WatchPosted for Patrick.net reader A.
Hi Patrick,
I am an avid follower of your site and learned quite a bit about do's and dont's of the real estate. Thank you for keeping up the site.
I have a short but an important question to ask you:
Does "the disclosure regarding real estate agency relationship" form bind me in any way with an agent after I terminate the relationship?
In this particular instance, I did not feel the agent carried out her duties properly in negotiating the price to justify my offer (such as pointing out the cons of the property or running comps to convince the seller's agent or the seller). After I got nowhere with this property that I really wanted to buy, I told her not to search properties any further. At this point, I am inclined to go after this property with a different agent that understands real estate negotiations and can produce a convincing argument to the seller. After her termination, I called the seller's agent and told my side of the story about this particular house and raised the price slightly. She approved my reasoning and told me that she would relate this message to the seller to reach a settlement.
I strongly believe that the real duties of being a buyer's agent goes beyond meeting the buyer in front of the property and write an offer letter. The real test is how well the agent is able to produce a convincing argument so that the seller's agent can work with you.
Please let me know what you think. If you want to post this email on the website, please go ahead :-)
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46 male
Menlo Park, CA
I think it depends on the exact verbiage in your contract. The fine print may say something like "if you buy any house anywhere within the next year, I, a sleazy realtor, get a cut."
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No jury would convict you if you snapped this piece of shit in half and stomped it to death.
But just to be safe, stuff its head in your ass crack and shit down its throat.
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46 male
Menlo Park, CA
ptiemann says
No, I'm pretty sure that's not always true. For example, in California:
From
http://www.car.org/legal/contract-forms-folder/buyer-broker-qa-for-consumers/
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47 male
Lafayette, CA
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I have yet to sign any of those three agreements. When I used to use a buyer's agent, it was pretty informal.
Under no circumstances would I ever sign any of those documents, especially the last two. What kind of legitimate contract is non-revocable even before any services have been rendered?
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"the agent gets the commission only if he/she procured the sale. That usually means, if that agent was the one who showed you the house first, or possibly emailed you about it first."
Who says??? As long as there is no form documenting buyer-agent relationship (buyer-broker agreement), you cannot support this statement.
What happens to this logic if the agent does not perform his/her duties for you? Is this not an important consideration whether or not he/she gets paid?
Even you sign "disclosure regarding real estate agency relationship" as a buyer before you make the offer is obsolete if the offer is not materialized.
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Victorville, CA
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APOCALYPSEFUCK is Tony Manero says
Not good advice in my book. Getting froggy is not the way to go.
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Victorville, CA
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iwog says
EXACTLY. Thank you Iwog.
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Sunnyvale, CA
ptiemann says
The agent gets the commission if and only if they close the deal.
Nope. I've never signed an agreement with a buyer's agent when looking at properties and in that situation there's no contractual obligation so if "your" agent isn't treating you well you can get rid of them and use a different one to close a deal even on a property "your" ex-agent showed you.
Agent #1 insisted on dragging my wife to see properties that we weren't interested in (like with 2-3 extra bedrooms my wife explicitly stated she didn't want to clean or pay for "Oh, you can just close the doors of the ones you're not using", for more money than we wanted to spend, etc.) and took us back to see the few my wife thought I might be interested in during which she tried to up-sell is "You won't be happy in this price range"
My wife was having back pain from driving around to places we wouldn't buy and I had better things to do with my time than sit through sales pitches for pricier properties so we metaphorically fired her (no contract, no pay, she technically didn't work for us).
We went back to see one of the same properties with Agent #2, saw there was a competing offer on it, and made a slightly nicer offer. Turns out it was by another of Agent #1's customers, Agent #1 was upset and said she was going to sue agent #2. Agent #2's brokerage said they'd indemnify her if we gave them a letter explaining the situation which we did noting that we had no written contract with Agent #1 and she hadn't done a good job in various ways.
We won, agent #2 got her commission, and agent #1 lost that round. Hopefully she'll behave better and listen to her customers next time.
My wife is a sweetie and actually offered to pay for agent #1's gas but agent #1 declined.
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A broker (not realtor) has told me that the buyer has the full authority to fire the realtor any time if he/she feels that the agent does not perform up to his/her expectations and can start the entire process again on "the same property" with a different agent.
