Profile picture for tuesday19

Ethics, Buyers' Agents and Update

Hi, again. The last time I posted here it was to ask about what to offer for a particular house. Well....I wound up not offering on that house because a couple of better options became available.

Here is one of these options and I'd love to hear some feedback. This is the house of a friend of a friend that has been on the market for months without them being able to sell it. It is a great house (from the pics, I haven't seen it in person yet) and in a fabulous neighborhood. At the moment, the sellers want more than I can/will pay for the house, but one thing that would make our difference work would be for them to do it FSBO and thus avoid paying commission.

Up until this point, I have been working with a buyer's agent, who I like quite a bit. This house is not even listed in the MLS (they delisted after firing their realtor and are waiting till after the holidays to relist), and I "discovered" it without the agent.

So here are my questions:

1) I know I don't have a legal obligation to work with my buyer's agent, but do you think I have an ethical one?

2) Is it a good idea pragmatically to still work with a buyer's agent here?

3) If I do continue to work with my buyer's agent, should I negotiate a lower fee with her since the house was discovered without her? And if so, how much lower? Under normal circumstances, the custom in my area is for the buyer's agent to get 3.5% on the first 100K and 2.5% on the amount above that.

Sorry I haven't posted except to ask questions. I've already learned a lot/been quite entertained on the site. It's just that I'm more a lurker by nature. Thanks in advance for your feedback.
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December 04 2007 - US
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Replies (10)

You should find out if the listing is completely cancelled or just withdrawn temporarily. If it is cancelled, you can have your agent submit an offer with your terms and her expectations of compensation. It would then be up to the sellers to accept the terms or counter your offer. I wouldn't worry so much about commission and just put in the offer that you want.
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December 04 2007
Profile picture for jsciii
Talk to them yourself. Do not go with a buyer's agent. Your only obligation to a buyer's agent is if THEY showed you the home. Even if it was listed on MLS, if you found it yourself you owe the BA nothing.

Assuming you and the owner are two reasonably intelligent people, you can sit down and work out a price that is of benefit to both of you.

Sure you don't have some seasoned pro looking over your shoulder making sure every i is dotted. But, do you need him. I bought a house; FSBO, toured it, loved it, made an offer, was accepted, drew up a simple contract with one loop hole, if the inspection found things to be fixed beyond a certain price either party could cancel. This allowed more negociations (but fortunately, there wasn't any issues).

Yes, there is a chance you could be screwed. What is that probability? It's the ratio of how reasonable two people can be. I have bought/sold 6 houses and have yet to have an issue I could not resolve using intelligence and reason.

Save yourself the money and go talk to the guy. Find a contract online somewhere and modify it to both your likings. Go from there. My bet is all will be well.

Good luck
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December 04 2007
Have you asked the seller if they would be willing to pay a buyer's agent commission? Legally, you have no duty to your buyer's agent. But ethcially--have they worked hard for you? How long have you been working with them? --You can always pay them out of pocket for the time they spent and do the deal with the fsbo---basically do what ever you think is fair and right.
If the agent has only spent a few hours on you--big deal. But if at been quite a bit more--try to work a deal out.
How much out of your price range is this house?
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December 04 2007
Profile picture for tuesday19
Rachel, the house was last listed at 215K but they were planning on relisting (I don't know if this was a delist or just a withdrawn listing, to answer your question, Marci) at a lower price. They knew I was looking to buy and approached our friend to see if I was interested in their place. I told our mutual friend that I couldn't/wouldn't pay more than 180K, which has been my price range all along. I know that they already moved and are very motivated to sell the house. If they are willing to come down that much, cool. But if not, I don't want to waste their time or mine. If they do appear willing to come down to my price, then I'll talk to them directly or through my agent and go from there.

Meanwhile, I told our friend to tell them that I have a buyer's agent, so we'll see how they respond to that. I guess I'm just not sure what to do if they ask me to go without the agent.

I am not particularly worried about getting screwed over by these people. I will get the place inspected and do all of the necessary due diligence. It's more a question of ethics for me. After all, Rachel, it's true that my buyer's agent has been working with me for a couple of months and shown me about 10 houses (this hasn't been the fastest search ever). I like her and I don't want to screw her over. I just don't know what is customary in this situation.
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December 04 2007
Profile picture for LinusK
10 houses * 1hr/house * $50/hr = $500.

Personally I don't think you owe her anything. If you'd found your house the fee would have been $5400. But if you feel like you ought to pay her, I'd do it on an hourly basis, not as a percentage.
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December 04 2007
I have seen the common arrangement in this situation to be anywhere from .5% - 1%. Which the agent will take care of all contracts, scheduling of services, inspections etc. this will save you grief of finding people on your own and avoid making it more stressful than it has to be.

I agree 100% with Linus. though 50 an hour even seems depending on which part of the country you are in.
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December 04 2007
Profile picture for jimmy57
If you end up not having a Realtor involved in the transaction, you might still get a RE lawyer to look over the documents.
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December 04 2007
Profile picture for Alan May
1) I know I don't have a legal obligation to work with my buyer's agent, but do you think I have an ethical one?
... Not in my opinion...

2) Is it a good idea pragmatically to still work with a buyer's agent here?
... couldn't hurt, but you could also have a real estate attorney handle this aspect of the deal, and probably pay less

3) If I do continue to work with my buyer's agent, should I negotiate a lower fee with her since the house was discovered without her? And if so, how much lower? Under normal circumstances, the custom in my area is for the buyer's agent to get 3.5% on the first 100K and 2.5% on the amount above that.
... absolutely... if you feel like you'd like to have your agent involved (you like her, think she'd be helpful)... then by all means include her, and have her reduce her fee... as a buyer's agent, she can accept almost any fee that the sellers are willing to pay, and (I've seen buyer's co-ops as low as $1,000.00).
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December 04 2007
I don't think that you have an ethical obligation to pay the buyers agent if he/she didn't show you the house. You hired him/her to find you an acceptable house for less than $180k and that didn't happen.

The agent agreed to be compensated by commission, so then he/she accepts that there won't always be a return for the time/effort put into a client if a sale doesn't happen.

Hire a real estate attorney, be smart, and enjoy saving the money that you've saved by going the FSBO route.
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December 04 2007
snip >>1) I know I don't have a legal obligation to work with my buyer's agent,...<<

Did you at any time sign any kind of paperwork with your buyers agent? If you have, you might be obligated to work with her or compensate her in some form or fashion.
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December 04 2007
 
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