Suzanne Grace

Okay, I admit it - after the week I have had, from the bizarre to the just oh my gosh, get me out of here, I am feeling a tad worn.........this business used to be so easy!

I got a phone call - yes, another phone call - from what I thought was a principal! Whooohoooo - love those calls - and better yet, the seller would like to sell for approximately $5,000,000! WOW! It's gonna be a great week!

During the course of the conversation, however, my bubble certainly deflated..........this wasnt a principal at all - this was some young couple trying to break into the luxury home market - and they need my help.

But wait - are you licensed I ask? Well, no..........

And that's where it started to go downhill.

Turns out they are approaching home owners and offering to sell their homes for a certain price and if they obtain said price - they receive a commission - if they get above said price, they get the difference. If the owner in this case receives 6,200,000 for her home, this couple receives 1,200,000 in commissions. And if I help them bring in a buyer, I get 35% of their commission!

Sounds great - but it aint legal!

I mean seriously, do these folks think they were the first ever to think of this? Nope, I am certain many have come up with this one before - and dealt with the $50,000 fine, too! (Because they are an LLC, they have a 50k fine versus an individual who faces up to a 10k fine - both however, can also face up to 6 months in county jail!).

As I told them, there is a very good reason for a seller to hire a Realtor; not just anyone can sell a home and having done it once or twice does not an expert make!

Do I have an obligation to notify the DA's office? The seller? This is my own personal gray area and I am not sure what I will, wont, can or cannot do. I do not want to hurt anyone but I personally am tired of having to deal with fraud, fakes, flakes and all other sorts of F words I can come up with. I am tired of flaky agents reflecting negatively on the rest of us as well.

I did explain a little to this couple that with disclosures - to which they are not privy - they not only cover the sellers' interests, but their own. They werent sure what I meant - how scary is that?

They did tell me that there are a ton of agents interested in helping them - I bet! However, the agents cannot list the property in the MLS! The agents can't take a listing agreement on the home, either. So, what would an agent be able to do for these folks? Not much!

What I told them was simple:

It is ILLEGAL to sell real estate without a license in the state of CA. The DRE states - CODE 10130 - It is unlawful for any person to engage in the business, act in the capacity of, advertise, or assume to act as a real estate broker or a real estate salesman within this state without first obtaining a real estate license from the DRE. If you are caught, you will be fined and possibly jailed.

The code is further broken down: (2) sells or offers to sell, buys or offers to buy, solicits prospective sellers or purchasers of, solicit or obtains listings of, or negotiates the purchase, sale or exchange of real property or a business opportunity. The same laws apply for leasing as well. It also states (e) Sells or offers to sell, buys or offers to buy, or exchanges or offers to exchange a real property sales contract or a promissory note secured directly or collaterally by a lien on real property or on a business opportunity, and performs services for the holders thereof.

The website they designed for this home? Right now, the websites, etc, are illegal; you cannot post them - you cannot advertise on behalf of the seller without your real estate license number on all ads, websites, emails, etc.

The legal homeowner is the only one who can sell by owner and if they hire a representative is must either be an attorney or a licensed realtor. Code 10137 states: It is unlawful for any licensed real estate broker to employ or compensate, directly or indirectly, any person for performing any of the acts within the scope of the above described acts, who is not a real estate licensee; no real estate salesman shall be employed by or accept compensation from any person other than the broker under whom he is at the time licensed. It is unlawful for any licensed real estate salesman to pay any compensation for performing any of the acts within the scope as described above Code 1017.1 Provided every partner through who the partnership so acts is a licensed real estate broker............... Code 10139: Any person acting as a real estate sales person without a license or who advertises using words indicating he or she is licensed without being so licensed shall be guilty of a public offense punishable by a fine not to exceed $10,000 or imprisonment in the county jail not to exceed 6 months; if a corporation - such as your LLC, it is a fine of $50,000.

I didnt bother to go into the details such as when an escrow company gets involved - the escrow company cannot pay a commission to a non-licensed individual; yes, the seller can pay them or even instruct escrow to do so, and label it something else I am sure. But, legally, this appears to be a gray area.

I dont know what they plan to do, if anything; like I said, I dont know what I will do - if anything. I would love your comments and advice - as sometimes it is hard to see the forest for the trees.

