Real Estate Agent Complaints and How to Protect Yourself

Do you have a grievance with your real estate agent? There are many avenues for consumers to file real estate agent complaints, including the New York Department of State, the Real Estate Board of New York (REBNY), the U.S. Department of Housing and Urban Development and the U.S. Department of Justice Antitrust Division.

Remember that filing a complaint against a real estate agent is a very aggressive move, and should only be used as a last resort or if the agent has threatened litigation against you.

How to report a real estate agent for misconduct

Report the agent to the New York Department of State

You can report a real estate agent for misconduct either by mailing or emailing a complaint to your state’s Division of Licensing Services.

For example, a consumer in New York can file a complaint against a real estate agent on the New York Department of State website, which contains a downloadable official Complaint Form as well as instructions on where to email or mail the application.

Per the NY Department of State’s website:

“Should a member of the public believe that a licensee has acted in an untrustworthy or incompetent manner, he or she may file a complaint with the Department’s Division of Licensing Services. The complaint will be reviewed and an investigation will be commenced to determine whether the licensee should be disciplined. Both the licensee and the complainant are kept apprised of the proceedings. A licensee who is found to be in violation of the law is subject to reprimand, fine, suspension or revocation.”

If you live in another state, you can easily find instructions for your particular state by simply searching the internet for your state’s name plus “file a complaint against a real estate agent.”

Consumers can file real estate agent complaints with the NY Dept of State, REBNY, HUD or the Justice Dept Antitrust Division. Only do this as a last resort.

Report the agent to REBNY

New Yorkers can report an agent to the Real Estate Board of New York (REBNY) for misconduct, incompetence or unethical behavior if the offending agent is a member of this New York City based real estate association.

In order for you to pursue this avenue, the agent you have a grievance with must be a member of REBNY. Keep in mind that there is no single, dominant Realtor association or Realtor-associated MLS in NYC as is commonplace in other parts of the country. If the real estate agent is member of a different association, such as HGMLS or MLSLI, you would need to pursue the agent through the appropriate trade group.

That being said, Manhattan based REBNY operates as the de facto real estate agent trade association in NYC given its prominence, so chances are that the agent you’re dealing with is a REBNY member. Per REBNY’s Code of Ethics:

“If an alleged Code violation involves an issue over money, the matter can be handled by voluntary mediation or binding arbitration. Non-monetary disputes are resolved by the Ethics Committees or subcommittees of the Residential Brokerage and Commercial Brokerage Divisions. For members of REBNY’s Residential Brokerage Division, the RLS Universal Co-brokerage Agreement Rules and Regulations supplement the Code of Ethics.”

Although the REBNY website does not have an easy way to file a complaint against a real estate agent, you can contact REBNY here. We recommend either calling the main REBNY phone number and asking whom you can contact to file a complaint as a member of the public, or calling the number listed for REBNY Counsel.

Report the agent to HUD for fair housing complaints

If you believe you have been the victim of fair housing law violations, such as steering or discrimination, then this is a federal matter that should be reported to the U.S. Department of Housing and Urban Development. You can file a complaint online on the HUD website in either English or Spanish.

The HUD website also provides a number to call to report fair housing violations by telephone, and also provides members of the public with a form that they can print out and mail to their regional FHEO office.

Report the agent to the Department of Justice Antitrust Division

Consumers can report real estate agents to the Department of Justice Antitrust Division for violations of antitrust laws, such as such as price fixing, boycotting of discount brokers, bid rigging and market allocation.

You can submit your complaint to the Citizen Complaint Center by email, phone or mail. The Department of Justice Antitrust Division does not have a standard complaint form that needs to be filled out.

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When to file a complaint against a Realtor

Filing a complaint is a nuclear move

Filing a complaint against a real estate agent should be a last resort, as it’s a very aggressive move, akin to launching a massive nuclear strike against an opponent.

For example, filing a complaint against a Realtor is similar to filing a complaint with your state’s Bar association against your lawyer, or filing a complaint with your state’s medical board against your doctor.

Any such action is extremely provocative and subjects the accused professional to potential fines, disciplinary action or even a revocation of their license.

If the accused loses his or her license, you will have essentially deprived someone of their means of livelihood.

When an agent is threatening you with litigation

It’s time to file a complaint if an agent has threatened you directly with litigation. Filing a complaint immediately after you have been threatened may help you take the initiative in a dispute, and cause the offending agent to focus on a response to regulatory authorities instead of pursuing you.

Keep in mind that you should obviously only file a complaint if you have a basis for doing so, i.e. the agent has violated his or her fiduciary duty; the agent has demonstrated incompetence or a lack of ethics, the agent has discriminated against you etc.

File a complaint before closing and any commission is paid

As you can imagine, it’s much more effective to file a complaint if you have to before closing, and before any commission exchanges hands. If you do so early enough, you may be able to prevent a commission from being paid unjustifiably.

On the other hand, if you procrastinate and only file a complaint long after the closing, then it may be quite a while before you see any monetary restitution, if any restitution ever happens.

Keep in mind that most real estate agents do not make much money, and the commission they earned may well have been spent long before any regulatory authority rules that the commission be returned.

Reasons to file a complaint against a Realtor

The agent did not present you with an agency disclosure form

The most basic duty a real estate agent has is to present the customer with an NY agency disclosure form explaining whom he or she represents.

Even though the customer is not required to sign the disclosure form, the agent is required by New York licensing law to present the agency disclosure form to the customer at “first substantial contact.”

First substantial contact is typically defined as the moment when pricing, terms or a potential offer is discussed.

