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With no contract, and no work done on my behalf... is this fair compensation?

Online, I found a house and then called a friend who is a part-time Realtor, asking him to open the door.  We have no contract, I never signed anything.  It was just a friend "helping out."  Upon entering, he immediately disliked the home and repeatedly discouraged my interest in it.  While looking through the home ourselves, other people drove up and he spent his entire time speaking with them, showing them around, because they were talking to him about buying it and flipping it.  Weeks later, when we saw it was still on the market, I asked him to call the listing agent and request a meeting with the owners and agent to find out some info on the house's history.  He did sit in the meeting - but said nothing.  Nothing came of the meeting.  Months later, the house again came to my attention when I ran into the owner.  We got to talking and worked out a deal.  The owner even offered to pay my friend a couple thousand dollars for the "referral."  (Though I found the house!)  My friend agreed.  He's the only one left in his agency, and now his agency is making waves like they deserve the commission... even though he had nothing to do with finding the house, I have no contract with him, he consistently dissuaded my interest in the home, and was not at all involved in making the deal.  What do I do?
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March 23 - US
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Answers (18)

I advise you to talk to an attorney.

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March 24
Your question sounded like it was cut and dry but WOW it sure opened a can of worms here.
 If a friend asked me for my official opinion I wouldn't expect any compensation. A friendship is reciprocol or should be.  It sounds like your "friend" isn't much of one.  It is sad how money can really change people. 
 You never had a contract so I see the $2000 as a thank you gift and it seems in this case a gift that is not deserved.   
 Hire an attorney to handle the paperwork and buy the house without your "friend"   
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March 24
Profile picture for xtrae12
Hello Caroline,

Thank you for your thoughts.  I appreciate all the insight I can get!

There are a few things you misunderstood: my friend didn't drive us anywhere, no appointment was needed because the house was vacant, and he wasn't involved in any negotiation.  At that "meeting" he specifically stated that the reason for his complete silence was that he "wanted to stay out of it."

He did turn the key in the lock, and then began immediately criticizing the home and discouraging our interest in it.  (We're used to it, that's just his way... he wants us to move to his town.)

The listing agent's contract had technically expired before the meeting ever took place.  He was already headed out to remove his signs.  The owner extended his time long enough for our meeting, trying to give him the opportunity to make a sale.  As soon as it became apparent to the listing agent that we weren't going to buy the house then, he became completely disinterested, frequently leaving the office, taking other phone calls, and, bored, began working on other clients' cases on his computer in front of us.  No joke, he actually picked up a guitar and began loudly singing a song while we were trying to talk!  Again, nothing came of the meeting. We had a few other houses we were considering, and this one didn't look particularly hopeful. 

Over a month later, when we re-connected with the owner (and the other houses we were considering had already sold) and discussed a home purchase, the seller had long since parted ways with his listing agent and they had both agreed on fair compensation for his services. In fact, the seller had just signed on with a new listing agent, but apparently as part of the paperwork, had listed our family as prior interests, and therefore unassociated in any way with the new listing.

Since neither of us had agents involved, the owner offered to lower the sales price - though in a nod to our friend, offered $2k. There's an addendum to the purchase agreement that the sales price is contingent on our friend's acceptance of the 2k. If our friend or his agency is making trouble, the owner may get skittish, want to avoid the potential for any kind of suit (tenable or not), and back out of the deal entirely... using the addendum. Why should he (or we thru sales price) pay for services that weren't rendered? Yet, I doubt the owner would be willing to write a new contract completely excluding our friend, and put himself at risk in any way.  I don't know what to do!
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March 24

I can't tell from your posting when the seller's contract expired. Both agents represented the buyer and seller in a meeting at some unknown date. What is in writing is what matters.

You asked your friend to complete work for you. You knew he was a Realtor doing this as a business, not as a charity. From you description your Realtor friend didn't do much for you - however you called upon him a couple times to complete agency work for you.  Did friend really say he would drive you around, make appointments, access lock boxes and negotiate for free? Must be a great friend.

