Question About Ethics
We recently sold our house through the use of a realtor. We are new to all of this so we were stupid and actually trusted him. He told us we'd receive $2000 more at closing than what we did. He was not referring to our money in escrow. When he told us the amount, he "forgot" about the previous year's taxes. When we closed we asked him about the additional 2k and he still said we'd be getting it. Well, we never did and now he denies he ever said it. I know he lied to get us to close the deal. I think he feared the house wouldn't sell before his contract was up. Anyway, the broker is unwilling to help. Is there anything else we can do?
The problem you are speaking of happens quite commonly with new Realtors. The tax proration was most likely the problem. I had one big deal that got messy because of the similar situation, my partner and i were the buyers agents. WE actually had to sit down with the sellers and explain the whole situation to them. I would think the Realtor would at least chip in a portion of their commission to at least attempt to make this wrong, right.
Quote:
On 2004-11-19 22:09, adelb wrote:
We recently sold our house through the use of a realtor. We are new to all of this so we were stupid and actually trusted him. He told us we'd receive $2000 more at closing than what we did. He was not referring to our money in escrow. When he told us the amount, he "forgot" about the previous year's taxes. When we closed we asked him about the additional 2k and he still said we'd be getting it. Well, we never did and now he denies he ever said it. I know he lied to get us to close the deal. I think he feared the house wouldn't sell before his contract was up. Anyway, the broker is unwilling to help. Is there anything else we can do?
Unfortunately the realtor and the broker are unwilling to rectify this. My point to the broker was that if the realtor was unaware, he SHOULD have known. If it were an honest mistake, he should compensate us partially, not LIE and said he never said those things to us. That is what is making me think he knew all along. I was hoping that the threat of further action, coupled with the negative referrals they WILL receive would be enough encouragement to give us SOME of the money. I guess some people aren't trustworthy individuals. Lesson learned, get EVERYTHING in writing.
He may have mislead you but that still doesn't change the underlying reality-that you were never supposed to get the money. If he had done something that caused you to lose $2k than that is different and he should be held to it. In this case he just falsely set you expectations. I am not saying though that he is not a liar.
Correct, he/they should be willing to at least partially compensate you. My question would be how new is the Realtor, if you were one of his first 5-10 listings, then I would say it's due to listings, if it's not, it was a lie.
Quote:
On 2004-11-19 22:47, adelb wrote:
Unfortunately the realtor and the broker are unwilling to rectify this. My point to the broker was that if the realtor was unaware, he SHOULD have known. If it were an honest mistake, he should compensate us partially, not LIE and said he never said those things to us. That is what is making me think he knew all along. I was hoping that the threat of further action, coupled with the negative referrals they WILL receive would be enough encouragement to give us SOME of the money. I guess some people aren't trustworthy individuals. Lesson learned, get EVERYTHING in writing.
When we hired him in the spring he had 69 previous clients. He's been a realtor for 3 years.
I understand that we were not meant to get the money, but since he led us to believe we would be making more on the house, he also changed how we negotiated, or even if we'd accept the offer at all!
I had to re-read the initial post - the folks involved in the deal are new to real estate transactions, not the agent. That being the case, I would say the owners are victims and that the agent is dishonest.
My advice would be to report this incident to state regulating agency that has oversight of real estate agents and let them get involved. Most likely you still will not get any money back, but that agent and his broker will be looked at and know that someone is watching.
Good luck,
Bob
1. Did he get your house sold?
2. Did you accept a contract to sell?
3. Were they your taxes owed?
Where is the problem? That his little estimation sheet did not list a pertinent fact. That is in your court.
Let him off the hook. Possibly his county tax bills work differently than yours. You should have known that one.
Having gotten a rotten agent while stationed overseas who was supposed to be handling my rental, and having the Californa Board of Realtors find in my favor because I could not make the trip myself,I say again, report him to the state. None of us have access to the documentation, we don't know what happened, the sellers are new, the agent is not, and the agent will have to give specific, honest answers along with documentation, to the state board of realtors.
Only when that is done will the sellers find out what really happened, and if money is due, they'll get it.
