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Answers (28)
- Reba Haas, "reba_haas"
- Contributions:620
Your main question as I see it is about legal issues of cutting out the agent. No one here is an attorney and cannot tell you that info. You would need legal advice.
Generally speaking, if there is an agency agreement, then you and/or the buyer may be liable legally.
Generally speaking, if there is an agency agreement, then you and/or the buyer may be liable legally.
- SoCal_Engr
- Contributions:5661
Thanks Sunnyview. I checked out (quick scan) the Northwestern study. Interestingly enough, it indicates FSBO sale prices are higher, and the major factor is time to sell and the fact that FSBO and MLS attract different types of buyers.
While I somewhat disagree with including FSBO's effort as a "cost" (after all, the idea is to pay yourself vice an agent), I thought the following text was very telling...
"We have compared the performance of MLS and FSBO platforms for the sale of single-family residential properties. After controlling for differences in house and seller characteristics, we find that the MLS delivers no price premium (even before netting commissions). MLS transactions do involve a shorter time to sell. The longer time to sell on FSBO is driven by FSBO listings that fail to sell and have to move to the MLS, and by the higher probability of a quicker sale on the MLS.
"The findings suggest platform selection. FSBO attracts a particular type of seller. The higher prices these sellers are able to command suggest that these sellers are the better bargainers, and the longer time to sell on FSBO suggests the sellers are also more patient."
Not exactly what the REAs are saying.
- Jeff Kinkade, "Jeff Kinkade"
- Contributions:23
Why would you even have the agent spend his/her time bringing you their clients then? You should decide if you are going to pay the buyer's agent commission before you even allowed the agent to begin working on the sale.
- Rhonda Lyles, "Rhonda Lyles"
- Contributions:7
Mike, it is a good question and deserves a good answer. There are several great ones here. But, in my opinion with the integrity of both buyer and seller it is my guess that it will never close.
As a professional we spend many years trying to stay on target with loan issues, appraisal downturns, and most importantly home inspection pitfalls. These are just a few things that still have to happen to get your deal done. Our job may be underrated by some, but it's usually someone that has not been in this kind of market that we're in today or just plain doesn't understand the process.
Hope you two are still speaking at the closing table...if you get there!
As a professional we spend many years trying to stay on target with loan issues, appraisal downturns, and most importantly home inspection pitfalls. These are just a few things that still have to happen to get your deal done. Our job may be underrated by some, but it's usually someone that has not been in this kind of market that we're in today or just plain doesn't understand the process.
Hope you two are still speaking at the closing table...if you get there!
- SoCal_Engr
- Contributions:5661
"There are studies out there that prove that using a Realtor will net the sellers more $ in their pocket on the sale of their home"
I am soooooooo tired of seeing this line thrown out without any substantiation. What is the reference for this info, and who conducted (or, mor importantly, commissioned) the study?
Never mind that the only real way to get real numbers is to actually sell the same house, under the same conditions, at the same time, using both methods. Otherwise, the best you can hope for is a reasonable extrapolation of numbers using comparables and attempting to assess what should have been the actual market value. All statistical processes, and all very able to be manipulated to pretty much support any premise you want.
So....what is "the study"? Was it presented to you by NAR to help fight the FSBO argument, or did it come from an independent source?
By the way...
The implication of the initial assertion is that using REAs costs the buyer the most, as the money going to the seller came from somewhere. Hmmm.
I am soooooooo tired of seeing this line thrown out without any substantiation. What is the reference for this info, and who conducted (or, mor importantly, commissioned) the study?
Never mind that the only real way to get real numbers is to actually sell the same house, under the same conditions, at the same time, using both methods. Otherwise, the best you can hope for is a reasonable extrapolation of numbers using comparables and attempting to assess what should have been the actual market value. All statistical processes, and all very able to be manipulated to pretty much support any premise you want.
So....what is "the study"? Was it presented to you by NAR to help fight the FSBO argument, or did it come from an independent source?
By the way...
The implication of the initial assertion is that using REAs costs the buyer the most, as the money going to the seller came from somewhere. Hmmm.
