Brokers Behaving Badly

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.”
 

David Goldsmith

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Ex-Keller Williams CEO sues brokerage, Gary Keller for $300M​

John Davis claims firm “weaponized” sexual misconduct allegations against him for leverage​

The former chief executive officer of Keller Williams is suing the brokerage and its co-founder for $300 million.
In a lawsuit filed last month, former CEO John Davis claims that after he resigned from that role in 2019, Keller Williams co-founder Gary Keller and former president Josh Team used sexual misconduct allegations against him “to gain business advantages” and “disparage and harm Davis” while negotiating the sale of several regional franchises he owned.

The complaint, first reported by Inman, names the brokerage, Keller, Team and Inga Dow, a Keller Williams franchisee who raised the allegations against Davis earlier this year.
In an amended complaint filed in March, Dow claimed she had been subjected to years of sexual misconduct, harrassment and abuse from Davis and that the Austin, Texas-based brokerage retaliated against her for reporting it. Davis acknowledged having a relationship with Dow from 1998 to 2004, but denied the harassment and abuse allegations as “false, defamatory, and malicious.” Dow’s lawsuit is currently in arbitration.

In his Oct. 27 complaint, Davis claims that Dow’s allegations were weaponized to compel the company to buy her regional franchises for more than their worth. Davis, meanwhile, says he was negotiating a $46 million sale of his regions to another franchisor, only for the deal to be rejected by Keller and Team, who then forced a sale that Davis claims “unfairly enriched” the brokerage and cost him tens of millions of dollars.
The timing of the lawsuit stems from the expiration of a non-disparagement clause, a spokesperson for Davis told Inman. The complaint seeks $300 million on the grounds that Davis has suffered “tremendous damages to his career and reputation, from which he is unlikely to recover.”

A spokesperson for Keller Williams told Inman that Davis’ “attempt to involve Keller Williams in his quest to clear his name is unfortunate,” but declined to comment further, citing the ongoing litigation.
Davis spent more than 20 years with Keller Williams and held the CEO role for two years before exiting in January 2019.
 

David Goldsmith

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MV Realty accused of scamming homeowners​

Florida-based company accused of obtaining mortgages without homeowners’ knowledge​

A Florida-based real estate company has been sued by the Massachusetts and Pennsylvania attorneys general for allegedly scamming financially struggling homeowners, the Philadelphia Inquirer and CBS Boston reported.
MV Realty is accused in both states of misleading homeowners by obtaining mortgages on their homes without their knowledge, the outlets said.
The company, according to the lawsuits, paid homeowners a few hundred dollars in exchange for the right to be the listing agent in the event a homeowner decided to sell their home.

MV Realty, under the 40-year contracts, would receive money if the company sold the property, the homeowner canceled the agreement or if the property was transferred in some other way, including foreclosure or a transfer when the owner dies, the Inquirer reported.
The contracts also allegedly permitted MV Realty to obtain mortgages on the homes, unbeknownst to the homeowners.

“I was shocked,” Philadelphia homeowner Timothy Calhoun, who entered into a contract with MV Realty, said at a hearing, the Inquirer reported. “They never told me that I was signing a mortgage. If I had known that I was gonna put a mortgage on my house, I would have never had signed the agreement.”
Calhoun, who claimed he was surprised when he received notice that MV Realty had taken out a mortgage on his home, said he was told he could pay more than $6,000 to get out of the agreement.

A Massachusetts homeowner said she had to pay two real estate commissions on a property she sold because she allegedly unknowingly signed a 40-year agreement with MV Realty.
The Pennsylvania attorney general’s office estimates there are about 1,000 mortgages involving MV Realty in the commonwealth, while the company says it has 550 “client relationships” in Massachusetts.

MV Realty, which operates in 33 states nationwide and has also been sued by the Florida attorney general, denied it engaged in any false or deceptive practices.
“We are confident that after a full airing of the facts, the conclusion will be that MV Realty’s business transactions are legal and ethical and that our team has operated in full compliance with [Massachusetts] law,” the firm said in a statement to CBS Boston.

The company issued a similar statement to the Inquirer.
 

David Goldsmith

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Keller Williams settles cold-calling lawsuit for $40 million
Keller Williams Realty came a-cold calling. Now, they owe $40 million.

That’s the amount the Austin-based real estate franchisor agreed to pay to settle a class action lawsuit alleging its agents made unwanted, pre-recorded phone calls to consumers, some of whom are on the National Do Not Call Registry.

