Real estate question for anyone with experience in dealing with agents

[+ purplekow]

I recently started to pursue a new site for my business. As I have a significant client base and the business is very strongly associated with my present location, I was in search of a site that was very close to the one I have now. A friend recommended a real estate agent and I went out and scoured the area with the agent. We came up with a few locations but nothing that really worked for me. There was a business across the street,not for sale, the site of which would be perfect for me. I had the agent contact the owner and he said he would be willing to sell and he named a price of $600,000. I gave my agent a bid of $525,000 which he offered. The offer was rejected and the agent told me the other owner came back with a price of $620,000. I asked the agent to keep in contact with the owner and to keep an eye out for other suitable properties. Two months later, my agent calls to tell me he is now representing the other owner, who has decided to sell, and he is putting the property on the market for $600,000. Anyone here with real estate dealings ever heard of a situation like this? I am rather annoyed and can't help but think that the agent pulled a fast one. Thoughts please.

[FinFangFoom]

Please clarify something for me:

 

Who is the "other owner" and what does he/she have to do with the deal. You've only mentioned one property.

 

I'm totally lost.

 

Helplessly yours,

 

FFF

[+ purplekow]

One property one owner sorry for the confusion. The property which was not initially for sale, is now for sale through an agent who I asked to contact the owner of the property. The agent gave me a song and a dance about the price. My guess is he found that the owner did not have an agent and is trying to get both commissions. Is that any clearer?

[MindThe Gap]

The answer you seek can be found within:

 

http://www.realestateabc.com/codeofethics/

[FinFangFoom]

It's all above board. You made an offer and it was refused. End of subject. The owner decides to sell later on and uses the broker he met through you - nothing wrong with that.

 

As for the commission, he's gonna make the same amount in Scenario #2 as he would have in #1. There was no other broker involved so he wasn't splitting the commission.

 

How exactly do you think you're getting screwed here?

 

Frankly, if you felt the property was exactly what you wanted you should have simply paid his price. In the grand scheme of things, $80K isn't that big of a deal when you think about what the added mortgage costs would have been for you.

 

Financially yours,

 

FFF

[+ purplekow]

>The answer you seek can be found within:

>

>http://www.realestateabc.com/codeofethics/

 

 

Thanks this was helpful. It does seem he was under some obligation to either tell me he was no longer representing me or to tell the owner that he would need my consent to represent the owner as he was already representing me. Standard of practice 1.5.

 

As for paying the extra $80 K, value and budget play a role when I make a business purchase. Just because I can afford something and I want it, does not mean I should buy it for more than it is worth.

Thanks for the help to all the responders.

[FinFangFoom]

>>The answer you seek can be found within:

>>

>>http://www.realestateabc.com/codeofethics/

>

>

>Thanks this was helpful. It does seem he was under some

>obligation to either tell me he was no longer representing me

>or to tell the owner that he would need my consent to

>represent the owner as he was already representing me.

>Standard of practice 1.5.

 

Did you sign anything stating that he was a buyer's broker and that you would pay the commission? If not, the moment he signs something with the seller, he can no longer represent buyers without written consent from the seller - that's called "dual agency" and requires consent from both sides.

 

However, all these things are different from state to state.

 

Informatively yours,

 

FFF

[Guest zipperzone]

As he is now representing the other side, (the owner of the property you wish to buy), and you don't want him to earn a "double" commission, you are free to choose another agent to represent you in this purchase. That way he only gets paid for the listing end and the realtor of your choice will get the selling end.

 

From your point of view it's not ideal if both a selling and a buying commission will now have to be paid. But you can have the satisfaction of reducing the amount of his commission.

 

Another way to deal with this would be for you to use the listing broker and put in a lower offer. Tell the agent that this is you firm offer and if the seller doesn't feel it is high enough, the realtor should reduce the amount of commission he is charging the seller to make up the differance.

