For Realty Executives Premier owners Mike and Pam Tezak, there’s an ethical way to do business and, since they started the company eight years ago, that is exactly what they’ve accomplished. While it has been their mission to assist and educate clients and agents, some colleagues in the industry don’t share those values.
“We’re in a good market right now and anytime that happens you start to see practices that become questionable from new companies or people who are trying to make money quickly,” said Pam Tezak.
The Tezaks and Realty Executives Premiers goal is educate people about what is, for them, the right way to do business and what to look for in an agent when you are buying or selling a home.
“There’s just a right way to do business and then a short-term way,” Pam said. “A company or agent might make more money in the short-term but it harms the industry and it harms the client.”
A prime example of the short-term, detrimental practices that the Tezaks are referring to happened recently with a property of which they were on the selling end.
“One of our agents has a listing and an offer comes in on it,” Pam explained. “The buyer’s agent (with another company) had written some further conditions in the purchase agreement that said ‘seller will pay closing costs, escrow, pre-paids and etc.’. With current market conditions, sellers paying closing costs is not uncommon. But the Realty Executives agent knew to question the ‘etc.’ because she’s an experienced agent who’s going to sell a good number of homes this year. She was representing the sellers, and not willing to have them pay one additional dollar which would hurt their bottom line. After some questioning, as it turned out, the buyer’s agent had asked his clients to sign a buyer’s compensation agreement that gave him (the agent) an additional 1% commission above and beyond the traditional commission offered by the sellers. The buyer’s agent was hoping that it would be wrapped into the closing costs and paid by the seller”
The buyers of the home were a very young couple with the husband away in the Navy. The wife was working with the agent to buy their first home, trusting that the agent was working in their best interest. The young couple was doing VA financing which is a type of loan offered to our military in which 100% of the total amount of the home is financed.
“This is a young couple that needed every dime they have,” added Pam. “They would’ve had to finance that extra amount and wouldn’t have ever known about it. It’s not like the agent said, ‘hey, you need to write me a check for an additional $2400 commission’.”
Agents that do these buyers agreements will tell their clients that it will be paid by the sellers or come off their tax credits.
“The agents shift the money around, calling it one thing and then it gets covered up,” Pam said. “In the end it costs buyers and sellers.”
The agents at Realty Executives think it’s bad business, it’s bad for their clients and it’s bad for the industry. After this incident, Mike called for a meeting with all of their agents.
“I wanted to make them aware that these practices were being used again and to be on the watch for specific agents and companies when purchase agreements come in on properties that we represent,” Mike said. “Had our agent not caught this, those buyers would be $6000 upside down right off the bat with the closing costs and the extra $2400 commission. We’re supposed to be helping these people and there are agents out there who are being trained by their company to do things like this.”
Technically this is legal but, as Mike put it, it’s a very gray area that involves some predatory practices on behalf of the agent and the company. The original intent for these practices, and the law that was written, was for an entirely different process than Realty Executives was confronted with in this situation.
“For most people, buying and selling a home is one of the biggest financial transactions they will ever make,” said Jason Utesch, an agent with Realty Executives. “The slightest misstep can cost thousands of dollars. Choosing a company and an agent with a proven track record who knows what they are looking for can help protect both buyers and sellers from situations like these. The problem is twofold -- people taking advantage of their uninformed clients and being greedy.”
Realty Executives Premier is a company that operates ethically and with the mission to help educate their clients, agents, and the public in general about what to look out for when buying or selling a home.
“We as a company have always wanted to be ethical and help people, even the agents, and that’s why we created the company,” Mike said. “We feel like we’ve stuck to our guns on all of that but when we see things like this it just really turns our stomach. It feels like we’re reverting back to where we were right before the market tanked.”
The Tezaks are working hard to make sure any business which they are apart of is done right and it’s done ethically. This starts with the experienced agents that they hire and runs down to the clients that they serve directly or indirectly. To find out more visit their website at: http://www.realtyexecutivesindiana.com/