Assuming the listing agent's contract expired and some form of release was signed - you owe no commissions.

The listing agent did advise, cousel and represent seller in a meeting with you. Your Realtor friend also
negotiated on your behalf. 

Next time, if you want to DIY then go it alone. 

You need some legal advice to review your contracts and situation specific to your state laws.


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March 24

You do not have a contract with your friend, so you owe nothing.  The seller offering money for services already rendered is not a contract, and you are not a party to it if it was one.

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March 24
I think it's an insult, sunnyview, to the people who serve on these boards. You may have this idea that we all know each other and we're all covering for one another, but it ain't necessarily so. Especially since most review boards are made up of managing brokers, who aren't in the field and aren't hobnobbing with licensees from other companies. The folks who serve on these boards would prefer to not have any hearings at all, and when they do, they're not especially eager to see that some unknown agent with a convoluted story line gets paid.
 
But, believe what you will. If the case is as the poster describes it, nobody is deserving a commission. Although, if it were me, I'd be concerned about the listing brokerage and the holdover clause.

All the best,
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March 24
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"Sunnyview is completely wrong, Realtor® boards do not look favorably on brokers claiming commissions when the broker is not actually brokering a sale."

I think you misunderstood or maybe don't want to be honest about the role of the board. Boards do care about their agents getting paid. They do sometimes side with their agents over common sense. However, with no written agreement there's no danger of an agent run "arbitration" board. A court would decide and they will rely on the fact that there was no contract or agreement for compensation. Problem solved.

This agent and his office earned no commission so the referral fee being offered is a gift out of friendship. He can choose to take it or leave it. I think that the agency is making the profession look bad by playing the bully and putting their hand out at this late date for a full commission they didn't earn.
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March 24
Oh Please ignore some of the incorrect remarks.  I spent years on hearing panels about commission and wrote a book on procuring cause.  Most agents think if they touched a deal months ago, they deserve money...wrong.  The agent would have to do something to make you want to buy the property.

I would not worry...you own nothing.  The property is no longer listed and you are a free agent to do what you want...including dealing with the seller directly.

You made no written agreement to pay anyone, and now you have no relationship with the agent.  That is called "estrangement" and when there is "estrangement" there is no procuring cause.

In order to have a problem,there whould have had to been an agreement in writing to pay this "friend's" BROKER("friend" is a term you use loosly) and the "friend's" BROKER  would then have a claim against the person that agreed in writing.

If you don't buy this property, find a true buyers agent at www.NAEBA.ORG the National Association of Exclusive Buyers Agents who work in Buyer Agency offices that represent ONLY buyers and NEVER seller.

Perfect example why no one should ever use a "friend"....

Eve
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March 24
Pasadenan is right, Your friend/agent may not be aware its very illegal for the seller to simply hand him $2k in a brown bag without that fee going through his broker, his broker might be taking exception to his verbal offer to you of $2k.

Is the listing still active in MLS? Is the listing agent a part of this transaction still? The seller, list broker, sale broker need to put their heads together and find resolution that all agree to (this really does not concern YOU at all, its out of your hands). The seller is the one at risk of being in "jeopardy" (even if he waits the time frame needed, if it can be shown he was doing this in bad faith or for the purposes of interfering with a contract he will still be at the same risks of the brokers coming after him in court). better for him to work an agreed upon deal NOW.
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March 24
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As the co-broker fee listed in the MLS is a contract between the seller and the listing agent; even if that contract is terminated, there may be a time frame listed.  And Mack is right; the co-broke fee in the listing contract goes to the broker first before the split with the agent, not to the agent first.

As it is "not your contract", you will need to see what is in the seller's contract with the listing agent, that was terminated.

Personally, if they don't want to abide by the agreement you made direct with the owner/seller, you may just have to "wait it out" and buy later after the contract expires.

And there is an issue with the agent accepting a finder's fee direct without it going through the agency.  All fees need to be reported on the HUD-1 form if there is a mortgage involved.  And the agent is not licensed to do transactions without a licensed managing broker.