- nedb7
- Contributions:25
Jeane, I agree, it would unethical to cut them out. However, I have one agent that thinks they can dictate 3.5%. To me it's unethical for an agent not to promote a house that the buyer wants, if they think they're only going to get say 2% or say a flat fee of maybe $8k - $10k. They are forgetting about doing what's best for their customer when this happens. Less of something is a lot better than a lot of nothing,,,, and a confused customer.
- Jeanne Stroda, "Jeanne Stroda"
- Contributions:54
Mike, I just want to say that I'm a professional realtor with years of experience
with contracts, negotiations, market values, and experience dealing with the pitfalls during negotiations and while you are under contract and working toward a closing. My services do have value, however, not everyone sees this value. That being said not everyone should use a Realtor, if you don't see the value in our services. There are studies out there that prove that using a Realtor will net the sellers more $ in their pocket on the sale of their home. But if your intention is not so honorable to cut a realtor out of a deal, I think you are wrong. This Realtor has brought you a buyer! This Realtor could have been working with this client for months and brought them to you.....and is trying to assist you in selling your home! Everyone deserves to be paid for their services, I'm sure you get paid for your work! Do the right thing!
with contracts, negotiations, market values, and experience dealing with the pitfalls during negotiations and while you are under contract and working toward a closing. My services do have value, however, not everyone sees this value. That being said not everyone should use a Realtor, if you don't see the value in our services. There are studies out there that prove that using a Realtor will net the sellers more $ in their pocket on the sale of their home. But if your intention is not so honorable to cut a realtor out of a deal, I think you are wrong. This Realtor has brought you a buyer! This Realtor could have been working with this client for months and brought them to you.....and is trying to assist you in selling your home! Everyone deserves to be paid for their services, I'm sure you get paid for your work! Do the right thing!
- SoCal_Engr
- Contributions:5661
My bet is you're in the clear anyway, because you have no business relationship with the REA as a FSBO. Howeever...
a. Most likely the REA would have reason to take action on the buyer.
b. I personally wouldn't trust anyone who screws someone else.
a. Most likely the REA would have reason to take action on the buyer.
b. I personally wouldn't trust anyone who screws someone else.
- nedb7
- Contributions:25
Based on the fact the last few houses I've bought, due to the internet, I have been the one that finds and researches the houses I want to see. So I only need the agent to open the door and do the paperwork. 3-3.5% is too much anymore. I think 2% is very reasonable. I have an agent that says he wants 3.5% if his buyer buys. I told him it depends on the the agreed price. If they pay my asking price or close to it, then he gets 3%. As the price goes down, so does his percentage. Seems only fair they have some skin in the game.
- Jennifer Stoker, "Jennifer Stoker"
- Contributions:7
Great example, Mike! Thanks for sharing! If I were the buyer and the seller suggested this, I'd question the seller's character - their honesty and integrity. It communicates that the seller will allow greed to trump ethical principles.
On the flipside, if I were the seller, I'd question a buyer that wanted to ditch their agent. I've seen this, too.
Now, to answer your question regarding fear of legal action, recourse brought by the agent assisting the buyer. Remember, anyone can sue anyone, but if the agent did not have a valid, signed contract with the buyer or seller, then it would be difficult to prove he's due commission.
On the flipside, if I were the seller, I'd question a buyer that wanted to ditch their agent. I've seen this, too.
Now, to answer your question regarding fear of legal action, recourse brought by the agent assisting the buyer. Remember, anyone can sue anyone, but if the agent did not have a valid, signed contract with the buyer or seller, then it would be difficult to prove he's due commission.
- Lisa Carter, "Lisa_Carter"
- Contributions:31
I personally believe in integrity, and living by what you say. So, if you stated you would pay the buyer's agent a commission, than you should honor your word, regardless if there is a written buyer's agreement in place or not. And any buyer that would consider dumping their agent in that scenario ( not saying that they agreed to) would being doing their self a dis service, they would have proper representation, all to save the seller a few bucks. Moral of the story, do the right thing, and your covered on end.
- Maria Morton, "MariaMorton"
- Contributions:716
This does happen. It's rare for the agent to take it to court but something bad always happens to the buyer and/or seller. S Kris Webb's story is classic.
