Pat Kennedy - Your Washington, DC Real Estate Connection

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The Latest Wrinkle In Limited Service Companies

 Yesterday, I sat down to write an offer on a house in northern Virginia.  There was an unfamiliar For Sale sign in the front yard, and I figured it was a local mom & pop I hadn't run across before.  

Wrong!

When I pulled up the MLS listing to fill in the broker's name and address, it was a firm in Hackensack, New Jersey, and its web site shows them operating in about 12 states and DC.

I called to request the disclosures and after several minutes in voice-mail hell, reached a person.  I asked to talk to the listing agent, and a very polite woman on the other end said that she was his helper.  She gave me the listing agent's Virginia license number to put on the offer and said she would email the disclosure information we needed to submit with the offer. At the same time, I asked if they could get me information about the sellers' time frame and how they wanted things handled.

Meantime, the seller called to follow up Sunday's showing.  He instructed me to deal with him directly, and I sent emailed all of the paperwork to him.  

A few minutes ago, I got a call from Hackensack.  It was the "helper" I spoke to yesterday.  I explained what I had done at the seller's request, and she told me that she handled he negotiations and would give him a call.

Now wait a minute!  In the Commonwealth of Virginia, that is committing an act of real estate that I think requires her to have a license.  Now I'm getting curious about how these guys work. 

My guess is, they have a broker for each of the states where they are licensed, then have assistants who, while perhaps licensed in New Jersey, may not be licensed in the states where the broker is licensed.

Shuttling papers back and forth between Hackensack and Virginia or DC (or any other state for that matter) probably doesn't require a real estate license.  That would fall under what we call "ministerial acts", and that is permitted. 

But negotiating on behalf of a client is a serious act of real estate, at least in these parts!

And who knows, maybe all of their people are licensed in every state and are totally pulled together.  If so, wow!  What a bunch of continuing educations requirements they must have to fill!  

There is plenty of room in the real estate market place for new and innovative services.  And so far, I have to give these guys credit for being responsive and getting me what I needed to prepare an offer.  And after checking their web site, I will also commend them on doing a great job of informing clients about what is or isn't included in their services.   

If they have addressed the license issues, this is even a pretty interesting business model! 

 

Comment balloon 30 commentsPatricia Kennedy • January 30 2008 12:04PM

Comments

I've noticed a few more listings indicating all offers. etc be directed to the seller.   Looks like a listing service.
Posted by Bill Gillhespy, Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos (16 Sunview Blvd) over 12 years ago
I have dealt with these folks as well.  I find it difficult to believe that they're driving down to our area to complete their CEs.  
Posted by Gregory Maley, REALTOR, GRI, CBR, SHS, e-PRO, ABR (Sold Buy the Sea Realty & R.E.N.T.) over 12 years ago
Are they offering a decent co-op? Some in this area are not.
Posted by Hank Roeters (Platinum Partners Realtors) over 12 years ago

Bill, they are pretty buyer agent friendly so far.

And Gregory, they do it all by fax and email, so they only have to come down, to DC at least, to take their continuing ed classes (no on-line here! at least not yet).  

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 12 years ago
Hank, I think they leave that up to their sellers, and in this case the guy is.  It probably depends on what the local market is like.
Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 12 years ago
Was it actually a licensed "helper" you spoke to? Sounds shady.  In Oregon we have a lot of people going limited representation, but it is through local brokers even if the relationship is started through a national company.  The owner usually does the negotiations. 
Posted by Beau Rudzek, Fairstone Properties (Fairstone Properties) over 12 years ago
I haven't had to deal with this yet but agree with some of the comments here-the sellers are often the ones to talk to.  I've seen properties in the MLS under limited representation and a note to call the seller for showings etc.
Posted by Jennifer Esposito (JenRan Realty, LLC) over 12 years ago

Patricia,

Here is the bottom line with "limited services" companies or those that classify their listing agreement in the MLS as an Exclusive Agency Listing (EAL): the seller is a FSBO for all intents and purposes.

