Although the vast majority of real estate transactions go through smoothly, occasionally buyers and sellers find themselves at odds with their agents. Personality clashes erupt. Someone feels cheated. Someone else files for bankruptcy and escrow money disappears.
How common are serious disputes?
The Illinois Real Estate Division receives between 50 and 60 complaints about agents per month, according to Julie Mategrano, executive director. About half merit further investigation under the division’s mission, which is to enforce the Illinois Real Estate License Act.
Real estate attorney John O’Brien of Arlington Heights says he is contacted infrequently by disgruntled real estate consumers. “But it’s also possible many of these matters are resolved–as they should be–before they get to me.”
Suppose you have a beef against your agent or the office he or she works for. Depending upon the gravity of situation, you have a continuum of remedies available. Consider the following:
– Determine whether your complaint is legitimate. If your house sold at a satisfactory price and within a reasonable amount of time, does it matter that your agent sent a stand-in to the closing? Or, if you’re buying, how annoying is it that your agent makes constant phone calls to other customers while showing you properties? Ask a couple of level-headed friends and perhaps another agent or two for their opinions.
“Sometimes the customer has to step back and ask, `Am I being overly sensitive?’ ” says John Kmiecik, president of the Chicago Association of Realtors and owner of two Century 21 offices on the city’s Southwest Side. “If the issue that keeps them up at night is a real issue, then take action.”
– Walk away. This works best when no contract is in effect. If you are a buyer in the early looking stages and can’t stand your agent’s penchant for country music or his Olympic gum-chewing abilities, find another one. If you are a seller whose listing agreement is up in a few days, let it lapse.
Sellers may also be able to cancel their agreements. Read the fine print and follow the procedure–usually a written 30-day notice. Be sure to get a return receipt.
– Calmly discuss the problem with your agent. Misunderstandings and expectations often can be clarified through open communication.
Speak up, advises Kmiecik. “Many people don’t like to be confrontational but an issue doesn’t have to become confrontational. Some people, out of fear or not knowing what to do, do nothing. That’s how a small problem grows into a big one.” He also recommends taking a conciliatory rather than accusatory approach.
“State the problem clearly,” says Jeff Lasky, an attorney and director of legal affairs for the Northwest Association of Realtors in Arlington Heights and Chicago. “Sometimes people think they are relaying a message but they aren’t.”
If the two of you are unable to reach an agreement or if you can’t locate the agent, try the next step:
– Set up a meeting with the owner or managing broker at your agent’s realty office. Your contract is actually with the office, not the individual agent.
“The first reaction of the boss back home is going to be, `I know we can work it out,’ ” says O’Brien. “Let him figure out a plan and then give him a chance to execute it.”
“The broker isn’t as emotionally involved as the agent might be,” says Lasky.
Depending upon the situation, the boss may renegotiate your contract or give you another agent to work with. He or she may also agree to terminate your relationship.
“It’s not worth it to me to have an unhappy customer,” says Kmiecik. “If I can’t solve your problem or resolve the issue, there comes a time to say goodbye. I’ll move on and you’ll move on and we’ll both be OK.”
– Enlist professional help. Still unhappy? You may want to involve a real estate attorney. He or she can advise whether satisfaction is worth pursuing, negotiate with the agency on your behalf and, if necessary, represent you in court.
You can also call the agency’s local real estate board either for information or to report ethical violations.
“Many times we can resolve a problem with a telephone call,” says Lasky. “Sometimes, believe it or not, the agent isn’t aware a problem exists. And sometimes we can provide clarification of who is responsible for what. People sometimes think something is the agent’s responsibility when it is the attorney’s.”
In the case of ethical violations, such as an agent’s purposely inflating a property’s value to get a listing or failing to submit all offers and counteroffers on a timely basis, the local real estate board will investigate and possibly discipline the agent. No damages are paid to consumers.
The Illinois Real Estate Division is interested in hearing about breaches of the license law, such as fair housing violations and the improper handling of money. One caveat here is that the law only applies to licensed agents. If you discover your agent is practicing without a license, you’ll have to call the state’s attorney’s office.
“Sometimes we hear complaints of, `The broker listed my house but didn’t show it and didn’t call me,’ ” says Mategrano. “That doesn’t mean they violated the law. If you’re not getting the service you contracted for, then maybe take action by canceling the listing agreement. We do not interpret or enforce terms of contracts between two parties.”
– Seek mediation or arbitration. When opposing parties cannot settle their differences, an outsider often can. In mediation, a disinterested party attempts to bring the factions to a mutual agreement. In arbitration, the parties are given a hearing and are bound by a decision made by the disinterested party. Some real estate boards, including Northwest, use buyer and seller contracts that require the disgruntled to pursue mediation or arbitration before filing lawsuits.
The National Association of Realtors has developed a dispute resolution system of mediation and arbitration. It has been adopted by about 20 states and 150 local real estate boards across the country. The Illinois Association of Realtors has not adopted it, but is looking into forming such a system. In the Chicago area, many boards have or are implementing dispute resolution systems. The Chicago Board of Realtors has an arbitration program in place and has plans to establish a mediation program. The North Shore Board of Realtors recently launched a mediation program.
“Lawyers and lawsuits are expensive propositions,” says O’Brien. “Costs tend to escalate and the procedure is cumbersome, inefficient and slow-moving. Mediation is cheaper and quicker than waiting for a case to come up in the courts.”
– File a lawsuit. When negotiations break down or when there is no agent or managing broker to negotiate with, you can look to the courts for relief. You may be able to get some money, too.
The Real Estate Recovery Fund, which is administered by the Illinois Real Estate Division, covers monetary losses consumers suffer because of agent license violations. It is bankrolled by a portion of their license fees. Claims are limited to actual cash damages of $10,000 or less plus 15 percent for attorney’s fees. To collect, consumers must have gone to court and received a judgment against both the agent and the fund. There is also a $50,000 lifetime cap against any one agent’s license.
“It’s not an easy thing to get the money,” says the division’s deputy executive director, Maureen Lydon, who oversees the payouts. “After you get a judgment against the broker, then you have to go back into court, prove you were unable to collect and ask for a payout from the fund.”
In the last six months, the fund paid eight claims, most of which were escrow disputes.
If possible, try to settle a dispute before it gets to court, say the real estate professionals.
“Most people will say they’d rather jump through hoops than go to litigation,” says Kmiecik. “It’s costly, time-consuming and never allows parties to re-establish the relationship that existed before. It always leaves a bad taste in people’s mouths.”
