If you find yourself working with a broker who regularly brushes you off or refuses to spend quality time with you, it might be time to look elsewhere. Find a broker who will treat you with the respect you deserve.
It’s legal for brokers and builders to make lofty promises, but you need to see those claims in writing. Some of the most common misrepresentations include:
They Make Claims without Documentation
Brokers can mislead in a variety of ways. Some are obvious, like lying or misrepresenting a property, but other forms of broker misconduct are more subtle and can still lead to financial loss for their clients. If you suspect that your broker has breached trust, there are several routes you can take to seek redress.
For example, if you are looking at properties for sale and a broker claims that the property is in good condition but later discovers it has significant structural issues or a mold problem that could pose health risks to occupants, this may constitute a violation of real estate laws. In this case, you would be able to sue the broker for damages.
Another common type of broker misconduct is when a brokerage fails to disclose important information about a property before the sale. For example, if you are considering buying a home with a known termite infestation, your broker should inform you that it is a serious risk and recommend you have an inspector inspect the property before closing. This is an essential part of the due diligence process that brokers must perform, and it’s a violation of law if they don’t do so.
A broker may also conceal information to benefit themselves. For example, if you are looking at homes for sale and notice that the listing agent works at a discount brokerage and that their commission is lower than the typical cooperating fee paid to buyer’s agents, they may not tell you about the listing because they will lose out on the potential commission. This is an unethical practice that can be reported to your state or provincial securities commission.
While everybody has to make a living, brokers who try to mislead their clients are likely to face legal action in the future. Thanks to RERA, home buyers will now be able to find quick legal redress in the event that they are harmed by the faulty business practices of their broker. The law will ensure that home buyers don’t fall victim to the tricks of unscrupulous brokers, and will protect them from uninformed or biased decisions.
They Represent Both Buyers and Sellers
A broker can only represent one side of the transaction in a given case, but brokers may mislead buyers into believing they are being represented by an agent that does not exist. This type of double agency is illegal in many states and erodes the trust between a buyer and their broker.
A common way that brokers can commit this type of misrepresentation is by listing an apartment as “limited availability” or “one-of-a-kind.” These types of terms create the false impression that the apartment is highly sought after and therefore not available to other renters, and thus it must be acted upon immediately. Brokers can also mislead clients by telling them that they have a good connection to a seller and that this connection will lead to a faster closing.
Another way that brokers can mislead homebuyers is by representing both the buyer and seller in a single transaction. This practice, known as dual agency, is not always clearly defined, and it can lead to misunderstandings and conflict of interest. In the worst cases, this arrangement can lead to a lack of representation for a buyer.
Dual agency can also be dangerous for sellers who are approached by a buyer’s agent at an open house. These agents are focusing on selling the property to the buyer and not looking out for the seller’s best interests. Finally, dual agency reduces your legal options in the event of a dispute because only the brokerage’s insurance company will be responsible for paying any damages.
When interviewing brokers, be sure to ask about the broker’s policies on dual agency. If the broker does not have a clear policy on how they handle dual agency, you should move on to another candidate.
Finally, be sure to ask a broker about the fees they charge for their services. Brokerage fees can include desk fees, transaction fees, copies, insurance, and more. Some of these fees are standard and apply no matter which brokerage you work with, but others are specific to the broker’s office. Be sure to find out exactly what each broker charges so that you can compare apples to apples.
They Don’t Provide You with All the Information You Need
When brokers provide their clients with information, they must be honest and accurate. For example, they must disclose the amount of commission that will be paid to the broker and the agent on the transaction. Brokers should also give their clients the information they need to make informed decisions about buying or selling a property. This includes detailed descriptions of homes, the history of home prices in an area, the number of comparable properties available for sale or purchase, and a clear explanation of the various financing options available.
Brokers are also responsible for teaching their agents everything they need to know about the real estate market and industry practices. They should also be available to answer questions when needed, especially about regulatory compliance, contracts and disclosures. If a broker is not responsive or knowledgeable, this can be a red flag.
A good broker will have a well-developed office manual and onboarding process that sets clear standards for their office and the behavior they expect from their agents. Ask to see the manual before you sign on with a firm to get a sense of their culture and how they work together.
In addition to the broker’s manual, you should also ask about the brokerage’s reputation and what they stand for as a firm. Find out how long the brokerage has been around and check out their online reviews to make sure they are legitimate. You should also find out about the fees that they charge for desk fees, copies, transaction fees and insurance. These fees can add up to a significant sum.
If a broker’s offices are full of disorganized chaos and people running in and out all the time, this may be a sign that the firm isn’t very organized or structured. It’s important to work in a well-run and professional environment.
Finally, be sure to ask about the brokerage’s compliance procedures and how they handle conflicts of interest. For example, how do they handle complaints and allegations of misrepresentation or fraud? Ask about the broker’s record of handling such issues in the past.
They Mislead You About the Market
Broker misconduct can have serious financial repercussions for investors. Unauthorized trading, fraud, misrepresentation and breaches of fiduciary duty all undermine the trust that clients place in their brokers and brokerage firms, leading to losses that can be difficult to recover from. Brokers and brokerage firms must exercise heightened diligence in hiring, training, supervising and monitoring their brokers to ensure that these misconduct types do not occur. Unfortunately, many brokers engage in misconduct that puts their own interests ahead of those of their clients, resulting in devastating losses.
For example, some brokers try to trick their clients into buying properties that they know are not worth the price by using misleading tactics. They may tell a client that the home is in a desirable neighborhood, when it is not or they may fail to disclose a property’s history of water damage. These misrepresentations can lead to costly repairs and significant financial loss for the buyer.
In addition, some brokers attempt to swindle renters by over-committing them to apartments they know they can’t afford. This type of behavior is especially common in NYC, where brokers have a tendency to push their clients past their intended rental budget. In order to avoid this type of swindling, it is essential to be very clear about your rental criteria and stick to it.
Brokers also have a tendency to take advantage of the informational asymmetry that exists between buyers and sellers by concealing commission rates from prospective buyers. For example, some brokers may hide the fact that a listing they are representing is being offered at a discount brokerage that pays a lower commission than the typical cooperating fee. This practice is illegal and can have serious repercussions for a homebuyer.
The good news is that it is possible to sue a broker for negligence or breach of fiduciary duty. However, it is important to understand that a successful lawsuit against a broker can be expensive and time-consuming. In addition, brokers often have deep pockets and can hire attorneys to defend them against claims of misconduct. For this reason, it is critical to carefully investigate the background of any broker you consider working with to ensure that they have the legal and financial resources to effectively represent your interests in a lawsuit.
