, kitchen, all three bedrooms and bathroom. Next to a space on the form for the building’s exterior, the selling agent wrote: “needs major repair, roof, walls, dry wall, fence.”

But Jimenez never saw those forms. Instead, Teque presented him with a seller’s transfer disclosure statement that was almost completely blank, showing no problems whatsoever. Teque, as the buying agent, also completed his own AVID form. “Nothing noted,” the agent wrote repeatedly.

The paperwork also included an appraisal, prepared for Jimenez’s lender. It put the home’s value at $370,000, and did not note any illegal modifications or raise any other flags. The appraiser would later testify that he never entered the home’s attic or roof.
‘Charred roof’

Jimenez had been in the home for a few months when he decided to remove the popcorn ceiling. The house started smelling smoky; as the new owner took off more of the particles he discovered that just beyond the plaster was a disaster — “the remnants of a charred roof,” in the words of the complaint. The fire damage extended throughout much of the structure of the house, compromising the rafters, the ceiling joists and the ridge beams. The electrical system was a mess; the roof, even after it had been illegally repaired by the previous owner, still had leaks.

Jimenez called the city, whose inspector red-tagged the property. Instead of a new home for his family, Jimenez had bought an uninhabitable teardown.

“He’s a really nice guy,” Sandoval, the lawyer, said of his client, who can also come across as naive, he added. “I think that was one of the reasons they felt comfortable taking advantage of him.”

The fire that swept through the house was extensive, an expert would testify, but it’s still unclear exactly when it occurred, or exactly who knew about it beyond the previous owner, who testified that he thought he didn’t need permits for roof and other repairs because they were inside the home.

In court Teque, who testified that he had numerous calls with the selling agent about the home’s repairs, tried to blame her for concealing the damage; the buying agent had concocted his own seller’s disclosure form, he argued in court, because he never received the one from the selling agent.

The jury, which saw the two forms side by side on a projector inside the Compton courthouse, didn’t buy it. One member of the jury was a real estate agent.

“You should have gotten rid of me,” she later told the defense.
 

David Goldsmith

All Powerful Moderator
Staff member

Broker pockets $20K fee for rent-stabilized UWS pad​

Solil-owned unit rents for $1,725 per month​

A broker fee for an Upper West Side rental takes the cake for the hurdles facing hopeful tenants.
A one-bedroom apartment at 206 West 104th Street was listed for $3,750 a month, but the broker said it was rent stabilized and would only cost $1,725 a month, the New York Post reported.

The catch? Ari Wilford of City Wide Apartments required a $20,000 broker fee to secure the unit in the prewar, six-story building near Central Park and Frederick Douglass Playground.
The anonymous renter told the outlet they convinced Wilford to shave $500 from the broker’s fee. The renter then pulled the trigger, persuaded by Wilford’s argument that the money would all even out by the end.
The fee is astronomical, even in New York City’s pricey rental market. While there’s no law that dictates what a broker is allowed to charge, the most common outlay is either 15 percent of a year’s rent or one month’s rent.

The fee “probably isn’t kosher,” power broker Dolly Lenz told the outlet, and the tenant “could probably get the money back.”
At least one potential renter was dissuaded from pursuing the apartment, which is owned by Solil Management, due to the exorbitant fee.

Wilford declined to comment to the Post, while Solil didn’t respond to the outlet’s request for comment.
Two years ago, renters seemed to be in the lease from broker’s fees. The Department of State ruled that under legislation from the previous year, landlords should be responsible for a broker’s costs. It interpreted the Housing Stability and Tenant Protection Act to allow for a ban on broker fees for tenants, but the law makes no specific reference to exempting tenants from these fees.

The victory proved to be short-lived. Real estate industry groups challenged the ruling and brokers and their fees were reinstated in May 2021 after a judge said the department’s guidance “was issued in error of law and represents an unlawful intrusion upon the power of the legislature and constitutes an abuse of discretion.”
 

woodside

Member
Rumor/Conspiracy theory is that the owner pocketed most of the broker fee behind the door. The broker can only get the list if he agrees to the fee to be paid back to the owner.
 

