Second Chance, or None At All?
Would you trust your finances to a real estate broker whose appraisal license once was revoked? Probably not… But, homebuyers seldom check their brokers’ backgrounds amidst the rising cases of real estate fraud. The number has grown high enough that the Center for Public Integrity discovered that since 2005, one in six appraisers whose licenses were revoked or surrendered kept their licenses in California and Florida. The investigation adds, “… The violations that led to these appraisers losing their licenses ranged from simple incompetence to fraud committed for personal financial interest. Yet they slipped through the cracks of a loosely maintained system of state oversight, which allowed them to continue working in the real estate industry negotiating sales to home buyers, who likely know little about their pasts… In several cases, banned appraisers also remained in the appraisal industry, taking high-level positions in appraisal management companies, the increasingly prevalent and often unregulated third-party companies that link lenders with independent appraisers.”
So how can these people still close deals? The CPI mentions “… fragmented state bureaucracies, divided regulation of the real estate industry, and poor communication between regulators” as the reasons why. If you ask me, any of these three is nearly impossible to solve immediately. These weak regulation need to be reformed first before hunting down violators.
In the meantime, buyers need to take precaution against these crooks. Check your broker’s reputation and commitment to honest dealings. Aside from their license, brokers should be willing to show you their past sales. It reveals much about their reputation. But, beware of those who have suspiciously high sales volume. You will hear all the good things about a property, but ask about any defects as well. As brokers, they are required to disclose all the facts about the property – whether these are good or bad. After all, it’s your right to know these things as a buyer.
Brokers need to attend to your needs from the perspective of building a long-term professional relationship. Some of the best have been in the industry for a long time, but to be fair to the new breed in the market, you can’t discount the fact that they are generally more aggressive at building a solid client base and can provide services that equal or exceed those of the more established brokers.
Finally, it is essential to research and ask about the broker’s past dealings, records and background. Remember, there is not a fail-safe way of preventing ex-appraisers from getting back in the housing industry. Always remain vigilant!