Help me understand how I should deal with my realtor

In My Humble Opinion
1

So, seeing as the housing market is severely depressed, I’ve decided to try to take advantage of it and try to buy something on the cheap. I’m currently renting, so I’m in no real hurry and am most looking to score a great deal.

My immediate supervisor referred me to his realtor. Nice woman. So far we’ve gone out twice over lunch to look at some condos. Nothing spectacular yet. I’ve set a price range for myself and what we’ve seen in that range is ok, and certainly better than my current apartment, but nothing that blows me away.

Anyways, my business manager heard I was in the market to buy.

“Hey,” he says. “Why don’t you come take a look at my condo? I’ve been trying to sell it for two years now.”

I laugh. “I know how much you paid for it - that’s pretty far out of my range”

“Well,” he asks? “What is your range?”

I tell him, intentionally lowballing it a bit because I don’t want him to try to convince me to try to get up to what he’s asking.

He pauses.

“I’d consider that. Come take a look, then go ahead and make me a lowball offer if you like it.”

His condo is a step or two above what I’ve been looking at. Huge (to me), in fact.

I try again - I explain that it’s a really nice place (and it is) but I just doubt I am within range of him.

“Well,” he says. “I can take it off the market. That would cut out about 6% I’d lose to the commission. I’ve already accepted that I’m going to lose about $60k on the thing. But I still owe X on the mortgage, and I just want to get out.”

(He has a separate house that he lives in - the condo was just for a place to stay near work. But it’s been empty and on the market for about 2 years now.)

X is within my price range. So I’m really tempted. It seems like a hell of a steal.

What I’m worried about - as I understand it, all real estate comissions come from the seller. So if I go ahead with this - and he cuts out his agent - there is no commission. And presumably the agent I’ve been working with gets nothing.

Is this how it’s done? This would be my first time buying a home.

Is it ethical to just drop the agent (on my end)? I’m not too worried about his end - after all, it’s been two years on the market.

It’s not like my agent has done that much with me - about 3 hours of showings, total. I just don’t want to be a jerk and I really have no idea how these things work.

Is there some protocol? Do I tell my agent now that I’m looking at buying something directly from a seller? Do I stop letting her show me properties until I’ve decided yea/nay on my manager’s condo?

How do I proceed, people?

2

To confirm, the agent who has been showing you properties is not the selling agent for the property that you wish to buy? That is, she showed you some properties, then a guy you work with, who has nothing to do with her, wants to sell you his condo? Just want to get the details straight.

3

Do you have a signed agreement with the realtor, to act as a purchasing agent? If so, there is likely a clause that if you buy within a certain time period, they get paid whether you buy something they show you or not.

If not, AFAIC, you have no ethical or legal obligation to the agent you’ve worked with.

You also have no ethical or legal obligation to the seller’s realtor. But the seller might. I would imagine that if the seller tries to cut out the realtor, the realtor could possibly take legal actions which could tie up the sale. I’m just guessing about this. IANAlawyer or realtor.

4

Correct. AFAIK, she is unaware of the property in question.

I have no signed agreement with the realtor that has been showing me some condos.

5

Hmm. That’s a bit of a tough one - the real estate biz is kinda funny with the verbal contracts (which you have with your current realtor) and stuff. She has been spending her time on you with the understanding that her payday will come when you buy, but you are about to cut her out of the loop (by the way, it sounds like a really sweet deal, and I think you should go for it). What you might try is calling her and saying you don’t need her services any longer because you fell into a private sale that is too good to turn down, and see what she says about that.

6

You have no obligation to your realtor. If the house is taken off the market, it is then FSBO, and unless you involve the realtor in the paperwork, she never needs to hear another word from you.

What if you just changed your mind, decided not to buy a house at all? What obligation would you have to her then? None.

7

Don’t tell your realtor anything. Her job is to find and show you properties you want to buy. So far she hasn’t done this.

If you find something else on your own and don’t want her to handle the sale, your business relationship is over. You don’t owe her a thing.

Buy the condo as a private sale and save some money.

8

In the US, the realtor is ALWAYS working for the seller. At least until quite recently, when they came up with the concept of “buyer’s agent” agreements. Those are actually pretty unusual, and you wouldn’t be in one without knowing about it. It changes the obligations of the realtor, and they don’t do it lightly. There would have been a document to sign.

9

The commission is paid by the seller and of course, is negotiable like anything else.

I’m constantly amazed at people who do not understand the value of a realtor. Getting the inspections, making sure the seller/buyer is doing what they need to do, making sure the closing happens, is why you use a realtor.

My house has been on the market 2 years. One of my best friends is a realtor, she has the listing. The reason she has it and no one else can, is because THAT is the person I want on my side to make sure all the i’s are dotted and the t’s are crossed. There job isn’t just to show you property, it is to make sure that you get the property you want at the price you want when you want it.

That being said, there are a lot of shitty realtors. In case you don’t want to enter into direct negotiations with your boss (eeek) I’d offer to pay her to negotiate and handle the transaction no matter who you buy from. She may very likely be a buyers agent and specializes on deals from that end.

Home purchases can be very touchy, sensitive transactions. IMHO, it is good to have someone on your side. Oh, and don’t forget, the listing agent is working for the seller, NOT YOU. They have no obligation to act in your best interest. YOUR realtor does, by law. And here is some news to your boss. If he cancels his listing, he still may have to pay the listing agent if he sells it himself within a certain time frame. Trust me, people try to screw around like that all the time. Listing a home is very expensive, you get paid only when the house sells, if the seller is gonna double cross you, he is stealing from that realtor. The realtor has risked their time, energy and money.

Go ahead, ask me why the hell I got out of real estate.