David Goldsmith

All Powerful Moderator
Staff member
Rumor/Conspiracy theory is that the owner pocketed most of the broker fee behind the door. The broker can only get the list if he agrees to the fee to be paid back to the owner.
That's exactly why the NY Dept of State rule used to be that if an owner forced a prospective tenant to use a broker then the owner had to pay the broker and tenant brokerage fees were illegal in that case.
 

David Goldsmith

All Powerful Moderator
Staff member
When I managed the sales side of JI Sopher (largest rental broker in NYC at the time) Greenwich Village office there was an agent who got all of Solil Management (estate of Sol Goldman, perhaps the largest Rent Stabilized landlord then) listings. For example he would get units at 20 5th Avenue for 50% of market. He always charged a premium fee and had multiple tenants vying for any space.
 
“Egregious”: Residential broker found guilty of fraud
The buying agent’s fraud was so bad, the jury determined, that they awarded punitive damages of $500,000 — a sum significantly greater than the price his client paid for the house.

“It was egregious, if I could use one word,” said Abraham Sandoval, the real estate attorney who brought the case and a licensed broker. “Especially when they’re supposed to represent the buyer as his fiduciary — you just don’t do that.”

In late July, an L.A. County jury agreed, finding the broker, Louis Teque, and Teque’s brokerage, Realty World Capero, liable for 10 different claims, including breach of fiduciary duty, breach of contract and fraud by intentional misrepresentation. In addition to the half-million punitive award — to be borne evenly between Teque and Realty World — the jury also awarded more than $100,000 in compensatory damages.

The defendants, who had already been disciplined by their local realtor association ahead of the trial, could still face further consequences, including a potential license revocation for Teque.

While the July special verdict amounted to a condemnation of one broker and his brokerage’s conduct — and a rare example of a brokerage being hit with a major financial penalty for exploiting the typically routine home buying process — the case also served as a broader indictment on nearly everyone involved in the deal. In addition to Teque and Realty World, the suit also named the previous home owners, the selling agent, the selling agent’s brokerage and the appraiser.

All of those defendants ended up settling, through their insurance companies, for a total of around $160,000, Sandoval said.

Teque and Realty World, who are contesting the amount of compensatory damages, did not respond to interview requests. But throughout the proceedings they maintained they did nothing wrong, denying knowledge of the home’s substantial damage and attempting to put the onus on the buyer for waiving voluntary inspections. A lawyer for the broker and brokerage also did not respond.

“I asked the jury to send a message that this is unacceptable,” Sandoval said. “The defense was trying to underplay what happened — ‘Oh this is not a big deal.’ In fact it is a big deal. My client has not been able to live in the house for four and a half years.”
House hunting

The saga dates to early 2018, when a 20-something small business owner named Jose Jimenez was looking for a home for his family.

But Jimenez, who had never bought a home, kept striking out: With Teque — who was also young but already had years of agent experience and had closed more than 100 sales — he had put offers on more than a dozen houses. They were all rejected.

Then Jimenez saw a listing on Redfin that caught his eye: an 1,100 square-foot, three-bedroom ranch-style house with wood floors and a large front yard at 2958 Oakwood Avenue in Lynwood, a working-class city in central L.A. County. The price was $345,000.

Jimenez shared the listing with Teque. The agent pushed his client to make an offer immediately for $380,000. “So u have a better chance of getting it,” he wrote on April 23, in a text exchange reviewed by TRD.

The following day Jimenez agreed to offer $370,000, a bid that his agent pushed him to “please sign ASAP!”

“Are we gonna have a chance to see [the] house,” Jimenez asked soon after.

“Yes,” his agent told him — but only once the offer was accepted.

Jimenez sent a $15,000 deposit, and Teque presented him with the paperwork from the selling agent, which included one red flag that might have been picked up by a veteran homebuyer or lawyer. The sellers had added a Section 1542 waiver, a kind of release form — not typically found in real estate transactions — under which the signer broadly agrees to give up future claims.

