“HELP! My Realtor® lied to me!” How to Put a Bad Real Estate Agent Out of Business.

Every once in a while, I get caught off-guard by the aggressive words or actions of a client. Many times, when I “peel back the onion” to uncover what is making them respond the way they are, I hear a story they have heard (or even lived through) about a real estate agent who acted unethically. It’s sad, but it’s true — in real estate, there are a few bad apples out there. Here’s a little insight, and some next-steps on how to respond, if an agent takes advantage of your good-graces.

First off, let me say that real estate agents are in a tough spot. We’re asked to predict market conditions of the future without a crystal ball, we’re supposed to foresee problems before they happen without the benefit of X-Ray eyes, and we’re supposed to put the client’s needs before our own need to get paid and put food on the table. I don’t bring this up because I want you to feel sorry for us; I bring it up to let you know that the trade itself sometimes necessitates unfair expectations of average, ordinary human beings.

Before your agent works with you, they are required by the State of California to have you sign a “Disclosure Regarding Real Estate Agency Relationships,” which is commonly called an “Agency Disclosure.” I have my seller clients sign one of these before I have them sign a listing agreement, and my buyer clients sign one before they make an offer on a property. An Agency Disclosure, in it’s most basic form, details that your agent owes you a “fiduciary duty of utmost care, integrity, honesty and loyalty” in their dealings with you. In other words, they have to be honest, even to the extent that if they don’t know the answer to a question they have to tell you that. Making something up isn’t allowed, either.

On top of that, if your agent is a Realtor®, they are bound by the Code of Ethics that is the foundation of the National Association of Realtors (NAR). From a consumer standpoint this may seem convoluted, but there’s a difference between a licensed real estate agent and a Realtor® (all Realtors are licensed agents, but not all licensed agents are Realtors…). A Realtor’s ability to use the MLS to advertise our listings, as well as the ability to sell each others listings, is tied to our relationship with NAR and its Code of Ethics.

In other words, your Realtor’s ability to work in the State of California depends on them having a license in good standing, while their ability to advertise listings and sell the advertised listings of others depends on NAR feeling good about their ethics. If either of those is threatened, your Realtor® may have to close up shop and go find a job in another industry. That is as it should be — a Realtor® who lies to you is a big deal.

Real Estate Agents also carry an insurance product called “Errors and Omissions Insurance.” Mistakes — ethical and otherwise — don’t have to be your problem if you buy a house and something obvious is not disclosed to you in the process. Mistakes also don’t have to involve attorneys. If you have a concern about your home sale, call your agent and talk about it. Your agent can talk to their Broker and have their insurance company cover a great deal of the associated cost to remedy.

If friendly conversation doesn’t get the job done, or if the problem is especially egregious, as a LAST RESORT I’d recommend you contact the following trade associations to start the complaint process:

• Here is a link to more information about filing a complaint with the California Bureau of Real Estate.
• Here is a link to more information about filing a complaint with the California Association of Realtors.