Know what kind of real-estate agent you’re enlisting, especially in Florida
Amid a white-hot housing market, the National Association of Realtors hit its highest membership count ever last year at nearly 1.6 million.
No doubt, some of the 101,000 folks who joined up are experienced agents and brokers who hadn’t previously seen the need to associate with the giant trade group. But many of them are probably rookies who decided to cash in on an “easy money” market in which buyers were bidding against each other for the sparsest number of houses for sale in ages.
If you are considering listing your house with a new agent, though, you might want to think twice, even if she’s your favorite relative. Yes, new agents have to start somewhere. But St. Paul, Minnesota, broker Teresa Boardman warns that having a real estate license “has nothing to do with selling a home.”
Writing for Inman, an agent-centric news service, Boardman said, “It’s quite possible to take the 90 hours of instruction and pass the test without having a clue as to how to write a purchase agreement or what to do with a listing contract.”
Buyers, meanwhile, have to be careful whom they engage to help obtain financing. Regulators in 42 states have come down hard on 441 mortgage brokers who lied about completing their federally mandated continuing education courses. The guilty loan officers will pay about $1,000 in fines for each state in which they are licensed as punishment for skipping the required eight-hour classes, meant to enhance consumer protection and reduce fraud. They also must surrender their licenses for three months and take additional educational programs.
In Florida, both buyers and sellers should have their antennae up. The Sunshine State is one of 15 states where transactional brokerage is practiced, but it is the only one where that form of nonrepresentation is not disclosed. As a result, sellers are overpaying billions of dollars in commissions, a new Consumer Federation of America report maintains.
Transaction brokers are nothing more than facilitators with no obligation to either the seller or the buyer. It’s not the dominant relationship between agents and consumers in the other 14 states, but it is in Florida.
Naples agent Chris Carter, who writes a blog about Florida real estate, calls transaction brokerage “the best-kept secret” in his state. And the CFA report says most real estate consumers doing business there don’t question their agents’ allegiance. They simply assume their agent is loyal to their interests.
Unless a savvy consumer asks exactly what the agent’s role will be and opts for some other form of representation that cements the agent’s role as a fiduciary who works only on their behalf, they are overpaying big-time, says CFA Senior Fellow Stephen Brobeck. Not only that, but they are exposed to significant risk related to the quality and price of the property.
Neither party to a sale in Florida can expect any advice from a transaction agent, Brobeck warns. Should such an agent help one or the other get a better deal, such as negotiating a better price, he or she would be breaking the law because those kinds of things are banned by state law.
Brobeck is calling on Florida lawmakers to require early and effective disclosure of all forms of representation and give consumers a choice. In the meantime, he advises consumers to demand much lower commissions because their agents have fewer legal responsibilities and less liability when they act as facilitators rather than fiduciaries.
Renters need to be on their toes, too. Like airlines and hotels that quote a low price online and then toss in junk fees when you go to check out, some apartment owners are doing the same. Not to pick on Florida, but here’s an example from Tampa: An apartment’s rent is listed at one price, but when you sign up, you discover you’re also obligated to pay for pest control, cable, trash and even gate access.
Because many companies use junk fees to boost their bottom lines, the Consumer Financial Protection Bureau is starting to look into them. In the mortgage space, the federal watchdog agency says add-ons not only cost borrowers thousands in application fees and closing costs, but also can act as a barrier to ownership.
Beyond that, the CFPB says that borrowers are sometimes “forced to pay fees for making payments over the phone or online, or even for the servicer’s bill pay service.”
Still, undisclosed charges like these don’t rise to the despicable level of the unethical landlords who took money under the Paycheck Protection Program and then evicted hundreds of tenants.
The program was designed to allow companies to keep workers employed when their revenues were slammed during the pandemic — like apartment owners, who took a big hit because their tenants couldn’t make rent.
Unlike the CARES Act, which called for a higher level of protection for tenants in properties receiving a range of federal subsidies, PPP did not bar landlords from filing evictions. But from a broad perspective, it is contradictory that it supported companies that engaged in behavior that is at odds with federal humanitarian policies, say Elizabeth Strom and Denise Ghartey.
Writing in a recent edition of community development publication Shelterforce, Strom and Ghartey — a University of South Florida professor and an attorney with the Community Justice Project, respectively — said they found 95 landlords in Miami-Dade, Hillsborough and Orange counties who received some form of federal aid but still filed hundreds of evictions while state or federal moratoriums were in effect.