Go for it,
Bob
Man, it truly amazes me sometimes of the "answers" that are given on these forums. Did anybody besides ceinvests actually read the post?
You said that you received $2k less than expected due to "previous year's taxes." Sounds like you hadn't paid your taxes, and in NC, all property taxes must be paid, in full, upon selling a property. Now, the only way that the agent would have known that you hadn't paid your taxes is if a) you told him you hadn't, or b) he took the time to research it. Unfortunately, b is not in his job description. That would be the attorney's job. You did have one of them at your closing, correct?
Which brings up another point. At the closing, you were asked to sign off on a few papers. One especially important piece was label HUD-1. This sheet detailed the entire transaction, splittting the costs/proceeds between the buyer and seller. At the bottom of this page was the amount that you would be paid after all your expenses were met. If this number didn't suit you, you should have mentioned it then. If you objected then, the attorney would have stopped the closing until you were satisfied one way or the other, meaning you either accepted the figure, signed the doc and sold the house, or you didn't accept it, didn't sign, and didn't sell the house. Now, if this agent said something to you at this point, I can see your frustration. However, unless the closing agent is willing to become a witness to the event, then there is little reason to pursue the matter.
However, what really bothers me more than anything is this part of your post:
If it were an honest mistake, he should compensate us partially
What you are saying is that if he honestly didn't know that you hadn't paid your taxes, then he should cough up some of his money to help you to pay for them. Somehow, that doesn't sound right to me.
So I'm going to repeat ceinvests questions:
1. Did he get your house sold?
2. Did you accept a contract to sell?
3. Were they your taxes owed?
And a one of my own:
4. If you had known about the $2k, would it have killed the deal?
It's time, people, to start taking at least some responsibility for your own actions. It's no wonder that our courts are so jammed pack full. It's always someone else's fault that we did what we did.
Roger
First, we did not live in NC when we sold the house, we lived in OH. Appenently the taxes paid out of escrow twice a year went to the previous year's tax bill. WE didn't know this, as I think most do not. The realtor DID know this. He failed to give us that information which mislead us.
As far as closing goes, he had power of attorney at closing since we had moved 500 miles away. When he sent the settlement papers and a check for $2000 less, we asked him about it. He said, "Don't panic, I know you were expecting 2k more and you'll get it." Now he says that is a lie and he never said it. The fact that he said it and now says he didn't at alll tells me something.
My point is that our escrows and property taxes are an important detail. When we purchase a house there are several pro-rate details per taxes. Each year our escrows are 'messed with', and we get annual bills or assessments from our County, City, State... There are many ways and reasons for us to know this VERY important detail.
In his case, maybe he is a 'lazy thinking' realtor; details are not his bag. He knows that many times sellers get their escrows back at closing and they get a pro-rate refund for items paid. So, he just lazily said you would.
My point is that this is a detail that you should be the boss of, not him. From the start you should have known if/what you would get per your taxes/insurance.
And please do not forget that You hired him! Would you again, maybe not! But he should not pay your taxes.
I understand what you are saying. Had he said we'd get back the amount we did, plus any money in our escrow we would have known better. However, we hired him because we DON'T know all the details a real estate transaction involves. That was HIS job to be totally honest in the amount we'd receive and not be lazy about details. Because he left out that VITAL peice of information, we agreed to a sale that caused us to MAYBE break even. Don't you think the realtor has a professional and ethical responsibility to be honest with his clients about details the client would not be aware of? This whole time we were paying our mortgage we thought it was for the current year. Talking to MANY friends and family, they thought that was how the taxes worked as well. The realtor knew better and should have told us.
Furthermore, he went through ALL the numbers and amounts that we would have deducted EXCEPT taxes. Had he included this amount we would have been able to make a more informed decision about the offer.
Exactly ceinvests. At least someone here is seeing this correctly.
Appenently [sic] the taxes paid out of escrow twice a year went to the previous year's tax bill. WE didn't know this, as I think most do not. The realtor DID know this.
