Thursday, October 05, 2006

Absurdities in Real Estate on the Big Island


I have started this blog 2 years into a lawsuit against Big Island Realtor Donna Herbst, Remax Hilo. It's just a way to vent frustration. For legal CMA, it is completely my opinion. I have been a licensed Realtor on the East Coast for a number of years, almost 9 to be on point. Never, ever have I experienced or even heard of a case like mine.

My partner & I and our 4 year old daughter contacted Donna Herbst, owner and agent of Remax Properties in Hilo Hawaii, to relocate to the Big Island. We had big dreams of moving to a tropical locale and living a dream that is Hawaii. We wanted to give up the East Coast rat race and all it's high speed craziness and live a better life. Don't get me wrong, we will always be Jersey Girls, however we were searching for a better standard of living.

We found a property that looked perfect for us online. That is the one that lead us to Donna Herbst and an obscene amount of legal fees. Now, being a Realtor in one state does not make you an expert in another by any means. There are different laws and different paperwork requirements. With such a big move, we didn't want to take the chance of losing a property or getting sued or screwed because we thought we knew everything.... didn't think the Realtor would be doing the screwing! I am getting ahead of myself.

In real estate, usually the Seller pays commission between 4 and 6 percent to whom ever sells their home. Their is a listing contract between the Seller and the listing agent (in this case Donna Herbst). Another realtor representing the Buyer would acquire 50% of that commission. The property we contacted Herbst on was listed by her. Who else would know more about this property? I told her who I was and lawfully explained my status as a NJ licensed Realtor and a fellow Re/Max agent! I also told her that I knew nothing about real estate in Hawaii and would forgo any commissions/referral fees if she would represent us as well. We entered into a dual agency and Donna Herbst agreed to represent both the Seller and us as potential buyers. The basic rules to "Dual Agency" is that you have to represent both parties equally and have full disclosure to both parties. We lived over 5000 miles away and did not want to chance any potential deal to have bad issues. Agents generally will sell their first born if necessary to make a Dual Agency deal go to closing. You have control over just about everything and only stupidity on behalf of one of the parties (or yourself) can make the deal go south. You also get the entire commission! In this case $16,000.

We were so excited at our new prospect. We asked for all the things a buyer would and should ask for when considering a home purchase, Seller's disclosure (everything the owner's know about the property and any repairs that were done or need to be), mortgage representation and home inspector referrals. Donna lied right off the bat and said there was no Seller's disclosure. We found out from the Seller's at our home inspection. After weeks of asking for a mortgage company and home inspector we had to find our own. Herbst was pushing us right from the start on price, my first red flag! We wanted to offer $215,000 on the listing that was $250,000. I did an online property comparison to come up with that number. You should not just imagine a number that sounds good. Do a home comparison to others on the market and to those that sold. You should be able, if comparing apples to apples come up with a price that is reasonable. (Turns out, our house appraised at $219,000 in the end.) Donna said "no" to the $215 and said you need to come in much higher, there are other offers coming in. Trusting my pushy realtor and ignoring my gut, we offered $230 or $235. Negotiation after negotiation we ended up paying $250,000! Herbst was really good at getting to us. She just kept pushing and pushing for us to "come in higher". You think, wow there must have been a lot of interest on this property.... NONE! It turns out Donna Herbst has been friends with the Seller's for over 10 years!!!!!!!! Something else my fraudulent Realtor forgot to mention to me!!!!! I had to come to closing with an additional $30k because my purchase did not appraise!!!!!!! My Realtor, whom I trusted not just because of Professional Courtesy but because of a signed "DUAL AGENCY AGREEMENT" totally screwed us to help her friends!!!!!! Did I also forget to tell you that DONNA HERBST LIED TO ME ABOUT THE PROPERTY I WAS BUYING? She misrepresented the bedroom and bath count. DID I FORGET TO MENTION THAT WHEN I SAW HER AT THE END OF MY HOME INSPECTION AND CONFRONTED HER IN FRONT OF THE OWNER SHE TRIED TO BACK PEDDLE AND THEN TOOK OFF! I traveled over 5000 miles to inspect this home with my 3 year old daughter and Herbst didn't even call me or set up a meeting/lunch or anything. She didn't even have the professionalism to show up to the home inspection on time!!!! I have to say a big THANK YOU to the owners/Sellers for being honest and helpful. Without their honesty and help, we would not be in the house today. Oh, Donna Herbst also lied about my access to the property. After flying from NJ for a home inspection I told Herbst about 2 weeks earlier, I had to change the date of my home inspection!!!!! Herbst said the owner needed 48 hours (BIG LIE). From that point on the RED FLAGS were flying!

Herbst tried to call me after the home inspection.....on the day I was flying home!!! I didn't get her call until we were safely back in NJ. Now I'm sure I'm making this move sound a lot easier than it really was. We had not one but two houses we were selling in NJ and a container that would take over 6 weeks to get to Hawaii. If the house fell through than it would be a chain reaction of bad events for us. It costs over $10k to move! We had 2 Houses on theNJ market that had contracts (we would be homeless!) and potentially no new home to move to! This was not a move you make on a whim. Everything had to be calculated exactly. Donna Herbst was causing problems where ever she could. She tried, on several occasions, to cancel escrow without anyone's approval. She would not give my original appraiser access to the property. She was still showing the house to other prospective buyer's even after the sellers told her to stop!!!!