The deal closed on April 26, for $370,000, when Jimenez signed the purchase agreement. Yet he also unknowingly signed falsified documents — the evidence that would later become the crux of the fraud case.
Disclosure forms

In their Real Estate Transfer Disclosure Statement, a routine form that accompanies every residential sale, the sellers had noted various issues: The form had check marks noting “significant defects/malfunctions” to the interior walls, exterior walls, windows, driveways and walls/fences. The form also noted that repairs had been done without permits and were not in compliance with building codes.

Another sellers’ form, the Agent Visual Inspection Disclosure (AVID), noted even more problems, including repairs to the entry, living room, kitchen, all three bedrooms and bathroom. Next to a space on the form for the building’s exterior, the selling agent wrote: “needs major repair, roof, walls, dry wall, fence.”

But Jimenez never saw those forms. Instead, Teque presented him with a seller’s transfer disclosure statement that was almost completely blank, showing no problems whatsoever. Teque, as the buying agent, also completed his own AVID form. “Nothing noted,” the agent wrote repeatedly.

The paperwork also included an appraisal, prepared for Jimenez’s lender. It put the home’s value at $370,000, and did not note any illegal modifications or raise any other flags. The appraiser would later testify that he never entered the home’s attic or roof.
‘Charred roof’

Jimenez had been in the home for a few months when he decided to remove the popcorn ceiling. The house started smelling smoky; as the new owner took off more of the particles he discovered that just beyond the plaster was a disaster — “the remnants of a charred roof,” in the words of the complaint. The fire damage extended throughout much of the structure of the house, compromising the rafters, the ceiling joists and the ridge beams. The electrical system was a mess; the roof, even after it had been illegally repaired by the previous owner, still had leaks.

Jimenez called the city, whose inspector red-tagged the property. Instead of a new home for his family, Jimenez had bought an uninhabitable teardown.

“He’s a really nice guy,” Sandoval, the lawyer, said of his client, who can also come across as naive, he added. “I think that was one of the reasons they felt comfortable taking advantage of him.”

The fire that swept through the house was extensive, an expert would testify, but it’s still unclear exactly when it occurred, or exactly who knew about it beyond the previous owner, who testified that he thought he didn’t need permits for roof and other repairs because they were inside the home.

In court Teque, who testified that he had numerous calls with the selling agent about the home’s repairs, tried to blame her for concealing the damage; the buying agent had concocted his own seller’s disclosure form, he argued in court, because he never received the one from the selling agent.

The jury, which saw the two forms side by side on a projector inside the Compton courthouse, didn’t buy it. One member of the jury was a real estate agent.

“You should have gotten rid of me,” she later told the defense.
This is amazing. Putting aside the terrible behavior on a human level, why would you risk a license that can bring you millions of dollars for one commission?
 

David Goldsmith

All Powerful Moderator
Staff member

FTC: Rental startup Roomster cheated apartment hunters out of $27M​

Startup’s founders bought 20K fake reviews to dupe low-income renters into paying for app​

Apartment marketplace Roomster could soon find itself evicted from the internet after being accused of cheating renters out of tens of millions of dollars.
In a complaint filed Tuesday, the Federal Trade Commission and New York attorney general Letitia James accused the startup of flooding the internet with unverified listings for rentals that in many cases did not exist.

John Shriber and Roman Zaks, Roomster’s founders and co-owners, then convinced prospective tenants to sign up for Roomster’s paid app with thousands of fake, positive reviews purchased from an online vendor, the complaint alleges.
The complaint accuses the defendants of deliberately targeting students and low-income renters in markets where low-cost housing is “extremely hard to find.” The lawsuit accuses Roomster of cheating the prospective tenants out of $27 million since 2016.

“According to the Roomster Defendants, Roomster customers are in the lowest end of the rental market, they generally have limited funds, and every dollar counts,” the complaint reads.
Alongside the FTC and James, the lawsuit was brought by attorneys general in five other states, including California, Florida and Illinois. Shriber and Zaks were individually named as defendants, as were Roomster Corporation and Jonathan Martinez, founder and CEO of the app store review vendor AppWin.
In a statement, a Roomster spokesperson denied the FTC’s allegations and said the startup would defend its business practices in court.
“We cooperated with the FTC for nearly two years in their review of our advertising practices, a process that demonstrated that the FTC was not sincerely interested in understanding the relevant facts about our marketing and advertising practices,” the spokesperson said.

