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Updated over 7 years ago, 05/27/2017
Bad Realtor who has cost me thousands of dollars
When I first started purchasing houses I had a Realtor find me a lot of deals. Once the houses were renovated I had her put the houses up for Lease on MLS. She would have the prospective tenants run a background check on themselves, which was fine to do the preliminary screening. I told the Realtor that she needed to run a background check once they qualified. This never happened. One of the tenants I had to take to eviction court which we got an $8,000 judgement and was counter sued for discrimination against an elderly person, which was thrown out of court. After running a background check through a Private Investigator ($150) we found all sorts of things that would have prevented me from leasing to him.
Is the Realtor liable for not running the background check as requested? There are a lot of TREC rules that she has violated. If I went to them she would probably lose her license. What I'm looking for is the money I lost and nothing else.
After all this drama I started listing my own properties and using a company called www.MySmartMove.com to do the background checks. in the past 6 months I have not had any problems with my tenants, pertaining to Evictions or braking the lease.
IMO, these REAs are first & foremost Agents and want to sell. Sometimes they will operate a Rental Placement business on the side, but that's in favor of the tenants. I would never expect an Agent to do background checks and thus not even ask them too.
Unless you have some form of contract with the agent, they owe you nothing other than courtesy.
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#4 All Forums Contributor
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this would be handed over to her E and O carrier most likely.. they have a 5k deductible at least that's what we have here.. she may pay it.. the carrier will decide if there if they want to fight you or pay.
- Jay Hinrichs
- Podcast Guest on Show #222
Originally posted by @Jay Hinrichs:
this would be handed over to her E and O carrier most likely..
Unless you have some form of contract with the agent, they owe you nothing other than courtesy. See my post above yours :)
Thats horrible that happened to you! I have heard of my smart move but we use zumper. After meeting them and showing the property ourselves, we tell them any disqualifying matters. These would be past eviction, unstable work or rental history. Then if all is well we send the link to potential tenants, they fill it out and pay all online. We get results in about 10 minutes and it has worked wonders. Best of luck.
If you asked the agent to run a background check, did you review the results of that background check before making a decision on the tenant?
The hard lesson here is that no one will look out for your interest like you do. Just because they have a real estate license it doesn't mean they are competent, intelligent or motivated. You took a good step when you took over managing your own affairs.
Originally posted by @Jay Hinrichs:
this would be handed over to her E and O carrier most likely.. they have a 5k deductible at least that's what we have here.. she may pay it.. the carrier will decide if there if they want to fight you or pay.
Since she has worked for two different brokers during this period I would file with the two different E&O policies? Each one being the separate violations? Also how do you find out the name of the Insurance companies where the brokers have the E&O insurance?
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#1 Personal Finance Contributor
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Where are all the 'You should hire a PM!' folks? The 'work on your business, not in it!' people? Here's a guy trying to hire the right people AND work on his business, not in it. Where you at??
They maybe haven't discovered this yet because it's in the renters discussion.
This sucks and I'm sad to see you going through it @Kent Harris.
For the future, research and bookmark free sites that allow you to 'search case records' for your state. You can search by name and see their court cases as a preliminary step. I've asked people to provide their credit report, but not their background check. Once you have these searches available to you, it just takes a couple minutes to do a simple court records search and a sheriff dept & state sex offender search as well. It's helped me avoid this. Best wishes to you!
Probably nothing here without a prior agreement requiring her to do so. Unless.......was the Realtor an agent or a broker? If she was just an agent, did she run this through her brokerage or was it a side deal ? Big no no if she did but it is done all the time. If she did, there is your leverage. Not running through the brokerage is a TREC violation as well as a violation of her agreement with her broker. Let the negotiations begin
P/C Insurance agent here...
If you're going to file a claim, you'd do so through your legal council. They would file a notice of claim against the realtor. No insurance company is going to answer a phone call or file a claim from anyone besides the named insured, and that's regardless of who the actual carrier is.
What contracts are there? Is it a "you said" and "she said" and "you said".