Before I became a real estate agent, a seller once suggested we dump the agent (I was the buyer) to save commission. I couldn't/wouldn't do it. It just felt wrong.
Your hypothetical situation is also something agents consider when thinking about showing FSBO properties. It's not just about how difficult the owner might be to work with but how ethical is this person?
Buyer's Agency is just one thing for an agent to worry about with a FSBO. We also consider RESPA, EHO and other laws that the general public often thinks they have found a 'way to save money' by breaking. They don't equate their money-saving ideas with fraud. Usually, when you explain that their idea is fraud, they decide to obey the law. Sometimes they don't care; or they feel the law doesn't apply to them. For someone without a real estate license, the penalties would only be a few thousand dollars in fines and maybe some prison time but for someone with a real estate license, it would mean the end of their livelihood.
In answer to your question, no, you would not be able to do this without fearing legal action if the agent had a signed agency agreement with the buyer..Would the agent actually take you to court? I don't know.
Before I became a real estate agent, a seller once suggested we dump the agent (I was the buyer) to save commission. I couldn't/wouldn't do it. It just felt wrong.
Your hypothetical situation is also something agents consider when thinking about showing FSBO properties. It's not just about how difficult the owner might be to work with but how ethical is this person?
Buyer's Agency is just one thing for an agent to worry about with a FSBO. We also consider RESPA, EHO and other laws that the general public often thinks they have found a 'way to save money' by breaking. They don't equate their money-saving ideas with fraud. Usually, when you explain that their idea is fraud, they decide to obey the law. Sometimes they don't care; or they feel the law doesn't apply to them. For someone without a real estate license, the penalties would only be a few thousand dollars in fines and maybe some prison time but for someone with a real estate license, it would mean the end of their livelihood.
In answer to your question, no, you would not be able to do this without fearing legal action if the agent had a signed agency agreement with the buyer..Would the agent actually take you to court? I don't know.
- S. Chris Webb, "PHX AZ RE BROKER"
- Contributions:411
Glad to hear you value integrity, Mike. As far as negotiations go, why wouldn't one have integrity? Something that turns me and a lot of people off is the "used car salesman routine" - "oh I don't think I can come down that low - let me ask my manager". Or pushy sales people, or people who use false facts or misrepresentations to support their side in the bargaining. When that happens I feel like walking away no matter how much I like the product or service. Negotiations tend to go smoother when everybody involved is upfront and honest and is real about the value of what they are offering. But I live in a fairly "no-haggle" society. That's my opinion. I'm interested to hear other opinions.
- mike_o
- Contributions:16
S. Chris Webb, that's a pretty crazy story. I suppose there's no shortcuts in life. From the looks of it, sounded like a pretty good deal too, even if it was just a small reduction in commission. You see, if this lady with a bad attitude could just walk a straight line, Karma would not devalue her newly-constructed home by $200K-$300K. I'm joking again. :-)
Kathy, thank you for those wise words. Integrity has always been my favorite Army value, and I've always tried to live my life by that which is, simply put...right. So much so, that at times this has been my weakness, I think.
Oh, speaking of integrity, can I ask you something? What role does integrity play in negotiations? I mean, like, is there any room for it? See, I suck at haggling, even my wife tells me so. That's why I'm just curious about this.
Just so that everyone knows, I was never planning (nor do I ever expect to do so in the future) to do what I suggested in my hypothetical examples, lol. In fact, I just bought a home two weeks ago and I'm very happy with my agent and the way everything worked out (for the most part, that is). So, as far as my actions go, they are not in question. As far as my consciousness goes, well, I suppose there could be something there, since I did bring up the topic in the first place. But again, never did I actively strive to deceive an agent, or anybody for that matter.
Mike
- Kathy Mazel, "KLMAZEL"
- Contributions:3
Mike,
All we have in this life comes down to relationships and how we treat each other. All we are doing is creating memories! Remember : "The Golden Rule". You ONLY end up in the end hurting your self when you deliberately go out and hurt someone else for greed. Greed is: Taking what honestly belongs to someone else and trying to justify it by saying that if it is not in writing then you have no agreement. We all know that your word has to good or what are we to each other? I hope you find integrity, it is there within you. You would not be asking this question on line if you did NOT question your actions and your own conscious. You know what's right......... now go do it!