There is no other person to work with EXCEPT the seller. They have no agent. The Seller has signed away their right to representation and they know it. That is why they signed an EAL agreement. They feel they are capable of dealing with the agent of the buyer. They want to save all the money they can, i.e., the listing side of the commission. Now, it is SELLER BEWARE. You are not there to represent the seller, but to gather all the useful information you can for the benefit of the BUYER.

"Seller Beware, you're dealing with a Buyer's Agent and I am not responsible for your actions!"

There is no reason to be stumped by this type of arrangement. You are guaranteed the commission, it is the listing side that has made special arrangements with the seller as to their fee. 

You are the agent of the buyer and should already have gone through your agency responsibilities and practices with that buyer, and have a signed Buyer Agency Agreement (if you have been on top of things from the beginning).

Your responsibility and obligations are to your Client, your buyer, NOT the Seller!.

Under an EAL agreement, it is the seller's problem to deal with you and is responsible for suppling you with disclosures and other necessary paperwork that your buyer demands. There really is no reason to even call the listing company. They have also signed away their responsibility, other than to place the listing in the MLS under an EAL listing.

It is the task of the seller to negotiate with you, not the company that only takes the listing and nothing more.

I started a "discount, limited services" type company years ago called FSBOLink. The people that signed on with me knew full well that the only duty I would perform was to get them the exposure they wanted in the MLS and that any appointments, showings, disclosures and dealing with offers was their responsibility. In exchange they, at their risk, would take on the same responsibilities as a listing agent and might save some commissions. I made no other promises to them.

I have since sold that business, but now we have Help-You-Sell, C21-Click-It and MANY other companies that basically remove themselves from the seller other than the MLS connection.

I think, in some cases, that works for some well educated and business minded sellers, but for many, it can be a very bad decision.

Posted by ActiveRain City and State Listing Group over 12 years ago
Pat, I find this intriguing. i wonder how they can legally do business if the negotiator is not licensed in said state.
Posted by Danny Thornton, WordPress Guru (R & D Art) over 12 years ago
Patricia - I noticed a new listing last week that said not to call the listing agent as the seller would provide all information and conduct negotiations.  These almost a FSBO listings seem to be popping up more frequently.
Posted by Norma Toering Broker for Palos Verdes and Beach Cities, Palos Verdes Luxury Homes in L.A. (Charlemagne International Properties) over 12 years ago
I have seen a number of listings here in out area with "Heckensack" address. I always wonder, agency issues aside, how well this works? I believe Real Estate is a local business, and I can not for the life of me figure out how you can market a property effectively from so far away? Reverse it; I have no idea how I could fulfill any sort of responsibility or provide an sound advice on a listing in Hackensack.
Posted by Kevin McGrath, Long & Foster Real Estate Companies (Long & Foster Real Estate Companies- Fredericksburg/Spotsylvania) over 12 years ago

Just another way for Sellers to pinch pennies.  As Don Davies points out (see above), all the Sellers are supposed to be doing is buying exposure on MRIS. Why this "helper" thought she was supposed to negotiate on behalf of the Seller is beyond me and, as you say, a serious agency function. And, if the helper isn't licensed down here than she's is acting in a totally unlawful way.

That being said, who cares? Buyer gets the house, Seller sells the house. Agents get the commissions.  Everyone lives happily ever after...until they don't because of lawsuits or other nastiness. 

I heard rumors that DC is cracking down on Realtors because of unlicensed individuals going into the District acting "as is" they were agents with all the requisite education and licensing. 

It's just another reason why Realtors have such low public esteem. You get all manner of people coming in pretending they know what they're doing.  Then when a consumer gets burned and cries "foul" it's all our fault. 

Posted by Ken Montville, The MD Suburbs of DC (RE/MAX United Real Estate) over 12 years ago
I'd rather deal with a full service realtor.
Posted by Kay Perry (Kay Perry, Broker) over 12 years ago

As with other innovative approaches to selling real estate, there are pluses and minuses.  Time will tell which survive.  A lot of the "innovative" companies of the past 5 years have bit the dust in this buyers' market.