In the June 2022 complaint reported by Inman, plaintiff Beverly DeShay claimed the cold-calling violated the Telephone Consumers Protection Act (TCPA) — a 1991 law designed to protect consumers against unsolicited telemarketing calls.

While cold-calling expired listings is a common industry practice, homeowners have long fought against the onslaught. In some cases, local authorities have stepped in to mitigate the problem, as in the case of one town in New York even banning all solicitations related to real estate in 2018.

TCPA violations have sparked legal action in the past. Keller Williams was hit with a separate lawsuit in 2019, and another was filed in 2022 against the Anywhere subsidiaries, NRT LLC and Coldwell Banker Real Estate LLC.

New York’s biggest, baddest and juiciest real estate lawsuits of 2022
Brokerages cough up $115K to settle Newsday discrimination claims
Keller Williams not immune to a slowing housing market
The legal challenges aren’t limited to cold calls. Other real estate companies have also come under fire for spam text messages. Two Fort Lauderdale law firms sued Coldwell Banker Residential Real Estate and two smaller Florida real estate agencies, Maxim Realtors and Marzucco real estate for sending auto-dialed text messages without consumers’ consent.

Miami attorneys Stefan Coleman and Avi R. Kaufman filed the class action in the Circuit Court for the Nineteenth Judicial Circuit in Indian-River County, Florida. Kaufman and Coleman have previously represented plaintiffs against real estate companies violating the TCPA, including the prior Keller Williams and Anywhere lawsuits.

As part of the settlement, Keller Williams also agreed to create a task force to ensure agents comply with the TCPA.
 

David Goldsmith

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eXp named in explosive sexual assault lawsuit​

Four women accuse two male real estate agents of drugging, assaulting them

Four women have filed a civil lawsuit in California, accusing two eXp Realty real estate agents of drugging and assaulting or attempting to assault them between 2018 and 2020.
In addition to the male agents, the complaint names eXp Realty and its parent company, eXp World Holdings, the Seattle Times reported. The Washington-based brokerage was allegedly made aware of allegations against the agents, but did not take action against them.

The incidents allegedly occurred at networking and recruiting events in California and Nevada. The brokerage declined to comment due to pending litigation, while the two unnamed male agents did not answer the publication’s requests for comment.
One of them, however, was allegedly arrested and charged with two counts of sexual assault from similar allegations, a case that was later dismissed. The agent, who is no longer with eXp, and his male colleague have not been charged with a crime in connection to the latest allegations.

The plaintiffs allege the male agents enticed the women “with the promise of career advancement and coaching.” The brokerage’s model incentivizes the recruitment of other agents, creating a need for networking and recruiting events.
One of the agents who filed the complaint, who now works in Florida, alleged one of the male agents encouraged her to go to a networking event in Southern California in July 2018. When she arrived, the agent learned there was no room reserved or available for her, according to the complaint.

The accuser said she had a cocktail at night and remembered nothing until the following morning, when a male agent allegedly exposed himself and attempted to engage in sexual contact.
Another accuser claims she blacked out and was sexually assaulted at a networking event in Beverly Hills in April 2019. She didn’t report the incident because she feared she would not be believed, according to the complaint. The other allegations stem from alleged incidents in Las Vegas in August 2020.

Several women told eXp, including executives of the company, about the alleged incidents, according to the complaint. The brokerage didn’t appear to take any action, though and “elected to continue to ignore pleas from other eXp agents who’d been assaulted,” the complaint stated.
The women are seeking damages in a jury trial.
 

David Goldsmith

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NJ brokerage put hidden liens on hundreds of homes: AG​

MV Realty offered cash to lure owners into onerous contracts, a lawsuit claims
A brokerage allegedly put liens on hundreds of New Jersey homes without their owners’ knowledge as part of a “homeowner benefit program,” according to the state’s attorney general.
The Clark, New Jersey, office of MV Realty, a Florida-based brokerage firm, marketed the program as an easy way to get cash, New Jersey Attorney General Matt Platkin said in a lawsuit filed Tuesday. In exchange, MV Realty would get the right to serve as their brokerage if they sell the home in the future, the suit alleged.

Homeowners received $300 to $5,000 upfront and were promised that the program was not a loan and imposed no obligation to sell.
In reality, it operated as a high-interest mortgage loan that gave MV Realty a right to list the home for 40 years. MV’s contract also continues beyond the homeowner’s death and “levies an exorbitant early termination fee,” Platkin said.

