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There are more shady and scuzzy mortgage brokers than there are shady and scuzy Realtors.  This is a fact.  There are a lot of reasons why–while it’s easy to get your real estate license, it’s dead simple to get your license to originate loans.  And, the path to money is more quick because of Internet lead pusbuckets, trigger leads, and the fact that EVERY home is in play and it’s easier to refinance than it is to move.

But in most states, Realtors have a moral duty as clients/not customers.  The duty-to-customer presumes fair and honest, and fair and honest is a low standard.  The duty one has to a client implies some type of fiduciary responsibility.  That’s a hard standard to judge, but acting in the ‘clients stated best interest’ is generally the key.  When a realtor does it, it’s the worst thing.

That said, the standards in both industries are tediously low–and I’ve come to expect incompetence from the industry.

So…I’m shocked when the Realtor says…

“You’re not gonna tell the buyer, right?”

I’m still a little naive or pollyannaish.  I still think people are out to do good.  The situation was simple: a first time home buyer with no pot to piss in was buying a home.  The appraiser said the value was OK, but he had to mark the area as declining.  I trust my appraiser, and he’s not generally going to put the “declining” tag on a neighborhood unless it really is.  This guy was buying a home at 106,000, it was probably presently worth $115k, but it had formerly sold for $139,000.  It was in a new build subdivision where everyone had used 6pt financing + 2-1 buydowns a few years ago.  Most of the transfers were done at the courthouse steps.

So, while the value was fine, it was declining.

I called the Realtors to appraise them of the situation.  Nothing I can do about it, but the realtor Representing Soley the Best Interests of the Buyer…said, “What kind of appraiser did use–why did he have to tag it declining?”

“Because it is.”

“But he didn’t have to mention that.”

“Um…yeah, he did, he’s got some professional obligations.”

“Chris, tell you what, why not use my guy.”

“Because the buyer’s have to know.”

“You’re not going to tell them, are you?”

So I knew at this second, the instant that I hung up, he’d be calling the buyer to spin the Declining tag.  This was a few months ago, before lenders had switched to curbing declining markets at 5% lower LTVs, so the buyer wouldn’t be impacted.  He was also safe because this property was trading towards the absolute bottom of acceptable housing prices in Columbus.  Still, he had a right to know.  And I was so disgusted by the Realtor.

So with my cell phone, with the Bad Agent still on the phone, I called the client.  This particular client had been in contract with a new build, the deal fell through, and he found an agent on his own, rejecting my referrals.  I didn’t have a relationship with him.

I make the call, hang up with the Used House Salesman.

Briefly explain declining markets, say that it appraised OK, and that we’re going to have to take another 2 days to close because we have to switch MI companies, and this was reasonably routine.

The buyer was cool, had some knowledge of the market, and was unsurprised by what I’d said, and was fine with going on with the transaction.  The Realtor, however lied when he didn’t need to, impugned my character…assumed the buyer would walk away when armed with this information…and left frantic messages while we were talking.  This Realtor had only done 14 transactions, as per MLS records. 

Made the buyer uncomfortable with the presumption that the Buer would not closed if armed with knowledge. 

The deal closed, everything worked out, but it’s so depressing to see professionals still trying to screw their clients over.