Home Help! Real Estate Question

[AmberGretchen]

OK, so this question is on behalf of someone I know. This person (X) decided to sell their house early last year. They hired a selling agent, we''ll call them L, and put it up for sale. It didn''t sell, and come last Fall (October 2007), X terminated his/her relationship with the seller''s agent L. I don''t know all of the reasons for this, but X made it clear he/she wanted nothing further to do with L in selling his/her house.

Now L has come back with potential buyers, even though the house isn''t really on the market (but X would still like to sell). The potential buyers check out OK, even have cash ready to go, and X feels he/she *might* be OK with the price they are offering. However, when L called X and told him/her about these people, L said that he/she was acting as the the buyers agent for the potential buyers. That left X with no sellers agent in the transaction. However, L is still insisting that X has to pay the entire 6% standard commission (this is in California if that helps), rather than just the buyer''s portion of the commission. L insists that this is the policy of the company, not L''s personal policy. But X knows that L has been dishonest or at least manipulative in the past. The 3% commission difference would make a significant difference to X in terms of money in his/her pocket, and as he/she is nearing retirement its kind of a big deal. And of course, it seems outrageous (to me at least) to be paying a seller''s agent commission when X has no one protecting his/her interests in the deal.

Finally, the timeline on all of this is SUPER fast - the buyers want all the inspections done in 3 days, and they want X out of the house in 21 days. I don''t know if this changes anything, but it certainly doesn''t give X a lot of time to figure out where he/she stands.

I think this sounds like crap, but I don''t know anything about real estate law, so I thought I would check here. Basically, I have a couple of questions.

1. Is X in fact obligated to pay the full 6% commission even if there is only one agent in the transaction? Do real estate companies (Pacific Union or Coldwell Banker or whoever, as examples) really have this policy that the full 6% gets paid, even if there''s only an agent on one side?

2. Isn''t it illegal, or at least unethical, for L to try to act as the agent for both the buyers and for X as the seller, since presumably they have conflicting interests?

Depending on the answers to the above two questions, what should X do to protect his/her interests?

I''d really appreciate any answers/knowledge, or even clues for where to look for answers.

 

[VegasAngel]

I am definitely no expert but if the house is not listed on the market by either this particular realtor or the sellers own realtor, how does this realtor think he/she is going to get commision? If this particular realtor listed the house & then sold it I think he/she would get 6% if the seller has their own realtor then the commision would be split between the realtors.?

 

[phoenixgirl]

No expert here, but I know realtor''s commissions are negotiable in my state. The seller''s agent kicked in an extra percent of commission when we bought our house to sweeten the deal for a hesitant seller.

It seems to me at the very least X should

1) speak to the manager of the local office and ask for the commission policy in writing

AND/OR

2) hire a new seller''s agent. In this case, X will probably still pay 6%, but at least s/he''ll have peace of mind knowing that someone is working for X''s interests only and also knowing that less commission is going to someone whom X doesn''t trust.

 

[AmberGretchen]

Thanks for the responses you guys.

Vegas Angel - the house had previously been listed by this realtor but is currently not listed by any realtor (the listing expired a long time ago is my understanding). So yeah, I just don''t get why L thinks she is entitled to a commission???

PG - thanks for chiming in. That''s a great idea to get the commission policy in writing, I''ll suggest that to X. At the moment though, X had fired L a long time ago and so L should no longer be acting as X''s agent, and should therefore not be entitled to any commission that would go along with that, right?

 

[robbie3982]

AmberGretchen, I believe that the percentage of commission is negotiable, but if there''s only one agent, he/she usually gets both commissions. I think it usually happens the other way around though where buyers end up not having an agent and everyone is represented by the seller''s agent.

 

[AmberGretchen]

Thanks Robbie, that''s good to know that it isn''t an unheard-of situation. I can see where if there''s only one agent they should get any commission that''s being offered, but I guess it just seems really unfair to me that L should get such a big reward after being so awful to X, and since she is no longer X''s agent and isn''t even claiming to represent X''s interests, it just seems unethical somehow.

 

[Dee*Jay]

In a dual agency situation (i.e., where one agent is representing both parties) the agent is entitled to the full commission unless a different agreement is reached in writing ahead of time (usually as part of the listing agreement). Also, the listing agreement should have had a place to agree (or not) to dual agency; the sellers should have signed off accordingly on that agreement. (Note that I''m speaking from experience in MY jurisdication, which is Illinois).

That being said, if the listing is cancelled or expired and the agent brings a buyer then my *opinion* is that he is just representing the buyers at that point becuase he is no longer working for the sellers.

