Real Estate Question (long)

I’m adding details that might or might not be relevant, so please excuse my ignorance with real estate practices.

About one month ago, my mother decided put her house up for sale with a real estate agent. My mother is aging quickly and the house was becoming too much for her to handle. The agent brought several prospective buyers to see the house, but none of them offered a price anywhere close to what my mother was asking.

She and I were sitting outside the house one evening and a man walked over and asked about the house. We’ll call him “Joe.” They had a brief discussion about the property and my mother referred him to the agent.

After haggling over the price with “Joe” for a week or two, the agent suggested she place the house on multiple listings and increase the asking price by $15,000. The agent told “Joe” this and the day before it was due to go on multiple listings, my mother and “Joe” came to a verbal agreement on a price. The closing date was set for several months from now (allowing time for my mother to find another home).

A week went by, “Joe” made an appointment with an engineer to look at the place and suddenly, and mom got cold feet. :smack: We had a family discussion about the pros & cons. She had not seen anything on the market that was to her liking, wasn’t sure this was something she wanted to do, etc. Too many cons basically, so we made a family decision that she should not make this major life change at a time when we were all so uncertain.

Note: I was uncertain/not happy about it from the very beginning, but I was over ruled; the market was/is good right now and she feared that this would not continue considering the economy.

So, mom sends the agent an email stating that she had changed her mind and to let her know what to send in reimbursement for her time and effort and also to have Joe call her so that she can pay part of the cost for the engineer, etc.

Well, the agent replied in short, she wants the full commission for her time and effort, even though the sale never took place. :eek: My mother nearly had a stroke. She was extremely upset, to say the least.
Some details that I have discovered since this occurred:

~ My mother had a twenty-minute conversation with the agent a day or two prior to my mother sending the email. She told the agent she was concerned that she would be unable to do this and was worried about the whole thing. The agent told her “that is natural” but never mentioned that she required full payment of commission if she bailed out.

~ According to my mother, the initial contract she signed with this agent was a homemade form that was not detailed, simply had information on the house, the asking price, etc. There was nothing on this contract stating that the full commission would be required if she pulled out early. The agent stated that she would send a copy of the contract and my mother offered to make a copy for her since she has the printer/copier/fax machine. The agent stated that there was something she had to do with it before the copy was made. My mother asked for a copy twice and was told it “was in the mail.” She has never received a copy of the initial contract.
~ In addition, when they decided to put the house on multiple listings according to the agent the initial contract was voided and my mother signed a new one – that new contract stated that if we bailed out early the full price of commission would be paid. However, the house was never placed on multiple listings.

~ I may be pulling at strings here, but frankly, it was my mother who found the buyer or rather the buyer found her. My mother being the honest woman that she is, referred “Joe” to the agent, rather than scrap the whole deal with the agent and avoid paying the commission.

~ And lastly, there was no written contract between “Joe” and my mother, just a handshake. We have no idea what the engineer report was – there were some issues about the water heater and the flashing (sp?) on the roof, etc. But there were some discussions about the first floor rental apartment between the engineer and “Joe” that she was not privy to.
I feel obligated to say that she is not trying to pull a fast one. She was willing to give this person compensation for the time, but she was unaware that she was required to pay the full commission since it was never mentioned on the original contract that she never received a copy of.

My mother is beside herself. She has no idea where she is going to come up with the cash and I am concerned. Is there anything that can be done to make everyone happy? If I have failed to mention some inportant detail please let me know. I am at my wits end and would like this resolved soon.

I have been a (commercial) real estate agent and a Realtor and CCIM for about 16 years now and I have never heard a story like yours in my life. I (literally) cannot imagine any situation with a licensed real estate agent that would have gone down as you have described without the agent being fired or losing their license.

I don’t know NY real estate law and possibly it is quite different than MD law, but generally in most real estate agencies in the US …

1: In most competent agencies an agent is supposed to put a listing in the MLS system ASAP. If it’s not there 99.99% of the other agents in the area will not know the listing is available unless the listing agent informs them directly. The only reason a residential listing will not go into the MLS immediately is than the owner has requested it for privacy or related reasons, such as if they do not want the neighbors to know etc.(silly I agree, but people are that way).

