Home Buying in Old Palo Alto>Question Details

Kathy Lee, Home Buyer in Palo Alto, CA

Our Real agent deceived us!:(

Asked by Kathy Lee, Palo Alto, CA Tue Mar 18, 2008

Hi,

Our real agent deceived us- she told us that she is going to return 1.5% of his commission(from total 3%), since she didn't help us finding the house.

Now she is disappeared and doesn't answer our phone calls- Last week she sent us an email saying " I only took 1% of the commission and I can not return back any money to you".

We contacted the seller agent and she mentioned they have paid full 3% to our agent!!!

Our mistake was we didn't ask her to sign any paper since she was very friendly and looked very honest and we just trusted her verbally.

What should we do at this point? It is a very frustrating because she even told us not to worry and put a higher offer on the house (10000$ more) since she is going to return 10000$ which was more than what we could afford.

really appreciate any recommendation.

Kathy Lee

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Answers

22
Lance Holtman’s answer
Hello Kathy,

I don't have good news for you...
Rebates are not in-and-of themselves illegal but if it was not approved by the lender's underwriter at the time your loan was approved and then listed on the HUD-I Settlement Statement, any money passed back to the buyer at or after closing is loan fraud. It is fraud because all of the condition of the transaction must be approved as fitting within the boundaries of the loan program and all monies trading hands must be on the HUD.
4 votes Thank Flag Link Tue Mar 18, 2008
So sorry Kathy.......usually when an agent will credit a buyer some commission, it must be written on the Purchase contract and all parties must agree - Seller, Listing Agent, Buyer, Buyers Agent and Lender. You agents broker must also agree and it must be in writing. Since it's against respa to give commission (cash) to a non licensed person, I don't think you can ever get that money from the agent. Any rebate has to be in the form of a credit towards closing costs or something like that during escrow. Good luck.
4 votes Thank Flag Link Tue Mar 18, 2008
Hi Kathy,

In online world, reputation is everything. You should consider posting a negative review on both the realtor and the realty house in http://www.yelp.com or similar services.

Also please inform us who is the realtor so we may avoid her. With this in mind, you could also purchase a domain name such as http://www.'realtor's name'.com and include your experience. This way whenever some performs a search on this person, this domain is sure to come up.

Zeke
1 vote Thank Flag Link Sat Apr 12, 2008
In addition to my answer before, I'd like to comment on an article I read recently regarding Realtor Rebates. The IRS is beginning to scrutinize these transactions. These arrangements have popped up in recent years and there were no clear rules. Because the rebates usually get passed around in the escrow procedure, nobody is paying taxes on it. When the listing agent pays the Buyers Agent a commission, then the Buyer's agent gives it to her Buyer. It is unclear whether the Buyers Agent or the Buyer may be subject to paying income taxes on the money. There are many other ways to give my clients a good deal without subjecting them (or myself) to scrutiny from the IRS. "Don't mess with the IRS".
1 vote Thank Flag Link Sun Mar 30, 2008
Let's stop with this thread, it's FIVE YEARS OLD!
0 votes Thank Flag Link Mon Sep 16, 2013
This sounds odd. Did she credit anything to you in escrow?

While it sounds strange, both the seller agent and your agent could both be telling the truth. The seller agent's broker may have paid 3% to the buyer agent's broker, but it's quite likely the buyer agent (if she's new) only did receive about 1% to her.

New agents typically pay about half of the commission to the broker-as in 50%. That would leave her with 1.5%. If she credited you some money in escrow, or if she paid taxes upon receiving that money, she may only have gotten a net of 1%.

I pay my broker 30%, and of course, agents like me have to pay their own taxes and that's usually about another 25%. So $36K the agent gets on paper may only be $16K net to the agent.

You'd actually be getting paid MORE MONEY than the agent if she agreed to give you $10K in that scenario. That hardly seems fair either.

If she is a new agent she may not even have realized how some of this worked, including RESPA and credits for closing costs to buyers. However, there are ways to resolve this issue with the agent.