The spokesperson claimed Martinez “completely misrepresented his services” and “is being used to paint false culpability on Roomster.”
To lure renters in, the complaint alleges, Roomster promoted its app as a “safe community” offering “millions of verified listings.” In reality, according to the suit, Shriber and Zaks did not vet the posts, but published them immediately so long as the platform recognized the address listed.
One fake listing, submitted as part of an undercover investigation, was for a below-market-rate apartment with the address of a U.S. Post Office facility. It remained active for months, the Aug. 30 complaint reads, and no one reached out to verify its legitimacy.
Roomster’s co-founders bought over 20,000 fake reviews from Martinez, whose website AppWin promoted its ability to “boost your app ranking,” before he became aware of the investigation, the suit alleges.

The thousands of fake five-star reviews overwhelmed the one-star ones submitted by real users.
Shriber and Zaks went on to defraud users by baiting sites such as Craigslist with posts that would direct them to Roomster to pay for more information about a rental.
“Consumers who sign up soon learn that the listings that drove them to the … platform do not exist,” the suit reads.
Some renters shelled out hundreds to thousands of dollars to nab a room sight unseen. The fraudsters frequently cited Covid as the reason they couldn’t show a property, according to the complaint.
Reddit posts dating back at least five years show consumers’ skepticism of the platform.
A 2017 comment on the subreddit r/LosAngeles warned a poster who asked about the app’s legitimacy to “Avoid Roomster like the plague,” as “most of the accounts are bots.”

A post on r/Craigslist from last September, titled “Fucking Roomster,” narrates a similar experience.
“I clicked the link, joined the Roomster, and voila! Of fucking course there is no same posting!” the user wrote. “Shitty thing is they made the posting like an real ad.”
The complaint seeks a permanent injunction against Roomster, its co-founders and Martinez, restitution for the duped consumers, and civil penalties for each violation of state law.
Roomster could be on the hook for $5,000 for each infraction in New York, $2,500 per violation in California, $20,000 in Colorado, $10,000 in Florida, $50,000 in Illinois and $5,000 in Massachusetts.

Neither Shriber nor Zaks immediately responded to a request for comment. Martinez could not be reached in time for publication.
 

David Goldsmith

All Powerful Moderator
Staff member

New York state scrutinizing $20K broker fee for rent-stabilized unit​

Solil-owned UWS unit rented for $1,725 per month​

A broker fee that far outstripped the norm has caught the eye of New York’s Department of State.
The agency, responsible for licensing real estate agents, is looking into the nearly $20,000 fee City Wide Apartments broker Ari Wilford collected in the Upper West Side on a one-bedroom apartment, the New York Post reported. There’s no limit on fees, but it’s against protocol for agents to charge “exorbitant commissions that have no reasonable relationship to the work involved.”

The one-bedroom apartment at 206 West 104th Street was listed at $3,750 per month, but Wilford said it was rent stabilized and could be had at $1,725 a month — but a tenant would have to fork over $20,000.
One renter was able to persuade Wilford to come down $500 before agreeing to the deal, believing the broker’s claim that the money would all even out by the end of the day at the Solil Management building.

Brokers don’t typically charge such a premium for their services, which usually run either 15 percent of one year’s rent or one month’s rent. Power broker Dolly Lenz previously told the Post that the fee “probably isn’t kosher.”

This doesn’t appear to be Wilford’s first attempt at collecting a big broker fee. One woman claimed to the outlet Wilford was asking for four times as much as the monthly rent on a rent-stabilized apartment, ultimately securing $7,000 for a unit that rented for fewer than $2000 a month. A prospective tenant in Gramercy Park balked at the $10,000 fee being demanded for a $2,400/month unit.

