Choosing Your In-Laws, Brother's, Half sister's, cousin for your realtor is REALLY not a good idea if they are not ready, willing and able to serve your special real estate needs. SERIOUSLY!!!
I've recently come across a few posts that got me to thinking about the way that some buyers and sellers choose their Realtors/agents.
First, there was You Don't Want To Bother Your Agent, So You're Bothering Me? by Lorrie Semler and then there was Your lender is your In-Laws brothers half sisters cousin? Oh joy. by Cynthia Larson and lastly, there was I don't work in that price range by Tish Lloyd. All really good posts and worth reading!
My comments on these posts were based on my professional experiences with my borrowers here in my market in Los Angeles & Ventura counties. As a licensed Mortgage Loan Originator (MLO), I work predominantly with buyers so I'm not going to address working with sellers. Furthermore, many of the buyers I work with are low-medium income borrowers who are either first time buyers or are using some sort of down payment assistance (dpa) program to purchase a home. These buyers are typically in the low-end of the market here, which is approx. $400,000 or less.
These types of buyers have many challenges in finding suitable and eligible properties to purchase. Because our market here in Los Angeles & Ventura counties is absolutely saturated with run-down, dilapidated, dumpy REO's, many of these properties are simply not suitable because their condition disqualifies them for financing.
Furthermore, some dpa programs here have also disqualified certain types of short sales and tenant occupied properties are also disqualified. Lastly, some programs are very area specific and are only eligible for certain cities, counties or census tracts.
Needless to say, a Realtor/agent for this type of buyer will be spending more time and energy serving the real estate needs of their buyer. As a result of the additional time and energy required for these types of buyers, many Realtors/agents have made the decision not to work with these types of buyers.
Without getting into my professional position on this practice or my personal opinions about these types of Realtors/agents, suffice it to say that finding a Realtor/agent around here for these types of buyers is really challenging. Consequently, many of these buyers are then left to either working with listing agents of the properties they wish to see/buy and/or working with friends or relatives who are out of area Realtors/agents.
These types of scenarios pose so many issues and predicaments with the most obvious ones being:
A) Out of area Realtors/agents (who are not members of the local boards) are advising their friend or relative buyers to lie to listing agents in order to see properties so that the out of area Realtors/agents who are a friend or relative can swoop in later and write the offer.
B) Working with the listing agent to represent you as your Buyers Agent (BA).
C) Realtors/agents with little to no business are taking on these buyers and then dumping them or ignoring them later once they have a few higher end clients to work with.
First and foremost, scenario A is just downright dishonest and unethical. Realtors and agents are bound by rules, regulations and codes not to behave and/or engage in dishonest and unethical. PERIOD!!!
Advising clients to lie to other Realtors/agents just because a particular Realtor/agent can't or won't spend the time, energy or resources to serve their clients real estate needs is simply no excuse to engage in this type of behavior. Furthermore, recruiting clients to engage in the same dishonest and unethical behavior is just despicable.
For buyers out there working with an out of area Realtor/agent who is a friend or relative, if your friend or relative tries to recruit you into engaging in this type of behavior - RUN!!! Engaging in this type of behavior sets you up for potential liability later on and you should be asking yourself why your friend or relative would put you at risk like this.
What your friend or relative should be doing is referring you to a local Realtor/agent who can properly, ethically and legally serve your real estate needs. Buying a home is one of the most important decisions you can make and choosing the right Realtor/agent is one of those decisions that a buyer really needs to make very wisely.
As for scenarios B & C, these are topics that could be a post all unto themselves because there are just so many reasons why these are just a really bad decision for a buyer to make so I will address this in a later post (stay tuned for Part 2). 
Today's real estate market can be really scary, which is why it's important to get as much information as possible before you start your search. The home buying process is not a simple process and it's because it can get really complicated and convoluted, that buyers today need to find the right person who is best suited to assist them. For more info on affordable home loan options in Los Angeles or Ventura counties, contact me, Donne Knudsen, at 805.2069123 or donne4loans@earthlink.net.
