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The art of fairness versus representation in the practice of real estate

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Recently I was speaking with a new Realtor (they’re so cute, when they’re little) and was discussing her exasperation with an agent who hadn’t yet sent a home inspection report, with an impending deadline looming. This Listing Agent mused that she needed to call the Buyer Agent and ask for the Home Inspection Report and addendum, before the expiration of the contingency.

My question was why is she calling the other agent? In the context of the contract, the purchaser had 10 days to complete the inspection and provide a full report and request for repairs. The Buyer Agent had the home inspection done a few days prior and e-mailed saying “We’re only asking for a few things and I’ll send the summary over tomorrow.” Tomorrow came and went and no report nor addendum.

Breaking Down the Problem

There are two main issues here, for the Buyer. Their agent hasn’t delivered the addendum, nor the report in the alloted time frame, and in the context of the contract the contingency has gone away and the Seller is no longer obligated to do the repairs. So, the inept Buyer Agent has failed to do the job and the Seller has been given a gift; leaving the buyer to move forward with the contract. There is also an issue that the Buyer Agent has revealed that she is delivering a summary… which is not the “full report” that the contract required. Even if the Buyer Agent delivers the Summary, and the contract calls for a “full report” she may not have met the criteria of the contingency obligation.

“That’s Not Fair”

As I was talking to this new agent, I told her that I wouldn’t make an effort to call and remind the Buyer Agent to send over the time sensitive document….unless the Seller wanted her to make such a reminder. I’m the first to say that Agents should work together for the Buyer and Seller’s best interest, but ultimately you work for YOUR client. Reminding the Buyer Agent of timelines that only benefit the Buyer is not going to be in the Seller’s best interest. I know it’s not fair, and it’s not nice to take advantage of the other agent…. but shouldn’t she be well equipped and knowledgeable enough to serve her client – without depending on you? When a licensee takes on the responsibility to serve the client, they need to do so, understanding that the client’s perception is more important than that of the other agent and what’s “fair”. Most Seller’s wouldn’t think it was fair to them, for you to cost them money in repairs, so that you can have a good working relationship with the opposing agent in the future.

Sun-Tzu

My favoroite Sun-Tzu nugget:

“Know yourself, know your enemy, and never lose in 100 conflicts. Know yourself, know not your enemy, win half the time, lose half the time. Know not yourself, know not your enemy, and surely lose.”

As much as I like many other agents; in a transaction, their clients have different needs and desires than your client. Many times you should size up the opposing agent, to make sure that they are capable. If they aren’t you should have the discussion with your client, as to how much assistance you should provide to ensure a smooth transaction. The only thing that most buyers and sellers typically have in common is their mutual desire to get to closing, usually with as few problems as necessary. However, the client needs to determine what’s necessary. In the case of reminding the other agent of their responsibilities, I am not convienced that your Seller would agree that his or her best interests were met. Anytime that you have two people with different interests in the same transaction, you’ll have inherent conflict. Those conflicting interests are what agents must server everyday and try to do it professionally.

Is It Fair?

Nope, it’s not fair – to the other agent and their client; but it maybe fair to your’s. It’s “representation” and many times the client may not want you to do what your think is the “right” thing to do. So long as it’s legal, you may just have to hang-up your disdain and move forward, hoping that the other agent really does understand that “It’s just business”.

Originally published April 08, 2008.

Matthew Rathbun is a Virginia Licensed Broker and Director of Professional Development for Coldwell Banker Elite, in Fredericksburg Virginia. He has opened and managed real estate firms, as well as coached and mentored agents and Brokers. As a Residential REALTOR®, Matthew was a high volume agent and past REALTOR® Rookie of the Year & Virginia Association Instructor of the Year. You can follow him on Twitter as "MattRathbun" and on Facebook. Matthew's blog is TheAgentTrainer.com.

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33 Comments

33 Comments

  1. Greg Cremia

    April 8, 2008 at 9:07 am

    Unfortunately not many agents understand what it means to represent a client. I was at CE when the president of our association stood up and told the head counsel for NCAR that our job was to keep deals together, not let clients get out of a deal. I feel sorry for those clients that have every right to get out of a deal and are blocked by their agent.

    Likewise, the idea that we agents need to help each other out because we all have to work together goes against everything fiduciary.

  2. Jessica Horton

    April 8, 2008 at 9:13 am

    I find that many agents can’t distinguish between personal and business. I’m not out to be cutthroat but I will do the best job for my client. Sometimes, other agents don’t know how to take that. Sorry…I do value my relationships with other agents but I have a job to do.

