Of course not, although by the logic, they should.
If a seller selects one of several offers, only that agent is entitled to a commission. But if, after an agent has done the work promised and provided what was contracted for, the seller, for no good reason, decides not to sell to anyone, the agent will still be entitled to the commission. The seller has contracted for a service (bring a buyer to the table, not close a deal) and that service has been performed.
I don’t know what would happen if several agents are involved, and the seller rejects all offers, but it would not be a good position for a seller to be in, as it would be looked upon as a breach of contract. My guess is the agent with the first reasonable offer would have the strongest case should it go to arbitration or court.
The UCLA economist I was listening to last night predicts that prices will flatten, and may decrease in real terms (i.e., increase less than inflation), but will not fall on a nominal basis. Previous crashes were all accompanied by horrendous economic conditions – massive job losses in the aerospace sector, for example. In the current situation, employment is relatively steady, interest rates, while higher than they were, are not anywhere near the record levels of the past. So, if you’re waiting to swoop in and buy something for way less than it’s selling for today, you’re probably out of luck.
Do you think the seller’s agent still deserves a commission if the buyer backs out? (This happened to us.) Maybe he deserves one from the buyer’s agent. Not all agents do a really good job of qualifying buyers.
But that’s exactly what happened in my case (that I started this with). The seller asked that all offers be in by noon on Thursday. Assuming that what we were told was true, they had five offers, two of which were higher than mine. Since I know that my offer was above listing price, they had at least three offers above listing price (and in all likelihood, all five were above). The seller rejected all offers.
The reason that the seller’s agent is entitled to nothing is that he is the one that set the price that they had no intention of taking in the first place. The reason that the buyer’s agent will get nothing is that he is probably doing the same thing to someone else on another property where he is the listing agent.
Besides, this ruse is, unfortunately, not illegal. I wasn’t pitting them for doing something illegal, just something really dishonest. God I’m naive!
I didn’t quite follow. Are you saying that a buyer’s agent with a reasonable offer could force the seller to sell? Or are you saying the seller’s agent could force the seller to accept a reasonable offer?
I certainly don’t think the first case could be true. I suspect the second case might be true, but it would be bad business for the seller’s agent. Not only do they want to sell the house and get a commission, they also want a satisfied customer. Agents rely heavily on recommendations and word-of-mouth for future business and it would not be ideal to force a seller to accept an offer they don’t want.
Additionally, while prices is the main factor in an offer, there are a number of other factors (some of them more important than others). For example, contingency, closing date, earnest money, likelyhood of mortagage finalization, home inspections, lawyer approval, and just plain contract approval. Now granted most people only worry about the first two, but I could see a seller not taking an offer if they think the buyer might not follow through. I could also see a seller not accepting a contract that stipulated home-inspection approval if they were hiding a problem.
I’ve resigned myself to renting for a while (at least as long as I’m in Santa Barbara). I make a very decent salary, and I would be seriously stressing my budget to try to buy even a 400 sq. ft. shack in a crappy part of town. Maybe these prices are sustainable, but I just don’t see how that could be.
I’m not an economist, but I think that the huge number of investment properties (mentioned above) and the explosion of variable rate mortgages that will soon outstrip the ability of the holders to pay them are sufficient to cause a crash. PunditLisa mentioned a record number of foreclosures last month. What happens when that record keeps getting topped?
We’re in the same boat here, and I feel the same way. Home prices have outpaced both salaries and rents by such an insane degree that I do believe there will have to be a price correction. I think the only question is whether it will take the form of an actual dip or a long flat plateau. Either way, though, for now renting is smarter than buying anyway. The conventional wisdom that rent is money wasted that should be used to build equity doesn’t work when you live in Real Estate Loonyland.
I hear that. First house I bought here in town was for 80K, not the best neighborhood, but a nice house. Sold it 6 years later for 80K. Now it’s under foreclosure, asking price 24K.
Bought my current house in 2006 for 140K and my house is hardly nicest in neighborhood, house kitty corner from me is currently under foreclosure asking price 67K.
Might as well face facts, I’m never gonna be able to sell my house. Or at least break even on it.
Anybody have experience w/ bank re-writing mortgage?? Wife and I both have good steady jobs, but I doubt if house is technically underwater.
Well, that house did eventually get sold, and they did get their asking price from someone (not me!). Pisses me off that their ruse worked.
We did buy a house soon after. Partially regret it, but we’re in San Francisco, and prices haven’t been too bad here in the actual city itself. Probably down a bit on it, but not too much. More regret the whole buying a house at all and feeling more locked down to a location than I ever had.
Thanks for the update, Lurker. We don’t get nearly enough of those around here.
I find it terribly interesting to watch real estate shows set in the US - the price variance is mind-boggling, as well as some of the real estate selling/buying procedures.