[Luv2play]

My own view on this is that the agent acted in an unethical way. Once purplekow had engaged his services to make an offer on the property, even if the offer was turned down, the agent should have told purplekow he was terminating his agency with him and going to represent the seller BEFORE making an offer on behalf of the seller to purplekow. In p's position, I would have felt betrayed. After all, it was p who introduced the agent to the seller.

 

I know that real estate is a cutthroat business and I have witnessed some slick manouevres in my own dealings with agents. In my own case, I have never used an agent to buy a property, only to sell properties and once I even sold a country property without an agent. I know how to read legal documents better than most real estate agents since I have a degree in law. However I will grant agents have a useful role in marketing a property.

 

I don't understand this business of a "double" commission. The only commission that is PAID is paid by the seller. It is either paid to the seller's agent wholly, if no agent represents the buyer, or split with the buyer's agent if there is one. In a case where the buyer finds the property himself, as p did, the buyer's agent has a pretty easy job to earn his share of the commission, IMO.

[Guest zipperzone]

>I know that real estate is a cutthroat business and I have

>witnessed some slick manouevres in my own dealings with

>agents.

 

Yes - it IS a dog eat dog world and Mr Niceguy may go home with a good feeling in his heart, but minus a paycheck.

 

>However I will grant agents have a useful role

>in marketing a property.

 

Agents are very usefull by their ability to expose the property to many more prospective buyers than a seller could, acting for himself.

Also they are able to take buyers through other comparable houses on the market in order to illustrate the superior features and value of your property. This would be nearly impossible for you as a seller to do on your own.

 

>I don't understand this business of a "double" commission.

 

There is no such thing as a double commission. The expression comes from the term "double ending" which means that the listing salesman is also the selling salesperson and there for is entitled to "both ends" of the commission

 

In a case where the buyer finds the property himself,

>as p did, the buyer's agent has a pretty easy job to earn his

>share of the commission, IMO.

 

This is true. Some times the job IS easy. However one must consider the other side of the coin. What about the difficult buyer who takes up a Realtors time for months, often ending in a decision not to buy, or worse yet, buys a "For Sale By Owner" cutting out his Realtor from any payday. The easy commissions are necessary to balance out the others.

[Luv2play]

>

>>I don't understand this business of a "double" commission.

>

>There is no such thing as a double commission. The expression

>comes from the term "double ending" which means that the

>listing salesman is also the selling salesperson and there for

>is entitled to "both ends" of the commission

>

Run this one by me again. The listing agent is the one whose picture is on the sign, right and who has signed the agency contract with the seller? The "selling salesperson" is who? That same agent or the agent who represents the buyer? If the buyer has his own agent, then that agent and the listing agent will split the commission. So do you mean that "double ending" only happens when the buyer is not represented by an agent?

[Luv2play]

I do have a question for purplekow. In your original agreement with your agent, had the owner agreed to sell the property to you for $525,000, what commission would you have paid him, since the owner would not have been represented by an agent?

[FinFangFoom]

You've never answered the question about whether you signed a buyer's agent agreement with him. If you didn't, he doesn't owe you squat.

 

You can still buy the property and the fact that he represents the seller now doesn't prohibit you from putting a new bid in on it or even paying the full ask. Who gives a shit how much he's making on the deal? Frankly, it's none of your business how much he's making off the deal anyway.

 

I can assure you that if you met another broker right after him and they told you they could get you the property for your offer but not involve your broker you would have done it in a second.

 

Real estate is filled with crooks, however buyers are the biggest whhores. They have zero loyalty and will fuck over their broker in an instant if they can get a better deal through another broker.

 

Loyally yours,

 

FFF

[kjun]

I was a "real estate" attorney for many years. Very few were the realtors with any sense of ethics. They are more like a starving roach or rat. Makes no difference if they screw their client or the other party. The only rule they know is to get the money.