  3. Charles Woodall

    April 8, 2008 at 10:45 am

    It is troubling when agents start to think like Greg points out in his comment. I agree with Matthew that the listing agent has no obligation to contact the buyer’s agent, unless the seller has requested it. I do think the listing agent needs to have that discussion with the seller, to let them know what could happen if this slacker buyer’s agent doesn’t do their job.

    The really sad part is that when all is said and done, the buyer will likely never know just how pitiful their agent was, unless the deal falls apart.

  4. Matthew Rathbun

    April 8, 2008 at 12:50 pm

    Greg – My favorite class to teach, mainly because it’s so misunderstood. Too many agents don’t grasp the idea that the client is their primary focus and not the transaction.

    Jessica – I agree, I’ve enraged one agent before because her offer wasn’t countered in a deal and the seller expressly told me not to counter it; that he wanted to accept another offer. She didn’t understand why I would follow his directive. Five years later I still can’t win her back. It’s business….but that isn’t an excuse to be ugly, just because you can. It’s a difficult balance.

    Charles – “The really sad part is that when all is said and done, the buyer will likely never know just how pitiful their agent was, unless the deal falls apart.” I agree, unfortunately we also have the “warrior” agents who cause hardship in the transaction, so that they can go back to their clients and tell them how much work it was to represent them. I’ve found clients are more favorable when you express how professionally the two agents are working out the problem, not how difficult it was.

  5. Vicki Moore

    April 8, 2008 at 1:30 pm

    I completely agree. Often we’re so worried about making the other person mad that we forget what we’re doing here. I find this especially true of new agents – including myself. I had to learn exactly what you’re describing. It isn’t about being friends, it’s about fiduciary responsibility.

  6. ines

    April 8, 2008 at 2:45 pm

    I am not reminding the other agent of their job if it doesn’t benefit my client – plain and simple. Now how to make the other agents follow the contract and contract dates….that’s another issue.

  7. Mike Farmer

    April 8, 2008 at 3:09 pm

    the bottom line is I will help the other agent if it helps my client and avoids legal problems for all involved — otherwise, I’ll let incompetence go if it helps my client.

  8. Vicki Lloyd

    April 8, 2008 at 5:36 pm

    You guys are lucky – in California we don’t have the “passive” removal of contingencies anymore. In order for a buyer’s contingency to be removed, it has to be done in writing, or it remains open forever! As a listing agent, I send over the “notice to perform” to the buyer’s agent, alerting them to the fact that I’m paying attention to the deadlines. If, after receiving the notice, the contingencies aren’t removed, the seller has the right to cancel escrow and put it back on the market. (Of course, in the current market, most sellers are doing everything they can to keep the buyers moving forward!)

    When I represent a buyer, I let my buyer know that they should be ready to remove their contingencies on time, but if the listing agent isn’t paying attention, I keep quiet! As long as contincencies are left open, the buyer has the right to escape and get deposit back.

    • Rob McCance

      September 26, 2010 at 12:16 pm

      I kinda like that for some reason. Looks like it creates a little more paperwork but alleviates all sorts of surprises.

      I find that clients struggle to grasp the reverse logic of things like “unless you tell us there is a problem, no problem is assumed, and your protection disappears in 14 days with no notice or warning..”

  9. Jonathan Dalton

    April 8, 2008 at 7:55 pm

    Vicki – California law sucks. 🙂

    Last December I wrote an offer with a non-refundable earnest deposit – except if the home didn’t appraise or if financing didn’t come through. The agent called and asked why I wrote it, since there are no contingencies to speak of except for financing. In other words, my clause didn’t mean anything.

    My reply – “How I was I to know you were one of the dozen agents who really know the contract? It was worth a shot!” The thinking was an inexperienced agent would see a “non-refundable” earnest deposit and start to salivate, not knowing what the contract really said.

    Honest? Yes. Fair? Pretty much. It’s my job to the best work I can representing my clients. If the other side in a transaction doesn’t know what they’re doing, that’s not my problem. Harsh? Yep. But true. They hired their agent.

  10. Bob

    April 8, 2008 at 8:14 pm

    Vicki, why would you miss passive removal? The change is a huge benefit to the consumer – protecting both buyer and seller from the less than genius agents.

  11. Elaine Reese

    April 8, 2008 at 8:32 pm

    When working for sellers I make sure the buyer’s financing contingency dates are met. Inspection dates are the onus of the buyer’s agent. I keep quiet on those when I represent the seller. I had one agent try to turn in a Remedy Request 2 days too late. I told her “so sorry”.