All we have in this life comes down to relationships and how we treat each other. All we are doing is creating memories! Remember : "The Golden Rule". You ONLY end up in the end hurting your self when you deliberately go out and hurt someone else for greed. Greed is: Taking what honestly belongs to someone else and trying to justify it by saying that if it is not in writing then you have no agreement. We all know that your word has to good or what are we to each other? I hope you find integrity, it is there within you. You would not be asking this question on line if you did NOT question your actions and your own conscious. You know what's right......... now go do it!
- S. Chris Webb, "PHX AZ RE BROKER"
- Contributions:411
Mike, I'm glad you have a sense of humor. I hear Karma does too.
Now, to address your hypothetical situation as a buyer that dumps their agent after they find them a home, something very similar happened to another agent I know very well.
A young lady with a bad attitude had an agreement with him that if he found her a home to buy, she would list her own existing home with him. He had an exclusive agency agreement contract with her that he would give her a nominally reduced commission rate on the sale of her home for doing a double deal.
After showing her several different homes subsequent to doing a lot of previewing, reviewing floor plans, and other leg work, he found her a new build show home that fit her just perfectly, showed it to her, and she went home to "think about it". The next day she called him up and said "Let's make a new deal - I won't buy this house with you as an agent unless you list my house for free AND pay some of my closing costs when I get my new house". He said "sorry, but I don't work for free - I'm already giving you n percent of my commission - but I would be losing money if I listed your house for free and for some reason your new house purchase didn't work out." She stood her ground and they thus terminated their agreement. I guess she could say their "relationship deteriorated".
She went back to the builder and signed an agreement to purchase, and gave them $10K earnest money. She refused to include the agent in the contract even though it would get her no better deal with the builder. This was at the beginning of the end of the boom. 2 weeks later, after she had unsuccessfully tried to sell her overpriced own home by FSBO, she realized her house that hadn't even been built yet was devaluing rapidly. She wanted out of the contract with the builder now and tried getting her earnest money back. That didn't work, and six months later she ended up getting stuck with a $500K worth $300K (probably $200K today) and was stuck renting her old place for less than the mortgage.
Yes, the agent had counseled her that housing prices were declining and that she probably couldn't get the price she wanted from her old home and would probably have to lease it out but she wouldn't listen.
Did the agent earn commission but not get paid? I think so. Should she have listened to him, most likely. Did he sue her or threaten her with bodily harm for being a little swindler? No. Did she get Karma's wrath or learn any lessons from this? I don't know.
Now, to address your hypothetical situation as a buyer that dumps their agent after they find them a home, something very similar happened to another agent I know very well.
A young lady with a bad attitude had an agreement with him that if he found her a home to buy, she would list her own existing home with him. He had an exclusive agency agreement contract with her that he would give her a nominally reduced commission rate on the sale of her home for doing a double deal.
After showing her several different homes subsequent to doing a lot of previewing, reviewing floor plans, and other leg work, he found her a new build show home that fit her just perfectly, showed it to her, and she went home to "think about it". The next day she called him up and said "Let's make a new deal - I won't buy this house with you as an agent unless you list my house for free AND pay some of my closing costs when I get my new house". He said "sorry, but I don't work for free - I'm already giving you n percent of my commission - but I would be losing money if I listed your house for free and for some reason your new house purchase didn't work out." She stood her ground and they thus terminated their agreement. I guess she could say their "relationship deteriorated".
She went back to the builder and signed an agreement to purchase, and gave them $10K earnest money. She refused to include the agent in the contract even though it would get her no better deal with the builder. This was at the beginning of the end of the boom. 2 weeks later, after she had unsuccessfully tried to sell her overpriced own home by FSBO, she realized her house that hadn't even been built yet was devaluing rapidly. She wanted out of the contract with the builder now and tried getting her earnest money back. That didn't work, and six months later she ended up getting stuck with a $500K worth $300K (probably $200K today) and was stuck renting her old place for less than the mortgage.
