Saturday, April 08, 2006

HOUSE CALLS

We all know that selling a house is tricky, but sometimes problems arise in areas which we hadn't foreseen.

C.S., a reader in Sunbury, Ohio, was trying to sell her house. She entered into a three-month contract with a real-estate broker. In exchange for paying the broker a smaller commission if her house sold, she agreed to pay advertising costs.

The three months passed, and her house didn't sell. The contract expired, and C.S. got a bill for $2,300 to cover the cost of advertising her home.

By the time the bill arrived, C.S. was busy trying to sell the house on her own, and had placed an advertisement in the local newspaper. A prospective buyer saw the ad and made an appointment to see the house.

"While I was showing the house," C.S. writes, "the woman asked if I had had the house listed with a specific real-estate company. When I said that I had, she went on to tell me how she had called them six times and left three messages, without a return call."

Given this revelation, C.S. is having second thoughts about the broker's bill.

"Do I owe the broker the full $2,300?" she asks. "Were they unethical in not responding to this person's inquiry?"

It's not unusual to be disappointed in a product or service that we've purchased, because not every venture delivers the benefits we'd hoped for. For example, an executive-search firm may not turn up any offers for you, even after you've plunked down a pretty penny. It's tempting to withhold a final payment if the results haven't been what you'd anticipated, but so long as the service was in fact rendered, it would be wrong to withhold payment, regardless of the outcome.

But C.S.'s case is not a clear-cut one. On the face of it, she agreed to pay for the advertisements, the advertisements were in fact placed and therefore she owes the money. But if she can prove that the broker did not return telephone calls from people responding to the ad she was paying for, she has a legitimate right to withhold payment. Her agreement to pay for the advertising assumed that the broker would follow up on the ads. If that job wasn't done, then she shouldn't have to pay for it.

Because C.S. suspects that the broker didn't do her job, the right thing for her to do is to contact the broker, tell her what she was told by the prospective buyer and ask to see any logs of telephone calls that were received in response to the original ad.

If the broker admits that not every call was responded to, then C.S. is entitled to at least a reduced fee for the advertising. Not responding to such inquiries would have been both unethical and unprofessional.

It might well turn out, however, that it's impossible to prove definitively whether there were calls to which the broker didn't respond. If that's the case, and if the broker can demonstrate that she did respond to other calls that came in, C.S. should honor her agreement and pay up.

If the prospect who told her about the unreturned calls ends up buying her house, of course, C.S. can bask in the knowledge that, by not returning telephone calls, her former broker lost the commission that she might have earned on the sale.

3 comments:

Tom Ward said...

Jeff,

I see we're looking at "ethics versus contract law" this month.

One of my biggest pet peeves is how our society today has made itself up so that everyone is a mini-Judge. They didn't call back therefore they deserve no fee- rubbish. What if the company did call back? What if they did call back and the property still didn't sell (better than a 50/50 chance)? What if they called back and gave out the wrong pricing information? You can see this can go on for some time. And that leads us to the point of who gave the consumer the right to determine a breach? I suppose they have the right to feel less than satisfied with their purchase, just like the dissatisfaction I feel when a pair of blue jeans wears out with 4 months of light wear. Outrage!:-)

This consumer was likely given less than the best for their money. Yet if that's what she bargained for, that's what she gets. Without seeing the contract or being a part of the negotiations that lead up to a signed contract, there's no way anyone can say whether the consumer was duped or whether they were cheap and unwise. There are always going to be people who try to cut out the middle man and there will likewise be those who know that and try to take advantage of those consumers. Generally there's a reason things are the way they are (eg the existence of real estate agents)- it's called success. Maybe the consumer in this case should have practiced a bit more Caveat Emptor and a little less greed?

Tom

Rick said...

Maybe I am reading this incorrectly, but I think the key here is she agreed to pay for advertising "...if her house sold." Well, it did not! End of story. She owes them nothing. But, if the contract said she paid that regardless, then she seems obligated.
Rick

Mark Powers said...

If C.S.'s agreement with the broker was to pay for the advertising regardless, then she should do that. She could also talk with the broker to discuss the lack of action, and the possibility that C.S. will complain to the local realtor's association (broker has failed in her fiduciary duty) in addition to mentioning to her neighbors that this particular broker doesn't even call back, much less actively work for the sale! But the real "revenge" will be selling the house and letting the broker know....

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