Photos courtesy of flickr: nadinereilly cheesecurls idreamininfrared giacomomacis
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Donne Knudsen
Realtor® - CalState Realty Services
DRE#: 01364050 / NMLS#: 249822
805.2069123
Serving low-medium income individuals and families as well as first time buyers with both their real estate as well as their mortgage needs including down payment assistance
Los Angeles County -- Ventura County
© 2010 - All Rights Reserved
Finding the right REALTOR(R) is key. When you find one telling you as the buyer to lie? We'll that's the alarm bell going off. What else is deceptive about them and their words? What else might get compromised for THEIR convenience?
Fantastic post! We should be asking, "Would you be willing to fire him/her if they aren't working in your best interest?" I suggested this one.
I agree wholeheartedly with this post & the above two comments. It is so important to have a knowledgeable, ethical agent who will work in the Buyer's best interest. And while it might be a bit more challenging to work with the buyers you describe, it sounds to me like a real opportunity for a buyers agent in your area to find their niche! If only I wasn't on the other side of the country!
The active pursuit of the real estate business, by state law, is limited toi licensed individuals for good reason.
without the training, individuals have no concept about responsibilities.
Great post. oh, there are so many issues here...and most people doing this have no idea about these issues.
Donne - we have had enough discussions about the dual agency, which is allowed in California, as long as my seller knows that I am going to work for them as a listing agent and knows that the buyer will be represented by me and I will work hard for both I will do it. I have not been successful on a close but it is there if someone were to come to an Open House not represented.
As to the topic, I hate when I hear this. I am not sure how honest an agent could be to a family member. I had a listing for my STEP aunt and it was O.K. except when it came to a reality check on price. They knew it was over priced for what it had to offer. They knew it was only going to meet a small buyer pool. So it can work but BUYER and SELLER beware, as you always say.
Donne ~ Excellent post! (And, thanks for the shout.) I know there have been many, many discussions regarding dual agency -- not going there, just want to say I have been blessed to have closed many transactions as a dual agent and have, in turn, had many referrals therefrom.
As far as working with family and close friends -- it has almost always ended in costing me serious $'s and a great deal of frustration and on two occasions, negative feelings (on my part). My advice here is do yourself and everyone else a BIG favor and refer. On that subject: Sounds as though there may be a serious niche in your marketplace which needs to be filled . . . Bueller? Bueller? Anyone??????
Donne, excellent post. I am just going to comment on the opening paragraph for now.
"Choosing Your In-Laws, Brother's, Half sister's, cousin for your realtor is REALLY not a good idea if they are not ready, willing and able to serve your special real estate needs."
Choosing any Realtor who is not ready, willing and able to serve your special real estate needs, is a bad idea regardless of your relationship with them. But to exclude some one just because they are a family member or friend, is an equally bad decision.
Friends and family are a big part of my business, and have been a major source of my referrals.
Giggles... I have worked for my family, when I'm the best fit for marketing that property. But I don't offer my family advice when it's out of my area... I find them a good agent for a referral. I truly hate when a listing comes along and the listing agent is Aunt Martha from 125 miles away and we can't show it and she knows nothing about it and well... you know...
Donne - I have been that Realtor - never again!
Donne, you had me at the title - then you made such a great case as to why this wouldn't be a good idea in many instances.
Sharon
Donne I believe it is really important to get rid of dual agency. The agent may intend to be fair but only one client is paying the bill. Further it is better to have two sets of eyes reviewing all those important documents and contingencies. I'll take one example. I always have a clause in my contract that says seller will fix safety related matters as shown up by the inspection. The inspector separates them out. If I was a dual agent would I argue on the behalf of the buyer that it is a safety issue? Or do I argue on the behalf of the seller that it is not?
Meanwhile I am representing my son in his purchase but I referred him to you for the loan when I could have had one my agents sign off on it. Wanted someone else also watching out for him Talking of which you are doing an admirable job. Thanks.
Great post. I think you would agree that this rule extends to mortgage lenders. I can't tell you how many times, as an escrow officer, we saw astronomical origination fees, only to be told, "Oh the mortgage broker is his cousin, in-law, uncle, etc." Oh, that explains it. How I wished not to be the neutral third party in some of those deals!