And there is the "it's someone else's fault" argument. Even though you were the homeowner, responsible for paying the taxes (either thru escrow or directly), you didn't know what was happening with your taxes. In fact, you go further and say that most people don't. Then you say that this agent DID know. Okay, first, if most everyone in your county didn't know how taxes were paid, then why did this agent get gifted with this precious knowledge? Second, whether he did or didn't know about the tax precedures, I still see no great cover up here. You were the homeowner, you were the seller. And you should have known where your money was going. If I'd been the agent, I would have assumed that you realized how your taxes was being paid as well.
As far as closing goes, he had power of attorney at closing since we had moved 500 miles away.
Personally, this was an error in judgement, your judgement. I would have never given power of attorney to anyone on a real estate transaction, least of all someone who has a financial gain in the outcome. In today's world, we have email, fax, and overnight services. All of which greatly aid in long distance transactions such as this. In fact, it's done all the time. Do you really believe that banks that foreclose on property in other parts of the country give power of attorney to some local person? Doesn't happen. I know that the answer to this is probably going to be something like "the agent told us it was the only way." And the only answer that I can give to that is to read the purchase and sale contract closely, especially somewhere near the end, because every realtor contract that I've seen has in it somewhere that if you don't fully understand the terms/conditions you need to consult an attorney.
He said, "Don't panic, I know you were expecting 2k more and you'll get it." Now he says that is a lie and he never said it. The fact that he said it and now says he didn't at alll tells me something.
Nothing personal, but this is just one side of the story, yours. I'm quite sure that his would be a little different. And as always the truth usually lies somewhere in the middle. It truly sounds like this guy wasn't the most ethical person around, but I still see nothing here worth fighting over. It's not anything that you are going to win anyway. Worst case, consider it a life learning experience and move on.
Last, you still didn't answer the questions. I know the answers to the first three here:
1. Did he get your house sold? YES
2. Did you accept a contract to sell? YES
3. Were they your taxes owed? YES
However, the last one is the one you'll have to answer for yourself:
4. If you had known about the $2k, would it have killed the deal?
If the answer is no it wouldn't have, then why make such a big deal out of it now?
Roger
This still makes no sense. If taxes are paid from the escrow and they took $2000 out of your funds from the sale to cover the taxes then you get that back from the escrow. Also, unless NC is different taxes you just paid were probably for this year as last year's taxes would have been delinquent and the tax cert sold and you notified one way or the other.
Also, go over your hud statement and see where the $2000 went.
When I bought my first house I was really ignorant of all this stuff. When I went to closing they wanted $3000 more than I was initially told for closing costs. I made such a stink, I called FHA, HUD, and a lot of various agencies. After a hassle they sat down and went over everything and saw where the realtor was giving herself a bonus at my expense. Needless to say they fixed that and she got in some big trouble.
The settlement statement is the key.
I would not leave it up to a realtor to tell me what my proceeds would be. I have done more than a couple of closing and I get a settlement statement prior to closing to review. Even then about half of the closing I attend have some last minute figuring. This is with two experienced investors and a darn good title company. It is the title companies responsibility to prepare the settlement statement. It is the realtors job to make sure that you recieve a copy prior to closing. Did you receive a copy??
Brenda
Unfortunately we don't have experience on our side, as most of you do. That is why we hired a realtor in the first place. Maybe we were naive in trusting him, but we did. We never thought he'd outright lie to us, which he did.
As far as the question asking if we'd have accepted the offer, probably not, considering we merely broke even, which I believe was stated somewhere before.
I understand responsibility and am not blaming him for not having our house sold sooner, not bringing in enough buyers, not getting the price we wanted, etc. I do think it was his resposibility to be truthful and honest in what he tells his clients.
Will we gain anything by pursuing this further? Maybe, maybe not. Is it right to sit back and let people take advantage of you? NO. If people don't stand up for what is right and say something, it continues to happen. Maybe he will think twice before doing this to someone else if we take action against him now. Maybe not.
I know the courts are flooded with frivolous lawsuits. I am not one of those people. I have never filed suit against anyone for anything. However, if I can do something now to right a wrong, I will. If you don't agree with me, so be it. I didn't post this to get into arguments and have people talk down to me. I came here for suggestions on the next step to take. If you don't know a next step, then fine, don't answer.
