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Agent commission w/ no sale?

Profile picture for ABC23
Here is my situation.  I was in the process of buying a condo, which was up to the point of a pending closing date.  However, before closing, me and my wife decided that we did not want to go through with this deal anymore and requested to withdraw our offer (we decided a house with a backyard would be better suited for our family)

So, about 2 weeks have passed since we requested our withdrawl.  I sent over an addendum stating we would forfeit our Earnest Money Deposit due to violating our contract about a week ago.

Just today, I sent an email to the real estate agent we were working with saying we were going to work with another real estate agent (a family friend).  However, later on tonight I receive an email from him (real estate agent w/ the condo) stating that he is still owed his 3% commission "buyer's broker fee of 3% for fully executed purchase of (condo address)"

Now, does he have the legal right to still request this commission? The deal do NOT go through, so it was not fully executed, correct?  I am going to seek legal advice, but it just seems wrong if he is still owed a commission on a property that was not purchased.  I think he just has hard feelings since we switched agents and now he wants to take advantage of us...



Any info or advice would be appreciated! 

  
(Location: Michigan)
 
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June 18 - US

Replies (20)

Profile picture for space_acer
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Since March 2009

REA thinks "there is a sucker born every minute"

This is why every buyer needs to educate themselves...

Any court will back you up since "No services were completed".. 

 therefore no commission was earned. Contract laws will back you up.

REA are looking for the uneducated to scam off...

 
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June 18
Profile picture for MikeEmery
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I don't know what contract you signed with your agent, but the Minnesota buyers rep agreement states

After a purchase agreement has been accepted by seller, Buyer is legally obligated to Purchase the property. If Buyer refuses to close the Purchase for any reason other than the failure of seller to perform, subject to relevant contingencies, Buyer shall pay Broker all compensation due under this Agreement.

Now would an agent play hardball and demand payment? Probably not. Look for this language in your buyers representation agreement.
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June 18
Profile picture for HopeThisHelp
I don't think so. you don't pay for buyer's or seller's commission anyways, the seller does.  tell him to go get it from them :) haha
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June 18
Profile picture for space_acer
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LOL! very good point Hope! 
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June 18
Profile picture for westridge88
AAM23,

Obviously this REA is starving...any agent that would pull this is bound for failure anyways...make him work for the money through the courts..itll be the hardest hes ever worked and hell end up with JACKsh1t
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June 18
Profile picture for azrob
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If you signed a buyer broker's contract that says you will pay a commission if you back out, then you likely owe the  commission. I don't typically write them up that way, but review your paperwork you signed with your prior agent.

You are getting very bad advice from some nitwits on this thread.
"make him work for the money through the courts"... Most aspects of contract law allow the prevailing party to sue for and recover all legal costs. Do you want to pay your broker's legal expenses as well?

seek local real estate legal advice.

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June 19
Profile picture for sunnyview
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Your agent did much of the work associated for that transaction short of sitting at the signing with you. The seller got to keep your earnest money due to your withdrawal, but your agent got nothing except for you changing agents on them. I see that as unfair. Your agent is not trying to squeeze you or be unfair. You yanked a transaction that would have likely closed because you changed your mind through no fault of your agent. You agent make a living from commissions. Do not get angry with them for that. Do what you can to make it right. 

 I am sure that you made the best decision that you could for your family in waiting for a house with a yard, but for every action there are consequences. Talk to your agent and seek legal advice if you need it. Being reasonable costs less than going to court. Depending on your contract, I am not sure the court would side with you in the end.
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June 19
Profile picture for BMFPitt
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Yes, you owe in 3% of the sale price, which was zero.  So send him a check for 3% of zero.
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June 19
Profile picture for nvchaz
Contributions: 1617
Think outside the legal box.

This guy/gal did some work for you in good faith. Put yourself in his shoes.

Why not sit down with him and work out some sort of settlement. Take a look at the hours he expended and offer him something.

Too many people resort to acting less than gracious because their behavior is defined by a contract.
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June 19
Profile picture for sunnyview
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I completely agree with NV. Be reasonable, be gracious and put yourself in the agent's shoes. If they did their best for you, I think you need to work it out with them. Don't set your jaw first, just sit down and talk with them. Chances are you can come to a reasonable solution for everyone.
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June 19
Profile picture for Lady Chattel
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I have heard of realtors asking for compensation for any work/funds they put out while they were under contract with you, but mostly it applies to listing agents since they pay to list the property.   Perhaps this guy thought he could scare tactic you, so tell him if he pushes the issue then you will make sure he isn't a very successful REA.

Now, with regards to you using a family member, think twice, never mix biz and family and if something goes wrong you will have soured a family relationship and holidays may never be pleasant again.  An agent of no relation is easy to cast aside, family not so much. 
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June 19
Profile picture for Lady Chattel
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My bad, family friend, be prepared for that relationship to flounder.....if you are okay with loosing the friend then work with them, you have no idea what their abilities are or lack thereof are until you use them in that capacity.


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June 19
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Hello, the only best way not to get hit with any recourse, is that you would have to receive a denial letter from your lender, I hope I helped, please rate me , it would be greatly appreciated.
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June 19
Profile picture for westridge88
OK...my post was a little shady...good call azrob. 
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June 19
You ARE getting some very bad advice on this thread.  Mr. "Ha ha, the seller is the one who pays" clearly missed the fact that you apparently signed a buyer-broker agreement.  In this type of agreement, it states the commission the agent is to receive is "X", say, 3%.  Buyer further agrees to pay the difference if the seller on a given property only offers 2%.  Since the agent brought a buyer and seller together and this resulted in a fully executed contract, the agent is owed the commish.  For those who are bandying about the "uneducated" comments, an executed contract is one which has been accepted by both parties and all contingencies have been removed.  This was the case here; the agent earned his commission, and the court will uphold this.
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June 19
Profile picture for sunnyview
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Honestly, nobody knows what agreement this poster signed, not even the poster himself. I tend agree that if it is a buyer's broker agreement that he would be responsible, but it really depends on the contract. I think the poster needs to be reasonable and talk to his agent. The contract binds them and a lawsuit will only fill the attorneys pockets. Sit down and work it out.
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June 19
Profile picture for space_acer
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"an executed contract is one which has been accepted by both parties and all contingencies have been removed"

"Executed" means nothing if services/goods were not performed/delivered. Has transfer occurred ?  As always seek a lawyer in your state. 

 
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June 19
Profile picture for aapostrophe
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Any REA who holds a buyer to paying a 3% commission on a house they did not buy is an REA who will not be attracting too many new clients in the future.  Regardless of what the buyer/broker contract says, that is poison for their career if pursued. 



   
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June 19
Profile picture for azrob
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actually, "executed contract" is one that both parties have performed, and the contract is finished. ie the house sold, the buyer bought it.

Realtors constantly misuse this term; what they should be saying is "executable contract" which is one that is valid and has force.
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June 19
Profile picture for PMSoldier
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The REA is more than likely hoping that the client will pay or at least settle this just to have it over with.  He can write off any client referrals from this guy, that ship saled the moment he sent the letter.

I agree with Sunny, call the REA and find out what he wants to have this go away or seek legal advice with a copy of your contract.  It might be cheaper to have an attorney tell you "This dude is on crack" or he might tell you "Yeah, you're boned!"

My money is one the REA is looking for a quick settlement.  My two cents is to offer him a grand to walk away but talk to him first to find out what he is attempting to get.  I am not a lawyer, so take it with a grain of salt.  Seek out a real estate attorney advice.

Keep us posted as to the ending of this story
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June 19
 

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