Picking a relative or somebody as you have described is usually done in my experience under the context that the person has your best interests at heart because they are somehow related or some other combination but often the self interests is what trumps all.
I've been there, husband's 2nd cousin was buying a home. Most time-consuming, frustrating transaction I've ever worked on.
Donne, I agree with you 100%, but I also think there is pressure for family members to use their agent brother, sister, cousin, family member so they can receive a commission. Are they getting the best representation? Most times not, especially if they are out of area or lack experience.
BLiz - Exactly!!! Unfortunately, these friends or relatives are truly doing their clients as well as the real estate industry a grave disservice.
Laurie - Whether a Realtor/agent is a friend or relative, when buyers needs are not being met, they need to find another Realtor/agent.
Christine - I adore my little first timers! Most of them are the kindest, most gracious and appreciative people I have ever worked with, which is not something I can say about the million dollar buyers I have worked with. I will take three 300k buyers over a 1M buyer anyday. Those three 300k buyers are going to be so much nicer to work with and be so much more valuable to me and my business than that PITA 1M buyer. I speak from experience when I say that.
David - Couldn't agree more.
Debbie - Its despicable when Realtors/agents instruct their buyers to engage in this kind of behavior. Buyers don't know any better and think they are doing nothing wrong but the Realtors/agents engaging in this practice definitely know better.
Thx for stopping by everyone; I really appreciate it. Have a good night too. :)
Ken - LOL Yes, we have had numerous discussions on this and because we both know each others position, let's just agree to disagree. :)
Tish - We have dual agency here in Cali and just like I said to Ken above, let's just agree to disagree on that topic. As for working with friends and family, I would rather refer them out than to jeopardize the relationship over a paycheck. Not worth it to me.
George - I too get a lot of referrals from friends and family but I don't take on every one I get though. I have no problem turning down referrals even if they were from friends or family. The same goes for friends and family, I've turned them down too.
Tammy - Good for girlfriend! I can't believe that more Realtors/agents don't refer out buyers that they are not capable of serving. It is really easy and it's just bizarre that so many Realtors/agents refuse to refer.
Virginia - Better late than never. Good for you for learning your lesson.
Thx for stopping by folks; I really appreciate it. Have a good night too. :)
Donne, if only every buyer/seller could read this post BEFORE employing their In-Laws, Brother's, Half sister's, cousin for their realtor/agent! I'm bookmarking this post!
Sharon- I'm glad you liked the title. I actually borrowed it from Cynthia Larson. LOL I'm terrible at titles and I loved her title.
Maya - I couldn't agree with you more about dual agency. Not a fan of it and I think it is a disservice to buyers who are more often than not at risk of getting inferior service and you make a valid case for it.
As for our transaction with your kids (who are absolutely adorable btw), this post is in no way directed towards that. If anything, your service to the kids has been exemplary and above and beyond the call of duty. And don't think they don't know that too. Besides which, you're not out of area. When I say out of area, I'm referring to Realtors/agents who are not members of our local boards, which doesn't apply to you.
In the brief time that we have been getting to know each other, I know you would never, ever advise your clients to engage in dishonest and unethical behavior. That's just not you. You have always shown yourself to be very ethical and honest and I absolutely admire and respect that about you.
Sinead- I'm sure you've seen some pretty crazy things. I too have heard the crazy stories too of the dishonest and unethical MLO's too.
Eileen - I agree that the relationship generally starts out the the friend or relative is the best choice because they will look out for their friend or relative but as you pointed out self-interest generally wins out.
Thx for stopping by ladies; I really appreciate it. Have a good night too. :)
Raine - LOL Been there, done that! I can relate to your experience. This is why I no longer have any hard feelings about saying no to some friends or relatives. It's just not worth the paycheck to me to generate hard feelings over a troublesome transaction.
Pamela - I do not support my borrowers using out of area Realtors/agents regardless of who they are. Unfortunately though, because so many of my borrowers have such a hard time finding a local Realtor/agent who will work with them, they so often end up working with out of area Realtors/agents because of desperation.