Yes, the agent had counseled her that housing prices were declining and that she probably couldn't get the price she wanted from her old home and would probably have to lease it out but she wouldn't listen.
Did the agent earn commission but not get paid? I think so. Should she have listened to him, most likely. Did he sue her or threaten her with bodily harm for being a little swindler? No. Did she get Karma's wrath or learn any lessons from this? I don't know.
- mike_o
- Contributions:16
S. Chris Webb, so aside from an exceptional real estate service which I'm sure you provide, you not only throw in spiritual advice (regarding Karma and such) but you also include some muscle in case the seller tries to pull a fast one? That's one heck of a deal. I'm in NYC, but if I ever decide to purchase property in Phoenix, you'll definitely be the one I'll call. We got a deal? :-)
But on a serious note, how about this case: Let's say I am a buyer. I've been working with one agent who's been showing me quite a few homes. Then one day something happens and our relationship deteriorates. Nothing has been signed. We part our ways. Then some time down the road, I decide to take a second look at one of the homes the agent showed me in the past. It is a FSBO (just like the 1st scenario I wrote, except the seller is not trying to screw the agent). I end up buying this home from the owner. So what, now the agent I no longer work with is going to come out of the blue and say "hey, I want my cut"? Am I not allowed to go see that home anymore? I wonder how this situation would play out. It seems pretty unique, but I bet it happens.
Mike
- John King, "John_King"
- Contributions:425
I know this is all theoretical ( I HOPE).
I actually had that scenario attempted on one of my buyers. They called me right away, we walked and I notified the seller. They would not have bought that home at ANY price after that.
At a minimum though, small claims court. Prior to an offer, I print everything up, including the offer of compensation. All of my offers are in writing, of which I keep copies. That would be all the documentation needed. Most agents fax/email/scan everything as a matter of business. It would be a rare instance where the agent had no proof of any type of offer made with one of his buyers as well as the offer of compensation.
Hope this helps.
- Ryan Anderson, "Spokane Homes"
- Contributions:18
Like was just said, you may end up in a situation where the buyer is forced to back out of the deal becuase they may be on the hook for commision. This would cause lost time and your home would not be on the market probably during negotiations. Even if they didnt sign anything, if it is proven that the agent was the reason the buyer found the home (i.e. showed them many homes, showed them that home, eliminated many other homes etc.), then the seller may be responsible to pay a commision. Unless, the seller could convince the buyer to lie under oath saying they had been ignored by said agent or the relationship was no longer working. Maybe buyer could agree with seller, get a lower price then not lie in court which means the seller gets hit twice.
Correct me if you know I am wrong, but this is how I understand it in Washington.
Correct me if you know I am wrong, but this is how I understand it in Washington.
- S. Chris Webb, "PHX AZ RE BROKER"
- Contributions:411
I'm no lawyer, but... Say you've advertised in writing that you will pay agents 3% I would think that you are in breach of a unilateral contract. You would not only be dealt with by Karma, but have a nice little lawsuit to go along with it. Although in most states, contracts must be in writing to be valid, but if you've verbally told both the buyer and the agent you'd pay it, I would think that a good lawyer (or a large friend with a lead pipe, duct tape, and concrete) on their side could also influence you into paying for the commission and other damages. Not only are you sleaze-balling the agent out of the commission, but you are also denying the buyer the representation protection that he hired the agent for.
- hpvanc
- Contributions:2567
Why not just do it honestly? Here is my counter offer where the agent is entirely your responsiblity $X,XXX, here is my counter offer where I compensate your agent $Y,YYY.
- SoCal_Engr
- Contributions:5661
Aside from everything else that goes with this scenario...
If I am a savvy buyer, alarm bells are going off everywhere. What just happened, and why? What is the seller afraid the REA may find? Even if everything else seems okay, if the selller has this little issue screwing the REA - how far down the road before I get reamed?
BTW - With the common usage of email and texting now-a-days, the thought that there would be absolutely nothing to tie things together is likely not a very well-thought-out idea.