I do know that I will NOT be assisting them in anyway - not unless the seller approaches me directly; as I explained above and to them, I cannot give them any sort of compensation if this happens - unless they have a license!

Well, Mercury is definitely Retrograde..........here's to another adventurous week in real estate!

It's that time of year again, Mercury is in Retrograde! Bringing about those time-eating traffic jams, snafus related to communication, computers and technology that just doesn't seem to be wired right, and a tendency to forget that which we already know, are just some of the many annoyances that occur during this period of September 7 to 29.

Funnily enough, that doesnt appear to be all that's happening! Now as a local agent, I get calls all the time from clients or potential clients, complaining about the market, the buyers, the sellers, etc, but rarely do I get a call like one which I received yesterday.

Now let me preface this by saying first and foremost, all I did was listen - all I am legally allowed to do is listen. I did not comment, advise (except to say to the caller, speak to your attorney) or offer any solutions whatsoever. Although, I wish I could have done so and in fact, my blood is still boiling from this conversation!

Let me back up! A few weeks ago I received a call from a family looking to sell their lovely home in Chatsworth*; it is in a desirable neighborhood and tract and because they were not upside-down, an easy and fast sales potential for me. I was excited to say the least as I am tired of the sad stories associated with short pays, although I have no qualms handling them, the sadness associated with them can be a little rough.

I digress.

So I met with them and was pretty confident I had the listing; both of the sellers were present (a newly married husband and husband, cute as can be!) and we all had a lot in common, they loved my "style" as well as what I was offering to do to get their home sold.

Needless to say, I was STUNNED when I received the call that I did not get the listing and instead they had gone with another agent; I asked why, although at this point I didn't really care - was choking back tears, thus not wanting to be the one doing the talking - I just wanted to take the pressure off myself for a moment, gather my composure (I am typically not quite so emotional but I am sure a lot of you agents will agree with me that in these times, a blow can be hard to take!), and I proceeded to take a few, albeit silent, deep breaths! Ahhhh breathe.............

What I heard next rocked my socks off; the agent they chose was charging them a flat fee of $1,700 to sell their home! WHAT THE (you can fill in your own blanks here)?????

Seriously? Seriously? Seriously!

What an INSULT to those of us busting our bums to get some business! I informed the seller that I cannot nor will I be able to beat that! But, I warned them, be careful as you typically get what you pay for.

My words have haunted them for weeks.......

The home came on the market approximately $150,000 LESS than TODAY's current market value - and $150,000 less than I would have listed it for - now I of course planned to show it right away as I had a few buyers looking for steals within that area. I figured the agent who listed it was trying to get a ton of offers and create a frenzy as well as sell it as quickly as possible because we all know you cannot afford to sell homes for that cheap and have them linger on the market for months on end!

However, as you know, there was NO WAY a buyer who was looking in this price range could afford to go up $150,000! So the seller was for sure going to lose money........by the time I got to the home the property's price had increased twice - going up about $50,000 - and as I later found out, all without the seller's knowledge or acknowledgment. They were never told the price changed/increased nor did they sign anything advising them of the increase or give verbal or written permission for the increase. Hmmmm.....

You get what you pay for.

So, let's fast-forward a few weeks and the phone call I mentioned above that I received. The owners have now of course realized they are in jeopardy and are seriously regretting their decision. What can they do? My advice? Simple - call your attorney as I cannot interfere with another agents contract - but I can certainly listen!

And listen I did; I am shocked, appalled, embarrassed, angry and frustrated and the only way I can relieve some of this frustration is to write about it!

First of all, the agent does not have a fully-executed listing agreement; nowhere on the contract does it state the address of the property nor the APN. Only one seller signed, which in the state of CA is okay for list, but must be signed by all parties prior to the close. Neither did the seller EVER receive a copy of their listing agreement until they asked for it yesterday (yes, this resulted in a second phone call to me.....).

