Diane M. Ramirez
Chief Executive Officer
Stephen G. Kliegerman
President of Development Marketing
Photo Caption: SOMETIMES, AN UNEASY PROCESS Jill Sloane of Halstead Property is Renée Mizrahi’s third broker. [Photographer: Michelle V. Agins/The New York Times]
By VIVIAN S. TOY
RENÉE MIZRAHI suspects that the first real estate agent she worked with deliberately didn’t tell her that a building was only 49 percent owner-occupied.
Her bank subsequently refused to give her a mortgage, and she lost the apartment.
Her second broker was worse. He stood her up at an apartment showing, she said, and he lied about the building’s financial requirements and about having put in her bid for the co-op. Then when she told him that she didn’t want to work with him anymore, he kept calling her — she has caller ID — and hanging up without leaving a message. “So he was like stalking me,” Ms. Mizrahi said. “What a nightmare!”
She is now working with a broker, referred by a friend, with whom she feels comfortable, but her bad broker experiences have nonetheless made her wonder if any broker can really be trusted. “I just want to work with someone who shows up when they say they will and who will tell me the information I need,” she said. “Why is this so hard?”
Ms. Mizrahi is not alone in her hard-earned broker wariness.
A Harris poll conducted last year that ranked occupations in terms of prestige placed real estate brokers at the very bottom of a list of 23 professions.
(Firefighters and doctors were at the top.)
Brokers themselves seem well aware that their business isn’t always held in very high regard. The National Association of Realtors has an advertising campaign called “Someone You Can Trust,” which stresses that Realtors are subject to mandatory ethics training. “Not many professionals can claim that on their résumé,” the ads read.
Svetlana Choi, a senior sales associate at Bellmarc Realty, estimated that at least a quarter of her clients are skeptical when they first come to her.
“I just try to draw them out and relate to them in a way that lets them know that I’m not the enemy,” she said. “I’m not trying to snow them. I’m really just trying to be helpful.”
So why do people often have trouble trusting a broker?
To start with, brokers are salespeople, so buyers with suspicious minds would naturally suspect brokers of trying to sell them something they don’t necessarily want or need. But brokers also admit that some real estate agents help to perpetuate stereotypes with classic bait-and-switch schemes and by putting their own desires to close a deal over a client’s best interests. The fact that brokers themselves sometimes find it hard to trust one another only compounds the level of suspicion in real estate.
There are two major sources of broker-to-broker mistrust. The first is the fear that one broker may be trying to poach another’s client. The second is that a seller’s broker may be deliberately avoiding phone calls or refusing to submit an offer because he or she wants to avoid having to share the commission. The cynicism may well stem from the fiercely competitive marketplace and the fact that there are more than 28,700 brokers and sales agents in Manhattan alone and 66,700 in all five boroughs.
Erik Serras, a sales agent at Pari Passu Realty in Manhattan, said another agent recently stood outside an open house that Mr. Serras was holding just to hand out his business card. “It was the equivalent of ambulance chasing, and it sheds a negative light on the industry on the whole,” he said. “There are just too many untrained agents out there doing things that are unethical and unprofessional, and once a client is exposed to that, the damage is done because it’s easy for people to generalize.”
Ann Rothman, a Bellmarc agent, said that some people were quick to judge brokers because they “just have a queasy feeling about real estate.” She added that she sometimes finds herself saying, “I do real estate, so yes, I sell used cars, and people are going to think the speedometer has been changed.”
But Ms. Rothman tries to be philosophical about it. “Any person in a service business is going to be up against that,” she said. “Even if you go to a doctor or a dentist, there are going to be people who think they’re only doing a procedure because they have their kid’s college education or a trip to finance.”
When she comes across skeptical clients, Ms. Rothman said, “I’ll bring it up, and I’ll say, ‘What’s the problem here?’ ” That seems to work, she added, citing as proof an entire family of doubting buyers. “They all have a distrust gene,” she said, “but they keep referring other family members to me.”
Another instance when a broker might appear to be evasive is at an open house. When brokers hold open houses, they represent the sellers, but they also routinely use the events as an opportunity to pick up other clients. So if a potential buyer walks in and doesn’t seem right for that particular apartment, the broker can offer to help the buyer find something else. But under the unwritten rules of the game, the broker does not have to disclose whether there are any other open houses in the same building, particularly if the events are being held by competing firms.
These kinds of situations can easily lead to mistrust on the part of sellers and buyers alike.
Managers at real estate agencies say that the only way to minimize misunderstandings is to train new agents to be highly professional and to establish and enforce industry standards. To that end, the Real Estate Board of New York has established a list of 17 resolutions aimed at addressing ethical questions in residential real estate.
The resolutions cover issues as basic as the definition of an “exclusive” and the need to have backup brokers available when the exclusive broker is not available. They also try to cut down on typical broker squabbles by declaring it improper to foist a business card on someone else’s client and asserting that brokers should give co-brokers and their customers at least 20 minutes’ grace time if they’re late for an appointment.
Diane Ramirez, the president of Halstead Property and a governor of the real estate board, said, “Some of these things may seem silly, but it creates a framework of proper decorum.”
The board and its policies have evolved to make it clearer that “we are an industry that works for our sellers and buyers, and that should be our primary goal,” Ms. Ramirez said. “That’s the only way to dispel the distrust that comes in, not because it’s earned but because of what our reputation may have been.”
