Agency

Imagine this: A married couple walks into an Open House, no agent in sight. Agent A, hosting the Open House, greets them, shows them around and engages them into a deep conversation. During the conversation, Agent A discovers the couple's buying criteria. Before leaving the Open House, the couple gives Agent A their contact information, so Agent A can send them active property listings that fits their buying criteria.

...This sounds like a harmless situation, right?

Well...Imagine this: Agent A follows up with the husband and wife through email, attaching two listings. Both the husband and wife like the listings so much (because it fits their buying criteria as they explained to the Agent at the Open House) that they want to make an offer on one of two. So the couple calls up Agent B - their lifelong Realtor - they make an offer. Two days later, the Seller accepts their offer.

Agent A, unaware of the situation, finds out about Agent B while searching through the tax records and feels cheated. Does Agent A have any stake in the deal?

The Result:
In the situation described above, Agent A has "procuring cause" and could be entitled to a full commission, since Agent A did find the property that was ultimately purchased. Agent B's failure to inform his clients of the rules and regulations involved in their agency relationship could wind up costing them their hard earned money.

Let me explain...when working with a buyer, a good agent will explain to the buyer that they must contact him whenever there is a question, concern or interest in any property. Doing so, will avoid problems in the long run. Additionally, the buyer should always disclose whenever they are being represented by another agent, so there is no confusion as to who represents whom. I see this situation as a mishap on the part of Agent B (not the buyers) because Agent B should have educated his clients and prepared them better.

Joseph Silverstein
Coldwell Banker -Chevy Chase Branch
5028 Wisconsin Ave
Washington DC
www.cbmove.com/joseph.silverstein

Ethics

There is a thin line between right and wrong, moral and immoral, legal and illegal...especially when practicing real estate. The notion of ethics is prevalent in today's real estate marketplace and must not be taken lightly. Predatory lending has turned a healthy marketplace into a subprime nightmare. As a result, buyers who were granted loans by lenders who used creative financing methods have been defaulting on their mortgage payments. If you look around, the effects are everywhere (...seen any For Sale signs recently?!?!). Yet, there are still plenty of investors looking to capitalize on foreclosures and short sales.

So, here's a question: who is to blame?

Lenders: Should lenders have granted loans to buyers whose credit score did not justify the loan amount?
Buyers: Were they misled by lenders or did they borrow beyond their means knowingly and take advantage of lenders who eased up their lending standards?
Real Estate Agents: We benefited by assisting buyers and sellers in the process. Were our commissions justified? After all, aren't we suppose to get our buyers prequalified by lenders prior to showing property?

There is no easy answer to these questions. Often not one action alone causes an epidemic. The subprime epidemic definitely conflicts with ethical behavior. For the mean time, we can hope that we've learned our lesson and that the worst is over with. We will not know the final outcome until years down the road. Nevertheless, it is important for each one of us to act in an ethical manner to avoid more horrific epidemics.

Joseph Silverstein
Coldwell Banker - Chevy Chase
5028 Wisconsin Ave
Washington DC
Website: www.cbmove.com/joseph.silverstein