The BIGGEST issue I have, though, is that the agent changed the commission! Yes, I said it - yes, the agent changed the commission - so instead of $1,700 it now reads $3,700 (the 1 was changed to a 3) AND the agent is charging them a referral fee of 27%! WHAT THE (you can fill in the blank here)???? No, the agent did NOT have the seller initial these changes (the original contract was typed but the changes are handwritten) nor did the seller have any idea until they received their escrow instructions in the mail (and they did get a call from the agent prior to receiving them stating that they will notice a change on the escrow instructions but just ignore it). HUH??? The agent also changed the selling agents commission from 2.5% to 3%, again, making this change AFTER the seller signed the listing agreement! However, on the MLS it shows the commission at 2.5%! Can you say, funny business?Oh, just slightly!

The owner told me they asked him about the commission change; he said that it has ALWAYS been on the MLS at 3% (which is not true as it is listed at 2.5%) and that the selling agent agreed to give up .5% because the selling agent "doesn't know how to do anything" and the listing agent is "having to do all the work" (ya, I bet it takes a lot of hard work to figure out the best way to commit all sorts of fraud....) The agent then went on to tell the sellers that this is an agreement between agents and the seller doesn't need to know the details nor is it any of their business or concern. So, it's none of their concern that their agent is fraudulently obtaining more money? Their agent is jeopardizing a purchase? Nope, guess it's none of their concern!

Okay, so wait a minute; when I add up all these numbers the seller has just rattled off to me, the commission now actually exceeds 6%!! WOW! The seller went from signing a contract at a discounted rate of $1,700 and is now paying more than 6%!

UNBELIEVABLE! And this agent is allowed to walk the streets, taking business from you and I. Charming thought, isnt it?

And yet, sadly, there's more!

The counter offer the agent sent to the buyer states that all contingencies are; for those of you who may not know what this means, it simply means come day 17 (or whatever day they agreed upon) the buyer doesn't have to sign a contingency release form - they are just released at the contracted time! HUH?

According to CAR and the DRE: The term "active removal" used when talking about a contingency means that a party must do something to remove a contingency. Typically this means removing the contingency in writing. For "passive removal" of a contingency, the party need do nothing and the contingency is automatically removed with the passage of time.

HOWEVER, The RPA-CA as well as all the other C.A.R. purchase contracts require active removal of the buyer's contingencies.

So, in other-words, the seller signed this but it isn't even acknowledged or VALID in the state of CA! What this means for the seller is that the buyer can essentially have all of their contingencies in place, walk the day of closing, with ZERO repercussions! How scary is that?

And this agent is walking around taking business from you and I (yep, I said it again!)!!!!!!!

For those of you shrugging your shoulders or not feeling as outraged as I am, let me point out a few facts here (and forgive me my emotion, but I am very frustrated by this chain of events and more frustrated that I lost the listing due to fraud!).

I am acknowledging the errors to the best of my abilities and from state-to-state, these errors may be erroneous:

1. Ideally, an enforceable real estate purchase contract should include the identity of the parties, clear description of the property being sold, the price, the terms of payment, and the time for performance; their listing agreement contained none of these items, with the exception of the fraudulently adjusted commission. There are no seller names, address, etc.

2. A contract is valid only if the parties voluntarily consent to its creation. If a party to a contract can prove that his or her consent was not freely given, the contract can be avoided (is voidable). Consent is not freely given when it is obtained through fraud, mistake, or as a result of duress or undue influence imposed by the other party.

3. State of CA only allows for active removal of contingencies; the RPA-CA as well as all the other C.A.R. purchase contracts require active removal of the buyer's contingencies.

4. Now the issue as to the seller paying a referral fee to the listing agent isnt covered in the DRE or CAR rules or laws and is an ethical issue. However, if anyone does have info on this I would be curious to see it. Those of us who have ethical practices know this is wrong - why would the seller pay a referral fee when the agent wasnt referred first of all, and secondly - and most importantly - ANY referral fee of this nature (which I am not describing due to the nature and protection of all involved) is strictly the agents fee to pay, not the sellers.

5. 10176. The commissioner may suspend or revoke a RE license if the licensee is guilty of the following: Obtaining a signature of a prospective purchaser to an agreement without having first obtained the written authorization of the owner of the property. Demonstrated negligence or incompetence in performing any act for which he or she is required to hold a license. Engaged in any other conduct which constitutes fraud or dishonest dealing. Ya, there's this in spades.............