If I am a savvy buyer, alarm bells are going off everywhere. What just happened, and why? What is the seller afraid the REA may find? Even if everything else seems okay, if the selller has this little issue screwing the REA - how far down the road before I get reamed?
BTW - With the common usage of email and texting now-a-days, the thought that there would be absolutely nothing to tie things together is likely not a very well-thought-out idea.
- mike_o
- Contributions:16
Yea, it's a pretty sleazy stunt, and I think I'd have to be in a pretty desparate situation to stoop to that level. I'm just sayin'...everybody draws their own line beyond which all these arguments (whether it be about karma, bad business practice, agents working hard for their money, etc) sort of get de-prioritized.
Brian, just one little comment. You said "Would you like to work for somebody without getting paid then have them pull the rug out from underneath you to save a few bucks."...I think most sellers would agree that paying the commission (the agents' salary) is not just a measly "few bucks", lol. Of course, I totally hear what you're saying, so no harm done.
Brian, just one little comment. You said "Would you like to work for somebody without getting paid then have them pull the rug out from underneath you to save a few bucks."...I think most sellers would agree that paying the commission (the agents' salary) is not just a measly "few bucks", lol. Of course, I totally hear what you're saying, so no harm done.
Mike
- wetdawgs
- Contributions:26784
Oh, my... I'm not an agent but I suspect you would be setting yourself up for a lawsuit.
- Mark Carter, "mcarterhomes"
- Contributions:5
A good agent will have had a discussion of this nature with his/her client before coming into negotiations with a FSBO. You may end up creating a situation where the buyer has to come up with the 3% commission and they would no doubt find a reason to back out of the purchase to avoid this, and you end up not selling the home.
Its very simple. Do business ethically and with integrity and you will get what you want.
Realtors talk to each other and word would get around pretty quick if you pull this kind of stunt.
Its very simple. Do business ethically and with integrity and you will get what you want.
Realtors talk to each other and word would get around pretty quick if you pull this kind of stunt.
- Brian Teyssier, "Brian Teyssier GRI"
- Contributions:964
If you nor the buyer didn't sign anything with the agent, you could but man is that slimy and unethical and karma is a real....well you know. After agreeing on price, the negotiations are far from over and that agent may have turned out to save you more than he would have cost you in the measly 3%.
Would you like to work for somebody without getting paid then have them pull the rug out from underneath you to save a few bucks.
That agent took time away from other clients and their family, kids, etc... to work on this only to be cut out?
Now, this is assuming that agent is doing a fine job and you want to "hypothetically" save some money.
Would you like to work for somebody without getting paid then have them pull the rug out from underneath you to save a few bucks.
That agent took time away from other clients and their family, kids, etc... to work on this only to be cut out?
Now, this is assuming that agent is doing a fine job and you want to "hypothetically" save some money.
- sunnyview
- Contributions:25120
Hypothetically, you might risk a claim made in escrow by the agent even if nothing is signed between the agent and the buyer . That is especially true if the agent came with the buyer to see the house. I understand your desire to save money, but I'd tread carefully.
I have seen sellers have two prices one with an agent and one without, but have no idea how that actually works in practice. You can also offer to split the 3% commission with the buyer to pay the agent. That happens in my market occasionally.
I have seen sellers have two prices one with an agent and one without, but have no idea how that actually works in practice. You can also offer to split the 3% commission with the buyer to pay the agent. That happens in my market occasionally.
Buyers dumping their agent during negitiations?
Ok, I've been sort of pondering about this. Let me just say in advance that this is a hypothetical example and you guys don't need to explain to me the value that goes into your work, or anything of that nature.
Take the following scenario: Let's say I'm doing a FSBO and willing to pay 3% commission to the buyer's agent. A buyer comes with an agent and we are now going back and forth in negotiating the price. Now, let's say I contact the potential buyer and tell him that we have a deal, but only if he dumps his agent (assuming they didn't sign anything), therefore avoiding me having to pay any commission. Would I be able to do this without fearing any legal action from the agent. I mean, again, assuming the buyers didn't sign anything with the agent, how is anyone going to prove that they didn't just walk in by themselves?
Regards,
Mike
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