For those of you that gave me encouragement I thank you. We will certainly be more careful with whom we place our trust in the future.
I'm not certain, but when hiring a professional, you do it becuase he is suppose to know everything. I know in California disclosure is key, and many agents lose thier license for not doing so. Maybe he honestly did not know about the taxes, but it is his job to do so, and he failed to do it. It also seems he might have intentionally left info out to expedite his sell. Although it seems like funny business, and poor RE practices on his part, thier is little to be done. Just dont reconmend him to friends.
Property tax is your responsibility. It's not your realtor responsibility. Yeah, he should have not told you that you are getting extra $2000, but he is by no means not obligated to give you the money. If he really told you that you were getting the money back, he should have been just approgized to you. But again, he has no responsibity what so ever to give you the money.
My guess is that he was given this info that you were getting extra $2000 from the closing attorney's office or title company. I am sure that they were the one who performed title search and exam. They were the one who is responsilbe to make sure the property tax has been paid up to date, and to make sure property tax is prorated between buyer and seller according to the cloisng date. I have news for you. They make mistakes all the time. As a mortgage broker, I work with them all the time. The most of time, the mistakes will be corrected before the closing. If not, they have insurance to cover them.
If you no longer trust this real estate agent, don't use him anymore, but the is the only recourse you have in this situation.
Taxes are always piad in arrears )sp. Excrows are paid at year end (no reason for tax sale for non-payment). Either a bill or a refund comes in for the difference. If it wasn't escrowed, your tax bill would have arrived at year end. Month and day of sale would be the stop point for your taxes. Most of the time, they credit the buyer for what the seller would owe at closing, but then the buyer would be responsible for the full year.
Have you:
1. Reviewed your HUD-1 closing sheet to know where the 2K is?
2. Reviewed with your previous mortgage company, county, insurance to be sure if any money is being sent to you?
3. Gotten very clear exactly where the money went and that there are no checks lost in the mail to your previous address for you?
If you are clear where all funds went and that there are none left for you, and you are sure that he violated his responsibilities to you, then you need to find out how to file a complaint with his Broker and his licensing Board and they will tell you what is next.
Unfortunately we don't have experience on our side, as most of you do. That is why we hired a realtor in the first place.
This has nothing to do with experience level, but rather the proper way to handle this problem. All my experience has shown me is that the single one constant in real estate transactions, whether that be buying or selling, is that there is going to be a problem. In every single one of my closings, there has been a problem, some minor, some major. The real issue then becomes the severity of the problem and how it is dealt with.
Oh, and even experienced investors will hire realtors. We do this because it is an agent's job to get the property sold.
As far as the question asking if we'd have accepted the offer, probably not, considering we merely broke even
You're saying that even though you were 500 miles away, making two house payments, that a $2K difference would have killed the deal just because you only broke even. I find that hard to believe. I had friends that had to move out of state. After 16 months on the market, they were happy just to get an offer on the house. Any "profit" that they had expected to get had already been eaten up in holding costs. It especially is confusing to me when you say in the very next sentence "I...am not blaming him for...not getting the price we wanted." Well, it was either the price you wanted or it wasn't, correct?
Will we gain anything by pursuing this further? Maybe, maybe not. Is it right to sit back and let people take advantage of you? NO. If people don't stand up for what is right and say something, it continues to happen. Maybe he will think twice before doing this to someone else if we take action against him now. Maybe not.
We know you're side of the story. We don't know all the facts. It's as simple as that. Forgive me if you don't like my responses, but I do temper them just a bit because of the single sided stories that we get to here in these forums. However, just using what you've posted so far, there is nothing wrong here, save for the fact that this agent is a real loser for not owning up to what he said, and clarifying why you didn't actually get the $2k. Taxes are the homeowner's responsibility, period. Whether he know about them or not, or told you about them or not, dosn't matter. You can argue this "he needs to pay" until you're blue in the face. The reality of it is that I doubt that an inquiry board would even rule that there was an ethics violation here because you should have known about your own taxes. Also, as stated above, if you haven't exhausted your hunt for this $2k, chances are that it is still forthcoming.