Posted by Margaret Woda, Maryland Real Estate & Military Relocation (Long & Foster Real Estate, Inc.) over 12 years ago
Patricia, I've seen what you are talking about too. Some FSBOs that say just that on the sign are in the MLS. Very confusing. These limited service companies are just taking people's money FOR NOTHING.
Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) over 12 years ago
I'm aghast! We have pretty strict laws in Oregon and some of the business models (such as Redfin) cannot operate legally here. I'm thankful I won't have to encounter anything so shady and frustrating. Let us know what transpires with a follow up post Pat. I, for one, would love to know :)  Good luck!
Posted by Jennifer Monroe, Real Estate REALTOR®/Broker in Beautiful Charlotte (Savvy + Company Real Estate) over 12 years ago
As a buyer agent, we have to be very cautious about arrangements like you describe, so that we don't act like an agent for the seller (if you walk like a duck and talk like a duck, you ARE a duck). We always have such a seller sign a non-representation agreement stating that he KNOWS we are not representing him, and even after that, have to be very careful when the sellers asks us questions so that we don't overstep the bounds.
Posted by Sharon Simms, St. Petersburg FL - CRS CIPS CLHMS RSPS (Coastal Properties Group International - Christie's International) over 12 years ago
Don said it best, and Kay while you may rather deal with a Realtor you have to understand we work for the seller and as the seller has become more educated they are making more demands and willing to take on more responsibilty themselves to save money, and we as the professionals who saerve these clients should sit up and pay attention to what they are asking for or we will be doing much less business.
Posted by John Stauffer (John Stauffer MBA, E-pro,CRS, ABR, GRI, SRES) over 12 years ago

The last time I dealt with "limited service" (I was representing the buyer) I had to repeat often "I represent the buyer..I represent the buyer" until the poor sellers finally understand they had NO representation on their end.

I'm concerned about what you described.  How do they get around licensing laws? 

Posted by Kris Wales, Real Estate Blog & Homes for Sale search site, Macomb County MI (Keller Williams Realty - Lakeside Market Center) over 12 years ago

I know why they have to go outside of the Hackensack area to look for business; it all makes sense now!

Maybe Billy Joel knew what he was talking about - "Who needs a house out in Hackensack; is that all you get for your money?

Posted by Kevin McGrath, Long & Foster Real Estate Companies (Long & Foster Real Estate Companies- Fredericksburg/Spotsylvania) over 12 years ago

I have seen these folks as well.  Virginia has new laws about Limited Service brokerages and it sounds like they are breaking those.

Limited Service Brokers are dangerous - its like everything - For that 10% of transactions where NOTING goes the least bit wrong -- they are just fine.

However when the smallest issue comes up.....uh oh

Posted by James Downing - Metro DC Houses Team REALTORS®, CRS, GRI, ABR,MRP, MilRes, When Looking to Buy or Sell - Make the Right Move (Real Living | At Home) over 12 years ago

Beau, it wasn't so much of matter of the helper being licensed or not.  I would bet she does have a real estate license, my question was did she have one in Virginia.  

Jennifer, you're right in that most limited service companies do have you contact the seller.  These guys are doing it differently, though.  While they are offering a pared down menu of services, they will help a seller evaluate and negotiate a contract.  This is a lot better than most of them who take money and enter the listing on MLS, then the seller is on his own.  But the higher level of service means that the service providers have to be more careful about meeting various state licensing requirements.

Don, as the title suggests, this is "limited service" with a new wrinkle that makes it less limited.  I have spoken to Hackensack, and I gotta say they are handling this a lot more competently than many of the "full service" agents working in the area.  Also, they do an excellent job of informing their clients about the nature of their services.  The whole point is, are they properly licensed in the Commonwealth of Virginia?  Or for that matter, in the other many states where they operate?  Help-U-Sell offers a menu, mostly bare bones, through local brokerages around the country, probably using some sort of franchise agreement. These guys offer more service but all out of Hackensack.