2: Agents are normally supposed to make sure that all real estate contracts are to be written and ratified with buyer and seller signatures. I cannot imagine a deal proceeding on a verbal agreement unless it’s really not a ratified deal, but is more of a tire kicking exercise where the buyer wants to satisfy some due diligence concerns before committing to paper, but this is not considered a ratified, enforceable contract to purchase in most real world situations.

3: This weirdness with the listings is beyond my ken. A licensed agent is usually supposed to use a real estate board or agency approved listing form not some odd homemade listing. If your mother has never signed a full listing she may not owe a penny. The only scenario I can imagine is that the agent had your mother sign a short, single page form typically called a “Show and Sell” listing but this is usually only done when the seller does not want to formally list the house.

4: The fact that your mother found the buyer has no bearing on the matter. If she signed a sale listing the agent would still be due a full commission if she produced a ready, willing and able buyer and ratified a contract with them.

Unless there is something you have not told me where your mother directly requested that the listing not be placed in the multiple list, I would say that you are dealing with a either an unethical or incompetent agent. In any case, there are so many things wrong with the scenario you described I really don’t have the time to go into all of them. If you mother never signed a contract with Joe it is highly likely she doesn’t owe the agent a penny.

Talk to a lawyer in your area that specializes in real estate. It sounds like you have been fed so much BS by this agent your mother doesn’t know which end is up. If you don’t want to go the lawyer route initially, talk to the agent’s manager and indicate how this deal went down and that you will make a complaint to the real estate board about the way this deal was handled. I think the chances your mother’s time compensation offer will be accepted are quite high.

Astro, I don’t think they’re talking about sales contracts; I think they’re talking about the listing contracts. Do you not sign an agreement before you represent a seller?

Normally yes, but I was not referring to the listing issue with that remark. My point refers to the fact that the OP is saying that the agent is claiming a commission when there was no written salescontract signed and the buyer is essentially (IMO) in more or less tire kicking mode where a price has been verbally agreed to predicate to an inspection, but no written contract has been ratified.

I should have indicated in the previous post that it is my understanding that “Joe” is the prospective purchaser not the listing agent in this scenario. I suppose it is possible that NY law may allow for an enforceable verbal only residential purchase contract (I would, however, be surprised if that is the case) , but this not the way competent, licensed real esate agents anywhere in the US are supposed to proceed when getting real estate deals ratified.


Oh and im2evil4u, I want to be very clear that my responses to your inquiry in this matter is based strictly on what you have posted and I am not representing my personal opinions in this matter as anything but a personal, and not professional, opinion regarding your specific scenario. Nor am I representing them as authoritative in any way, shape or form regarding NY law or your specific situation. Please do NOT go after this other agent saying “Well this other real estate agent on my message board says you’re an idiot”. My opinons regarding your situation are not intended (by me) to go beyond this thread. Please honor this request.

In retrospect it would probably be best to seek competent legal advice from a NY attorney specializing in real estate before proceeding with any further discussions with this agent.

IMHO, the most important question is what the listing contracts say. Normally, the contract states that if the broker produces a ready, willing, and able buyer, the broker is due a commission. Did that happen here? It’s hard to say, and it’s kinda pointless to speculate without seeing exactly what the listing agreements said.

I think your mom needs to contact a lawyer pronto. A polite letter to the broker on an attorney’s letterhead could work wonders.

(standard disclaimer about legal advice)

Thanks Astro and everyone else for the info. My mother has contacted her lawyer already, so hopefully she will have some good answers.

To answer some qeustions:

1 - As far as the MLS business, the agent only charges 2% commision if the house is sold via the company’s website or ads placed in the local paper. Once the house is placed on multiple listings, the agents commission doubles.

2 - There was no written contract bewteen my mother and Joe, for several reasons. One, Joe had not yet been approved for the morgage amount, two, he wanted the house inspected before making a full comittment.

3 - As far as the listing agreement goes, my mother recalls it only stating details about the house, etc. Her memory is not what it used to be, so it is difficult for me to say without having a copy of the darn thing.

Assuming that this transaction is in New York City or one of the surrounding counties in New York, there is no commission earned until the broker produces a ready, willing and able buyer. If you just have a verbal or handshake deal, there is usually not considered to be commission due because the parties would have to negotiate out and sign the written sales contract.

I am a lawyer in New York, but I am not your lawyer. This is a general discussion of the law as it applies in downstate New York, and not specific legal advice, nor does it necessarily apply to your situation. If you have questions, please hire your own lawyer.