Little did I know that Donna Herbst had already started maneuvers to kill my deal on this house. She sent a memo to the Broker of record @ Remax, Charles Aki that this deal needed to be killed! She did everything she could to shake us. Finally, we had to obtain legal representation! In NJ it is standard practice at the inception of an offer to get an attorney. I can't express how valuable these people are in making sure you don't get screwed! Although the Big Island is the largest in the Hawaiian chain, the population is just over 150,000 people. I called attorney after attorney and finally the last one said "it's just too small of an island to make enemies". I had to call a firm on Oahu just to get legal representation. My only regret is that I didn't hire one from the inception! The poor Seller's were confused because Donna was telling them a bunch of lies to get them to kill the deal. She told them that we got an attorney because we could not get a mortgage and that they better kill the deal now before things get really bad. They had already found another house and wanted this deal to close just as much as we did! They got an attorney too!!!! During the entire time I was emailing the Seller's telling them what was really going on. They did not respond back, which was ok but at least I was keeping them informed and forwarding Herbst's emails to them.
I really feel badly for them because they trusted Herbst too. She was their friend. Although in the end she was really trying to screw us to help them, I think.... She was so bad that they needed an attorney too. The Seller's attorney realized what a fraudulent liar Donna Herbst was too and sent her a letter telling her to knock it off, stop showing the property and basically watch out or the Seller's will sue you too! Now, I was already on to Herbst, my attorneys were in shock that a Real Estate Professional would act in such a fraudulent and liable manner and now the Seller and their attorney noticed it too!!!!

THE LAWSUIT: another screwing coming our way

Our attorney put together a great sounding lawsuit. We had a court date assigned but we needed to go to a Mediation conference first to show due diligence. More expenses our way. The legal fees up to that point were manageable. Between the extra money we had to pay out of our pockets for the house that didn't appraise to the $20k we spent trying to close the deal it sucked up all our investment/savings. Our attorney told us it would be good to settle because a court hearing could cost another $100k and the law may not allow for the for what we were asking. $50k in expenses up to date, $25k for the loss of another property because Herbst did not act (Oh, forgot to mention that. We wanted to purchase the lot next to the house we were purchasing and Herbst just didn't act when we instructed her to) and any legal fees and expenses related to this fiasco Herbst caused.

Let me just say that lawsuits do not hurt Realtors the way it hurts normal people. Realtors carry an insurance policy called E & O insurance, otherwise known as Errors and Omissions Insurance. This policy covers a Realtor in the event they mess up professionally. Kind of like malpractice insurance for doctors. Now usually E&O wants to just end any problems and if the price is cheap enough, pay out. Our selling out price was $50k, cheap by most standards. Donna Herbst did not want to end it at $50k, her pride was injured. After all, I was an out of state realtor who called her on gross misconduct. I was letting the cat out of the bag on how she does business, shady. The initial offer was $16,000. My legal fees and expenses were close to $30k. At that time we were asking $75k. My attorney stated that Herbst would not ok a payment to us over $23k. She injured us emotionally and financially and now wanted to rub salt into the wound. After the talk about additional costs of $100k, my partner wanted out now before it got worse. We verbally accepted the $23k and awaited to get the written agreement.


In this Release and Settlement Agreement Herbst's attorney conveniently wrote in that by accepting the pennies they were offering, we were not to speak to anyone about what happened! No mention to our friends or other people who could fall prey to the shady business practices of Donna Herbst, No complaint to the Hawaii Real Estate Commission, NOTHING! I called my attorney and told her to relay this message.... "Take your offer and shove it up your ass!" . Now our attorney is a mellow and reasonable woman. She suggested we let them know that we could not accept those terms. After 3 drafts of this agreement, they are still trying to sneak it in about disclosing to the public Herbst behavior. Now, if they were reasonable about the settlement and Herbst admitted her obvious wrong doing and was remorseful, we would have been able to sign an agreement covering those terms. Instead Herbst is pretty much saying, "yeah I raped you on this deal, too bad, take what I am now giving you and shut up". Oh, what I forgot to mention is that they came to this number out of what our expenses were at the time. They didn't feel they needed to cover our legal expenses because it was our decision to obtain legal counsel.... can you believe this?

Where is our Protection?

So, now it's over 2 years and the legal fees keep mounting and Herbst is still practicing real estate without consequence. She is still being allowed to do what ever she wants. I think, what if a senior couple with their life savings decide to use Donna Herbst. What happens to them? Who protects them from Donna Herbst shady dealings. We still to not have an agreement.

The Real Estate Commission Complaint:

I found out just a couple of months ago that a lawsuit complaint does not automatically go to the Hawaii State Real Estate Commission. I have to file it separately. I am awaiting paperwork from my attorney to put in our complaint. Who knows how it will go? We would ultimately like her license pulled, however & realilistically, some stiff fines and a suspension would be good too!

Who knows how this will end. I thought that by having 80% of my correspondence with Herbst in writing and most of her behavior witnessed by others it would be a slam dunk. It's turning out to be another example of why the little guy stops fighting for what is right and starts thinking of how the hell they got themselves into such a mess.

The only thing I can say is, and this is my opinion....


Oh, and always cover your ass. If something doesn't seem right, it probably isn't.

More news/details later.......