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House on market 3 months and did not sell. Realtor wants me to pay marketing costs. Is that normal?

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December 15 2010 - Fort Collins
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Unless you agreed to it in writing, your agent is out of luck.  

Look at your Exclusive Right To Sell contract in Section 20:

20. COST OF SERVICES AND REIMBURSEMENT. Unless otherwise agreed upon in writing, Brokerage Firm shall bear all expenses incurred by Brokerage Firm, if any, to market the Property and to compensate cooperating brokerage firms, if any. Neither Broker nor Brokerage Firm shall obtain or order any other products or services unless Seller agrees in writing to pay for them promptly when due (examples: surveys, radon tests, soil tests, title reports, engineering studies). Unless otherwise agreed, neither Broker nor Brokerage Firm shall be obligated to advance funds for the benefit of Seller in order to complete a closing. Seller shall reimburse Brokerage Firm for payments made by Brokerage Firm for such products or services authorized by Seller.
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December 15 2010
Profile picture for ColoSeller
Thank you all for your advice. 20. section of my contract states the Brokerage Firm is responsible for all marketing costs. The agent and I discussed that I could "pitch in" on the marketing costs if I chose to withdraw my contract before the end date, prior to signing the contract. The contract will expire in 2 days and I do not intend to renew it at that time. When I said I do not want to write an extension was when she wanted me to help with marketing costs. I am not contractually obligated but wanted to know if I was "ethically" obligated. I have had no written offers on the house. I have made all improvements that were requested. I have also dropped the price $20,000 at the agent's suggestion. This home should have been sold by now.
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December 15 2010
Profile picture for sunnyview
No, it is not normal in my opinion. Unless the contract specifies different or you withdrew the listing before it expired, you would generally not be expected to pay for any advertising fees.

Read your contract and do not pay a dime until the agent can point where you agreed to pay expenses in the event that the house did not sell. If you need legal advice, pay the $150 for a 30 minute consult before you agree to pay anything.
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December 15 2010
Thanks Sean,

Now that I'm at a computer and not the iPhone, I can see how poorly I put that together. And the auto-correct feature made some words I wasn't expecting. Let me clarify my intent slightly. I am not a real estate agent, and am not as qualified to answer this question as an agent would be. I do work in the industry with agents, and have worked with them on countless transactions. Most of the agents I've worked with have been consummate professionals who take great pride in their knowledge, experience and responsibility in working in agency (with a fiduciary responsibility) with the buyer and seller. I respect what they do very much. With the legislation and oversight for mortgage professionals, I believe that our part of the industry is beginning to look to real estate agents for our business ethics, professionalism and knowledge. I would never recommend that anyone entering a sellers agreement or a buyers agreement should do so without a reputable agent.

My point about what to expect from a listing agent is this: A good listing agent should be able to illustrate what you should expect from the sales and listing process. He/she should present you with all of the options necessary to make great choices about what time, money and efforts to expend to make your home as appealing as possible to a potential buyer. This includes marketing, online presence, repairs/renovation, inspection preparation, staging and scheduling showings.

The agent should also be able to show you supporting data to set your expectations for how long your home should sit on the market at multiple price points, so that you know that if you want a higher-than-average sales price, you should be prepared to wait (_x -number_) of months. And if you offer it at below average, it should take  (_x -number_) of months. But as far as actually selling it to someone, that seems to happen less than 5% of the time. I can't back that number up with an actual statistic, so please take it with a grain of salt. But from the outside looking in, I don't think that a seller should place the burden of selling on the seller's agent. It is his/her job to set the expectations for the seller, give the home the highest possible visibility, then represent them throughout the contract process. I know that agent's want seller's to choose them based on their ability to sell, but I believe they are more an adviser than salesperson.

If this seller has done what their agent has recommended, and priced it as the agent has recommended, and they have not received any results, then it may be time to look for a different agent. But if the agent says you need to price this at $250,000, but the seller insists it should be worth $300,000, now go and sell it, The fault probably doesn't lie on the agent's ability to sell.

This may not apply to this poster's situation whatsoever, so please forgive me if this hasn't addressed the actual scenario.

These are just my honest impressions. I would advise any of my customers to take the advise of a trusted agent, and not just choose the agent who says they will list the house for the highest dollar.

I don't know if the original agent has any actual rights to receive any compensation for expenses. I suppose it would depend on the agreement you signed with the agent, and whether the seller is breaking the agreement early. There may be several agent's here who would be willing to look the agreement over with you and help determine the answer. I have not heard of an agent actually going through with that provision, but they may have the right.

Best of luck.
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December 15 2010
That is all costs associated with listing your home.  You are now responsible for paying marketing fees. 
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December 15 2010
No, that is not normal here. Are you listening to the advice your agent provides in terms of price reductions, staging, open houses, showings, etc? Are you out of your listing contract timeline? Do you like the services your agent is providing? I would never work with someone who was not happy with the services I provided, it should be a win-win for all.
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December 15 2010
Look at your listing agreement.
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December 15 2010
  • David Widlund has brought up some great points I would disagree on the fact that a listing agent can make a HUGE difference in how they advertise. Although he is right price is # 1 I think getting the information out to the person who wants to buy the house is # 2.  There is a buyer out there somewhere for your house, if it priced correctly, it is your Realtors job to find them!
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December 15 2010

As a rule especially in real estate, if it was not written into your mutual contract and signed by you or both the realtor and yourself it has no grounds. There are those very few and far in between companies that have the small print at the bottom of their contracts just like insurance companies do. But then they are always questionable, both legally and ethically. If your agent belongs to a board of Realtors I would contact them with regards to this matter and let the agent know prior to your contacting the board that you're doing so. Your agent might just change his mind and save his reputation. Goodluck

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December 15 2010
I've never hear of that in CO. I have hear a realtor threaten to charge for those costs when a seller has decided to break their listing agreement. Many time sellers get frustrated because they had unrealistic expectations that the agent would sell their house for them at a high price in a short time. Sometimes those sellers decide that it is the agents fault that their expectations weren't met and they believe that a different agent will give them the results they expect. While an agent's efforts can make the home more visible, the truth is that a home is priced at market value or not. If no one makes ambushed, it's usually about price, not who listed it. Buyers agents have much more influence on a sale in my opinion. And with the technology available, buyers can find the house they want with relative ease. The agent can make sure they have a fair and equitable transaction, and help the buyers avoid emotional mistakes. They also offer protections against one-sided contingencies. If you have an agreement with your absent, which you are attempting to break, it makes sense to reimburse the agent. If you are going with a different agent, see if the new agent would consider paying the original agent for his expenses. Good luck
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December 15 2010
Profile picture for wetdawgs
It is not normal in Colorado, at least wasn't when we lived there.  Read your contract carefully, was the marketing cost called out in the sales contract you signed?  There are several reasons the agent may be making this request:   Did you reject a fair offer and thus the agent things s/he is entitled to some compensation?  Did you back out the contract before it was expired? 
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December 15 2010
I do not know want normal is in Colorado but that is not normal here.  Did you sign a listing agreement or any other contract that states you would be asked to pay these costs?  Did you ask to get out of the contract because your house did not sell right away?  If your listing is expired and the costs were not listed in a contract that would be uncommon request.  If you decided to just back out of a contract and not sell your house you have to realize that as agents we do have costs that are covered in your commissions from sales and when we get a listing we work hard to promote and sell the property.

There are obviously two sides to every story it would best be worked out between you and your agent / office broker.
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December 15 2010
 
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