Broker from Hell and my first deal! (long) - Posted by Nicole_AZ

Posted by Nicole_AZ on February 17, 2000 at 11:40:38:

We had decided not to initial on the changes in the contract. The escrow agent knew the docs had been changed. We weighed the option of avoiding closing till the possession issue had been settled and the likelyhood that any damage should occur to the property. We decided to gamble on there not being any damage, feeling that 10K was a lot to keep tied up in escrow, (and this had actually been released to the seller already). My beef was more with the broker than the seller. I felt the seller would not do any damage to the property. If damage were to occur, I felt I had enough documentation to take the thing to court. I did not want to stir the hornets nest any more than it was if it wouldn’t be necessary.

I have also been burned before on possession. The house that I bought for my personal residence had the same issue. That time I had granted, willingly, the additional 2 days and the seller tried to take 4. The cops were called to the house and we ended up agreeing on an extra 24 hours. She then stole all the light bulbs, curtains and drapes, medicine cabinet shelves and some full length wall mirrors.

I took the chance that it wouldn’t happen again. Thankfully that was a bet I won. This time.

Broker from Hell and my first deal! (long) - Posted by Nicole_AZ

Posted by Nicole_AZ on February 16, 2000 at 17:57:25:

Ok, let me start by saying that I accept there are good and bad types for every profession out there. I just happened to have run across the worst “professional” in real estate imaginable. At least that is my opinion.

Second, let me say that this was the first property I purchased for investment purposes and I made a lot of mistakes that I have learned some valuable lessons from.

This story will be long enough, so in the interest of time and space, I have left out a few of the other issues. On with the story.

I ran across an add in the paper back in late October/early Nov. The property was advertised as 20K below market value so I decided to call on it. I was given the price of $179,900 so I decided to check it out. The house was immaculate. There were no repairs necessary at all.

I had the broker run some comps for me and my estimate came in that it was much closer to 30K below market for the area. I contacted my investment partner to take a look. While we were there, the broker then informed me that the property would be listed in the MLS the next day for 209K and that it was a steal at 189K. I said, “Wait a minute, you told me 179K, I even wrote that down.” She said she would never have said that and proceeded to announce to all present that I had screwed up and the price was actually 189K. First lesson; When the broker/seller is misleading right off the bat, run!

Well, my partner and I talked about it and felt we could do a quick flip for retail at 179K. So this is what I told the broker. She said she didn’t think the seller would accept but she would talk to him.

The next day, I received a call that the seller would accept 179K, (gee, without hesitation), but since it was an investment deal, he would want 10K deposit. I knew that was very high but my partner agreed to go for it (it was his money, not mine). Second lesson; 10K is WAAAAYYYYY to much for a deposit no matter what the circumstances.

The seller countered that he wanted close of escrow plus two days to turn over possession. I have run into problems with this before and refused to accept this. The seller agreed to having loan docs to the title company one week prior to close and this was added to the contract. (this will be revisited later).

A qualification letter was required within one week. Here is another of my errors. I did not follow up with the loan officer to verify that this had been done. Next thing I know, I am getting a letter that I am in breach of contract and had better wave all further contingencies and sign over the 10K to the seller or the contract was to be null and void. I contacted the loan officer and she said that brokers very rarely require this and ususally call her directly if they do want it and haven’t received it. She sent it immediately. This was not good enough though because it stated it was contingent upon the appraisal for which the broker couldn’t seem to coordinate with the appraiser for access.

They continued to demand we release all contingencies and escrow. We refused until she informed us that they had a back up offer on the house and, according to an addendum that we signed, they were entitled to entertain all offers and we would have first right of refusal only if we waved all contingencies. Here we go again. So, we waved. We knew there would be no issue getting the loan, the appraisal had finally come back and everything was kosher.

At this time, I am feeling ok. I assumed my troubles were over. Boy was I wrong. I was showing the property on the weekend before we closed. The seller then informs me that the moving company would be there on the following Saturday and they should be done by Sunday. I, as politely as I could, mentioned that we were closing on Friday and that was when we were supposed to have possession. He contacted his agent. They both said they would fax me the information proving that it was +2 days. I said if I signed it, I would agree to it. After having to call twice for the information, the broker sent me a letter she had written and signed (no sellers or buyers signatures) stating they would require 2 extra days. I was furious. Broker and I got into the debate as to the validity of this before she hung up on me.

