State regulators working to educate all sides in real estate transactions
CAPITOL As the real estate market continues to come back to life, state regulators are educating industry professionals and consumers about regulations on those who sell homes.
It’s using as examples five brokers who broke the rules and are paying the price now.
Among them is Jeffrey Walton, an Amsterdam real estate broker who put a client’s money for purchase of a home in a regular bank account instead of a dedicated account.
He is not accused of any theft or misuse of the money itself, but putting it in the wrong account led the state Department of State to revoke his broker’s license.
Also, a former Erie County broker lost his license in February after collecting deposit money from clients and moving to Texas — the clients never got their money back. Another broker collected more than $570,000 from owners and renters after selling property to out-of-towners. He’d agreed to handle rent and property maintenance and send profits to the owners he’d sold the properties to but the owners never saw any money, according to the Department of State.
The new campaign aimed at education comes at a time when real estate activity is starting to pick back up.
“As the real estate market is coming back, we’re seeing more and more people licensed. And more and more people are buying homes in New York state, that’s been very clear,” Department of State spokesman Joel Barkin said.
“We want people to understand as we’re getting into these transactions that there’s certain things they’re entitled to,” Barkin said.
The department has issued a new brochure pointing out important facts for anyone looking to buy, sell or rent property.
For one, there is no such thing as a “non-refundable commission.”
In other words, brokers earn a commission only when they find a person ready, willing and able to purchase or rent, and all elements of the deal have been agreed upon.
There is no mandatory commission rate, either — the parties have the right to negotiate the amount of the commission, according to the Department of State.
Other facts the state wants people to understand before a real estate transaction include:
All real estate professionals must have a state-issued license, which can be verified on the department’s website, www.dos.state.ny.us, or by calling 518-474-4429.
Anybody involved in a real estate transaction has the right to their own broker. Without a written agreement, the broker could be representing both the buyer and the seller.
Brokers should identify who they are representing upon the first meeting with a client.
An agent representing a client owes that client reasonable care, undivided loyalty, confidentiality and must be able to give the client a full account of money spent on their behalf.
Real estate sales people and associate brokers work under the oversight of a broker, and clients have the right to contact that broker about concerns.
Ultimately, Barkin said, it’s important for people involved in real estate transactions to report any behavior or activity they feel is suspicious.
“We are really trying to also just encourage folks to come forward even if they’re not sure if something was illegal or not. It’s better for them to at least let us know so we can see,” he said.
The department issues roughly 120,000 licenses for real estate professionals each year, and each year a small percentage of those licensed turn out to be “bad apples,” Barkin said.
“I’d say the industry themselves are good partners in this effort in educating their people and making sure that they are operating above board,” he said, though adding: “People also have to understand there is a cop on this beat and we are aggressively going after those people we hear about who are breaking the rules.”