Speak up or lose out!

Buyers, sellers, and consumers in general lose out if they do not speak up when they don’t get what they pay for.

As a real estate buyer or seller, you stand to lose a great deal if you do not speak up to learn exactly what you are getting and getting into…

• BEFORE you start negotiating a purchase contract…

• AND during negotiation…

• AND absolutely BEFORE YOU SIGN ANYTHING!

In July 2021, the Consumer Federation of America (CFA) released the results of its annual survey of a wide range of consumer (that’s you) complaints made through the US network of state and local consumer protection agencies:

• The CFA Report “provides a snapshot of the most common, fastest-growing, worst, and newest 2020 complaints” and how they were resolved by agencies. The impact of COVID-19 is reflected throughout the report

• CFA—consumerfed.org—is “a nonprofit research, advocacy, and education association of more than 250 nonprofit consumer organizations that was established in 1968 to advance consumer interests.”  

Frankly, The CFA 2020 Consumer Complaint  Survey Report is both hard-to-read and easy-to-read:

• Hard to read because the 34 state and local consumer agencies in eighteen states, that participated in the survey collectively handled 280,413 complaints which represent largely preventable loss of rights, finances, and property that most consumers can ill-afford and do not deserve. Agencies recovered or saved more than $262,973,073 for consumers (that could be you).

• Easy-to-read because, this plain-language explanation of complaint cases does not pull punches. Among The Top Ten Consumer Complaints, are real estate complaints and resolutions including timeshare issues and:

• Home Improvement/Construction complaints about shoddy work, failure to start or complete the job, and failure to have required licensing or registration.

• Landlord/Tenant complaints which covered unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, deposit and rent disputes, and illegal eviction tactics.

• Credit/Debt complaints which included billing and fee disputes, mortgage problems, and predatory lending.

CFA, itself, does not handle consumer complaints. The dedicated people at federal, state and local complaint agencies—who are not as new to the “buyer beware game” as you are—work hard, year after year, to resolve consumer and business problems:

• State and local consumer agencies obtain refunds for consumers when possible, prevent foreclosures and “self-help” evictions, and deal with a deluge of complaints about price-gouging and pandemic-related scams.

• Educational services are also available through the agencies to head off problems. For instance, timeshare education includes checking the timeshare’s reputation with the Better Business Bureau nearest to its headquarters.

• Complaints are usually mediated informally by consumer agencies. Many also have the power to enforce the law through administrative procedures, civil action, and/or criminal prosecution.

• Federal agencies are also there to help. For instance, the Consumer Financial Protection Bureau (CFPB) ensures that financial companies treat consumers fairly. CFPB also provides information about support available during COVID-19 for mortgage and rental relief, student loans, dealing with financial difficulties, and avoiding scams.

• Agencies cannot do their jobs if you do not complain about unfair or unscrupulous activities or complain about businesses who ignore the wrong they have done to you.

Ignorance of Loss Favors Double-Dipping

When real estate buyers and sellers do not realize they have been taken advantage of, they cannot complain about their financial and lifestyle loss.

Naive buyers and sellers can find themselves in this situation if they allow the real estate salesperson and brokerage representing them to also represent the other party to the transaction.

These double-dipping professionals “serve two masters” who are not well-served and are not “masters” of the transaction. The extra cost of the double commission is usually added to the purchase price and paid by buyers.

Double-dipping (also known as dual agency, double ending, double siding, or conflict of interest) allows collection of the entire 5-6% commission by one real estate salesperson and brokerage, often with less work and time involved. This practice is quite different from that of impartial transactional brokers who receive a much lower commission or fee.

As part of CFA’s ongoing effort to address inequities in the real-estate-transaction marketplace, CFA reviewed more than 6,000 home sales, in more than a dozen cities, to identify the extent of double-dipping by real estate agents. 

This very controversial practice is considered by many real estate professionals to be unethical, unacceptable, or not desirable. While some professionals do not condemn the practice, they do not engage in it.

The recently-released report “Double-Dipping Real Estate Agents Overcharge Consumers Billions of Dollars Annually” examined how the rate of double-dipping is impacted by sales price, agent dispersion, seller expectations, and the priorities of real estate firms and individual agents. CFA “estimates that some one million sellers and buyers in home sales with a single agent are charged excessive commissions totaling several billion dollars annually.”

Report excerpt: “One surprising finding of this research was the great variation in double-dipping rates from city to city…. Double-dipping rates in smaller cities were often much higher – for example, 36 percent in McAlester (OK) (compared to 9.0 percent in Oklahoma City) and 30 percent in Laurinburg (NC). The report estimates a national double-dipping rate of about 10 percent.”

Double-dipping by the real estate professional salesperson or broker or lawyer you hire is not improved service for you. In fact, being paid to represent the buyer and seller at the same time in a real estate transaction may be less than standard service for those consumers.

This substandard approach makes negotiating the contract easier for the professional since they have the buyer and seller listening only to them and to the alternatives they present. Either the buyer or the seller may be favored by the professional, but not both.

The CFA Double-Dipping Report refers to situations where NEITHER the buyer nor the seller are well served by the double-dipping professional. Don’t just take our word for this and much more. Read CFA’s plain-language, easy-to-read release and Double-Dipping Report yourself. The research was done for your benefit and protection.

The CFA report states that “The excessive DD [double dipping] charges are largely added to home prices, so are paid mainly by some 500,000 home buyers in DD [double dipping] sales.”

Understand what you are getting and getting into before you jump into a contract. Hindsight can be expensive. Do you want and need additional and unnecessary stress and financial loss—which you may not even be aware has happened? Instead, invest a little time learning how to put yourself in the safest and best position from the beginning.

Forearmed is Forewarned: Dare To Repair

Buyers and home renovators often obsess over kitchen and laundry room decor without putting at least as much time into learning where value lies with the appliances necessary for these rooms.

Five-years ago, I replaced my 30-year-old double-door fridge-freezer with the latest Samsung french-door fridge, largely for looks. Now, my Samsung is hobbling along, freezing my veggies, leaking, and making weird noises. I really miss my old reliable fridge. I’ve met many appliance owners with similar lack-of-longevity complaints.

If only Mark Miodownik’s BBC podcast Dare to Repair had existed when I made my decision. This UK podcast examines why electronic gadgets and appliances don’t last and are hard to repair and what’s being done to fix the problem. Yes, that’s the UK, but you’ll discover why appliance problems are the same the world over.

My Eyeopener? Episode 1: How We Broke the Future (28 minutes)

Fight your apathy and indecision with often surprisingly-entertaining information and you’ll benefit in more ways than you realize now.