To get out of the deal, homeowners must pay at least 3 percent of the home’s sales price (or 1,000 percent of the customer’s initial payout).
MV Realty previously denied that liens are initially placed on homes, according to an FAQ posted on a website run by the company. Rather, the site claimed, a memorandum or mortgage is filed on homes to serve as public notice of the agreement.
“In the event the customer breaches the agreement MV Realty has a right to [place] a lien against the home,” the website reads.
But the filed “memorandums of benefit” are indeed liens against the consumer’s property, according to the complaint.
A representative from MV Realty did not return a request for comment, but a trade group representing brokerages that buy future listing rights issued a statement implying that its members give homeowners a better deal than traditional brokerages.

“It’s shameful that an alternative to traditional real estate relationships that directly benefits New Jersey homeowners is somehow being presented as abusive or deceptive,” said Jim Terlizzi, director of the Future Listing Purchasers Association. “Homeowners have always given away the right to sell their home without any form of financial compensation to them. Future listing agreements allow homeowners to be fairly compensated for the right to list their home by a licensed realtor if they ever choose to sell their home.”
MV Realty’s CEO, Amanda Zachman, was the star of MTV’s Big Brother season 15. She was formerly known as Amanda Zuckerman.
The firm, which is not registered as a telemarketer in New Jersey, allegedly marketed the agreement by making unsolicited calls to homeowners in need of cash, according to the complaint. Telemarketers also never revealed all the terms of the program, including the 40-year contract length and hefty early termination fee.

The fee also applies if the home is foreclosed upon, if the title is transferred, if heirs try to sell a home or if the consumer tries to get out of the deal, Platkin said.

The attorney general’s complaint alleges that MV Realty’s practices violate the Consumer Fraud Act, as well as New Jersey general advertising and telemarketing regulations.
Over 1,250 consumers in New Jersey fell for the alleged scheme. MV Realty also has offices in 32 other states, according to its website.
The New Jersey lawsuit demands MV Realty void all liens against homeowners and pay restitution, repay profits earned through the scheme and pay civil penalties.
The New Jersey Real Estate Commission will also be taking action against the real estate licenses of the company and affiliated individuals, Platkin said.
Its filing Tuesday demands company executives and at least one New Jersey broker explain why their real estate licenses should not be suspended or revoked and fines imposed.

MV Realty has also agreed to stop soliciting New Jersey customers for the program until the case is resolved, Platkin said.
“This company misled consumers about the true nature of its product,” Platkin said. “MV Realty sold its product as free money when it was really a loan secured by what is often consumers’ most valuable asset, their home.”
Pennsylvania, North Carolina and Ohio state agencies all sued the company last year, making similar allegations.
 

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Scammers making agents miserable with impostor accounts​

“It makes you feel incredibly vulnerable and victimized”

The tearful calls started coming into Bohemia Realty Group about a year and a half ago.

Clients would say they had just sent money to a broker for a deposit on an apartment — except they hadn’t. They’d sent it to a scammer impersonating a Bohemia agent.
“People call the office and they’re like, ‘That was all the money I had. What do I do?’” said Sarah Saltzberg, co-owner of the brokerage. “And people are crying and your heart just breaks for them.”

Online scammers have been around as long as the internet itself, but industry professionals say the frequency and brazenness of fake-broker scams has grown with the use of social media to advertise listings.
The remote nature of the crimes and reluctance by social media companies and law enforcement to intervene has left brokerages and agents scrambling for solutions.
“It’s gotten increasingly worse to the point where I now have an impostor, [as] the head of the firm,” said Saltzberg. “It really feels like such a violation.”
The hubris of scammers adds insult to injury. Doug Heddings, a manager at Compass, has communicated directly with one of his Facebook impersonators.
“Please remove this fraudulent account immediately,” Heddings messaged the impostor from his own Facebook account. “You have been reported to the FBI and local law enforcement for internet fraud as you are impersonating me!”

The impostor replied: “Send me $5,000 and I’ll delete the account. I promise.”
The Real Estate Board of New York has pledged to take action “in the near term”, though it’s unclear what and when that will be.
“This is an increasingly frustrating issue for agents and we are discussing it with numerous members,” said a representative. “More effective anti-fraud policies on social media platforms are necessary and we are exploring ways to further engage platforms and law enforcement on this matter.”
One of Heddings’ agents, Dennis Laronga, has been pushed to his wits’ end by scammers on TikTok. He does not see REBNY’s advice, which was to Google himself and to report any fake accounts to the social media platform, the police and New York’s Department of State, as the answer.
“I hate that I have to Google myself every day just to make sure there’s nothing new,” said Laronga, adding that he was “crushed” by the lack of help from his trade group. “It just repeats itself. It’s Groundhog Day.”