For example, it is not necessary to present an agency disclosure form the moment an unrepresented buyer walks into an open house, but it is required to present an agency disclosure form if pricing and an offer is discussed.

Failure to present an agency disclosure form precludes an agent from earning commission in the event of a dispute.

Remember, the first thing that a litigator will ask is whether the real estate agent presented an agency disclosure form to the customer. If the agent failed to do this basic professional duty, then what basis is there for any of the agent’s claims?

The agent is bullying you into paying commission

A very common reason to file a complaint against a real estate agent is when a broker tries to bully a tenant into paying commission on a rental listing, especially when the agent was not the procuring cause of the transaction or if the agent did not present an agency disclosure form.

Often times, unscrupulous agents will successfully bully tenants into paying a commission by threatening the tenant with litigation, or even threatening to report the tenant ironically to the Real Estate Board of New York.

Should you encounter this situation, you should inform the agent of the recent New York Department of State ruling on 1/31/2020 stating that landlord’s agents cannot collect a fee from the tenant. Even though REBNY and the New York State Association of Realtors (NYSAR) is currently disputing the ruling, it is something that should be kept in mind.

The agent violated his or her fiduciary duty to the client

A great reason to report an agent for misconduct is if the agent engaged in self-dealing or other unethical behavior to the detriment of his or her client.

For example, let’s say a listing agent received two offers, one from a direct buyer and one from a represented buyer.

The represented buyer is undeniably more qualified, but the listing agent successfully pushes the seller to accept the direct buyer’s offer because the listing agent would earn the entire, typical real estate agent commission of 6% of the sale price.

This behavior would be a direct violation of the agent’s fiduciary duty to the seller for personal gain, and if discovered, should be immediately reported to the New York Department of State.

The agent will not take down your listing

If your listing agreement has expired but the agent refuses to delist your home, you have grounds to make a complaint. Any new listing agent you decide to hire will be unable to re-list your property until the old listing is removed. For example, StreetEasy only allows one active listing per property.

You might also be in a similar situation if you allowed any agent(s) to informally advertise your home through an ‘open listing‘. Sometimes, one or more of these agents might refuse to stop advertising your home once you decide to hire an exclusive listing agent. They might ignore your request to remove any listings they may have syndicated to 3rd party real estate websites.

An agent who refuses to take down an active listing upon expiration of a listing agreement or upon your revocation of an open listing arrangement is effectively holding you hostage. This is obviously highly unethical behavior. That being said, we suggest making every possible effort to resolve any dispute directly with the agent before considering any form of official complaint.

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Examples of real estate agent complaints

Rental agent tries to bully customers into paying a commission

An especially egregious example involves a listing agent who puts up a commercial space for rent on LoopNet without a listing agreement in place and without having presented the owner with an agency disclosure form.

This listing agent then proceeds to fire the landlord as a client when the landlord refuses to accept a potential tenant’s terms.

The exasperated landlord reaches out to the tenant directly after having been “fired,” and negotiates an entirely different deal with the tenant.

The lease is negotiated and the building’s rental application is submitted entirely without the listing agent’s involvement.

However, despite not being the procuring cause of the transaction, the former listing agent sends an aggressive email to both the tenant and the landlord, threatening them with REBNY arbitration, if they did not pay her a one month broker’s fee.

In this bizarre situation, the former listing agent did not bother to present an agency disclosure form to the tenant either, and it became increasingly unclear as to who she was claiming to represent.

Furthermore, it was extremely strange that this licensed real estate broker continued to attempt to bully the customers into paying a commission when she had violated New York Department of State licensing law by not presenting an agency disclosure form, the act of which precluded her from earning any commission.

As a further, utterly baffling twist to this situation, she kept involving the son of the tenant in the dispute even though the son (a licensed real estate broker) had disclosed that he was simply helping his father for free.

If she was claiming that the son is the tenant, which is presumably why she sent the son the invoice initially, he is not. If she was subsequently claiming that the son was the tenant’s broker, then the son did not collect a broker’s fee, so there is nothing to dispute or arbitrate per REBNY’s legal team.

Furthermore, the son and the former listing agent did not have a co-brokerage agreement in place for the commercial listing even if there was a commission involved.

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Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided. Hauseit LLC is a Licensed Real Estate Broker, licensed to do business in New York under license number 10991232340. Principal Office: 148 Lafayette Street, New York, NY 10013.

2 thoughts on “Real Estate Agent Complaints and How to Protect Yourself”

  1. I would appreciate advice on my issue and if that is warranted for filing complains. I am in process of buy an unit; the seller agent indicated the unit has a storage bin and is part of the sell. She also showed me the storage in the basement along with my agent. However, when I wanted to submit the purchase package to the building board and asked the seller agent to fill out the form for transferring the storage bin, the agent didn’t respond and later I learned the storage bin was sold to others. I was not told and informed of this change. I believed this was untruth from seller agent like cheating presentation and would find a solution to get compensated for this loss, as we came to agree this purchase which include this storage bin from the beginning. thx.

    1. Sonja Gosine, Spokesperson at Hauseit®

      Hi YZhang, was the storage bin referenced in the actual purchase contract that you signed? Generally speaking, if the listing agent told you something like this (i.e. separate storage, deeded parking etc.) was included verbally, but there’s no written evidence and it’s not referenced in the contract you signed, then you may be out of luck.

      However, this type of behavior is quite unethical and would violate various Realtor and REBNY Code of Ethics clauses, which could be grounds for a complaint. For the legal side, we advise you to consult one of our partner lawyers who can give you an answer on the legal side: https://www.hauseit.com/real-estate-lawyer-partners/

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