Posted by Tim Fierro (Tacoma, WA) on October 03, 2002 at 16:50:57:
I actually started a club for Pierce County and our next meeting is this Saturday @ 09:00 AM. More information is at http://www.piercecountyinvestors.com
Introduce yourself when you show up and we can talk.
Problem Paying Realtors Commission - Posted by Marc NJ
Posted by Marc NJ on October 02, 2002 at 22:35:49:
I rehabbed a large 4 BR 21/2 Bth house and listed it with a realtor after triing to sell it by FSBO for a month.The realtor didnt start advertising until about 1 mon. later. It has been 2 1/2 mons. on a 4 mon. listing agreement and not 1 offer. The house is priced under appraised value. The realtor says nothing in that size and price range is moving.
In comes my buyer which wanted to buy this house months ago and rehab it himself, he calls me and I show him the finished rehabbed house. We negociate the price and signed the sales agreement tonight.I take him to my mortgage broker and get him approved, hes self employed. I will hold a small note.
My question is . What do I do about the realtors commission? I dont feel that I should have to pay him the 12K thats on the listing agreement. And I also stated when I signed this agreement that I would not, if I found the buyermyself. He has stated that it should be paid that this is customary proceedure for his company. I think hes blowing smoke. What would the experts do. Should I cancell the agreement and wait the 60 days or maybe he will accept 2k and get lost.I’d appreciated all of your opinions.
Thanks for the imput.
Re: Problem Paying Realtors Commission - Posted by Dave T
Posted by Dave T on October 04, 2002 at 23:55:03:
If I have been working with a potential buyer prior to signing a listing agreement, I always write in an exclusion clause for my potential buyer.
Re: Problem Paying Realtors Commission - Posted by Nate(DC)
Posted by Nate(DC) on October 04, 2002 at 24:49:15:
When you signed the agreement you “stated” that you would not pay a commission if you found the buyer.
Do you mean “stated” as in A or B:
A:
Realtor: “Sign here on the dotted line and we will have a valid listing.”
Marc: “OK.” (signs a form called Exclusive Right to Sell)
Realtor: “Great, thanks for the business.”
Marc: “Oh by the way, if I find the buyer myself I won’t pay you a commission.”
Realtor: “Want to go grab a cup of coffee?”
-OR-
B:
Realtor: “Sign here on the dotted line and we will have a valid listing.”
Marc: “OK, but I’m not going to pay you a commission if I find the buyer, and I’m writing that into the contract. Let’s both initial the change so we know it’s valid.” (writes, both parties initial, then he signs)
Realtor: “Go get your own f*cking cup of coffee, cheapskate!”
Just kidding about that last line… but seriously, it depends on what the WRITTEN contract says and nothing else. Not on what you said or what he thought or what is “customary”. Read the contract. You’ll have your answer.
NT
PS Tim I BETTER make out of context this week!
Re: Problem Paying Realtors Commission - Posted by Marc NJ
Posted by Marc NJ on October 03, 2002 at 20:49:57:
Thanks for the imput, but I would like all to know that I produced this buyer months ago with the “Handyman Special” ad that I ran before I took title to this property.This buyer and I almost entered into an agreement then, but did not B/C I would have then, as now, would have to hold a second. He even has proof of this with a mortgage estimate from that time.
So, if I produced the buyer and realtor did a poor job of marketing and selling this property, then why should they recieve the entire commission?
I think I’m being more than fair and honest by offering a 2 1/2% pay day. I did not try to go around the broker, I told them of the buyer, and asked them to take the cut in commission, which I think is very generous.
Thanks again for the imput.
Re: Problem Paying Realtors Commission - Posted by Heather (Seattle,WA)
Posted by Heather (Seattle,WA) on October 03, 2002 at 20:17:16:
I understand your frustration about making a commitment to an agent that didn’t hold up their end of the deal. It’s unfortunate but a contract is a contract.
If you signed an exclusive listing with this agent then you really are legally obligated to pay the commission regardless of whether you found the buyer or not and if you try and go around the agent it is feasible that he/she/company could bring a lawsuit against you for the commission. Now granted not everyone would do that but it’s possible and you should consider it.
If you try and wait it out by putting your buyer off they may decide not to buy and then what would you be out? It would be better to try and work something out with the agent.
I would recommend talking with the agent and reasoning it with him/her. Explain that you did not feel that they did what they said as far as marketing and try and get out of the contract. I know that there are agents that offer every client the option of getting out of their contract with 1 days notice like I do. See if this agent/company offers anything similar or there are any “outs” written into the contract.
If it’s not an exclusive listing agreement then you should be in the clear. Read your contract carefully.
Otherwise, chaulk this one up to learning from experience.
Re: Problem Paying Realtors Commission - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on October 03, 2002 at 19:50:31:
Marc–(NJ)--------------
When I list with an agent, I have a much-reduced commission should I sell the property myself. Typically 1% or 1.5% of the sales price as a sort of consolation prize. This is not too bad for the agent/broker as it is not split with some other brokerage and there is no work with this particular buyer, as I procured the buyer myself. But, the agent may well have spent some money–it costs money to put listings into the MLS–and time and effort on the property. I feel this reduced commission is reasonable. And I have had agents agree to it.