If you don't agree with me, so be it. I didn't post this to get into arguments and have people talk down to me. I came here for suggestions on the next step to take. If you don't know a next step, then fine, don't answer.
Well, this is the whole point that I've been trying to make. Right now, you're angry and irrational. I had assumed that by posting a question here, that you would want other people's views on the subject, not just more support for the "cause." If you want to continue own and not listen to a neutral party's advice, then fine. Do as ceinvests above said. IF you can prove that he violated his responsiblities AND he is actually a REALTOR and not just some RE agent, then call up the local REALTOR board and report him AND his broker. That's the next step. See where it takes you.
And please keep this in mind as well. If you think that you may not like the answer, don't ask the question.
Roger
Wow, you are really something. I wasn't asking you if what he did was right or wrong. I wasn't asking you if you agreed with me thinking what he did was wrong. If you notice, the last sentence of my original post asked if there was anything else we could do. I didn't ask if you thought we should.
Quote:
On 2004-11-19 22:09, adelb wrote:
We recently sold our house through the use of a realtor. We are new to all of this so we were stupid and actually trusted him. He told us we'd receive $2000 more at closing than what we did. He was not referring to our money in escrow. When he told us the amount, he "forgot" about the previous year's taxes. When we closed we asked him about the additional 2k and he still said we'd be getting it. Well, we never did and now he denies he ever said it. I know he lied to get us to close the deal. I think he feared the house wouldn't sell before his contract was up. Anyway, the broker is unwilling to help. Is there anything else we can do?
adelb
The point is that you as a customer believe you have been wronged!
I would first suggest that you review all the facts on your closing statement.
It will be of no service for you to file a complaint without anything to support your claim.
If you have supportive documents to support your claims than by all means make the wrongdoers own up!
I do apologias on behalf of TCI for the attacks on your character by one or two members, as this is not the norm of this forum. Even nasty people have a place in this world. Shoot I've been one of those nasty mean people my self when an immature attack comes my way on this forum from time to time. Just let it go as many would not act this way face to face but they simply hide under nick names and words, just consider the source and learn from the good.
To win a battle make sure you have all the facts, you can support your position with facts and are willing to do what it takes. If any of these factors is left out than truly there is no point.
Good luck on this issue and hope to see you around on this forum more often.
[addsig]
adelb,
Your question has been answered, although apparently you don't like the answers you've been given.
JohnMichael-- Thank you for your imput! I did learn quite a bit about what actions need to be taken and that is what I came here for. I appreciate all those who were honest without being condescending. I like this board and think there is a lot of great information available.
best protection is get it in writing........km
I believe he thought it was in writing..."see here, it says pro-rate taxes...that means your going to get an extra $2,000 or so at closing" I'm guessing that is what happened...
I think he got hosed. But I don't think there is much he/she can do about it. You usually see the HUD summary before closing to make sure everything is correct...this problem should have been noticed there. I think a realtor should be knowledgable in what proceeds of the sale the seller will receive. But, I don't see how this would affect a deal...no matter who made an offer as long as things are pro-rated, you would still have gotten the same amount. That will happen no matter what their offer price is....
Also, in my state the closing statement is done by the closing agent...which isn't the title company...and the lender is required to get the HUD statement...if you didn't use a realtor would you not get a HUD summary statement?!?!?
It does make sense. In most states, taxes are paid in arrears. So - the funds in the escrow account were likely for the prior year, and THEN they are prorated through the date of closing when you sell.
Regardless, they were your taxes, and whether or not the "estimate" was accurate, that does not change the fact that you owed them. Get over it, move on, be very happy your house sold, and consider it a lesson in RE transactions in your State. It's going to cost you more time and energy to continue to beat this issue up, and what will you gain? You've sold your home, move on.
We didn't get a settlement paper beforehand. I know when we bought the house we got a good faith estimate with everything on it, but not when we sold. I don't know if it is customary to get one or not.
One more thing, the taxes that were paid out of our escrow account were for last year. That's the way they do it, although we didn't realize that. Our mortgage statement always said WHEN taxes were paid, but not for what period of time.