I will be very interested to see how this turns out. Please keep us posted!

 

[AmberGretchen]

Deejay - I am 99% certain that the situation is the second one you mentioned, that the listing was cancelled at the request of the seller (due to the agent not having fulfilled their obligations to the seller''s satisfaction), and now the agent has come back with buyers. The seller definitely did not sign something agreeing to have the agent be dual agency after terminating their original contract.

I''m really interested to see how it plays out too - the agent is incredibly pushy and aggressive and X is, as I mentioned, elderly and eager to sell and I worry that the agent is taking serious advantage, but I''m not sure what I can do about it.

 

[Dee*Jay]

Is this a jurisdiction where there is a period of attorney review or any other type of involvement by a lawyer? If so hopefully the seller will have someone else looking out for his/her interest in this transaction.

 

[KimberlyH]

My husband is not a real estate agent, but he is in the business, in CA, and has been for 20 years. His response to your questions are:

1. If the house is not under contract for sell, the sellers commission is completely negotiable as part of the offer to purchase.

2. It is not illegal or unethical for the agent to represent both buyer and seller.

3. He recommends the seller hire an agent to represent him/her. Contacting a company like Help-U-Sell, that works for a flat fee, might be the best option for L.

 

[KimberlyH]

Date: 3/15/2008 10:33:07 PM
Author: Dee*Jay
Is this a jurisdiction where there is a period of attorney review or any other type of involvement by a lawyer? If so hopefully the seller will have someone else looking out for his/her interest in this transaction.

In CA lawyers are rarely involved in real estate transactions. It's amazing how different the real estate systems are set up in each state.

 

[lauralu]

Commissions are ALWAYS negotiable. Saying it is policy is unethical and against the law

L is most LIKELY trying to get the full commission because of the work and money he has put into trying to sell it when he had the listing.

Essentially what L has done is brought a potential buyer to a FSBO or for sale by owner. Usually you would negotiate a 3% or whatever is the common commission split for FSBO's in L's area with the seller.... to be paid by the seller to L's company and L would get his share after that.

I do see why L wants 6% as he most likely has money and time in this property from having the listing and without L finding the buyer. Seller would still have his/her house with no buyer. However, saying it is policy...again...is unethical and against the law.

Unless seller signed another seller agreement with agent L and his company, than no seller... is not represented in the transaction. L most likely signed a buyer rep form with buyer before bringing them to the home.

Seller can have the contract looked over by a Real Estate lawyer though if seller chooses. Or seller can sign another seller rep with agent L so both parties are represented equally. Hence dual agency. Or seller can call another agent to represent him/her on seller side only(which I would recommend)

As far as closing goes. Buyer may truly need to be out of where he or she is living and need that closing date. Now whether seller wants to give that closing date to buyer is totally up to seller. Alot depends on price usually. if offer is good, than sellers are motivated. closings can happen in any time frame. As long as title companies and mortgage companies can get it closed in time it can happen in a week if needed. However, 30 days or more is usually a good comfortable amount of time for all.



Thats what I know......hope it helps...

 

[AmberGretchen]

Thank you so much you guys - this is really great information. I''m seeing X tomorrow for lunch and will share it all then and see what X decides to do.

Kim - I was really surprised when I read that, that its not unethical for an agent to represent both buyer and seller in the same transaction. That just seems odd to me - that it would be a conflict of interest somehow.

I''m pretty sure X was planning to call around and see what could be done in terms of at least getting a lawyer to look over the option, even if its not a standard practice. I''m pretty sure there''s a family friend who is a real estate lawyer, it would just be a question of contacting him in time for it to be useful.

 

[AmberGretchen]

lauralu - that''s really helpful information as well. I really appreciate you taking the time to share it. Interesting about how saying it is policy isn''t legal. I had vaguely recalled something like that but wasn''t sure. Honestly though, from what I know of L''s dealings thus far, it wouldn''t surprise me at all if she was doing something unethical/illegal. Do you know where I could get more information on that by any chance?

I''m for sure going to encourage X to try to negotiate the seller''s part of the commission, because it really doesn''t sound like L did anything all that strenuous to try to sell the house (part of the reason X terminated their relationship in the first place), so it just seems really unfair for L to now be demanding this commission that she didn''t really earn.

 

[akw94]

Date: 3/16/2008 12:54:33 AM
Author: AmberGretchen
Kim - I was really surprised when I read that, that its not unethical for an agent to represent both buyer and seller in the same transaction. That just seems odd to me - that it would be a conflict of interest somehow.