What could I do at that point? We realized that, even though we had legal right to possession, we would not get it no matter what. So we proceeded to the title company to sign the closing docs.

This is when I discovered that the broker had altered the contract that we faxed to her. She had changed the possesion date after we had signed to reflect +2 days. The title company was well aware of this and wanted us to sign off on that. We refused but still proceeded with closing. I was finally able to obtain the keys yesterday. Luckily, the house was not destroyed.

Now on to getting it sold!

I learned one really big thing about myself. If I can make it through all that and still want to invest in real estate, I can make it in this business!

Thanks for letting me vent. See you all in Atlanta!

Nicole Macarle

PS; and some of you thought yours was long!

Re: Broker from Hell and my first deal! (long) - Posted by Sabrina

Posted by Sabrina on February 23, 2000 at 01:56:43:

I truly sympathize what you have gone through. I just want to let you know that some of us (agents), have to deal with agents like the one you discribed and it makes our job very stressful and difficult. I work very hard for my clients and I want to stress the statement “work for my clients”. We are only messengers for our clients. I can only suggest that the next time you “employ” an agent to represent you, that you make sure the agent knows you are in the driver’s seat and will not give up the steering wheel (control). What this agent/broker did was totally unethical. Unfortunately, I have experienced similar situations where the Department of Real Estate takes the “chicken” way out by using the excuse that it is only a result of miscommunication. Good luck with your future real estate transaction and chalk that one up as a chapter in our life time of educational experiences. That is what I do now. :slight_smile:

Re: Broker from Hell and my first deal! (long) - Posted by Rick W.

Posted by Rick W. on February 18, 2000 at 04:52:58:

How many other businesses can you make mistakes like Nicole did and still realize a profit? If she sells it quickly, her profit will improve, and if she can sell it without the assistance (or disadvantage in my book) of a Realtor, she even comes out better. Is this a great business or what?!

Re: Broker from Hell and my first deal! (long) - Posted by Bill K. - FL

Posted by Bill K. - FL on February 17, 2000 at 12:23:53:

Hi Nicole,
I strongly believe in following Corey’s advice and report the broker to the RE comm. in your state for altering the contract. They will investigate it and you might get some satifaction for what you went thru. I have never heard or even thought of releasing an escrow deposit to the seller before closing. I would never go along with that. The occupancy issue is a little more tricky as I have seen situations where the closing didn’t take place and the seller is moved out with no $. Also from the seller point of view once they are moved out they have little leverage for the shenanigans (different figures etc.) that can occur at the closing. But actually I am more concerned about your “deal”. If you say the current market value is 209K and the place is immaculate suggesting there is no upgrade potential, have you sat down and actually figured what you and your partner are going to net? I would assume your buying and financing costs = 10K + up to 6 months holding costs of 8K + selling costs of 5K (not including a RE commission)= 23K.
209K-179K-23K=7K/2=$3500?

One question… - Posted by Mark (SDCA)

Posted by Mark (SDCA) on February 17, 2000 at 11:41:56:

You used the word “broker” in your post. Was it actually the broker you were working with or was it an agent? If it was an agent, report it to his/her broker…

Mark

Re: Broker from Hell and my first deal! (long) - Posted by L Kreidler

Posted by L Kreidler on February 17, 2000 at 06:10:45:

I don’t see this as being such a big problem! I will usually use a system that I purchased from a guru called
"How to work around the Broker from Hell" Great Material!

Buy It
Apply It
Be on top of the Brokers edge

LK

Did I Miss Something Here? - Posted by Hugh James

Posted by Hugh James on February 16, 2000 at 19:44:04:

Just one question: Where was your attorney during all this madness…especially regarding the possession issues?