You can do what you want to do, but you can't pay the agent under the table skipping the broker and still getting it reported correctly on the HUD-1 form.
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March 23
Profile picture for xtrae12
Mack,

Thank you for your reply.  Actually, before we ever ran into the owner and discussed a home purchase, the seller had already parted ways with his listing agent and they both agreed on a fair compensation for his services. 
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March 23
What do you do . ..

Well, you don't take our word for it, that's for sure.

Sunnyview is completely wrong, Realtor® boards do not look favorably on brokers claiming commissions when the broker is not actually brokering a sale. In this case, it seems as if your seller is offering to pay a fee to the selling office, but stiffing their listing office.

With that in mind, you can sit and wait for a letter from the broker's attorney, but I would be a bit more proactive and consult with my own lawyer, because the seller MAY owe the listing broker a commission, and commissions are lienable.

All the best,
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March 23
Profile picture for sunnyview
"But there is an addendum specifying it was conditional that my friend accepted the compensation and there wouldn't be any hassles."

The seller sounds smart in adding the addendum. I would ask your friend to sign off on the existing agreement. If he refuses, stand your ground. It feels like the legal threats are all bark with no contract. 

If you feel very nervous, you can ask an attorney to weigh in, but courts don't like unwritten agreements between "friends" when it comes to real estate so until you put something in writing the burden of proof is on the agency not you. You can also ask the avvo forum about the specific laws in your state. The licensed legal advice on that forum is free and may be able to ease your mind while you wait. Hang in there.
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March 23
Profile picture for xtrae12
Thank you for all the info!  I appreciate every insight. 

My "friend", clearly and specifically agreed to the compensation (though only verbally to me and my adult daughter).  But the next day, is apparently seeking to use his agency as a "scapegoat" in his effort to get more money.  At least, he said that he went to his boss and was told that "legally," as long as he turned the key in the lock, he's due the commission.  He claims there's "nothing he can do about it" and subtly mentioned "testify under oath" - as though they would try to cause us legal problems!  I'm afraid all this nonsense is going to freak out the owner, and we're going to lose the house! 

How can I fire someone I never hired?!  How can I stop that agency? (I've never had any dealings with them, nor knew they existed in this situation... nor had so much as a verbal contract with my friend... who once in a while took us along to see a house.)  Don't know what to do!  We met with my friend Friday afternoon, and he said of course he would accept the compensation.  So, late Friday, we met with the owner and signed the purchase agreement, I think is what it's called, and were so happy.  But there is an addendum specifying it was conditional that my friend accepted the compensation and there wouldn't be any hassles.  I don't want to lose this house! 

Please help!
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March 23
Hard situation, doesn't sound like there are any easy answers, let us know what ends up coming of it. 
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March 23
Profile picture for sunnyview
"Ask about procuring cause."

Don't bother. The real estate board will undoubtedly say there is always a reason to pay an agent commission, but courts in these situation may feel differently. No agreement, no meeting of the minds, no written contract and no specific timeline for services and months between any deal and the agent sounds like no procuring cause to me. 

The agent friend already agreed to the offered "referral" fee, so the agency can sue him for not paying them enough or butt out. If the RE agency doesn't like their agent's gentlemens agreement with no contract that mentions them, they can sit and spin.
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March 23
Call the local real estate board because you may be liable for the listing commission which the seller pays out of the purchase price. Ask about procuring cause. Good luck.
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March 23
Profile picture for sunnyview
You cut your "friend's" agency loose. If the agency does not want to accept what the seller is offering for the "referral" fee, they get paid nothing . Business is business. If it was business your "friend" should have had a contract or participated as a professional. 

I'd tell your friend that he needs to tell his agency to stuff it and tell them that you will make sure the referral fee the seller offered out of pure generosity will be included in your escrow if he agrees. If not, the amount to him and the agency is zero.

If you are handing out full commissions, I'm sure there are plenty of other real estate agencies willing to put their hand out before close of escrow for doing nothing. Why choose just one?
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March 23
 
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