    Realistically, the buyers and sellers are adults and should be watching the due dates on their own, since it’s really THEIR contract. They share some responsibility to make sure due dates are met even if their agent doesn’t, however, most rely on the agent.

    I don’t think I would like CA’s way of doing things.

  12. Bill Lublin

    April 8, 2008 at 11:15 pm

    Matthew;
    I agree with you that advocacy is our job as agent for either party, but I’m not sure that the example you give is one that would make me comfortable. The unseen potential damage to our seller might be in the transaction becomes contentious with the buyer claiming that the oversight of their agent led to a “no harm no foul”situation where they should be allowed to make their inspection even though the time frame has passed. Assuming the our seller stands firm on their position the options become limited. Either we hope the buyer “rolls over” and passes on the home inspection (potentially leading to litigation later if there are any property defects) or fighting with the buyer about it all the way to settlement (where the situation will be brought to some conclusion) where the seller might have to try to enforce the contract through litigation, With the exception of a really weak buyer who doesn’t fight for the reasonable right to inspect the home they’re buying, all of the outcomes are stressful , and have substantial downsides for the seller. After pointing all of that out, I strongly agree that our job is to be advocates, and that may mean not pointing out to the other party some deficiency in their negotiation or representation.
    And Vicki- I think I would like the way things are done in CA- the idea of notifying the other party that the closk is running out is a great way to assure that failure to act on the part of the other person is not s deficiency that a court might use in a finding that was not in your client’s best interest.

  13. Mack in Atlanta

    April 9, 2008 at 8:23 am

    So that everyone is on the same sheet of music, at the time we reach a binding agreement, I send a list of all the time sensitive dates to the co-op agent along with the loan officer. The financing contingency in Georgia has a time limit on it also. It is the obligation of the buyer to notify the seller in “X” number of days that their mortgage has been denied or the contract changes to an all cash at closing contract. Should the buyer not close they are in default.

  14. Matthew Rathbun

    April 9, 2008 at 9:35 am

    Bill,

    Those are all things that should be discussed with the Seller. The Seller should be making the decisions to risk the buyer’s leaving on some other term of the contract, etc… My broader point is that too often the agent tries to serve the other agent and transaction and not their client.

    I see your side of the argument and felt the same way for several years. However, after watching several professional standards cases, I see where the agents are taking too much away from their clients in these scenarios and fighting battles that aren’t their’s to fight.

    Your points should be made to the seller and they should weigh the risk and reward….

  15. Matthew Rathbun

    April 9, 2008 at 9:36 am

    Bill… BTW, thanks for disagreeing! This is all way more fun that way 🙂

  16. Sue

    April 9, 2008 at 9:49 am

    I agree with Ines in looking out for my clients on the dates. We have attorneys representing both sides on all tranasactions, so there are alot of eyes on the dates.

  17. Bill Lublin

    April 9, 2008 at 10:02 am

    Sorry Matthew – But now I have to agree 🙂
    Sorry I didn’t make clear that I felt that those were issues to be brought to the seller. You’re right – it is not the agent’s fight, nor their decision, though to often their egos get in the way of remembering that- (your humble rookie)

  18. Vicki Lloyd

    April 9, 2008 at 12:20 pm

    Bob –

    The reason I liked passive removal was because it put more pressure on the parties to perform to the originally agreed upon dates and deadlines. With “passive” removal, after the deadlines pass, the contingencies are automatically removed. I think people should be able to make committments and live up to them, without having to be given a final notice in writing. “Active” removal requires more paperwork to make the original deadlines stick.

  19. Erica Ramus

    September 25, 2010 at 1:35 pm

    I see this all the time here. Whatever happened TIME IS OF THE ESSENCE? In our contracts if buyer fails to deliver report/requests in the required time frame, then in effect he has chosen to ACCEPT the property as it is.

    I had an agent with 15 days to do inspections recently, who failed to do them on time. His request to arrange inspections (which came on day 14) to get into the property on day 17 were denied. He was infuriated! It was his buyer’s right!

    I replied no that he had 15 days to arrange this or get an extension. He did neither. He could not believe I would be so “strict” — in his words. Then the buyer wanted to know what the seller was hiding!

    Too may agents don’t read the contracts or know what they mean.

  20. BawldGuy

    September 25, 2010 at 1:56 pm

    Over the years, my best deals, both for buyer and seller, have been when dealing with house agents representing the other side, involving 2-4 unit properties. They find not only that words mean things, but what it says about ‘contract’ in the dictionary.