Of course, there is an ethical issue here if the buyer fires the agent just to see the property. But, I don't think this is the case in this thread.
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I do not get it.
OP did not like the price being too high, so he/she fired the agent and offered higher price?
I doubt, OP approaches this in any rational way.
As far as procurement case, yes, the agent would have one and if learns about another his/her offer on this property being accepted, may demand it and possibly derail whole deal with possible buyer expenses/deposit loss.
i would not risk it.
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drew_eckhardt says
if agent #1 wrote an offer the same property, she'd have procurement cause for 6 months or so and thus entitiled to commision.
likely, listing agent would not increase the comission to selling side; agents ##1,2 would not have agreed on comission slpit between themseves, which leaves a buyer in losing position:
1. pay up comission from own funds and complete the deal.
2. bail out of contract...if contingencies are still in effect, then only inspection/appraisal fees may be lost, otherwise deposit can also be lost.
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In New York there is a standard disclosure form whenever an agent shows you a house. It tells you if the agent is a buyers agent, sellers agent or dual agent. Methinks this might be what you are referring to.
Now - its supposed to be signed BEFORE seeing the house, but I've had a few agents ask me to sign AFTER (I simply tell them that I cannot sign anything of this nature without consulting my lawyer).
I had a case once where I first saw a property through the listing agent, then upon further reflection, contacted my own agent to write up an offer. He expressed the same concern - the agent who showed me the house had a right to the commission.
At the end of the day, as a buyer you don't pay commission directly. That is an indirect cost paid from the sellers side. (Seller pays 6% - 3% goes to sellers agent, 3% to buyers agent) so it would really be up to these two agents to find an amicable agreement with respect to commission.
At this point, you should probably just go with the sellers agent (the listing agent directly) as he (or she) is already working both sides of the deal to try and get something done. Coming in with a new buyers agent is only going to complicate matters further.
Just be sure that you have a good inspection, and do some of your own homework with respect to any unforeseen issues. A little bit of leg work will help ensure you are not buying someone else’s problems.
First question I usually ask the listing agent (assuming I like the house) is "Why would anyone want to sell such a beautiful home"
Usually gets them to open up a bit about the back story.
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Vero Beach, FL
The real sleazy agent is the listing agent who will attempt to get the whole 6 percent commission while cheating the buyer's agent out of half. OP saves no money unless OP negotiates with listing agent to reduce the commission. If that happens, OP and listing broker/agent may still be sued should buyer's agent discover the sale went through. An honest listing agent would inform the OP that the buyer's agent must be paid as the procurrer whether the OP was happy with the service or not.
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I can't beleive anyone would use a buyer's agent. It guarantees a commission regardless of how the buyer finds a house. The buyer could find a house through another source or even buy their grandmother's house and the agent still gets a commission. I want agents to know one basic thing, "whomever finds me a house, gets the commission", simple, period.
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Wheeling, WV
Patrick says
I once had a realtor show me a house as a buyers agent, then he told me it was a 'freebie' and if I wanted him to show me any more I would have to sign a contract that basically meant he got a commission within 6 months whether I bought a house (through him or anybody else) or continued renting. Needless to say, I didn't sign it.
JoesAttic4us says
I find it helps me get a better deal and is one of several methods I use to conduct due diligence; as a buyer its no money out of my pocket and why would I want to trust the seller's agent who has their best interests at heart instead of mine? Yes I would like ot go without and not have the cost, but its not gonna happen so I use it to my advantage.
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What makes you believe both agents aren't on the phone with each other gaming the seller and buyer for mutual benefit? They have no interest in any party save themselves and whatever cash they can scam out of a transaction.
chemechie says
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Beverly Hills, CA
APOCALYPSEFUCK is Tony Manero says
NO BIG SECRET....its called a CLUB they are in it ...and YOU THE BUYER ARE NOT INVITED....but YOU the BUYER is the chump who pays for their party. Like VULTURES these estate agents will dine on your body and tear every little bit of flesh off you...if they get close enough. We must be ready for the blood seeking vultures circling around for the kill...!
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My experience in Florida before I finally had to dig up a retired zombie realtor, I knew from the old days.
Realtors would make me sign a contract, before they would submit an offer on a house. If the seller didn't accept my offer, I never heard from that Realtor ever again. They would even stop taking my calls.