Wilford didn’t comment to the outlet about the investigation. City Wide owner Michael Jacobs defended the fees.
“Brokers provide great value to their clients and have been working harder than ever at a time where demand is surging, supply is low, and finding a home in New York City has become more challenging than ever,” Jacobs told the outlet.

Actions, however, may speak louder than words. While Wilford’s LinkedIn page still showed him as a City Wide employee as of Monday morning, his profile page on the company’s website appears to have been removed.
City Wide didn’t immediately respond to a request for comment.
 

David Goldsmith

All Powerful Moderator
Staff member
One thing this shows is the lack of due diligence on building financials which is pervasive (i.e. the most cursory examination of payroll costs would have led to questions about staffing).

Tribeca buyer accuses Corcoran broker over doorman claim​

Marketing over Warren Lofts’ part-time doorman sparks lawsuit​

No doorman? Well, big problem.
The buyer of a luxury penthouse in Tribeca is accusing a Corcoran broker of marketing the property without disclosing the building did not have a full-time doorman. Kara Dille, who purchased a $19 million penthouse at 37 Warren Street, filed the lawsuit Wednesday in state Supreme Court in Manhattan, Crain’s reported.

After signing a contract for the unit in March, Dille figured out the apartment building has a part-time doorman on weekdays and a virtual attendant on weekends. The single mother of three, who said not having a full-time doorman was a safety issue, broke her contract three weeks ago and is now suing to recoup her $1.9 million deposit.

The lawsuit alleges the sellers “clearly intended to fraudulently induce plaintiff to enter into the contract to purchase.”
Dille toured the building several times, however, the lawsuit alleges that the listing agent, Corcoran’s Catherine Juracich, showed the building only when the doorman was on duty, creating an illusion of a full-time doorman.

The lawsuit also alleges that Juracich and her colleagues hide the virtual doorman equipment to prevent questioning or suspicion.

An attorney for the seller told Crain’s that advertisements for apartments are not always factual, citing variables like room counts and square footage. The lawsuit includes a Corcoran Group ad for the Tribeca building that lists “doorman” as an amenity. The ad is still available online.
Dille counters that, in running the ad, Corcoran is misleading.
Dille’s apartment-to-be was PHCD, which has 5,500 square feet across five bedrooms and seven bathrooms along with a wraparound terrace.
 

David Goldsmith

All Powerful Moderator
Staff member

Queens couple nearly homeless after 'real estate runaround'

Instead of the getting keys to their new Queens apartment, one couple said they got a real estate runaround and were left nearly homeless. Nina Pineda and 7 on your Side stepped in

NEW YORK (WABC) -- Instead of the getting keys to their new Queens apartment, one couple said they got a real estate runaround.

Out thousands and nearly homeless, they turned to 7 On Your Side's Nina Pineda to get their lifesavings back.

Just before moving into a new apartment, Ronin and Karina Rodriguez-Miller had to scramble to find another place to live.

Now the couple has crammed all their belongings from overseas into a single rented room because they can't get thousands back from a broker after their lease fell through.

The U.S. Army veteran was moved to tears twice discussing getting dissed after putting more than $3,500 down on the rental back in August.

State senator says drone show over Hudson River should have never happened
"I'm full of anger, disheartened and upset," Ronin said. "We worked nine years to get our own place and that one single man can destroy us in under a month."

Ronin says the broker at the New York Pyramid Group Corp. abruptly changed their lease.

"Couple of days before we were supposed to move, and he voids it and says he puts new dates and says we can move in the 15th," Ronin said.

Then just before September 15, there was another delay he blamed on the boiler.

"That we won't be able to move October 1st, that's when I said what's going on," Ronin said.


So the security guard did some digging and found the boiler issue with their unit was reported last winter. When Ronin asked why it wasn't fixed then, the broker canceled the lease altogether.

"He said that I spoke to the landlord, and he's afraid you're going to call 311 at everything that you see fir that is wrong with the apartment,'" Ronin said. "So he said that he's not renting and gonna give our money back."

They got $1,000 back, but then the company's check for the balance bounced.

"It bounced, it bounced, that was it," Ronin said. "We tried to get a hold of him trying to get our money back and he never responded."