He wants REBNY to create a liaison to push social media companies to take down fake accounts, saving brokers valuable time.

An assistant delegated by Saltzberg to scour Instagram every morning recently tabulated more than 20 fake profiles impersonating 18 Bohemia brokers, the boss included.
Knowing that scams are being committed under his name has Laronga worried about going to the office and open houses.
“What happens if one of these people that are swindled shows up here?” he said from a Compass office. “Or shows up to one of my listings … saying I swindled them? How do I know if they would get physical?”

Impostors are hard to deter because their scams don’t require any hacking. They simply find a photo of the broker online and create a profile that displays listing photos or videos pulled from the internet with an AI voice overlay. The listings usually offer a deal that’s too good to be true, like a spacious Midtown apartment for $1,050 a month.
Scammers sometimes take extra steps to appear legitimate, posting an agent’s license number or declaring in their profile bios that they’re the real agent and that the real agent’s account is fake.
“It makes you feel incredibly vulnerable and victimized,” said Heddings.
Laronga and Saltzberg both had a hard time getting the police to take them seriously — the NYPD didn’t want to take a police report from Laronga — and Saltzberg’s complaint to the Department of State produced a bumbling response that culminated with a promise to investigate Bohemia Realty.
“No, no, no, I’m Bohemia,” she told the agency. “I’m not complaining against myself.”

Social media platforms have not been very responsive either. Instagram and Facebook have refused to remove the fraudulent Bohemia Realty and Heddings accounts.
“Every single day Instagram comes back and says, ‘We investigated this and it’s not a fraudulent account,’” said Saltzberg, echoing Heddings’ experience with Facebook.
Laronga has paid for verification on Instagram — something Saltzberg said she hadn’t done — a $15 a month cost he seems confident will inspire action from the platform should an impostor show up there.
TikTok ignored his complaints for weeks until a colleague sent him a link to submit one. Each time he does, he has to upload a photo of himself holding an ID, but the platform eventually gets around to deleting the impostor account.
Agents can take some preventative measures to discourage impostors, said Madison Sutton, a Serhant agent with a large TikTok following. They should include their email or name in photos and videos and add watermarks that are hard to edit out. They should also include a call to action at the beginning and end of videos, with instructions on how to find them.

“I gave them a very clear path if they did want to contact me,” said Sutton. “Make content around the subject … talking about what the process would look like if it was legitimate.”

 

David Goldsmith

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New York real estate broker sentenced to house arrest in homeless-shelter bribery scheme​

Sheina Levin paid $690K in kickbacks to former head of Bronx Parent Housing Network, Victor Rivera
New York real estate broker sentenced to house arrest in homeless-shelter bribery scheme
Sheina Levin paid $690K in kickbacks to former head of Bronx Parent Housing Network, Victor Rivera

Handcuffed hands; New York City, map of the Bronx, hands exchanging paper

A New York real estate broker was handed a nine-month house-arrest sentence last week for her involvement in a bribery scheme that spanned several years.

Sheina Levin, 61, who owned a Brooklyn-based real estate company, paid Victor Rivera, a prominent shelter operator, over $830,000 in kickbacks to secure leases for properties under her control, the New York Times reported.

The scheme came to light when Rivera, the former CEO of the Bronx Parent Housing Network, pleaded guilty to federal crimes the previous year and was sentenced to 27 months in federal prison.

Rivera’s financial ties with Levin and allegations of sexual assault and harassment against him were exposed in a Times investigation in 2021.

Levin’s sentencing followed her guilty plea in March to one count of conspiracy to commit honest services wire fraud for her role in the pay-to-play scheme, which operated from 2019 to 2021.

In court filings, Levin revealed that Rivera initially solicited bribes during their collaboration to sublease several Bronx buildings as homeless shelters. Rivera insisted on a portion of Levin’s rental profits, and she complied, knowing these payments were improper. Levin concealed the payments to Rivera by disguising them as consulting fees to a fictitious company owned by Rivera’s son, who, in turn, used the kickbacks to cover mortgage payments.

Rivera, who founded the Bronx Parent Housing Network two decades ago, amassed $274 million in city funds from 2017 to 2021. During this time, Rivera began living large, receiving a salary of more than $450,000, leasing a luxury car through Housing Network and doling out contracts to close associates, including Levin, as well as commingling nonprofit work with for-profit companies.. Rivera also demanded kickbacks from other associates, but the payments from Levin were the most substantial.