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ptiemann says
A simple google search reveals that such an agreement does exist.
http://www.aaronline.com/documents/buybrok_new.pdf
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San Francisco, CA
JoesAttic4us says
I assumed that this was the case, and now I am confused. Our (buyer's) agent has been showing us a ton of houses and we have already put in 2 offers. He's a decent guy, though I have maintain a deep sense of mistrust for all realtors.
This week I answered an ad on craigslist about a house: seller's agent is trying to sell it before it gets listed.
We went to see it, liked it, but decided today not to put in an offer, for various reasons.
So someone please clarify:
1. I have never signed anything with our buyer's agent. If I find the house myself (before it's been listed) and choose dual agency from the listing agent, is this any business of our buyer's agent?
2. If we did forego a buyer's agent and worked solely with the listing agent, what is the best way to protect ourselves? We are first time home buyers, and while I consider myself extremely well-informed, I am not experienced in this, and I am sure there are many ways to get screwed.
I followed the previous thread on pat.net but these 2 answers weren't clear. We are on the Bay Area, if that makes any difference.
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Los Angeles, CA
The buyer can get screwed and end up owing a commision to the buyers agent EVEN IF THE SALE FALLS THROUGH. I heard about it once - a lady backed out after the 'contingencies expired' and broker sued her for the buyers side commish which is outrageous as no sale took place. BUT this is legal since the agent did work, there was breach of contract on the buyers part.
ALSO if you 'change agents' on the same house as a buyer you could very well end up paying one of those agents out of YOUR POCKET. Basically the law in CA is that the first agent that shows u the house physically gets the commission no matter that you didnt even write up an offer and instead had a 2nd agent (or the listing agent) write up the offer.
Im not lawyer and this isnt advice, I could be be wrong. I believe these laws are probably due to the listing agent trying to shut out the buyers agent and get both sides of comission. Of course its pointless since all they do now is not return buyers agent phone calls and thats totally legal! haha. the law really is useless except as a weapon to attack your enemies if you have large cash pile to hire lawyers.
As a buyer, if you are informed, the best bet is never use buyers agent, always use listing agent. Also keep in mind OP, the 'negotiating' the buyers agent does simply does not exist. its a joke. All they do is call the listing agent and try to get work out if a deal is possible and how much each side will cave in - the 'meet in the middle' is a common tactic. Sellers wont listen to comps, or arguments, wont look at a case-shiller graph - they have a bottom price and thats it.
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bmwman91's website
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1sfrenter says
I, too, am curious about this one. All common sense would indicate NO as the answer, but the world is in short supply of common sense. Can anyone answer this definitively?
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Danville, CA
gregpfielding's website
Patrick says
The answer is no. There is nothing about this particular form that binds you.
However, there is a precedent for "procuring cause" which effectively means that if you end up buying a home that the agent showed you, they can make a case that they are entitled to the selling agent end of the commission. This would mean that the listing agent would have to pay them their half, instead of taking it all for themselves, even if that agent never did any work. The same applies if you decide to use a different agent to write the contract on a house someone else showed you.
It's important to understand that this is a effectively a dispute between your ex-agent and your new agent (even if your new agent is the listing agent).
In practice, these disputes are usually settled by splitting that side of the commission somehow - effectively paying a "referral fee" to the ex-agent. The ex-agent typically won't try and fight for the whole commission (in a hearing with the local association) if they are being accused of incompetence.
You can imagine circumstances where agents do need to be protected. There have been times where buyers are shown homes, and then those buyers contact the listing agent to work directly with them to try and negotiate a kickback or somehow better deal. Or, they take advantage of a local agent, showing them lots of homes, but then have their cousin from San Jose write the contract hoping the local agent won't notice.
In your particular case, your ex-agent would be entitled to commission, probably in the form of some sort of settlement, with the listing agent (assuming you decided to work with them directly). My advise would be to ask the listing agent if they would be willing to pay a 25-50% referral fee to your ex-agent and then explain to that agent, in writing, why you are choosing to no longer work with them and that a referral fee is being offered as a settlement. This is the fair, right way to end your relationship and proceed with the purchase.
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San Antonio, TX
jvolstad's website
I would just drop my pants and shorts and tell the agent to kiss my behind. I think the Realtor will get the idea that the buyer agency contract is cancelled.
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jvolstad says
You can't do that in Texas! You'll wind up in the hoosegow sure with that kinda deal.