If you have no luck contacting her, do contact the broker. If the broker is a franchise, you can contact the franchise management. You can also contact the local Santa Clara Count Assoc. of REALTORS(R) or Silicon Valley Association of REALTORS(R), or California Association of REALTORS(R).

Best of luck resolving this.
0 votes Thank Flag Link Sun Sep 15, 2013
I would contact the California state real estate commission and file a formal complaint.
Here's the web link: http://www.bre.ca.gov/Consumers/

I would also suggest you learn something form this experience namely you get what you pay for: There's only one reason in the world Realtors offer to share their income with their clients: they honestly have nothing else to offer. They lack experience, can't make it on their own and in your case lack ethics. Professional experienced agents never offer to share their commissions and the reason is simple they don't have to. What other professions do you know that offer to share their income with you. Would you hire a doctor who offered you a rebate if you allowed them to perform surgery on you. How about a discount lawyer to defend you in court.

Consumers need to wise up and realize that you almost always get exactly what you pay for and Buyers rarely if ever pay the real estate commission, this is a seller expense.
0 votes Thank Flag Link Sun Sep 15, 2013
Find her house, burgle it, set fire to it, then sell all the stuff on ebay. quick and easy.
0 votes Thank Flag Link Sun Sep 15, 2013
Kathy - I am sorry to hear about your story. I have been in the real estate business for 30 years and my most important asset is the reputation for honesty and integrity I have established over this time. I agree with the other respondents - about contacting the agent's broker. If you even have an email confirming the conversation about the "rebate"; that would go a long way to helping you recover what is due you. The agent you were involved with is very short-sighted. Over the next few years, you may have well referred several friends and associates to this agent. But now, when you hear this name or someone asks about this agent; you can only tell the truth which will probably eliminate this agent from further consideration.
0 votes Thank Flag Link Tue Apr 15, 2008
get it in writing
learning is painful
you learned some stuff

anyways

good luck
0 votes Thank Flag Link Mon Mar 31, 2008
Try using Honey to get the Bee to come back!

More than likely, the agent has only been in the business for a short time and probably is flat broke. Thankfully alot of agents like that have not lasted as long, but soon many of those pretenders will be completely out of real estate sales. However, to error is human and to forgive is to be devine.

what i would do, is call the agent, and be very calm and relaxed and sympathetic. No one likes being in that situation ever and where the problem really lies is the breakdown in communication not the money. Becasue if the agent would have explained the situation they were in and worked out a plan to get you the money or at least a plan then more than likely you would have gotten something rather than northing.

Attempt to re-establish some common ground and demand a payment as a sign of good faith.. if you do get a payment you know have evidence of a referral to be paid to you... if they flake again,.. you can always to write a complaint to their local board of realtors..

If the $10K more you spent made it unaffordable...then you probably spent $50K over your comfort zone...

More than likely if you approah this agent and not attack him, they will cough it up.
0 votes Thank Flag Link Sun Mar 30, 2008
Any consumer can check the CA Dept of Real Estate at http://www2.dre.ca.gov/PublicASP/pplinfo.asp to verify license info on real estate agents. This will also tell consumers who the agent's broker is. I also recommend double-checking your closing statement (HUD-1) that you received from the escrow/title company. It should say "FINAL" and "SETTLEMENT STATEMENT". This shows both sides (buyer and seller) exactly where all the money went.
0 votes Thank Flag Link Sun Mar 30, 2008
Please tell us who the Agent is and broker so we consumers can avoid them.

Thanks,
Nael
0 votes Thank Flag Link Tue Mar 25, 2008
Kathy Lee, if you encountered fraud, you need to contact your Dept. of State to report it- I'm sure they'll direct you to the right person. The Realtor "code of ethics" is only as good (or bad) as the participants. A slap on the wrist from a local or state real estate association isn't the answer for fraud (which this appears to be). Good luck.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Tue Mar 25, 2008
Kathy,

Sorry to hear about this. I was in more or less similar situation few years back. My realtor was reluctant to sign any paper for the money back. I made sure that she signed all legal paper work including stating that this money back will be as part of the escrow closing, before all contigencies were removed.