Ronin said he would message them or call them back after giving up their old place and with no savings to put a deposit down on a new apartment.

"Basically technically we had no place to live," Ronin said.

They were homeless, so the former soldier made a strategic move after trying for weeks to get their money - he reached out to 7 On Your Side.

So we called and paid Pyramid a visit at their Astoria office.

The company said the check didn't clear because its bank account was frozen. The rep never gave a reason for refund delay.

But right after we left their office, they ended up paying Ronin almost all their money.
 

David Goldsmith

All Powerful Moderator
Staff member

New Jersey broker accused in $1M arson​

Harcourt “Paul” Ward allegedly torched six commercial vehicles​

The owner of a Point Pleasant real estate firm is accused of setting fire to six commercial vehicles at a local business, causing more than $1 million in damages.
Toms River resident Harcourt “Paul” S. Ward, 69, of Ward Realty is facing four counts of second-degree arson in connection with the late-September incident, Patch.com reported.

Officials on Friday released few details other than police were called to a Wall commercial neighborhood around 10 p.m. on Sept. 26 to respond to the blaze, which they say Ward set.
Police, who have not released a motive for the incident, said their investigation is ongoing. It was not clear if Ward was represented by an attorney.
Ward Realty is a family run firm of four generations that has been in business since 1926, according to its website.

The firm represents buyers, sellers and renters along the Jersey Shore, and says on its website that it earns more than $2.5 million a year in rental fees alone.
Its tagline on Realtor.com is “Service, Courtesy, Results!”
Real estate agents don’t often face arson charges. When they are accused of breaking the law, it’s typically financially related.
For example, a Virginia couple last month was sentenced to prison after they used one of their real estate jobs to steal people’s identities.
Caprice Foster, 51, and her husband 33-year-old Marcus Foster stole $632,500 by using false identification, tax and employment documents to buy luxury vehicles, lease high-end residences and get loans, according to the U.S. Attorney’s Office for the Eastern District of Virginia.

Caprice Foster was sentenced to 80 months in prison, while Marcus Foster was sentenced to 58 months.
In another case earlier this year, New England real estate broker Michael Flavin was sentenced to 30 months in prison after defrauding prospective homebuyers of millions of dollars over a three-year period.
 

David Goldsmith

All Powerful Moderator
Staff member
Are buyers receiving adequate representation with Buyer's Brokers?

Prior to 1990 in NYC almost all listings were "Open Listings" with 1 agent involved in the negotiation. I'm not sure the shift to exclusives and 2 agents on every deal is an improvement over that, especially since in many cases I've seen "Buyer's Agents" just try to encourage buyers to bid whatever it takes to get the property rather than actually giving sound Real Estate advice.

Lately I'm seeing a substantial amount of transactions where the Buyer's Broker takes 1% commission (either by accepting that split from the listing broker or rebating a portion of their commission to the buyer) and it seems the only thing they are really doing in many cases is taking the order like a waiter. I have no objection to agents setting whatever fee schedule they want. In fact I'd love to do a fixed fee buyer's agent model. But I think buyers are being misled into thinking they have someone doing their fiduciary duty and protecting their interest when they are actually just trying to do as many deals as possible and blame everything on the buyers while they cheered them on to overpay. They will say they are simply doing what the buyers want and they have no say in the matter, that they don't predict the market, etc. But they are also saying what a great time it is to buy no matter what the market is doing.

Whether receiving discounts or not Buyers deserve actual representation from Agents who understand what their fiduciary duty is.


The Buddy System, or the Buyer’s Broker​

IN this do-it-yourself era of online real estate listings, it is easy to find out what is on the market, visit open houses and even research sales data to come up with a reasonable price to offer for a home.
So why should a buyer bother using an agent?
In a nutshell: to protect his or her interests in an expensive, often complex purchase that can become even more complicated by the labyrinthine co-op approval process in New York City.
A buyer who relies on the seller’s agent to handle both sides of the deal may not hear about problems with the apartment or the building, or have a real advocate during contract negotiations.
“When you work with a buyer’s agent, their fiduciary responsibility is to you as a buyer,” said Walter Molony, a spokesman for the National Association of Realtors. The organization has helped establish state laws that require clearer disclosure to consumers about which party in the transaction an agent represents.