    Either we have contracts that mean something or we don’t. The rest is happy talk.

    Good stuff, Matthew.

  21. Erica Ramus

    September 25, 2010 at 7:22 pm

    Yes, contracts have to mean something and frequently agents either don’t know their contracts or just don’t care. Many don’t enforce deadlines, so let’s let them pass. I am one who does NOT just let contingencies expire or pass, no harm no foul.

    But as Bill Lublin pointed out, sometimes that does make the deal more contentious than not. I don’t purposely make it contentious, but when I represent someone, I represent them 100%. I am not here to make friends with the other agent and be best buds. I am here to do my best for my client, in his interests, not mine. Isn’t that the definition of “representation”?

  22. hermanchan.com

    September 26, 2010 at 12:36 am

    for those cases where the contingency deadline has passed (or in CA, post 24 hour notice to perform has been issued), how far was it taken? i want to hear from agents about what happened afterward? buyer just relinquished deposit and walked away? was the property tied up in arbitration/litigation indefinitely, thereby rendering property unsellable until cleared? did property pop back on the market, but with negative connotation/stale status?

    • Vicki Lloyd

      September 26, 2010 at 1:39 pm

      (In California) The buyer’s failure to perform doesn’t automatically cause them to forfeit their deposit, it just gives the seller the right to cancel the escrow, and sell the house to someone else. The cancellation of sale form has a box that can be checked to simply return the buyer’s deposit, less any costs incurred.

      Unless the house was sold with multiple offers (and back-ups kept in the file drawer) sellers are reluctant to have this show down if there is still some hope of the buyer performing. I think it’s pretty rare that a seller tries to keep a buyer’s deposit when they have demonstrated that they can’t (or won’t) close.

  23. Erica Ramus

    September 26, 2010 at 8:36 am

    I’ve had it happen twice recently. Once the seller decided to grant buyer 5 extra days to do the inspections. But this buyer did nothing in a timely manner. He also did not apply for mortgage within the 10 day time frame, and thus missed his mortgage commitment date, and also settlement date. Missing the closing date was a biggie. Seller refused to extend since buyer did nothing along the way in a timely manner. The deal did fall apart, and did become bitter between the 2 parties. If the buyer’s agent had kept the buyer on track, reminding him to stick to dates, perhaps it would not have ended that way.

    In second deal, buyer again missed inspection timeframe. Agent said buyer didn’t want to do inspections (put out money) until buyer was sure he could get the loan (red flags red flags!). Shouldn’t you know that (pretty much) before you write the offer???? Buyer did inspections late. Seller refused to make repairs since he was past deadlines. We closed on this one, late (as yes the buyer DID indeed have problems getting the loan). It went thru, but took some time.

    I blame the agents. Buyers sign contracts and most don’t understand them or realize how serious the time lines are. A good buyer’s agent keeps the buyer on track.

  24. Matthew Rathbun

    September 26, 2010 at 8:48 am

    Ok… So, my simply question is: “What did you or your Seller’s do about the Purchaser’s not adhering to the terms?”

    I’m drafting a one page summary of the Buyer’s responsibilities based on deadlines in our regional contract and completely explain Default. I’ve never really had a consumer that didn’t get things done in a timely manner, although they may need a little prodding.

    I think the largest issue is that almost every contract I’ve ever seen buries the deadlines and undersells the potential penalties of default. The agents glaze over them and establish no standard of understanding with the Buyer who is often overwhelmed by the process anyway.

    It would be much easier if the contracts had a summary of client responsibilities and deadlines in the document. Maybe everyone should ask their contract committees to consider this in the future.

  25. Chris Sanderson

    September 26, 2010 at 9:12 am

    My daughter and I were ready to cross a very busy street. Despite the SUV racing towards us at 50 MPH my daughter began into the roadway. I yanked her back and asked what she was thinking! Dad, she exclaimed, “Pedestrians have the right-of-way!” In all my fatherly wisdom I explained that “You’re absolutely right. But the problem with being dead right is that you’re still DEAD!”

    Same applies here. Sure, we can let the agent miss the deadline because they’re “new” or just plain careless. Regardless, when we then come back with “tough luck,” my experience has been the buyer will dig in their heels and the transaction will not close, despite all the contracts in the world! Dead right but still DEAD.

    That said, I LOVE the idea of asking your seller what they would like you to do. Takes the responsibility for the decision off of your back while, as you very correctly point out, they may not want you to do the “right thing.”

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