The way the realtor made things sound, as far as how much money we'd get back, helped us determine our counter offer on the house. They came with an offer and when we were talking to the agent about our counter he told us how much we'd get a check for at this price. There were quite a few points negotiated back and forth during this process, and our couter price would've been a bit higher had we known we'd only break even.
Complain to the State's Real Estate Commission. Let them investigate and determine if there was something wrong done or not.
look at it this way..the $2000 is not totally lost...i'ts a tax write off...regards...CWal
tmpringle301, in PA, our re taxes aren't paid in arrears. The county and township/city/borough tax year is January through December and are due in the spring (April in my county). The school tax year is on a fiscal rather than calendar year basis of July through June and is due in the fall (November here).
How long was the property listed? Could the mix-up have potentially been in the few months between listing and closing? I have been in a situation or two where the sellers proceeds were lower than we expected, but usually we say "oh crap" and sit down and figure out the problem. Commonly a missed mtg payment at the end, as some people do not believe they have to pay their mtg payment before closing.. or a tax problem.
Quote:
On 2004-11-23 00:08, suekostalas wrote:
tmpringle301, in PA, our re taxes aren't paid in arrears. The county and township/city/borough tax year is January through December and are due in the spring (April in my county). The school tax year is on a fiscal rather than calendar year basis of July through June and is due in the fall (November here).
Quoate:
Commonly a missed mtg payment at the end, as some people do not believe they have to pay their mtg payment before closing.. or a tax problem.
Reply
In addition to that, most people don't realized that you always pay the mortgage a month behind. That is the reason why most of time when you get a mortgage, you don't start paying for it at least 30 days later unless you choose a short pay oftion. So you are always 30 days behind until the mortgage is paid off. Some people don't understand why the payoff quote is so much higher than the mortgage blance, and get upset about it. The payoff number can inluded 60 days worth of interest, when you don't make the payment in the month of refinancing or selling the property.
johnmichael you are no position to be giving any advice or apologizing for anyone elses conduct.
Adelb,
Based on what I have seen in this thread, I don't think it will be worth your while to go after the real estate agent. I am not real thrilled with him saying he didn't say something if he did, but that could come from a lack of security with his position. In most cases, time and experience will correct that. Time and experience should also correct over promising and under delivering. The fact of the matter is that I doubt anything positive will come from a complaint about him.
Now, that said, there is an issue that you may want to pursue. I don't know how Ohio does real estate taxes, but the tax proration should be for the current tax year. If they collected also for last years taxes, that means that the taxes weren't paid at some point. If that happened while you owned it, and you had been paying money into the escrow account with your lender, then you should receive those funds from your lender. If the taxes were in arrears when you bought it, and not brought current when you settled, then you have a title claim. The second scenario is very unlikely since most jurisdictions require all taxes to be brought current before they change title.
Finally, there is one other thing in this thread that bothers me. You made the statement that if it was an honest mistake that you should be compensated. I fail to see why you should be compensated if you were not damaged as a result. I know you said that it might have affected your negotiations, or if you would have accepted the contract at all. Had you not accepted the contract, your holding costs could have very easily reached if not exceeded that two thousand dollars. I know that when you are counting on it, that two thousand dollars is a lot of money. But in most real estate transactions, it is a very small sum, that is very easily used up. The other point is that most people I know who move to another home before selling the one they were in, are so happy when it sells that they really don't mind if they didn't make a lot, or even any profit on the sale. They are just happy they are not making two mortgage payments every month any more. You may not fall into that category of seller, but I buy from sellers like that all the time.
I am not a Realtor, but some of the responses to your posts have come from Realtors. I am confident that some of the Realtors who responded to you are top notch, ethical Realtors. Some of them are not. You can do what you wish, but my recommendation to you is to get an accounting of escrows from your lender, and make sure there was not a problem with your previous settlement. If the escrows are all accounted for, and there was no problem with the previous settlement, then it is time to move on. I understand that you were counting on that money, and that you were disappointed, but from what I know about your situation right now, you were not damaged.
Take care.
Bruce..