Profile picture for CWizzle

Compensating agent if we buy without him

Hello,

So here is the deal... My wife and I have been looking for about a month now, working with an agent. For the most part we've been pretty unhappy with him. It seems like all he is good for is getting us in the door. We are doing ALL the work looking for the houses. I don't know if that is normal, but one of my coworkers recently bought a house and her experience is way different. She told the realtor how many bedrooms, bathrooms, and style of house, and the realtor found places for them to check out. This has not been our experience at all. I feel like he is totally uninformed about the properties before we arrive, and question his negotiation skills based on a few offers we've put in.

Yesterday, my guy at the credit union called me about a property another member of the credit union is selling. My wife and I are very interested in this.

What I am wondering is, if we do go ahead and purchase this property, I'd like to compensate him for his time showing us properties (probably around 30), even though we haven't been entirely impressed with his services. Is this an acceptable thing to do? How much would be appropriate?
  • October 26 2013 - Cedar Rapids
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Answers (22)

Procuring cause says no, you don't have to compensate the Realtor you worked with, however, are you submitting the offer on the property yourself?  Are you familiar with handling a Real Estate transaction?
  • November 19 2013
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Profile picture for knightlight
It sounds like you are getting a better deal FSBO, like usual.  It may be worth $170k but after realtor commissions they would be likely to walk with $145k. 

Don't give the agent any money.  This will start a precedence that you think you owe him, which you don't.  A gift card for thanks seems adequate.  

Realtors are used to buyers not buying, thats why they make more that enough money when they do sell something.  

Ultimately your lender will hired a new appraiser and determine todays value.  
  • November 19 2013
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My question is why have you been with him for 30 homes, if you are unhappy with his services?  A buyers agent works for you.  Have you signed a contract with him as a buyers agent?  Your agent should be listening to what you are looking for in a home, showing you homes that are available, etc.  Is the home that you are interested in listed?  A relationship works both ways, and if you have signed a contract and he is not doing what the contract states, you may end the contract and find someone else to work with.

  • November 19 2013
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If the house was appraised two years ago that appraisal is meaningless.  Any appraisal can be negated by a newer comp in the market 24 hours later.

You are not getting 25K instant equity.  The home may be worth less than 145K now. No one selling a home is a philantropist.  They want to get the highest price possible.  They don't discount because you are a member of the same credit union, fraternity or fraternal organization.

If on both of your prior offers - two owners countered back at full price - something was wrong with the offers.  Sellers do not usually do that unless you low ball them.

If you did the same thing twice and got the same result - it's time to change what you are doing.  When the agent showed you a CMA - which is what you should look at - not the gross sold prices - there are 3 results.  High - medium and low.  If you picked the low price to make the offer you low balled.

"My wife and I don't really know what we're doing, we're first time buyers" so you are contemplating going full steam on a FSBO and have no understanding of how to equate value, or the responsibilites of a buyer and seller in a real estate transction.  Not to be snide, but does that sound like it makes good sense?

If you think the problem with your home search is the agent - find another agent.  After looking at 30 homes and making two failed offers - it is certainly not lack of effort on the part of the agent.

  • October 29 2013
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If you are not in a binding contract then legally you don't owe him a commission. Frankly, speaking 30 houses is a lot! A smart agent should sit down with you and build a home buying strategy. Once the strategy has been build, your agent should know what you're looking for. Choosing the right agent to help you buy or sell a home is very important. I recommend you interview 2-3 agents and ask for a few recommendations. Hope this will help you in your home buying process.    
  • October 28 2013
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I don't know why they'd be more willing to sell to you for $145,000 than to anybody else for more, and until I really knew the answer to that, I'd presume that the real "list" price is $145,000 and that they've had no takers at the price.
  • October 28 2013
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Profile picture for CWizzle
We haven't signed any sort of agreement to that effect. Only the two different bids we put in.
  • October 28 2013
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If you have put offers in on other houses with him, most likely you DO have an active buyer agency contract with him.  I would recommend pulling that out of your paperwork and reading it carefully.  You may owe him compensation depending on the terms of the contract.  
  • October 28 2013
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Profile picture for CWizzle
The offers we put in were based on the comps provided to us by the agent. I do feel as if the owners felt they were low ball offers; in both cases the owners counted back with full price counters. My wife and I don't really know what we're doing, we're first time buyers, we're fully relying on the agent and his expertise.

Part of the reason we became so interested in this FSBO property is because the house has been appraised in the past two years at $170,000, but the owner is willing to sell to a member of our credit union for $145,000, and we feel like this would be a great opportunity for us.
  • October 28 2013
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Profile picture for JoshBarnettREIB
Questions to ask your agent to better help you identify if you will use him:

1.  How long have you been in?
2.  Do you carry any certifications or designation?
3.  How many houses have your helps your clients buy and sell?