Ed - In a perfect world, this would be great. But alas, the world is not perfect so we have to deal with what we get thrown at us.
Thx for stopping by folks; I really appreciate it. Have a good night too. :)
Great blog, Donne. Good points but we don't always know if our buyers are honest when the state they are not working with other agents. Yes, it happens more often than not that they "milk" you for all the information and then have their relative not only from out of town but out of state help them with the transaction.
It comes down to ethical behaviour for both real estate professionals and clients.
When I first stated selling real estate, members of my family thought that it was okay and that they were doing me a favor by calling the agent on the sign to show them a home and then once they found a house the like, then they would bring me in. They learned quick, fast and in a hurry that I wasn't going to participate. If nothing else, I'm principled.
It is more work to handle something with people that you know than with people that you don't....The wild card is perceived expectations......Friends and family are quick to point out and not forget when things don't go record smooth... I just finished a very difficult deal for friends and right before my success appeared, I got told and scolded...what are you doing about this?...What I always do was my answer.....Donne...good one...thanks
Donne, you have covered this topic very well. I can't imagine someone not wanting to work with a first time buyer. They give the best applause on the happiness meter when they find their house! And I don't do that 'use someone else to see the and I'll write the offer,' not only because I hate it when it is done to me, but it is just plain wrong.
I think the key to this is.... if they are not ready, willing and able to serve your special real estate needs
I represented my cousin who bought a condo in Honolulu (although not my area it's within driving distance ....Oahu is kinda small :) and it was a breeze...then again, my cousin and I are not anal ;0
You really hit the nail on the head with more reasons why someone should work with someone who is really in this business as well as being local. We can all sell anywhere but when it comes down to specialized knowledge and local expertise, you need an agent who can really do the job. That's only going to come from a local agent.
Just for the record, if I find out a prospect or client is working with another agent, I thank them for their interest but send them on their way. Poaching clients is really bad.
This ain't friends and family like ATT, it's bad news. Never works out.
Anja - "we don't always know if our buyers are honest when the state they are not working with other agents". Therein lies the whole crux of this issue. More times than not, those dishonest buyers have been coached by their Realtor/agent who is a friend or relative who is typically an out of area Realtor. There is another scenario that also applies and I'm going to make that Part 2 and should have it up on Friday.
Charita - Good for you! That actually doesn't surprise me about you.
Ritchie - It is true that some friends and relatives are horrible clients. I have on more than one occasion turned them down and with absolute relief too.
Sandi - One of the reasons that so many buyers actually find theirselves working with friends or relatives who out of area Realtors/agents is because they are having a really difficult time finding local Realtors/agents who are willing to spend the time working with them.
Being a Ventura county Realtor, you are well aware of the practice that so many Realtors/agents refuse to take the lower-end buyers. I'm sure you probably even know specific agents who have one maybe two sellers or buyers in say Mandolay Bay or Hollywood Beach or Silver Strand but will refuse to take a buyer or seller in El Rio. I'm sure a few names come to mind - I know they do for me.
Thx for stopping by folks; I really appreciate it. Have a good day too. :)
Sally - I'm sure HI real estate is sooo different than the mainland. I couldn't even begin to imagine what selling real estate there is like. If your scenario worked for you that's wonderful and it's so true that when buying a home these days, you really need to be able to roll with the punches. If you're the kind of person who gets all bent out of shape over every little thing, you will never make it to the closing table with your sanity intact. At least not around here you won't.
Bryan - I am a HUGE fan and promoter of using local Realtors/agents. Somedays, I can not simply stress that enough with my borrowers. On another note, I too do not engage in poaching. If someone calls me who is currently in escrow with another lender, I almost always advise them to try and work out their issues with their current MLO since they are most familiar with the transaction. If they come back to me later after their previous transaction fell apart, that's their prerogative.
As far as poaching among Realtors/agents, I am of the philosophy that if a buyers agent was doing their job and serving their buyers real estate needs, then listing agents wouldn't have the opportunity to poach them. This is a scenario I intend to address in another post - probably on Friday.