And Danny, yes, that is the big question in this post!

 

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 12 years ago

Norma, we've been seeing these for years.  They are sort of hybrid FSBOs - they do it themselves but pay someone to put it on MLS.  It gets them the additional exposure to the market but lets them control the other marketing and negotiating.

Kevin, from my point of view, it's working pretty well.  They return calls faster than I do, they got me the documents I needed within a fewe minutes of our conversation, and their client, the seller is happy with them.  And I guess that's the bottom line.  From where I sit, they are doing what they said they would do.  

Ken, the helper was offering to help with the negotiations because they include that in their limited service package. And I've had agents from large, well-known area firms that have come into DC without a license then gotten a colleague in their office to put their name on a contract for them.  And again, my only real question wasn't about competence - if they were just faxing disclosures there would be no issue.  This is a new business model where everything is done from a remote location.  Some of us are doing the same thing from our offices in NW Washington.  These guys happen to be a little more remote!

Kay, let's hope other people do too!

And Margaret, I agree.  The ones that survive are the ones that can change to meet the changing consumer demand - and the ones that do what they say they will do and operate in a fully legal manner.

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 12 years ago
Patricia - I wonder if this is a sign of things to come?
Posted by Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional, Palm Harbor, Dunedin, Clearwater, Safety Harbor (Charles Rutenberg Realty) over 12 years ago

Sharon, I have no trouble with that distinction.  And that's an issue that can come up in a transaction where a seller is fully represented.

John, this is about the marketplace in action.  And I think this business model is an interesting one.  The seller in this situation seems pretty able and willing to do his own marketing, handle showing arrangements and even negotiate on his own behalf.  And big factor here is "willing".  Would his neighborhood expert have done a better job?  I really am not sure.

Kris, and when we represent our buyer well, the under-represented seller might find that there are some false economies.  But there are a lot of full service agents who don't do a whole lot better than a seller on his own.

Kevin, actually, didn't Hackensack become a sort of chic suburb of Manhattan a few years back?

And James, you're right.  They're fine as long as there are no issues.  And the same could be said for some of the fully licensed agents in the area.  

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 12 years ago

I too would have concern if the "helper" is licensed in Virginia. I would say heaven help them if they are not and are acting as an agent.

We have run into discount brokerages here...one who is also out of state, but has you go through the seller for everything and then fax the contract to the agent for the change in MLS. Same with the closing statement.

We just have to remind the seller's that we do not represent them. One of my agents had to do this several times and even the title company had to tell the seller the same thing before they understood it.

Good luck with your deal.

Posted by Cris Burlew, Broker ~ St Pete Beach FL Real Estate (Beach & Luxury Realty, Inc.) over 12 years ago
Cris, in this case, the seller gets it.  And the broker's disclosure made it pretty clear.  And I'm also sure the seller understands my role in this transaction.  But I could also see how some sellers would get a little confused.
Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 12 years ago
I have dealt with this type of listing before.  It does seem to be what Don says that it's basically a FSBO that bought their way onto the MLS.  Now the licensing issue is interesting...did you ever find out if the assistant is licensed in VA?
Posted by Krista Fuchs, Chester County Realtor - (484) 459-8025 - Home Buying and Selling (Prudential Fox & Roach) over 12 years ago
Patricia-  I have not had any good experiences with limited service companies and do not like their models and I am not open to having them in my backyard. :( 
Posted by Katerina Gasset, Get It Done For Me Virtual Services (Get It Done For Me Virtual Services ) over 12 years ago

Next time you talk to her, why don't you ask? It is at least good information to have to see if she is licensed in all 12 states or is acting out her legal ability as an assistant. Please report back to us, I'm sure most of us would love to find out.

Posted by Respect Realty LLC, Brokers - Oregon / SW Washington Real Estate (Respect Realty LLC) over 12 years ago

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