Of course, I have this understanding in writing at the time of the listing.
Good InvestingRon Starr*****
Re: Pay it, as you agreed. (nt) - Posted by Ed Copp
Posted by Ed Copp on October 03, 2002 at 18:11:55:
3
Renegotiate… - Posted by Ben (NJ)
Posted by Ben (NJ) on October 03, 2002 at 06:31:53:
Ed Copp will have my head for this but since you are taking a reduced price, its not cash AND you are carrying back a note, I would tell the agent the only way this deal gets done is if agent reduces his commish. He will probably go for it.
Re: Problem Paying Realtors Commission - Posted by Glen SoCal
Posted by Glen SoCal on October 03, 2002 at 03:05:49:
Marc NJ-
The following is from your post: ‘And I also stated when I signed this agreement that I would not, if I found the buyermyself.’
Did you state that, or did you have it in writing?
At some point you realized that you property wasn’t moving and needed to take some further action , and enlisted the services of a Realtor.
Unfortunately your agent wasn’t hustling in a way you expected, or hoped.
I know an investor who asks the agent to give him a price that would insure his property would sell within 1 month. Once the price is stated he locks the agent in to a one month contract…which is renewed upon the agreement of both parties, yada, yada.
Maybe you would have benefitted with such an agreement.
It’s unfortunate that you contracted with, what seems by your post, a sloth, to sell your property.
I feel your pain, but a deal is a deal.
Hopefuly you will profit now and in the future from the knowledge you gained from this experience.
On the other hand. If I was the Realtor, I don’t think I’d sleep well knowing that I could look forward to years of bad press, and for taking a full comission for a job not well done.
Re: Problem Paying Realtors Commission - Posted by Ed D (NH)
Posted by Ed D (NH) on October 03, 2002 at 01:07:58:
Generally speaking the agency can collect the commission up to 6 months from the sign up. ( check your paperwork).
1)Wait it out
2)If you get a buyer agent involved (discount the commission) it bumps out the original agreement.
(I did this once when I couldn’t wait.)
Re: Problem Paying Realtors Commission - Posted by JohnP SFL`
Posted by JohnP SFL` on October 03, 2002 at 24:11:34:
Well Marc do you have in writing stating that if you find a buyer that the realtor receives no commission? I would try to cut a deal with him and not just blow him off. He can cause trouble for you. Remember he has a legal binding contract with you. No I am not a realtor. But I think you need to be careful in signing any legally binding contract in the future.
JohnP sfl
Re: Problem Paying Realtors Commission - Posted by Tim Fierro (Tacoma, WA)
Posted by Tim Fierro (Tacoma, WA) on October 03, 2002 at 24:08:41:
The following is assuming you have an exclusive arrangement with this agent.
I am sure that Ed will pop in here with his thoughts on this, but to summarize; Don’t you think your signed contract with this agent should be binding?
If not, do you think it fair that all contracts should have a loop hole such as just saying no, I changed my mind? If you did not want to pay a commission if you signed up the buyer, then put that in your listing agreement. You didn’t, so pay the agent.
Now, what kind of options do you have?
Next time, be careful with what you sign.
Re: Problem Paying Realtors Commission - Posted by RR
Posted by RR on October 02, 2002 at 23:35:24:
What kind of agreement you signed?
exlusive right of sale listing?
Re: Problem Paying Realtors Commission - Posted by Tim Fierro (Tacoma, WA)
Posted by Tim Fierro (Tacoma, WA) on October 04, 2002 at 24:08:24:
As you explained the chain of events, you are still on the hook for a full commission to the agent.
Since you knew this was going on, it might have been prudent to talk to the agent about getting out of the agreement, BEFORE you signed a P&S with this buyer.
We expect our agreements to be fulfilled when dealing with buyers and sellers, but you are not holding your own signature to that same standard. You could have tried to do something about the commission before, and even now might have a shot at it.
Why should the agent receive the entire commission? Because you agreed to give the agent a full commission if you have an exclusive agreement with them. Basically an exclusive agreement, that you signed, says that no matter who brings the buyer, the agent will get paid.
It’s all hindsight and you are back to the options I mentioned earlier in this thread. Yes, there is another, but I don’t want to go there.
Re: Problem Paying Realtors Commission - Posted by Tim Fierro (Tacoma, WA)
Posted by Tim Fierro (Tacoma, WA) on October 03, 2002 at 09:44:16:
My default forms for listings show an expiration date, and a full 6 months AFTER the listing date. That means that if a buyer came in on week 1 of a 3 month listing, I am entitled to the commission even if this buyer buys the property 8 months and 3 week later.
To wait out a contract in order not to pay means reading that contract very carefully.
Re: Problem Paying Realtors Commission - Posted by Phong Le
Posted by Phong Le on October 03, 2002 at 15:38:14:
Hi Tim,
I live in the Seattle area and work in Federal Way. It seems like you’re very experienced with Real Estate investment. Is it possible for me to meet and talk with you just to learn more about RE investing? I’m looking to learn as much as I could before trying to get my first deal. I would appreciate your help very much.