In New York, real estate agents must have clients sign a disclosure form that explains the difference between a seller’s agent, who provides undivided loyalty to the seller, and a buyer’s agent, who represents the buyer’s interests. A dual agent can represent the buyer and the seller, but both parties must consent to the arrangement and acknowledge that they are giving up the benefits of exclusive representation.
“Obviously if you’re representing a buyer and a seller in a transaction,” said Neil B. Garfinkel, the residential counsel to the Real Estate Board of New York, “you can’t have undivided loyalty.”
A dual agent can maintain each party’s confidence, Mr. Garfinkel said — for instance, by not disclosing to the seller that the buyer just received a big bonus check, or by not telling the buyer that the sellers are divorcing and want a quick sale. But things get murky when it comes to negotiating a price or discussing a home’s flaws.
“Perhaps it’s a defect in the property or potential financial issues in the building,” said Gea Elika, the founder of Elika Associates, a real estate agency that works exclusively with buyers. “Or maybe the resale potential is terrible. Buying a home is an emotional thing, so buyers may not see what’s wrong.”

When the market was booming, it was sometimes difficult for buyers to find a broker to show them properties unless they had millions of dollars to spend. That is because properties were selling so fast that agents preferred working with sellers rather than buyers who might take months to make up their minds. But agents say that with listings taking longer to sell, there is generally more willingness to work with buyers.

Noah Rosenblatt, the founder of the real estate data site Urban Digs, is among the agents who focus exclusively on the buy side of the deal.
“The buyer clients who come to me tell me that they’re not interested in someone to show them what’s on the market,” Mr. Rosenblatt said. “Once they find a property they like, my services really kick in at that point.”

Those services include providing a market analysis, evaluating comparable sales, coming up with an offer based on the value of features like outdoor space, and handling the back-and-forth of negotiations and contract terms. The role of a buyer’s agent may also involve preparing a co-op board package and navigating speed bumps that can derail deals, like delayed seller responses to a bid.
“I would not allow my client’s offer to be used as leverage by a seller who might be entertaining two or three other deals on the side,” Mr. Rosenblatt said. “I would put a deadline on the offer.”
A common uncertainty is at what point a buyer should start thinking about bringing an agent into the picture. Many savvy shoppers are happy to visit open houses on their own, and many even acknowledge, when signing visitor’s logs, that they are not working with an agent. But brokers recommend finding a buyer’s agent before making an offer or scheduling an appointment for a second viewing.
Engaging a buyer’s agent later in the process opens up the potential for a dispute over whether the new hire is entitled to a portion of the selling agent’s commission. Also, by this point in the proceedings, a buyer may have chatted too much with the selling agent, revealing information that could influence the outcome of the deal.

“You may have already lost your negotiating power because you’ve already told them what you’ll spend,” said Kimberly Kahl, the executive director of the National Association of Exclusive Buyer Agents.
Although the seller typically pays the agents’ commission, that fee comes from the purchase price of the home — in other words, out of the buyer’s pocket — so buyers who think they have no financial obligation to an agent are deluding themselves.
“You’re paying for it,” Ms. Kahl said. “You might as well hire someone to represent you.”
Some buyers worry that if they work with a buyer’s agent, their offer may be less attractive to the seller, whose fee to his own agent could be smaller than the full 6 percent if that agent represented the buyer too. In many cases, the listing agreement stipulates a 6 percent commission if the deal is split between brokers and a 5 percent commission if the listing agent represents both buyer and seller.
But with financing tight and qualified buyers scarce, Mr. Rosenblatt said, for the seller to be swayed on this issue, he would have to receive two very similar offers, with similar terms and financing conditions, and both buyers would have to have similar appeal to a co-op board.
“How often does that really happen?” Mr. Rosenblatt asked. “It happens, but the stars do not align that perfectly often enough that it’s something buyers should be paranoid over.”
 
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