AmberGretchen,
It is a conflict of interest. That doesn''t mean, however, that parties can waive that conflict if they choose. So if both parties have notice (which the agent must give notice) that the agent represents both, they can say it''s ok and go forward. If one or both parties does not say it''s ok, it cannot be done. Both parties should have to sign off on something before dual agency is allowed. I would not generally advise having the same agent for both parties unless it''s a very straightforward deal but especially not if one party does not trust the agent.
It sounds like this agent is acting unethically and I would suggest calling his firm and also reporting him to the appropriate licensing agency if need be.

Hope this works out..

 

[KimberlyH]

If the agent is honest he/she can look out for the best interest of both parties and make a fair deal. Our real estate agent, whom my husband has been working with for 10+ years, does this sort of deal quite often. It sounds like the agent we''re discussing isn''t the most honest person and I personally wouldn''t want this agent working for me but in general it isn''t an ethical issue. In such a case you could view the agent as a mediator of sorts.

 

[lauralu]

I would call agents broker first and tell him/her what this agent is saying about policy and commissions. The Broker needs this info about this agent and hopefully will do something about her.

If the seller wants this buyer for their home. Than get another agent to represent them in the transaction so it may continue on and the home sold. Buyer may lose interest and move on.

If seller still has bad feelings and wants to do more about reporting the agent. You would call whichever government office in your state that issues Realtor Licensing. Ours is the Department of Commerce, Licensing department.

Dual agency is very common everywhere. There is no law preventing it. However the Realtor code of ethics bound Realtors to act ethically and to represent both sides fairly as well as the contract Realtor, buyer and seller sign. Not every Realtor will play by the rules though, as with everything in life though, there are always the ones who make it tougher for the ones who walk the honest side of the fence.

You do not have to agree with Dual agency. However, if you are a buyer, when working with your Realtor he/she cannot show you or enter into a contract for any homes that are listed for sale by his/her agency. Even if another agent in his/her office has it listed for sale. When a seller lists a property for sale....any agent from that agents company will not be able to bring buyers to or enter into a contract to purchase sellers property. Those are all dual agency situations.

Again though, it is a consumers choice to enter into dual agency. There are choices, and a good agent should be giving full disclosure and making sure everyone is clear and understands.

Good Luck and let us know how it goes.
though

 

[AmberGretchen]

Thanks for the additional information guys. Unfortunately, I found out when I had lunch with X yesterday that she was bullied and manipulated into signing on to say that dual agency was OK - the agent kept threatening that the buyers would walk away from the deal if X didn''t agree to dual agency with L acting as agent for both, and continued with the line that the commission was dictated by the agency and L had no say in it. L also told X that the buyers wouldn''t negotiate AT ALL on the offer price (which is, admittedly, cash), but X suspects L is lying but has no way to prove it, and L is pushing the deal through at really high speed. At this point, it seems that X cannot get out of the situation or find any way for her interests to be more fairly represented.

I am going to try to help X - there is a huge amount to be done to try to get out of a house in 21 days. I am also going to look into writing a complaint letter to the agency that L works for detailing all of her illegal and unethical actions around this. I''ll also see what I can find about complaining to the licensing board for California on X''s behalf.

I have to say this whole situation left an incredibly bad taste in my mouth - it makes me sick that someone who doesn''t even need the money from doing this (L has a wealthy husband and only works for "fun" by her own admission) would lie and manipulate and do unethical and possibly illegal things to basically take advantage of a somewhat desperate senior citizen trying to sell her house

 

[surfgirl]

If it''s a senior citizen being taken advantage of, I''d call a lawyer and cancel this deal. It sounds fishy to me, and like people are trying to pull one over on this person. You say she got bullied?! Nobody can bully someone into signing anything. This person sounds like she needs representation to me.

 

[AmberGretchen]

surfgirl - its a senior citizen, but she''s very very smart and well-educated and not usually someone who gets taken advantage of. She is, however, kind of desperate to sell this house so she can move on with her life, so I''m sure that played into it, and she''s had no other offers on the house. She''s really determined to take this offer, and the buyers are offering cash which is very attractive. I offered to try to call a lawyer and get them involved, but X has insisted she doesn''t want that and wants to just take the deal and get it over with, and I feel I have to respect that. She does agree with writing a letter to the broker agency after the fact and possibly submitting a complaint to the licensing board. But I think she''s afraid of scaring off the buyers (or rather, of L taking advantage and scaring off the buyers) if she doesn''t anything other than that, and ultimately its her decision.