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I bought my sister out AND have to pay Realtor?

 My sister and I inherited my parents' house when they died. My intention was to buy my sister out, however, she wanted to try and get the most money out of selling the house so as Executor if my parent's will, she listed the house with a Realtor. I had the first right of refusal which I exercised when she received a contract bid recently. I have received a refinance approval through a lender.( Refinancing because I already own 50% of the property.) I am now being told that my sister and I have to pay the Realtor who listed the property her 5% commission which means, I pay $8K and my sister pays another $8K. Why am I paying a Realtor commission on a house she didn't sell to me? And that I already own 50% of and have been living in with my family?

  • March 19 2013 - Naperville
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Answers (19)

Best Answer

You should speak with an Attorney... there's a couple of issues here... and please remember that I am not an Attorney, nor is it my intention to practice law.

In these responses, I have seen some Realtors say that you should have been listed as an exclusion to the contract, and some say the Realtor worked hard nonetheless and rightfully earned a commission.

I agree with both.

When I have been faced with a situation like this with clients, there is a creative solution that keeps everyone happy regarding the commission. In a rare special situation like this, the Seller and I agree that if the Seller procures the Buyer - and if that Buyer is without Realtor representation - then the entire Realtor commission shall be reduced by the amount of the payout (which is the amount that the Listing Realtor would have otherwise payed the Buyer's Realtor). And so in your case, your Realtor still would have been payed... but only 8k, not 16k.

That way, the Seller's Realtor gets paid the same whether another Realtor brings in the Buyer, or the Seller bring in the Buyer. The Seller's Realtor ends up earning what they most likely would have made anyway, and they also do not have to forfeit their entire commission. The Seller knows that if they procure the Buyer, they will be rewarded with a reduced commission, instead of experiencing what they might consider the "inequity" of paying the full commission - which quite frankly - is double what their Realtor would have earned in the very probable event that a Buyer's Realtor was involved.

I believe my way is fair to both the Seller and the Realtor.

PS: I just realized that this thread is dated... but I will leave my answer here anyway just in case you still have not resolved the matter. I sincerely wish you the best of luck.
  • April 26 2013
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Yes you have to pay everyone who contributed professional services in order for you to sell your property. You should have a signed contract that outlines what you have agreed to pay.
  • April 26 2013
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Profile picture for JoshBarnettREIB
You do not have to, your sister hired the Realtor, your sister can pay them out of her 50% of proceeds.  

  • March 21 2013
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If your sister signed a contract with a Realtor she is obligated to pay a commission. She most likely put in a lot of time and energy to find a buyer for the home. It is unfortunate that there was not a clause in the contract that excluded you as owing a commission, but you have to remember that Realtors work on commission only and it would not be fair to cut her out after her hard work. 
  • March 21 2013
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Profile picture for blub blub blub
This is a very unusual situation, What should have happened is you should have been listed as an exception to the listing contract.

If the house sold to another party, the realtor would get the commission per the listing.  If you ended up buying it, as you did, then there could have been some kind of commission arrangement for the listing agent, such as a lower percentage or flat fee.
  • March 20 2013
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Profile picture for user3298445
Connie - As I stated, I did not sign any agreement. My sister as Executor arranged the listing and only she signed the agreement. My attorney and I never even saw it. All he told me was the Realtor remained involved even with my buy out because it would have been difficult to get any Realtor to take a listing if they knew there was a contingency such as my right to refusal. So they must not have made her aware of it (?) I sure did make her aware however when she called to arrange showings (my sister lives out of state).
  • March 20 2013
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None of us are in front of the listing agreement you both signed.... but if you had first right of refusal with no commissions due, and exersized that right in the time frame allowed, then no commission should be due... it was a gamble the listing agent took... if you don't get anywhere with the agent sit with the broker and if that doesn't work hire an attorney to write a letter on your behalf...
typically commissions are due on consumation to the procurring agent... nothing was consumated with the agent... check and recheck the contract you signed with the agent... stand up for your rights
  • March 20 2013
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You need to check with a lawyer.  If you were going to buy the house you should have never involved a realtor.  Your sister signed an agreement so I have a feeling you are on the hook due to the fact that they found a buyer, even though you had first right of refusal. 
  • March 20 2013
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It does depend on the listing agreement your sister has with the Realtor.  I have a listing, and commission does not vary if I find the buyer.  Commission is generally paid out of the Seller's proceeds and if you both own 50/50, I can see why she is syaing you have to split the commission.  But I would still question and seek legal counsel regarding this home being listed for sale if you own 50% and you didn't sign the listing agreement.  Good luck to you
  • March 20 2013
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Sounds like you need to speak to a lawyer. Check the contract and make sure you get a copy,,just in case
  • March 20 2013
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Profile picture for user3298445
Thank you for all the great answers. Unfortunately my attorney and I were not privy to view the Realtor agreement with my sister. As stated, my sister is the Executor of my parent's will which leaves me with very little power involving the property. As it is I had to have a judge grant me the right of refusal contingency. I find the one response interesting that pointed out there is no buyer's agent for the seller's agent to split the commission with. I assume this is the norm(?)That might be one fact I can bring up when the final contract is being composed between my sister and I via our attorneys.

The reason I reached out to all of you is quite frankly, I don't think my attorney knows quite what to do as he's never crossed this path before.
  • March 20 2013
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This is a first and I have never heard of such a stipulation. In my experience, commission is paid upon closing. I would carefully read the full agreement your sister signed. If you didn't sign/agree I would guess she never had the right to list anyways. If you still can't find a definitive answer I would definitely speak with an attorney! Good luck!
  • March 19 2013
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I have to be honest unless the total commission was 16000 and the split was 8 and 8 you shouldnt have to pay seperate commissions.  I would talk to the attorney on this one and look back at your listing agreement

  • March 19 2013
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If you had a right of first refusal the Realtor should have been informed when she took the listing. You could have been exempted as part of the contract.
  • March 19 2013
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You need to check with an attorney, but look at the Listing Agreement your sister signed. What does it say about commission. If you received a full price offer with NO contingencies, then you probably owe a commission, but that rarely happens. It is all about how the listing agrement was written and what sort of offer you recieved. See an attorney.
  • March 19 2013
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Thats a very interesting question and circumstance.  When your sister signed a listing agreement with a Realtor she agreed to pay a 5% commission and it sounds like indeed you did get an offer and then you exercised your first right of refusal.   It sounds to me like you do owe the Realtor the commission or at least half (2.5%) of it.  The reason I say half of it is I'm guessing that the Realtor was going to split the 5% commission with the other agent representing the buyer.  The Realtor did their job, listed and marketed the property and obtained an offer and as such should be compensated for their time and work.  That sounds fair.
  • March 19 2013
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Profile picture for BradNiemann
If you were excluded from the contract that is one thing, If you were not it is another entirely.  You need to get a copy of the contract she signed and seek legal advice.  It will all depend on how it was written up.  
  • March 19 2013
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Profile picture for craigfial
If your sister listed the home with a Realtor in order to get the highest possible price.   There is a compensation clause in there that regardless of how the home transfers title, commission is due.  The Realtor spent time, energy and effort to find a buyer ready willing and able to purchase the home.  You purchasing the home is the same as someone coming in off the street.

Having said that,
What the agent could have done or your sister could have requested was to have a separate commission structure should you purchase, vs. an outside party.

All water under the bridge.  Nothing you can do at this point.
  • March 19 2013
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Hi there, In my area if the realtor does not sell the home they are not entitled to a commission.  If you signed a listing agreement with the realtor, I would reread that contract and make sure of the stipulations.

  • March 19 2013
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