Morris - While I think that some friends and relatives are probably a joy to work with, there are others that are wrapped in red flags from the get-go. It's up to us to make those distinctions and run away from the red flags as fast as we can, or better yet, REFER THEM OUT!!!
Thx for stopping by folks; I really appreciate it. Have a good day everyone. :)
Every now and again I am surprised what some will do for a quick buck :). I really wouldn't have ever thought about working out of my area and then telling a client to lie. First, what a hassel. I can't rightly be a good advocate for anyone if I don't know the market. Secondly, it would make more sense to get a referral fee, family or friend.
How about your MLO? I would really love if you could put this article on my WP blog :)
Excellent post and kudos to you for calling out some of those more unscrupulous agents. I've been dealing with a few from group A and C lately and I'll tell you, it's no fun and a headache for all involved. I'm sure if we, as MLO's, sat down for coffee to discuss all these issues, it'd be a very long coffee break indeed!
Interesting post, and same with some responses. I believe Dual Agency is not in the best interests of the clients. I am negotiating a deal right now in that position. I explained to pros and cons to both sides before I engaged in the transactiion, but they wanted Dual. I prefer one side so I can dig in my heals and fight for one person's best interests. I had a conversation about just this topic with my Broker this morning. As for out of area or family, I prefer to refer both.
But all realtors are alike, right Donne? Just like all loan officers are equal in their skills and abilities.
:)
Brenda - For a long time, I was never surprised what some people around here would do for a paycheck. But just when I think I have heard and seen everything, something else will come along and shatter that illusion. The scenario I described here is probably a lot more common (at least around here) than a lot of people might think.
Renee - Same thing goes for MLO's and Cynthia Larson actually addressed that one in a rather amusing way. I've actually cleaned up some messes that MLO relatives or friends of some of my borrowers left my borrowers in. It's not a pretty sight when a relative or friend MLO messes up a transaction.
On another note, I did include this on your outside AR blog. How would I include it on your WP blog? Do I send it to you. I remember once before I logged in to add it to your WP blog. Is that the same? I'll call you.
Melba - Oh the war stories we could tell! Cali is a wacky place to work for an MLO these days to say the least.
Natalie - Not a fan of dual agency. I know that some Realtors/agents will argue that they have no conflict of interest with it but I have a slew of previous clients who will attest otherwise.
Erica - OY VEY!!! Thank God not all Realtors/agents or MLO's are alike. The country would be worse off than we are if there weren't really good ones to keep the industries going.
Thx for stopping by ladies; I really appreciate it. Have a good night too. :)
Not a fan of dual agency. My entire family is involved in real estate so we keep our distance but talk strategy when asked.
Donne - Having a Realtor help you just because they are your brother's sister's in-law's mother just doesn't make sense if it's not also because they are knowledeable.
Barb - My feelings about dual agency are based on 8.5yr of working with buyers some of who truly suffered for it. As I mentioned before, some Realtors/agents will argue that they have no conflict of interest in dual agency and maybe they don't. In the dual agency that my borrowers have been a part of they were cheated.
Christine - I agree that it doesn't matter what the relationship with your Realtor/agent is just as long as they know what they're doing and are committed to serving the buyers real estate needs.
Thx for stopping by ladies; I really appreciate it. Have a good night too. :)
I notice in particular that Sunday and Holiday Weekends you get the calls from Buyers who cannot reach their agent so they want to get anyone to do the job...an unpaid job, however.
Well deserved gold star as you struck comments dear to our hearts. I can't tell you the number of times I pose the question ... are you currently working with an agent (REALTOR)? I get a NO and then one magically surfaces to write the offer.
Have a great and safe Memorial Weekend!
While we're at it, let's have Uncle Fred the dentist remove our gall bladder. He is, after all, a doctor, and he'll give us a family discount.
Cheryl - I'm sure that holiday weekends are loaded with buyers roaming around without their Realtors/agents.
Connie - I can't even imagine how frustrating that is for listing agents. I feel for you folks - really I do.
JP - LMAO!!! Sure, why not. How bad could it be?
Thx for stopping by folks; I really appreciate it. Have a good night everyone and a wonderful holiday weekend too. :)