A common marketing ploy by Realtors^® is for them to tell home sellers that they are much more ethical than just licensed real estate agents who are not Realtors^®.  This is also a ploy to get all real estate agents to become Realtors^® so they can get more dues-paying suckers into their ranks.  Well, this just ain’t the case.  Just to clarify, it is possible to be a licensed real estate agent, which I am, without having to pay dues to become a Realtor^®.

The many Realtors^® I know are just like anyone else with all the virtues and fallibilities of any other human being.  In fact, I know a few Realtors^® who are just plain crooks despite being upheld to the supposedly higher standards of ethics that the Realtors^® Code of Ethics proclaims.  To emphasize my point, consider the cases of two different Realtors^® who listed properties for sale, one in Colorado and one in Florida, who failed to present valid offers to their own clients so that they could undercut those offers, themselves, and then flip the properties to the end buyers, who made the original offers that were supposed to be presented, for much more profit than their usual commission checks would give them.  The Realtor^® in Colorado did end up losing his real estate license but the one in Florida was allowed to keep his despite underhandedly keeping his client, a bank who took the property back in foreclosure, in the dark about a valid offer so he could flip it to the end buyer, himself.  This cost the bank an extra $12,000 and makes me wonder why that Realtor^® isn’t in prison for committing fraud.

I have syndication feeds that come in from a few blogs and saw one come across my computer screen that really put fiberglass in my undies.  In this blog post, the National Association Realtors^® (NAR) claims to have higher ethical standards but the blogger here, Matt Jones, has a more realistic view of their true conduct.  Truly, what a bunch of crap.  Let me illustrate this with a real-life example rather than just show you a steaming pile of caca on a plate. 

Back in 2008, a friend of mine, Kenmond Sanders, brought me a lead to buy a single-family house at 3351 Ravenwood Drive in Augusta, GA.  The seller needed cash fast.  I did some numbers and told Kenmond that I could only pay $65,000 for it but that I would put down all $65,000 as both earnest money as well as purchase price so if I walked away from the deal, I would forfeit the entire purchase price.  At the time, the house was listed for $125,000 by the Augusta, Georgia office of Blanchard and Calhoun Real Estate Company, one of the big real estate brokerages in the area.  My comps showed a value of about $124,000 to $141,000 at that time so getting it at $65,000 seemed like a good deal to me if the seller agreed.  Surprisingly, she did agree.

Once I got verbal agreement from the seller to buy her house for the $65,000, I made a site visit to the house to see what kind of repairs had to be made.  I was VERY surprised to see that repairs looked to be very minor, no more than $5000 (actual repairs after I purchased the house came out to about $4200).  As I walked through the house with the seller, I said to her, FOUR TIMES, “Your house is worth much more than $65,000.  Are you SURE you want to sell your house to me for such a low price?” to which she responded, EACH TIME, “Yes, it’s something that I HAVE to do”.  Apparently, she had one contract on the house fall through already and needed money like we all need oxygen.

The Realtor^® who listed the house was unable to be at the meeting with the seller and me, and told the seller by phone that she was making this decision without his guidance, blah, blah, blah, and other disclosures.  In fact, this Realtor^® almost killed this deal between me and the seller by initially insisting that I wait around for two more hours until he could get off of work (his full-time job that’s not in real estate) which is something that I couldn’t do because of my own schedule.  The seller told him that she understood she was signing our purchase and sale contract without his “guidance” and still wanted to sell the house to me.  I then got on the phone with the Realtor^® and told him that I would drop off a copy of the contract at his office and have $65,000 wired to Reimer Law Firm, the only law firm in Georgia that I would trust to hold my $65,000 earnest money since I fully trust the owners, Bob and Sue, and they are excellent attorneys.

When I went to Blanchard and Calhoun’s office to drop off a copy of the purchase and sale contract, I asked one of the Realtors^® there where I should leave the papers.  She looked at the contract and asked where the listing Realtor^® was and if I was co-brokering the deal.  I told her that I was the buyer and, in the spirit of full disclosure, that I am a licensed real estate agent in South Carolina but not a Realtor^®, to which she replied, “Oh, that’s scary” and the broker-in-charge gave me the hairy eye after reading the contract and while watching me leave the office.

I guess it “scared” this Blanchard and Calhoun agent that I was not a Realtor^®.  But let me continue and let you, dear reader, decide what is more scary, a real estate agent who has put 100% skin into a deal up front for a can’t-lose situation for the seller, or some dufus Realtors^® who have no risk involved and who will get paid a risk-free commission at closing.

I had the necessary funds wired to Reimer Law Firm and figured all was well.  While I’m working on some other deals and doing my thing, about a week later I get a call from the listing Realtor^® of the 3351 Ravenwood Drive house.  He tells me that his broker-in-charge says that I have to put my $65,000 into THEIR escrow account and not the attorney’s.  Now I may be dumb but I ain’t stupid.  I know other investors who got burned when some idiot escrow agent released their funds to a seller prematurely and they not only lost the deal but also their earnest money, so no way was I gonna trust some Realtors^®-by-day/pizza-delivery-personnel-by-night to hold on to my $65,000.  I called the Georgia Real Estate Commission to ask if I HAD to put my money with Blanchard and Calhoun as they told me.  The lady I spoke with at the Commission actually got angry and said that I did the right thing by having an attorney hold my money.  She added that it was outrageous that Blanchard and Calhoun would even try to get hold of that amount of money from a buyer they didn’t even represent.  I called back the listing Realtor^® and told him, “No dice, sport.  You guys ain’t gettin’ my money.  If your broker-in-charge has a problem with that, have him call me and I’ll set him straight.”  I never got a call from that broker-in-charge.

Anyway, the deal closed, I put in about $4200 in repairs, sold the house for $117,000 and split the profit with my friend, Kenmond.  Seller was happy, my end buyer was happy, Kenmond was happy, and I was happy.  Look, I know this is a long-winded story to illustrate a point but I hope it gets the point across.  Don’t believe the hype, especially when money is involved.  Verify as much as you can before ever deciding on a Realtor^®, real estate agent, or investor to work with.  As much of a rant as this post has been about Realtors^® who claim that their “code of ethics” makes them much more trustworthy, I caution you to test ANYONE who is somehow involved with anything involving your time, money, or reputation.  There is a saying that really applies to all of us: “Behavior Never Lies” – Robyn Thompson.

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