Re: Broker from Hell and my first deal! (long) - Posted by Eduardo (OR)

Posted by Eduardo (OR) on February 16, 2000 at 19:25:17:

Hi Nicole–
I have been a real estate investor for over 30 years. I had a broker’s license for 15 of those years. I have seen hundreds of transactions. I would estimate that about 50% of all agents are either stupid, shady or both (the turnover is very high in the "profession–many people drift into the business having failed elsewhere; then they drift out again. The average agent has about 3 years experience. You can become a broker in about 3 years. It takes more years than that to learn what you are doing (in any profession). (I once surveyed successful r.e. brokers on this question; most agreed that that it took 5 to 10 years to learn the business). About 80% of the business is done by 20% of the agents (those with experience and knowledge). Chances of having to deal with an agent who is either not very bright, not very honest or just plain inexperienced are very high. I would estimate that as high as 50% of all real estate transactions I have seen go together over the years have had something wrong with them somewhere along the line to the extent that someone could sue someone else if they wanted to. Fortunately (or unfortunately), most people just complain, take their lumps and don’t sue.
Having said this, what do you do? Learn to swim among the sharks and beat them at their own game. Those with superior knowledge win. Where do you get knowledge? Experience! Where do you get experience? By failing! I have learned more from failing than from anything else I’ve done. I used to tell my classes that you’re supposed to fail. This is how you learn. So treat this experience as a priceless learning experience. You have to stick with it long enough that the failures become fewer and further in between. Remember, it’s going to take you several years to learn the investing business. If it was easy, everybody would be doing it. Good luck! --Eduardo

Re: Broker from Hell and my first deal! (long) - Posted by Corey (ND)

Posted by Corey (ND) on February 16, 2000 at 18:28:08:

I would get all of your documents together and turn them over to your states real estate commission along with a formal complaint. They may be able to punish the Broker for his actions. It is sad to see “professionals” do these type of things. As it gives all people in the real estate business a bad name.

Re: Broker from Hell and my first deal! (long) - Posted by Nicole_AZ

Posted by Nicole_AZ on February 17, 2000 at 13:02:22:

Thank you for your thoughts. I admit that I am making mistakes. And maybe this whole deal was a financial one. I did not realize it was too skinny till half way through. But I still don’t think it will be that skinny. I did run my numbers at the beginning and thought I was being generous but maybe I wasn’t. I know the buying and financing wasn’t anywhere near 10K ($3500)unless I missed something entirely. The rest is still to be determined as to how much off I am in my numbers. If we have that skinny of a profit, it was a good deal just for the experience. The same mistakes will not be made twice.

Again, thanks.
Nicole

Yes, it was a Broker - Posted by Nicole_AZ

Posted by Nicole_AZ on February 17, 2000 at 11:55:18:

And I have gone to the AZ Department of Real Estate and the AZ Real Estate Brokers Association. I have requested forms to file a complaint. I have considered the fact that filing a complaint might not be a good thing for my reputation, if she is well liked (for some unknown reason) but I don’t think this woman should be able to do this to other individuals. I am still new to this but I have a lot more knowledge than the average joe. What would she be able to pull on them?

Nicole

Re: Did I Miss Something Here? - Posted by Nicole_AZ

Posted by Nicole_AZ on February 17, 2000 at 09:09:06:

In Arizona, attorneys are rarely used for anything less than a large commercial transaction. It is not required by law here.

Thank you - Posted by Nicole_AZ

Posted by Nicole_AZ on February 17, 2000 at 11:48:23:

You are very right. That is why I feel confident that I will be able to swim in this game. I love the fact that I have had some strong challenges up front. I have had the chance to fail and learn and gain experience early. If my first deals were easy, I’d really have to wonder and possibly would get stuck when it came to a problem later on.

I love this game. It isn’t easy, but, to me, it is fun. Though it would be great to have all the answers from a seminar, it will never be possible. Anyway, I love to learn from my mistakes and move on. You have only truly failed if you have failed to learn the lesson.

Thanks for the information and the encouragement. I am here to stay!

Nicole

Great Post !!! nt - Posted by Barbara(AZ)

Posted by Barbara(AZ) on February 17, 2000 at 10:13:13:

nt.

I’d take the time and file the paperwork. - Posted by SusanL.–FL

Posted by SusanL.–FL on February 17, 2000 at 14:15:59:

She shouldn’t be allowed to pull that baloney on others.

Sorry, Didn’t know that, but… - Posted by Hugh James

Posted by Hugh James on February 17, 2000 at 11:27:22:

…I just can’t imagine entering into a contract dispute, especially over possession issues. I’ve tried doing it on my own in the past (to save the fee) and got badly burned because I didn’t use the right language in the contract. It also let’s me play “good cop/bad cop” and stay above the fray. Just a thought.