 

the Cajun

[+ purplekow]

As to how much the agent makes, I have no problem with the agent making a commission that will be paid by the seller. I never raised the issue of how much the agent is making, only that he stands to make the full commission if I buy the property now, prior to this, he would have made half of the commission if the seller had opted for an agent who would have gotten the other half. The commission on this sale would be about 6% or $36,000, if there are those interested in such things.

 

As I have answered to people who have e-mailed me regarding this, (and thanks for the interest), the agent never asked for a contract and while I have sold other properties and signed exclusivity contracts, I cannot recall signing such a contract when buying one.

 

FFF, As far as loyalty goes, if by "you" you meant people in general, well I am in no position to know what most people would do. If by "you", you meant me, well then your assurances are worthless. I would not have been paying the commission on the sale to begin and if it were my duty to pay, I would have paid. While you can choose to believe me or not, since you do not know me, speculation by you in this matter is more a reflection on your own belief system

 

My issue here is with the ethics of the agent, which as detailed by the site mentioned in one of the early answers, were probably lacking. I am well aware of my ability to put in another bid, get another agent or to hire an arsonist to burn the building down, should I want to take that risk, that was not question asked.

The question asked revolved around whether this man did me a disservice. FFF, I will put you down in the NO column.

[FinFangFoom]

To be clear, no, it was not unethical for an agent to represent a seller whose property he showed to a buyer two months prior - a buyer with whom he had no written agreement. Nor was he under any ethical obligation to call a customer (from two months prior) and alert him/her to the fact that he was going to be getting an exclusive on it.

 

Slow curtain.

 

The End.

 

Clearly yours,

 

FFF

[+ purplekow]

>To be clear, no, it was not unethical for an agent to

>represent a seller whose property he showed to a buyer two

>months prior - a buyer with whom he had no written agreement.

>Nor was he under any ethical obligation to call a customer

>(from two months prior) and alert him/her to the fact that he

>was going to be getting an exclusive on it.

>

>Slow curtain.

>

>The End.

>

>Clearly yours,

>

>FFF

 

So does that mean you are still in the no column?

 

 

As an aside, is it usual for a real estate agent to have a contract with a buyer?

 

And just to be clear, as mentioned in the original post, on our last meeting, I had asked (and he had agreed) to keep looking for suitable properties and to keep me informed of events about this property.

Can you resist taking an extra bow now that the curtain has been raised again?

[FinFangFoom]

>As an aside, is it usual for a real estate agent to have a

>contract with a buyer?

 

No it's not.

 

 

>And just to be clear, as mentioned in the original post, on

>our last meeting, I had asked (and he had agreed) to keep

>looking for suitable properties and to keep me informed of

>events about this property.

 

 

And that's exactly what he did - he got the exclusive and called to tell you that the property was officially on the market. At that point, had you wanted to get another broker involved so you had someone representing you, you could have. Absolutely nothing has changed regarding your ability to put in an offer on the property.

 

 

>Can you resist taking an extra bow now that the curtain has

>been raised again?

 

I will now quietly and humbly exit stage left, with nary a nod to my cheering audience.

 

Discreetly yours,

 

FFF

[Guest n2colour]

While I understand that you may not like the answer you are getting here, the fact is that you had no written contract and there was no ethical breach on the agent's part. I'm neither a lawyer nor an agent, but I learned early in my life that, when it comes to real estate in particular, if it isn't in writing, it means nothing. That is just the way it is in real estate law.

 

Not that this matters, but, unless someone has told you specifically otherwise, it is quite possible that the agent never pursued the conversation after that and that owner called the agent, not the other way around, because the owner remembered the agent bringing in your earlier offer.

[+ purplekow]

>While I understand that you may not like the answer you are

>getting here, the fact is that you had no written contract and

>there was no ethical breach on the agent's part. I'm neither a

>lawyer nor an agent, but I learned early in my life that, when

>it comes to real estate in particular, if it isn't in writing,

>it means nothing. That is just the way it is in real estate

>law.

>

>I was actually very happy with the answers I have received. The one referral to an actual written code of ethics supports my position, at least my interpetation is that it does.