The real estate board also has an ethics committee that handles complaints filed by brokers against other brokers. Stephen Kliegerman, Halstead’s executive director for development marketing and a former chairman of the ethics committee, said the committee handles only a handful of cases each year, but he added that most complaints do not get to the board because agency managers tend to resolve complaints among themselves.
One of the biggest current complaints involves brokers who post listings on their Web sites for the exclusive properties of other brokers. “They’ll advertise a property they don’t represent, or sometimes the property doesn’t even exist,” Mr. Kliegerman said. “So when the buyer calls, it’s a bait-and-switch — the broker knows nothing about the property and winds up trying to take them to something completely different.”
He said the ethics committee is developing a new resolution to deal with the problem. “This kind of thing happens daily, and it taints the consumer’s impression of the entire broker community,” he said.
Consumers can file complaints about real estate agents with the Department of State in New York, the Real Estate Commission in New Jersey and the Department of Consumer Protection in Connecticut.
The New York Department of State can punish agents for infractions ranging from practicing without a license to a catchall category labeled “untrustworthiness and incompetency.” The latter can include things like lying about the school district for a particular address or misleading a buyer about future development in the area.
If the number of complaints filed in New York in recent years is any indication, brokers may actually be becoming more trustworthy. From 2001 to 2005, the last year with complete statistics, the annual number of complaints declined from 1,589 to 1,176.
The complaint category that showed the sharpest drop and that accounts for most of the decline was in “agency disclosure,” indicating that real estate agents have gotten better at disclosing whether they are a seller’s broker or buyer’s broker and what that means in terms of where their loyalty lies.
Of the completed cases from 2005, 109 real estate agents were fined, 3 had their licenses suspended, and 14 had their licenses revoked. Fines can run as high as $1,000, and suspension periods are determined on a case-by-case basis.
But most ethical breaches probably never reach either the real estate board or the Department of State. Ms. Rothman of Bellmarc recalled a case in which she represented a buyer who made an all-cash, full-price offer on an apartment, only to have the seller’s agent stall and falsely claim that the sellers wanted time to consider the offer.
“I later found out that he was waiting for a customer of his own to make an offer and he never even told the sellers about my offer,” she said. She filed a complaint with the other agent’s manager, and her buyers eventually got the apartment.
When training new agents, larger real estate companies stress the need for proper broker etiquette, both with clients and with other brokers.
Vasco Da Silva, the director of sales at Halstead’s Riverdale office, says Halstead’s broker boot camp tells agents when they should keep their business cards in their pockets, advises them to turn off cellphones while showing an apartment and instructs them never to talk about an apartment inside an elevator if there are other people around.
“We go through a logical step-by-step process, and it’s all about winning a customer’s loyalty and trust,” he said. “You don’t get it with your first meeting, so what you have to do is win your customers over with service and with confidence in your ability.”
In its training, Bellmarc urges new agents to be as straightforward as possible and to avoid pushing an apartment on a reluctant customer. “If someone doesn’t want an apartment, you don’t want to try to talk them into it,” said Janice Silver, an executive vice president at Bellmarc. “You can’t say, ‘But it’s fabulous — here’s why you should buy it.’ ”
Instead, she trains agents to ask simple questions like: Do you like this apartment? Can you see yourself living here? Do you want to buy this?
“Don’t be pushy, but be very direct,” she said. “Because if they don’t like the apartment, you should move on and not waste everybody’s time.”
Some brokers say their colleagues should not try to hide a property’s blemishes. Jill Sloane, a senior vice president at Halstead who is Ms. Mizrahi’s new broker, said she once represented a seller whose apartment came with a 33 percent flip tax, and she made a point of including that in her advertising materials.
“There was no point in hiding something like that because buyers would eventually find out about it anyway,” she said. “It’s just not worth the damage it would do to your reputation to be deceptive.”
Patricia Warburg Cliff, a senior vice president of the Corcoran Group, agreed. “If I know that there’s a bus that idles under the living room window, I have to get it out first thing,” she said. “Because if a buyer finds out about it midway into a transaction, you have egg all over your face, and the seller isn’t served because they’re not out to swindle someone.”
Sometimes, even when a transaction provides a happy ending for everyone, a buyer can still be left with lingering doubts about the broker and his or her motives.
Take Rob and Lauren Mank, who are now happily living in an Upper West Side apartment they bought last year. Mr. Mank said they had no qualms about their agent, a buyers’ broker, until final negotiations, when she pushed them to offer the full asking price, which would have meant raising their bid by $45,000. They ultimately went up by $35,000 and got the apartment because two competing buyers did not raise their bids.
“I felt like it was very high pressure and her loyalty to us was compromised by her desire to do the deal,” he said. “It left us with a bad taste.”
But Ms. Mank said she didn’t believe there was any malice involved and noted that without a crystal ball, there is no way of knowing if they could have gotten the apartment for less.
“Maybe you’re always going to want to blame someone for some infraction because you’re always going to feel taken advantage of in some way,” she said. “It’s a delicate and intimate situation because it’s your home and it’s your finances — the whole thing is just so fraught.”
Copyright 2007 The New York Times Company
Sunday, January 28, 2007