A question of ethics

Issue : A rejected offer for a Baltimore house turned into a threat of a lawsuit after complaints about the dealings of a real estate agent.

March 26, 2000|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

John J. Sullivan, a man who makes his livelihood purchasing real estate for the U.S. Postal Service, was furious.

He had submitted a full-price offer for a Patterson Park home and thought it would be his. When the house was sold to another agent working in the same office where Sullivan's offer was written the day before, he was hardly happy.

"If I ever did anything like this, I'd be fired summarily," he said.

He and his wife, Barbara, felt betrayed, he said. The whole situation was suspicious. "It seemed that the other Realtor had inside information, which made him able to match [our offer] and one better it," Barbara said. "If not illegal, [it was] at least unethical."

The real estate company defended itself, saying its agent submitted the contract not knowing another agent in the office had done likewise for the Sullivans, and that the situation was a coincidence.

The Sullivans retained an attorney, as did the agent they were accusing of unethical practice. Sullivan went to the Maryland Real Estate Commission, threatened a lawsuit, while having his lawyer attempt to negotiate a settlement.

On Thursday, the two sides reached an agreement that called for the agent to assign the contract on the East Baltimore Street house to the Sullivans in exchange for $8,000, John Sullivan said.

"I have a thick streak of doing what I think is right," he said. "If you don't do what you think is right, why have the value? It's better than just slinking away."

Whether the Sullivans were victims will never be known. But it brings to the forefront the question of what are proper real estate ethics? What is an agent's responsibility to the seller, or to the buyer? Who is representing whom?

What happens when a buyer leaves a real estate office after formulating a contract? Are agents allowed to discuss offers? Can they disclose information?

What does it mean by "shopping a contract" or "time is of the essence," and what is a reasonable amount of time for an agent to present a contract to a seller?

These are questions consumers should be aware of and know the answers to.

The Sullivan story

Though John and Barbara Sullivan live in Massachusetts, they are no strangers to Baltimore. He has done work here, and their son and daughter purchased homes in Fells Point using an agent who worked out of the neighborhood office of Long & Foster Real Estate Inc.

With their thoughts turning to retirement and with a yearning to be closer to their daughter's family, John and Barbara thought it might be wise to purchase another home in Baltimore. Their son, who had rehabbed a home he had bought and then sold it, would live in the new home, giving his parents a place to stay when they would visit and eventually a new address when they retired.

So they went back to the same agent who had served them well.

A little more than a month ago, the Sullivans found what they thought was the perfect home on East Baltimore Street across from Patterson Park. Four bedrooms with a separate apartment with its own kitchen, bath, living room and bedroom. It had just come on the market and was listed for $65,970 by Re/Max Greater Metro in Towson.

The Sullivans' agent wrote an offer the day she showed them the home. The contract was for $66,000, with provisions that called for getting a mortgage -- though John had told his agent he could make a cash offer -- as well as a home inspection clause.

The Re/Max agent told the Sullivans' agent the house was getting activity, but no other offers had come in. The contract was delivered that afternoon.

The Sullivans felt confident. They tried to make another appointment to see the house the next morning, but couldn't, so they went back to Massachusetts, not knowing if their offer had been accepted.

Later that night, they were told their offer was rejected, that someone else had put in a better offer.

"We were disappointed," Barbara Sullivan said. "But we knew that you win some and you lose some, and we really questioned [our agent] about it a lot. `How could it happen? We don't understand it.' In Massachusetts, in order to accept another offer you have to first write down that you have rejected the first offer before the Realtor can accept another offer."

In Maryland, that protocol does not exist.

The next day, John called the Re/Max office and found out the buyer was an agent in the Long & Foster office.

Was there collusion or inside information? The accepted contract was for the same purchase price, but the terms were better. It was for cash, and the contract was not contingent on a home inspection. Still, it seemed to the Sullivans that the timing was too perfect.

"From the time frame of the whole thing, it just did not seem like it was right -- that it was a coincidence," Barbara said. "I would really like that house, but it has definitely become the principle of it."

The Sullivans complained to office manager William Cassidy and to Alice Burch, the vice president and Baltimore regional manager for Long & Foster.

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