What is written?
- Mike Cumbie
Kent Harris - did you do everything you needed to as a PM? Did you start the eviction process immediately upon the initial late rent? (5 days notice to pay or quit?) $8000 is a lot of missed rent and/or crazy lawyer fees. A lawyer here in Trenton NJ will help someone evict for $200. Did you file for a default judgement against the tenant you can theoretically collect in the future? A real estate agent should bring you every tenant application unless you've specifically asked him not to. Did you review this tenant's qualifications? It's your lease and your ongoing property management of that tenant. Statistically you will also make a mistake picking a tenant directly even using smart move such that you'll have to evict again in the future. Stuff happens in any long term relationship. I'm sorry this happened to you.
Originally posted by @Greg H.:
Probably nothing here without a prior agreement requiring her to do so. Unless.......was the Realtor an agent or a broker? If she was just an agent, did she run this through her brokerage or was it a side deal ? Big no no if she did but it is done all the time. If she did, there is your leverage. Not running through the brokerage is a TREC violation as well as a violation of her agreement with her broker. Let the negotiations begin
A few times she had me make the checks out to her directly. This was before I went to Real Estate School to get my license. She is a Realtor. I had sent a letter to her new broker and he never respond. Didn't mention to the broker that I had paid her directly on some rental listings. Was going to keep that Ace in my pocket until the time comes.
Originally posted by @Account Closed:
@Kent Harris I know everyone like Mysmartmove, but their background checks are not updated like the other bureaus, and most landlords can nor get approve with the other bureaus, so they take what they can get.
What does that have to do with anything in this thread ?
Originally posted by @Natalie Schanne:
Kent Harris - did you do everything you needed to as a PM? Did you start the eviction process immediately upon the initial late rent? (5 days notice to pay or quit?) $8000 is a lot of missed rent and/or crazy lawyer fees. A lawyer here in Trenton NJ will help someone evict for $200. Did you file for a default judgement against the tenant you can theoretically collect in the future? A real estate agent should bring you every tenant application unless you've specifically asked him not to. Did you review this tenant's qualifications? It's your lease and your ongoing property management of that tenant. Statistically you will also make a mistake picking a tenant directly even using smart move such that you'll have to evict again in the future. Stuff happens in any long term relationship. I'm sorry this happened to you.
If a person is up front about moving out before there lease expires, I charge them 3 months rent, technically 2 since I keep the deposit. In the case where I filed an eviction and was counter sued for discrimination against an elderly person, and he had hired an attorney. I requested to the judge that he give me the full amount that was due on the lease agreement, and it was granted. The thing about Eviction court you have to keep the amount your asking for under $10,000 or you will have to hire an attorney. In the case where the person owes me $8,000 and he told me to go fly a kite. I'm going to give him a 1099 at the end of the year and get $2,400 off my taxes next year.
Originally posted by @Mike Cumbie:
What contracts are there? Is it a "you said" and "she said" and "you said".
What is written?
The fact of the matter is she had me pay her directly instead of her broker. My intentions are not to have her license taken away. My intentions are to cover my losses. Me paying her directly is documented since I had given her company checks and she cashed them. It may be a he said, she said situation, except if she doesn't reach a settlement I could quickly go to TREC and file on her for paying her directly and discrimination against a handicapped person. (You can't tell a handicapped person. "This might not be the right house for you since all the bedrooms are upstairs.") I will let her clearly know that if she wants to weasel out of it. It won't be in her best interest.
You asked for a second background check and clearly you never received it. But you went ahead and signed the lease anyway. Sounds like the mistake lies on your end. Sorry to be harsh. Maybe you were eager to cut your vacancy costs? Regardless, you took a gamble and it didn't work out. But good for you for taking things into your own hands. Mysmartmove is a good site for the independent landlord.
Side note: I'm a property manager. We don't accept outside credit or background checks. We run our own. That's the problem with using an agent. As other posters have touched upon, most agents focus on sales. Rentals and tenant relations are a small side gig. As such, they're not your best resource.
