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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.
Originally posted by @David Grabiner:
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?
I haven't done the tax write off yet. I am also angry because she also got me a Tenant that did $15,000 worth of Damage to one of my rental properties. (He was a pack rat). Why should she not be accountable for her actions. She will keep doing it to other people. My wife replied "Not your problem!"
@Kent Harris In your original post you stated you were just looking to get the money back that you lost and nothing else. But from your response to me it is clear that you are probably after a little something else because she made you angry and you want her punished.
Probably the most constructive thing would be for you to focus on what mistakes you made and how can work keeping those mistakes from happening again and don't waste time, energy, or money to punish her. Listen to your wife :).
@Kent Harris That sure sucks about the 15K in damages to that house. What would have popped up in the background check that would have told you not to rent to that person?
Your getting your license and plan to place the 8-10 extra tenants into another rental and collect the commission? I'll warn you right now that is a bad idea and likely to be a complete waste of your time. The "commission" for placing a tenant is usually 1/2 months rent, minus 40% for the broker split minus 35% for taxes and dues. So for example a tenant who rents a $1000 rental would net you around $200. From experience, there is zero money to made this way. 1) you'll need to screen them to make sure they even qualify to rent. 2) you'll have to show them units until them find one they like. 3) nothing is stopping them from finding a place on their own. 4) as I illustrated above even if your successful the payoff is minimal. 5). One day in the future you might find yourself being blackmailed by a landlord who is claiming you placed a bad tenant in their unit and says it's all your fault.
From what everyone said the screening wasn't done properly by both parties. I had to tell a realtor one time that wanted to stuff a tenant in a property just to get the commision. I let them know that we will be doing the screening because after you get your commision you're gone. I know in Florida realtors are suppose to have a fiduciary responsibility to you unless they are a transactional broker. We also set up exclusive leasing agreements that go over what is required of us. Not all realtors follow that though. Also some are only focused on sales.
I doubt the State licensing board will revoke her license. The panel at most will place her under restriction to be supervised by her broker. In most states one needs to be a broker with special insurance for property management. You should file a complaint with DRE.
Originally posted by @David Grabiner:
@Kent Harris That sure sucks about the 15K in damages to that house. What would have popped up in the background check that would have told you not to rent to that person?
What would have popped up is he got sued by a previous Landlord. In Smart Move it would have shown the judgement. I would have been able to lookup the court case in public records.
Originally posted by @Sam Shueh:
I doubt the State licensing board will revoke her license. The panel at most will place her under restriction to be supervised by her broker. In most states one needs to be a broker with special insurance for property management. You should file a complaint with DRE.
In Texas the Department of Real Estate is called TREC (Texas Real Estate Commission). I want to do that as last resort. TREC has setup a fund for Customers who have been defrauded by Realtors up to $50,000 or $100,000 per Realtor. The Realtor only get there license back when they reimburse TREC. https://www.trec.texas.gov/public/real-estate-recovery-funds
This will have to depend on what type of agreement you had with her. Was she allowed to place a tenant without you reviewing the application and background? Because if she was and you specifically gave her a set criteria to abide by, then she can be at fault. In our market we use smartmove with smaller owners who have a few units and any investor who has many usually has their own. The way we do it is we gather all paperwork from potential applicants, run the background and credit through a company like smartmove(Unless owner or management company does their own), and then we present the entire packet to the owner. If the paperwork and background looks good then they move forward with the interview. The entire decision is made by the owner. We've never had an owner who hasn't been involved in the decision. I could only see you getting anything if she was allowed to put them in the rentals without you have to approve. And if she can prove that she had followed your set criteria, you going after her may be a waste of time.
Just to add: I will never take the responsibility of making the final decision on a tenant because we abide by a strict code of ethics, and 1 mistake can cause a fair housing lawsuit. I make sure that the tenants meet a written set criteria made by the owner and if they pass that then the application goes straight to the owner to make the decision on interviewing.
Originally posted by @Kent Harris:
Originally posted by @Sam Shueh:
I doubt the State licensing board will revoke her license. The panel at most will place her under restriction to be supervised by her broker. In most states one needs to be a broker with special insurance for property management. You should file a complaint with DRE.
In Texas the Department of Real Estate is called TREC (Texas Real Estate Commission). I want to do that as last resort. TREC has setup a fund for Customers who have been defrauded by Realtors up to $50,000 or $100,000 per Realtor. The Realtor only get there license back when they reimburse TREC. https://www.trec.texas.gov/public/real-estate-reco...
Kent- I know I am the one that suggested the TREC option as a leverage tool. Frankly that is all it is. While she may or may not have done the screening, with the lack of a formal agreement in place there is really not much there
The agent not running the funds through her broker is a violation and while she may get a slap on the wrist, that violation in no way harmed you and you would not be able to file a claim against the Recovery Fund