Levin faced a maximum penalty of 20 years in prison for the felony charge but received a sentence of house arrest and two years of supervised release, with prosecutors citing her cooperation in aiding the investigation into Rivera. Additionally, she agreed to forfeit more than $790,000 and pay over $838,000 to the Bronx Parent Housing Network.

In a statement, Levin’s lawyer acknowledged her wrongdoing, stating that Rivera manipulated her commitment to serving the homeless population for personal gain. Levin is committed to making amends for her actions, according to her attorney.
 

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What did I say one year ago?
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.”

Sitzer/Burnett verdict could trigger foreign model, “race to the bottom”​

Suit’s reference to UK, Israel and Australia says lower commissions could end exclusive listings, MLS systems

The world of residential real estate is grappling with the changes that could be coming to agents’ commission structure in the wake of the Sitzer/Burnett case.
The Kansas City jury in the landmark antitrust suit found NAR and two brokerages guilty of conspiring to keep commissions high under the industry group’s rule dictating commission splits in exchange for access to the MLS.

The defendants have pledged to appeal but the case, which is awaiting a final decision by the judge, has already prompted copycat suits, including a nearly identical one filed minutes after the Sitzer/Burnett verdict was delivered.
The filing identifies several countries with a more competitive commission structure, including the United Kingdom, Israel and Australia, as a potential answer to the billion-dollar question facing U.S. brokerages and agents.

The comparisons to international markets spell out few exclusive listings, the end of the MLS and online listings, and agent commissions as low as 1 percent, brokers outlined to The Real Deal.
“Our view is the U.S. has a very unique model that actually, the representation is actually properly separated [between] the buyer’s agents and [the] seller’s agent,” said real estate entrepreneur Thomas Ma.
But that could change, should the industry be forced to adopt commission structures that more closely resemble those foreign markets.
“I think it will be a race to the bottom,” said Ma, founder and CEO of Real, a social media app for real estate listings.
If commission rules are decoupled from MLS access, Ma said agents could be incentivized to undercut one another until a 1 percent commission, or something close to it, becomes the standard. It’s the norm in markets around the world: In the United Kingdom commissions are 1 percent and in Israel and Australia the standard commission is about 2 percent.

For clients, Ma said spending less on agents will come at a cost.
“The service level will be so bad,” said Ma. “The consumer is getting half of that 1 percent service that they used to get at 6 percent or around there.”
Exclusive listings are rare in such markets, because the necessary time and money doesn’t make financial sense for a 1 percent commission. And if listings aren’t exclusive, there’s no incentive to share them with an MLS or a Zillow.

“The consumer takes it for granted that the listing is going to be there,” said Ma. “It’s not going to be there.”

In Israel, the only MLS system is in Jerusalem, according to Isidora Fridman, founding partner of Israel Sotheby’s International Real Estate. In other parts of the country, agents join WhatsApp groups to discuss listings. Getting an exclusive listing is very difficult, because sellers think they can get more exposure by offering a listing to multiple agents.
“It’s very hard to promote and market a property,” Fridman said. “We even have to sometimes reach out to agents one by one.”
Compass CEO Robert Reffkin was optimistic during the company’s third quarter earnings call that changes would be minimal.
Reffkin pointed to the Northwest MLS, which covers Seattle and surrounding areas, and which in 2019 eliminated the requirement that sellers offer a commission to the buyer’s broker. The change had little impact on commission rates, with the average commission there now at 5.3 percent, according to Reffkin, roughly evenly split between buyers’ and sellers’ agents.
“We have evidence in a major US market of what this change will look like. That gives us confidence,” said Reffkin. “I feel confident that Compass is positioned well.”

But some precedent suggests it’s not clear brokerages will be so lucky in upcoming financial quarters.
Anywhere and RE/Max proposed settlements ahead of the Sitzer/Burnett trial that included a financial sum and some rule changes, similar to a deal NAR negotiated with the DOJ in 2020, which the DOJ subsequently revoked.
NAR clarified language in its participation rule ahead of the trial, but commentary from the Department of Justice on a case in New England suggests the government isn’t convinced that not requiring sellers to pay buyers’ brokers goes far enough.
“Merely tweaking a buyer-broker commission rule to allow zero-percent commissions does little to ‘unfetter a market from anti-competitive conduct,’” attorneys for the department wrote in the New England antitrust case, which doesn’t involve NAR.
The Justice Depatment’s ongoing investigation adds to the stack of concerns for the residential works, as it would run independently of the class-action lawsuits given its approval by an appeals court.

 
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