I don't think it is discrimination to suggest a house wouldn't be good for someone because they are handicapped (Definitely bad business). Discrimination would be refusing to rent to someone because they are handicapped. But discrimination is always a fine line and I am not an attorney. Sounds here like she did end up renting to her since you were counter sued in the eviction.
Some things to look out for are any payments directly to her after you were licensed (if you have it) or maybe even during your schooling and when the notice to pay rent or quit was served. Any days in between the day rent was delinquent, the notice to pay or quit was served and the date of eviction filing may not be held against her if she wasn't the one responsible for serving it.
Your comment about settling up, or else, could be construed as extortion. If you're going to sue, be prepared to prove any wrongdoing on her part which might be tough.
Good luck on however you choose to pursue this. I like the idea of the 1099 to the past tenant. The likelihood of collecting is slim to none so why not pass the collecting on to the IRS and enjoy the write-off!
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You are the one that signed the leases, I presume. If you did so without all the background info you wanted, that's on you. The 1099 idea is delusional, as you didn't pay them, or have a "loss"....you never reported that $8k as income or came out of pocket for it....you simply never collected it as income.
No written contract spelling out specifically the agent responsible in term of leasing the house, back ground check ..... How would you make any claim?
If all you have is a cashed check paying directly to her, can you prove that it's for her real estate service and not because you own her money?
You can check my past posts on this site: I NEVER run to the aide of Realtors.
I say that so that you can take this next part seriously:
Kent, you screwed up. This is all your fault. The sooner that you admit that and move on the better your business and your life will be. The effort that you will put into MAYBE getting that 8k back will cost you nearly all of that 8k and in the mean time you could have found 8k worth of new deals and built credibility and self-satisfaction.
8K is cheaper than ANY formal education. Just be happy it wasn't 80k and go find your next deal.
So, take the education that has been given to you. What have you learned?
So you took the guy to court and got judgment for $8000 even though the real amont you were out was much less, probably 1 or do months rent. So more like $1,000 or $2,000. You stated you are going to "make" $2,400 by getting a 1099 tax write-off, so I fail to see what you want the agent to pay you for now? Yes they messed up and didn't do what they were supposed to but why are you trying to get more money out of them if you are already made whole by the tax write-off?
Unfortunately, I have to say I agree with @Matt Geerts. No offense, but it seems to me that you're just as much at fault for this situation. Ultimately, you and your agent weren't on the same page and you agreed to accept tenants that you hadn't fully vetted. I would take it as a lesson learned and move on with your life. In the grand scheme of things, $8K is probably not going to break you. It'll probably cost you at least that much, if not more, to pursue this issue. Fix your systems or hire a good professional PM and move on to the next deal.
Best of luck!
Originally posted by @Matt Geerts:
You can check my past posts on this site: I NEVER run to the aide of Realtors.
I say that so that you can take this next part seriously:
Kent, you screwed up. This is all your fault. The sooner that you admit that and move on the better your business and your life will be. The effort that you will put into MAYBE getting that 8k back will cost you nearly all of that 8k and in the mean time you could have found 8k worth of new deals and built credibility and self-satisfaction.
8K is cheaper than ANY formal education. Just be happy it wasn't 80k and go find your next deal.
So, take the education that has been given to you. What have you learned?
Matt,
I can always send him a 1099 at the end of the year for the $8,000. That won't take much effort. Realtors are not all that bad as long as you use the right one. I'm about to get my Real Estate license. I will be working mostly with investors that don't have time to find deals on there own. Since I have a listing agreement with the right Realtor and do all the work myself then things turn out really good. I have been doing it myself since November and since then have not had any evictions. The other reason for getting my license is when I have a vacancy I usually have 8-10 applicants on each property. With my license I can find other rentals and collect a commission. The other reason is if I sell a house I don't have to pay the full 6% commission. I will get most of the 3% back after broker fees. Yes I have learned my lesson, Trust but verify everything a Realtor tells you. The last house I purchased was through a Realtor and got a house 60% below market.