6. An agent has a duty to disclose to his/her client all material facts in a transaction unless it is disclosed to and approved by the client. Per NAR Code of Ethics: When entering into listing contracts, REALTORS^® must advise sellers/landlords of: the REALTOR^®'s company policies regarding cooperation and the amount(s) of any compensation that will be offered to subagents, buyer/tenant agents, and/or brokers acting in legally recognized non-agency capacities. Article 6
REALTORS^® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client's knowledge and consent. REALTORS^®, for the protection of all parties, shall assure whenever possible that all agreements related to real estate transactions including, but not limited to, listing and representation agreements, purchase contracts, and leases are in writing in clear and understandable language expressing the specific terms, conditions, obligations and commitments of the parties. A copy of each agreement shall be furnished to each party to such agreements upon their signing or initialing. REALTORS^® shall not offer for sale/lease or advertise property without authority. When acting as listing brokers or as subagents, REALTORS^® shall not quote a price different from that agreed upon with the seller/landlord.

Yes, I am upset, angry, mad, frustrated but ultimately, I am not affected by this accept guilty by association - agents like this give all agents a bad rap. When agents make these decisions, they affect ALL of us. These choices leave a bad taste in the mouth of the consumer - ultimately, we all just look bad.

What can we do? Nothing. The seller has a decision to make and it isn't an easy one, that's for sure. In my opinion, I am sure their attorney will advise them to either continue on and cut their losses or fight for their home back and lose their buyer. The issue at hand though, is the seller isn't truly free to re-list their home with another agent, unless the current agent agrees to this in writing; his fraudulent behavior will ultimately go unpunished because the seller needs to sell and most likely will not want to rock the boat. Or their attorney can call the agent, threaten everything under the Sun, and we can hope that he quietly walks away and goes back under the rock from under which he crawled.

I again want to stress here that although difficult, all I did was listen. I wanted to yell, laugh, cry and mostly just scream I TOLD YOU SO, YOU GET WHAT YOU PAY FOR - but I held my tongue because, although not fair at times, I have to.

If the seller chooses to share more information with me, I will keep you updated on what happens next - I, too, am curious.

But ultimately, there is only ONE winner here - the rest of us lose. The winner is this agent, who signed a contract for $1,700 and ended up making more than 3% - and yes, he obtained his commission fraudulently, but he's in a contract, he is protected by the law - and the home owner is just plain old out of luck!

Don't get me wrong - I know there are "ways" the seller can most likely get out of the listing agreement - but what of the buyer? The seller signed a purchase agreement - even though they do not have a legal listing agreement, accepting the offer is as good as saying you agree - even though they never got a copy of it, signing the purchase contract says they did.

What a mess!

I wish I could blame this on Mercury in Retrograde but I can't.

*changed to protect identities.............cuz you know who you are!

There are a lot of articles hitting the blogs questioning the ethics of today's challenging market. In my area, we face a housing shortage, esp in some price ranges, and it appears as though many are not listing the homes on the MLS as directed - and as a result are selling the homes themselves. While double-ending a listing is legal in CA, is it ethical? One may think of the multitude of fiduciary duties owed to a seller - whether the seller is a bank or an individual - and challenge just whose interests are being protected.

If a seller hires an agent - again whether it be a corporate listing or an individual - you are charged with the duty to obtain the best price for your customer as well as the best buyer. Can you do this ethically? Can you effectively due your duty? In my experience, the only one who wins is the agent. It seems to be happening more and more where the agents are withholding the listing from the MLS or putting that there are no showings until further notice (typically due to repairs) yet the home pops up as pending/sold either before or on the date the home is advertised as available. Another issue is the agents will post a sign in front of the property yet not put it in the MLS - when a call is made to see when the home will be available for showings, we are given a non-commital reply. Again, the home is NOT in the MLS - but when it is finally listed at some point in the future it is listed as pending/sold...........so the agent is putting it in the MLS as per the rules but tends to sell the home themselves before reaching the market place, effectively, in this agents opinion, of stealing from the seller.