If you are not satisfied with the answers, do not use him any longer. 
  • October 28 2013
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Shopping around for 30 homes is a lot, and by the sound of it, it is very possible that your offers were not "up to snuff" if none of them were accepted. Most likely meaning that you low-balled. It doesn't sound like your realtor is much of the problem, I know many realtors who would not waste their time looking at 30 houses with clients. However, to answer your question, you do not owe him any compensation. Also, keep in mind that his commission is paid by the seller side, so using him to help you will not necessarily cost you anything anyway.
  • October 28 2013
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If you are going to make an offer on a FSBO ask them if they are willing to compensate a buyers agent.  Let the seller pay the real estate commission for your buyers agent.

Asking the agent to be a transaction agent (just doing paperwork) may seem like a reasonable alternative but not without pitfalls.

You would not have the benefit of his counsel or advice.  You are only paying him to fill out forms. You could not ask him to supply comps or advise you on purchase price.  That involves buyer representation.

In most FSBO situations the seller has no clue as to the procedure or their legal responsibilities.  Even if the seller agrees to pay your buyers agent - the buyers agent often gets roped into offering help and assistance to the seller besides.  This is necessary to keep the deal moving forward for their client the buyer.

While he might be willing to represent you as a buyers agent with the FSBO he may be reluctant to be a transaction agent.

Go look at the house and decide if this is really a viable option for you.  Then decide whether you want to go it alone or with representation.

  • October 28 2013
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Profile picture for CWizzle
I do realize that legally I am not obligated to pay him anything if in fact this does work. 

I did read elsewhere online that perhaps I could have the agent be involved in drafting up paperwork. No negotiations or anything like that. And just pay him a fee. Has anyone heard of this?
  • October 27 2013
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If you had no contract with the agent and the home you are interested in purchasing was not shown to you by the agent, you probably have no legal reason to pay them a commission. Is the property listed with another compnay?
  • October 27 2013
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A gift card or something and tell him you will refer him to other people or in the near future again.

Sam Shueh
Keller Wms Realty.

  • October 27 2013
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If you had no contract with the agent and the home you are interested in purchasing was not shown to you by the agent, you probably have no legal reason to pay them a commission.

The rare time that you might owe a commission to an agent who is not under contract is when they show you a home that you end up buying without their assistance. That could come under procuring cause, but without a contract would be probably be unenforceable.

Whether you give the agent compensation outside of the home purchase is entirely up to you. But don't sign a representation agreement or you may be obligated to pay them their commission.
  • October 27 2013
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Profile picture for CWizzle
Sisters, we have not signed any sort of agreement or contract yet.
  • October 27 2013
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Do you have a written buyers agency agreement with him?  If so read the contract carefully.  Usually it includes a clause whereby if you purchase a FSBO you still owe the buyers agent the commission.


  • October 27 2013
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Profile picture for Outer Banks N C
Wow, multiple offers that were not accepted and you blame his negotiating skills? Really? Like an agent is going to talk a seller into a low offer, how? That is really unrealistic! 30 properties? It sounds like you have burnt him out and he feels he has wasted a lot of time. In this day and age many buyers love to shop around online looking and some are very good at it. You have not gotten past step #1 (finding the house and making a successful offer) to see what your agent can do. There is more to do once you get under contract, hauling buyers around is easy enough, but takes time and money in gas. I wonder how experienced this agent is, but it's what we do and not all buyers buy. We know that they all don't work out. It is rare that a buyer compensates me when they buy FSBO. The last time was another Realtor from another state and he gave me $1000 after he bought directly from the seller around me.
  • October 27 2013
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Profile picture for CWizzle
I continued to use him because I felt pressured to by my father-in-law, who knows him personally in another capacity. I am not simply considering this because I feel I will be able to save money. I've been ready to dump him for a long time, and now this other opportunity has come up.
  • October 27 2013
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There is not enough information given to make a really good  decision. 

Is this other property listed?  Was this agent really bad or do you just think that you  will now just save yourself some money by not having commission on this next deal?

If you were unhappy with this agent, you should have cut them loose and found another one....but you continued to use him...on 30 homes?

If you indeed are now going to cut off ties, yes it would be nice to compensate him for his time.  Keep in mind that you have to pay his broker ( not him direct) and the broker will split with the agent.  $1,000 seems reasonable, since he should get at least $500 of it.

Eve
  • October 27 2013
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Hi
  • October 26 2013
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