Monday, 25 August 2008

Just when you thought capitalism might not be so bad...

In the weekend, I had an unpleasant experience with a real estate agent, and I just have to get it off my chest. Prepare for a rant.

My partner and I made a successful offer on a house on Saturday, and assuming tomorrow's building inspection goes OK, we'll have a new home in a few weeks. Nice for us, but perhaps not so nice for the elderly lady selling the house. The real estate agent who was supposed to be working for her sold her down the river at almost every opportunity.

First of all, as we were drafting our offer, the agent said 'I'm going to be a bit naughty'. She wrote an earlier, lower figure we'd mentioned on the offer form, crossed it out, then wrote our revised offer beside it. 'I know what old people are like', she said, and explained that the vendor would only be encouraged to ask for more money if we didn't do this. I sat uncomfortably silent - something I now feel a bit crappy about.

The rental home my family and I are living in has been sold, and we've got four weeks to get out. Because of this, I asked the agent to see if she could negotiate with the vendor to have the date of settlement brought forward. Off went the agent to talk to the vendor.

When the agent reappeared on our doorstep later that afternoon she said immediately, 'Before you look at this, I'll let you know that the vendor will accept your original offer'. At the prompting of her adult son, the vendor had made a counter offer, trying to push us up by five grand. The agent undercut this immediately, deciding that her own haste to finish work for the day was more important than the price her elderly client got for what is probably her only major asset.

At this stage, I was very uncomfortable. I asked the agent, 'What about the settlement date?'. The agent told us that the vendor had agreed to bring it forward to the date we'd proposed. I expressed my concern that the agent had pushed her into this. The agent said, 'Don't worry - I'll bundle her into my car first thing Monday and we'll drive around until I sell her a new house'. She added, 'And if she has to rent for a bit, that's OK'.

OK with whom? We're talking here about an elderly woman who had just had a surgery, and is leaving her home of more than three decades, in which she raised her family, because of health problems. I asked the agent twice more for an assurance that she wasn't pestering the vendor, and said that if someone had to rent or go homeless for a week, it should be us - not a frail elderly person. I got the response, 'You just get your building inspection sorted so we can finalise this and the vendor knows how much she's got to spend'. In short, the agent was about as interested in my concerns as she was in her client's welfare.

The problem with the real estate industry (or one of them, at least) is that agents seem to have no duty of fidelity to the people who engage their services. This agent cared only about the sale, and was happy to compromise her client's interests over and again to speed up the process.
The agent was inducing the vendor to rush - making it likely that she'd buy a new house in a panic, also to the benefit of the agent.

I would guess that elderly women are particularly vulnerable to unethical real estate agents. Because women on average live longer than men, there are lots of elderly widows out there in sole possession of properties. As the phenomenon of elder abuse receives increased attention, it's becoming clearer that old people's children will also sometimes take advantage of them financially, pushing them into decisions about selling their homes.

The whole thing has left me with a bad taste. I feel like a bit of a loser for letting an aggressive real estate agent run over the top of me. When we conclude the deal, I'm going to stick a letter in the vendor's letterbox, assuring her that she doesn't need to leave her home urgently, and that we can be flexible about this. I may even write the real estate agency a letter telling them they suck. I've met some really nice real estate agents, but on the whole, the industry is so brutally competitive that it brings out the worst in people and rewards the unethical. Regulate the bejesus out it, I say.


homepaddock said...

I'm not sure it's fair to blame unethical behviour on capitalism.

The agent may have contravened REINZ standards too because I think an agent is required to act for and in the best interests of the vendor.

Anna McM said...

It's really the old problem that liberalism grapples with - if you assume people are motivated by self-interest, you need to put some regulations in place so each of us doesn't pursue our own interest at the expense of others. Otherwise, life is 'nasty, brutish and short'.

I think real estate is a particularly hideous example of capitalist logic because there is less interdependence between agents than you might find amongst workers in other industries. This acts as a kind of regulation in other industries. Each agent really is in it for him or herself. The reputation of the industry doesn't seem to be enough to keep the bad behaviour in check, and there isn't much other incentive for agents to be ethical since the industry keeps on trucking regardless and the dodgy agents seem to do well for themselves.

I think that REINZ standards are weak because a) the industry doesn't particularly want to enforce them and b) if an agent sells a vendor down the river, there may be a benefit to the buyer, so the buyer is less likely to complain - it makes 'users' of the 'service' less likely to group together to lobby the industry.

The ex-expat said...

Not that I am excusing the behaviour of the agent, but I suspect that with the dwindling number of sales agents are really feeling the pinch and this sort of behaviour might actually get a whole lot worse.

Anna McM said...

Probably right - with the housing market in the doldrums, it could be a bit of a survival of the fittest scenario amongst agents.

Anonymous said...

It's not new - agents make their money off churn. How much they make off a sale is pretty fixed, so the only way to increase their income is to make sales faster. As well, there's not a lot of repeat business, and only limited market information (viz, it's not a free market), so agents have little incentive to be nice about it. They'll push you to buy whatever rotten shack they have on their books, and the vendor to accept whatever derisory offer you can be bothered making, just to pocket their commission and get out.

Of course, the better agents cloud this with cups of tea and conversation, but it's hard to do that well.