10

Regardless of what happens with the realtor, I do suggest you get a real estate lawyer involved. They’re fairly cheap (a few hundred bucks) and, after having one real estate deal go foul, I wouldn’t buy a thing without having a lawyer look over the contract. As everyone says, the realtor works 1) for him/herself and 2) for the seller, so it’s nice to have someone who’s completely one your side.

Put it this way: I bought a house from my parents, who I love, and who love me, and who I have a great relationship with. I still got a real estate lawyer involved.

11

Assuming you have no legal obligations here…

If I liked this realtor and felt she was trying to do a good job I would send her a very nice note explaining the situation and thanking her for her time. I would also include a check made out to her personally for $100 -$200 in payment of for said time…it’s up to her whether she cashes it. It never hurts to have a connection with a good realtor.

That said, this is not a typical or conventional way of handling the situation. Doing a lot of work on a deal that falls through is par for the course for any commissioned salesperson,it will not be the first time this has happened to your realtor and it won’t be the last. When I bought my apartment in a private sale a there was a realtor that helped the seller and I out with comp values, etc and she did this totally gratis, because she knows both of us will use her if we decide to sell or rent our homes.

12

If you’ve signed a contract with your Realtor, I’m certain there’s a clause in there stating if you buy a house within X number of months after cancelling or the expiration date of our contract without signing a new contract with a different agent, you owe me for the commission. That’s legally binding. If you haven’t signed a contract, anything is fair game.

But on the flip side, I guarantee with 100% certainty there’s a contract between your business manager and his agent and with 99% certainty there’s a clause like the one I described (subbing in buying for selling) on his side. This isn’t your problem, but it’s something you should at least be aware of.

You should also be aware that a buyer’s agent worth his or her salt does a heck of a lot more than just show you houses. He or she will set up negotiations, make certain any counteroffers are fair, ensure the contract is binding, set up time for due dilligence (inspections, title searches, etc.) and set up an escrow account through a reputable firm to ensure a timely closing.
You wouldn’t know any of this because you haven’t gotten that far into the process, but a GOOD buyer’s agent does a lot more than what’s been done so far and earns his or her commission not by showing you the house but making sure you get the house and you’re happy with the house.

Given all that, if there’s no written contract, dump the agent or not. I really don’t care. But please at least be aware of the advice I’ve given you.

13

We just took up probably ten hours of a realtor’s time looking at a house - and we did make an offer. But the offer wasn’t accepted. And since we aren’t really in the market to buy - it was a “waste” of her time - we won’t likely buy a different house.

But had we bought, she would have made $15,000 buyers commission off what probably would have turned into 40 hours of work directly with us.

14

You have no legal or moral obligation to the realtor (unless you buy a property that she showed you, or otherwise let you know about). In fact, you can go see other realtors (again, as long as the same realtor stays involved with a particular property from the moment they let you know about it). And of course, you’re free at any time to find a property on your own and buy it. If you did find a home on your own, I certainly wouldn’t give a cent to the any realtor who showed you some homes.

The seller may have issues with their selling agent, depending on the contract they have. Morally, it’s close, too. In your case, I’d probably make sure there aren’t any legal issues on the seller’s end with dumping the realtor, and leave it up to his conscience for the moral issues.

15

IANAlawyer or realtor either buy my understanding is the same as Boyo Jim and others, you’re not obligated to use this person as a buying agent in this situation.

If you haven’t done so already I would suggest picking up one of those “Home Buying for Stooopid People” books, and at least one book specific to buying a condo – with condos there are a lot of details to consider besides whether or not you like the individual unit, and IMHO it’s helpful to get all this info from someplace other than people who are involved in the transaction.

16

Seconded, but this may or may not pose a problem depending on the contract.
When we sold our house last year our contract with the listing agent was for 6 months. It stated that if we sold the house within the contract period, he got the commission. If we sold the house after the listing period expired (up to 3 months later IIRC) to someone who had seen the property during the listing period, he would still get the commission. However, after the period was up, we were free to terminate the contract (in writing, by registered mail). Then we could sell to whomever we chose with the realtor getting nothing. Which is what we ended up doing. Six months passed, no offers. Terminated the contract in writing, the realtor wished us luck and said goodbye. Sold the house weeks later to someone who didn’t lay eyes on the inside until the contract was already terminated and who never had any contact with the agent. Totally on the up-and-up.

If the business manager’s contracted agent’s time is up, he may be able to end the relationship with his agent and work with you completely legally.

If he can’t finish out his contract with his agent but you do not use an agent, the manager may be able to save at least 3% buy only having to pay his own agent’s commission. That’s between him and his agent, but is common practice from what we were told.

17

Yes, definitely use a real estate lawyer regardless of how this goes. You don’t want to deal with land title transfers and lien searches and all that paperwork.

I would send the note to your agent, but I wouldn’t offer her any money. It seems to me that that would be setting a precedent you don’t want with her (like you are agreeing that you owe her something).

18

I don’t think you need to pay the original real estate person any money, but I would officially tell her that you no longer require her services.

Buying a house, cheap, from your boss sounds like something only second to loaning a relative money when it comes to the potential for future pain and grief. Even if it means spending a few hundred dollars I would absolutely employ a lawyer or a buyer’s agent and keep everything as professional as possible.

When I was last looking for a house, I had one person show me places - reluctantly. She did no follow-up, did not get back to me with information she said she’d deliver, etc. After not hearing from her for 5 weeks I found someone else that was a better communicator. On the advice of my daughter (a realtor) I called the original person. She was SHOCKED, SHOCKED to learn that I wasn’t thrilled with her services and was going with someone else. But at least everybody knew exactly where they stood.