It is best way to take money back in escrow - comes as a realtor credit. It has less implications and little to no chance of cheating to buyer/seller.

Is she/he independent agent or working for a firm? You may contact firm and she will be forced to respond.
0 votes Thank Flag Link Tue Mar 25, 2008
In California Commission Rebates are not illegal. It is legal to pay a referral fee to someone who introduced the client to the agent (provided no other services are performed), and the agent can share their commission with the client (I have reviewed this information on RESPA). What can not be done is that the buyer receive funds from the Seller without disclosing that on the HUD statement. However the Lender/Broker can not give rebates.

Yes, everything in real estate should be in writting to be enforceable. But with that said, the Broker has a duty to oversee his agents and this needs to brought to the Broker's attention. The Broker is the one who actually receives the commission and it is then disbursed to the Agent.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Sat Mar 22, 2008
Kathy....

Your situation does not feel lika a pleasant one. Please call the broker and discuss the situation to get a resolve. You may also consider a mediation if that does't work.
0 votes Thank Flag Link Tue Mar 18, 2008
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
Kathy, I am so sorry for your troubles! I would give the agent the opportunity to explain and I would notify her that I plan to speak to her broker, contact the realtor association in the area and contact the Department of Real Estate. But, do allow her to explain why she is not keeping her word.

We are held to a code of ethics and most of us take it very seriously!
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Tue Mar 18, 2008
Reputation is very important in any business. If someone is dishonest, you should give them an opportunity to fix the problem, otherwise let everyone know your awful experience so that it may not happen to another person.

Contacting the broker, real estate board are all good options. You may want to add a negative review to some agent review sites out there too. All in all, without a contract, it'll be tough, but reputation is everything, especially in our business.

There's also a consumer mediation complaint department at Santa Clara County affiliated with the District Attorney. They help protect consumer's rights and give you options. That might be a good direction to go too.

Ping me and I can give you their contact information.
0 votes Thank Flag Link Tue Mar 18, 2008
Kathy Lee, I am so sorry to hear of your troubles! I am with Deborah on this. Honoring your word is very important. Erk! This frustrates me when agents do stuff like this because it makes all of the good agents look bad too.

Anyway. I may be wrong here, but I didn't think that a buyers agent could give money back. However, I am not an attorney, but you might want to check with a real estate attorney. Although you could be headed up an uphill battle since you have nothing in writing other than the e-mail that says your agent only took 1%. I always think it is better to have too much in writing than not enough.

Talking to your agents broker would surely be the first step I would take. After that you might even file a complaint with the local real estate board and maybe even the state. Then they will have to look into it. However, I am not sure how far you will get with nothing in writing. I am so sorry.

I hope this information helps! Best Wishes!
Web Reference: http://www.gomelinda.com/
0 votes Thank Flag Link Tue Mar 18, 2008
I am not a big fan of rebates.....but I am a big fan of "honoring your word"...

Contact the broker of the office and explain the situation. The broker will know what was paid to the brokerage firm (all chks go to the broker first, and the broker pays the agent).

Best of luck
0 votes Thank Flag Link Tue Mar 18, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Contact agent's broker? file a complaint with the local realtor group (if the ganet was a realtor) However, without a written agreement you really have nothign unless the other party admits that whatever it is you claim is true. If your ex agent claims she never said anything like that, well, it's your word against hers so you aren't likely to get far.

Also, unless your agent was an owner broker, she has to pay a portion of that commission to her broker (ranging 10-50% of the comission she gets) So, it could be that she thought she would be able to give you 1.5% back, but her broker didn't agree with it, obviously she's not going to give you her own 1.5% since that's all she got.

Who knows really, you should try to talk to her, and contact her broker and explain your situation.
0 votes Thank Flag Link Tue Mar 18, 2008
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