The AM's I work with require me to prove that it is in the MLS for 5 days before they will even look at any of the offers and in my experience, wont pay me both ends if I bring in the buyer - in effect, they are discouraging this from happening. I know there are some who side-step this rule by "referring" the buyer to another agent, thus obtaining a referral fee on top of their half of the commission. Legal? Yes! Ethical? That's up to you to decide............

I could go on and on due to the fact that I have cultivated relationships with both buyers and sellers who wish to purchase/sell in this market. However, I refuse to be dragged into the quagmire of greed.

I know a lot of buyers may beg to differ, but honestly, there are so many good deals out there, I am personally frothing at the mouth - okay, that's a little gross - but seriously, I have to pass on those great buys day after day after day - due to the same reasons buyers today are struggling - affordability!

However, the media reports of homes in CA now reaching an all-time high of affordability are actually true! In Thousand Oaks - and surrounding communities - we are seeing homes priced - and selling - for 2003 prices! Whodathunkit?? Not me, that's for sure!

However, short sales and foreclosures have essentially set a new price for our market - and it is a great place to be - if you are a buyer of course!

So, how do we capture these steals? Well, that's the tough, million dollar question. There is a ton of competition - a lot of people pulled their cash out of the stock market - and are now investing it in the best possible place - the real estate market! Where else can you earn approx. 6% a year at minimum? Most banks arent certainly offering that type of an ROI!

Now we know that most of the buyers today tend to be investors - you as a buyer are competing with an all cash buyer who doesnt tend to care about the carpet and paint; they will sink a few grand into the home, stick a tenant in for a year and make a great deal of money the next time around - which a lot of those financial wizards are predicting will happen by the end of this year or very early in 2010.

What can I do you ask? Well, first, having an agent who knows the market is just one part of it; having an agent who lives in the area is also essential. Okay, so your neighbor, your brother in law's cousin, etc, are all agents - you have lots of advice coming at you, right?

The key is simple- you need to look at the home and see the value in it at the listing price - or in most cases lately, 10 or 15k higher than the listing price. I also supply my clients with comparables from different time periods - 2001 through 2003 as well as 2004 through 2006 - you as a buyer need to see where the homes value was, where it went and I then help you calculate the math at where it will go. Once you see this, you can then determine what the right price is for you. I can guide you of course, but ultimately, you are the one writing the check each month, and sending it to the bank, not me.

Another important factor is to get your pre-approval from a well known financial institution or loan officer in writing. Make sure they have reviewed your credit, your income, assets as well as sourced all of the money you have; too many times - even in this market which is maddening - loan officers dont want to take the time to fully review a buyer - and you find out while you are in escrow and could loose your deposit, that your loan officer didnt quite do all of his/her homework. That's very frustrating - don't worry I have some amazing loan brokers I can refer to you - and it slows down the entire process.

It is extremely important to know - prior to going out and even looking - what you are qualified for! If you have credit issues, let's figure out what those are NOW - not when you are under a contract. Keep in mind as well that if you are looking to purchase a home at $350k, you can purchase using FHA or Conventionall - rates fluxuate on both - and the costs also differ greatly - you put down either 3.5% for FHA or 5% for Conventional - but the credit score requirements are very different. If you are being gifted funds, we need to know - via a letter - where they are coming from and so much more! Bottom line? Get your ducks in a row - FIRST - so that you dont have your dream home taken back from you!

Again, there is so much advice I would love to share with you; please feel free to call or email, anytime! And don't forget - I also assist with loan modifications and short sales - there is hope! If you know of anyone in distress, please have them call or email me.

Best,

Suzanne Grace

That's not an easy question to answer! However, as an experienced agent - specializing in negotiating - and CLOSING - short sales, as well as bank owned homes, I have the knowledge and the tools available to me to successful help today's distressed home owner!

I am not asking to strictly list - and sell - your home. If you want to stay in your home, yet you cannot afford the payments any longer, allow me to help! I take my job as a realtor very seriously - and it's not just about selling homes! I am very experienced in helping home owners work out loan modifications with the bank and I am more than happy to help you.

As far as I am concerned, selling your home as a short sale is a last resort. If you are a seller or an agent with a short sale you have no interest in working on, please call or email me; I truly want to help - and truly care! There are answers out there - and I would love the opportunity to assist you!

Best!

Suzanne Grace