The rest of the opinions as to things not being worth anything unless they are in writing, while legally true, is not morally true of all people. Some people still are of their handshake is their word variety. This agent is not one of those. I now know he is not someone I want representing me in any dealings.

[Luv2play]

As I have never engaged an agent to buy a property I have had no experience on this end of the deal but I have participated in deals where the buyer was represented by an agent. The buyer's agent was paid half the commission that the seller(myself) paid to his agent, i.e. the seller's agent forked over half to the other agent and this is standard practice.

 

Now when p asked the agent to make his original offer of $525,000, the agent conveyed this to the owner and it was rejected and the agent conveyed this info to p. As far as I can see, they had an agreement between themselves, albeit unwritten, and had p upped his offer and had it been accepted the agent would have expected some payment.

 

What p has not stated, and I have asked it once before, what would p have paid the agent for acting on the sale, since the seller did not have an agent at this time? Did p have any understanding, verbal I would assume, what the agent would get if he succeeded in buying the property? Can p answer this? It occurred to me that maybe the reason for the counter-offer of $620,000 was to give the seller his original asking price of $600,000 and $20,000 to the p's agent but that is just speculation on my part.

[+ purplekow]

>>

>Now when p asked the agent to make his original offer of

>$525,000, the agent conveyed this to the owner and it was

>rejected and the agent conveyed this info to p. As far as I

>can see, they had an agreement between themselves, albeit

>unwritten, and had p upped his offer and had it been accepted

>the agent would have expected some payment.

>

>What p has not stated, and I have asked it once before, what

>would p have paid the agent for acting on the sale, since the

>seller did not have an agent at this time? Did p have any

>understanding, verbal I would assume, what the agent would get

>if he succeeded in buying the property? Can p answer this? It

>occurred to me that maybe the reason for the counter-offer of

>$620,000 was to give the seller his original asking price of

>$600,000 and $20,000 to the p's agent but that is just

>speculation on my part.

 

I actually included the answer to this in another post. It was my belief that the seller would be paying the agent or that the price was raised so that the agent would be paid. If a deal had been reached, I was not expecting to pay more. With that said, if there was nothing set aside for the agent, I would have expect to pay a fee. Of course, all that would have been determined prior to the sale.

 

While you may be right about the $20000 being added on as the broker fee, that should have been clarified at the time the first price was given, the $600000. It may be that the seller did not realize there would be a fee and the broker wasn't clear with that and as a result, when everyone was on the same page, the price was now higher. No explanation for the increase in the sale price was ever given to me so it might be that the seller decided to increase the price.

[Luv2play]

Sorry I didn't catch that before. In that case, you accepted the fact that the agent was going to work as a dual agent in effect since you expected the seller to pay his commission. I don't think you have any reason to feel hard done by in these circumstances.

[+ purplekow]

>Sorry I didn't catch that before. In that case, you accepted

>the fact that the agent was going to work as a dual agent in

>effect since you expected the seller to pay his commission. I

>don't think you have any reason to feel hard done by in these

>circumstances.

 

Interesting point. Just thought the seller always paid the agent.

If the seller had an agent, the agents split the fee from the seller.

Never thought the buyer paid the fee, but as i said, I would have paid him had that been the arrangement made prior to the sale.

[Luv2play]

>Interesting point. Just thought the seller always paid the

>agent.

 

The seller only pays the commission if he has hired the agent. When you first approached the owner, he had no agent. You did. If the sale had gone through then and there, the seller would not have been under any obligation to pay your agent a commission.

 

>If the seller had an agent, the agents split the fee from the

>seller.

 

Not sure what you are saying here. The agents split the commission when both buyer and seller are represented by their own agents.

 

>Never thought the buyer paid the fee, but as i said, I would

>have paid him had that been the arrangement made prior to the

>sale.

 

This is meaningless since you don't seem to have made any arrangement. What were you thinking when you made your first offer? If it had been accepted who would have paid the agent?