Do we owe this broker/agent a commission?

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Latest post Wed, Apr 12 2017 3:58 PM by cathammer. 24 replies.
  • Tue, Dec 1 2015 11:06 PM

    • cathammer
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    Do we owe this broker/agent a commission?

    Hi folks,

    I live in Georgia and am the executor of my mother's estate, part of which includes a house in Mississippi that had not been lived in for a few years and needed a good bit of updating and cleanup, but is in a good area.  To get an idea of what to do with the house (renovate, sell as-is, etc.) we met with a broker/agent (known by a friend in the area) to ask her opinion.  When she met us at the house, she brought along an investor ("flipper") with whom she works and seemed more interested in getting us to consider an offer from him than giving us any advice on the market in the area.  She did, later, send us a link to some misc. nearby sales and listings, but didn't work up any kind of valuation or comparables.  Investor did make a verbal offer (thru her) that seemed too low, and we advised her so and that we were looking into other options.  At no time did we list the house with her (or anyone) or make or sign any type of agent agreement.  She has periodically contacted us to see if we had any interest yet in selling to her investor.

    We talked to various contractors and other agents and eventually decided that if we got a better price, it would be easier to sell the property as-is, rather than try to oversee renovations from another state.  When the agent asked  again recently, I told her we might be interested at a better price, and eventually the investor worked up to an agreeable higher offer (sold as-is, subject to a termite inspection, buyer pays closing) and she sent it to us on a boilerplate Mississippi real estate contract form. Closing is set for Jan. 18.  The only things on that form that address her status are a checked line:

    "The selling firm and its salespersons represent the buyer(s).  The seller(s) is/are not represented and is/are not a customer."            and a following line:

    "(C)Compensation. The parties under this contract or through any other negotiated agreement agree to pay as per listing agreement or prior offer of cooperation and compensation."

    What concerns me now is that the broker/agent has made a couple of remarks that seem to indicate that she may be expecting some type of commission from us, the sellers.  We were under the impression she was working for her investor buddie.  The first remark was made when my sister (from Texas) was over at the house when the investor was back with the agent taking a look before upping his offer, and was something to the effect of "I'm only charging you 3%".  My sister had not been dealing with her, so asked me later if we had an agreement with the agent (this was before we got the contract offer).  I told her not that I knew of, and this seemed confirmed by the wording of the offer.

    Today, though, in a forwarded email to the closing attorney (I need to work out deed particulars with them) she said   "It's an FSBO.  They are paying me 2.5% of the contract price."  and seems to be refering to us, not the buyer.

    I'm a bit hesitant to question her just yet, as she still might be able to throw a wrench into things with the investor before the termite report clears (or is resolved should treatment be needed or something) and closes the last "out" for the buyer, but figure I will at least need to clarify things with the closing lawyer at some point before closing.

    Sorry this is so wordy, but as a reader and sometimes contributor to the forum, I didn't want to make others have to fish too much.  In any case, would be glad to hear anyone's opinions or advice.

    Thanks!

     


  • Wed, Dec 2 2015 6:17 AM In reply to

    • Drew
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    Re: Do we owe this broker/agent a commission?

    Thoughts from a layman with a few RE deals under his belt:

    1. It is entirely possible that agent represents the buyer and that the buyer  is paying some fee.

    2. The fee arrangement is in some written docuement , and if it's not in the ones you for, it's likely in buyers paperwork.

    3. Real estate agents are rather resourceful at getting paid ...( Perhaps because some buyers /sellers seek to cut then out )   The agent is darn sure to be paid...or else s/he will jam up the closing. 

    4. I don't think it it wise to go stir the pot before closing ...but I do think as executor it is wise that you are represented by counsel .....and have copies of evey relevant docuement executed by executor..if you don't have representation, the other more skilled players may gang  up on you to eat  costs or make last minute concessions not in your best interest or duty to do.  

    5. Has the termite inspection been completed ?  For all We know the buildings in your area all  have at least  two termites and some folks bring thier  own termites to a test.....be careful.....be sure it's out of the way....in writing 



  • Wed, Dec 2 2015 8:40 AM In reply to

    Re: Do we owe this broker/agent a commission?

    Generally, the agent's fee is paid through the escrow and paid by the seller from the sale proceeds.

  • Wed, Dec 2 2015 8:56 AM In reply to

    • Drew
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    Re: Do we owe this broker/agent a commission?

    General practice may not apply IF the agent represented the buyer and there was no agreement for fee with the sellers ...just be careful and read fine print and have your backside covered ....



  • Wed, Dec 2 2015 10:26 AM In reply to

    • cathammer
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    Re: Do we owe this broker/agent a commission?

    JamyeP:

    Generally, the agent's fee is paid through the escrow and paid by the seller from the sale proceeds.

    Generally, yes, but like Drew notes, I think that follows there being a listing agreement or other contract specifying that with some broker (though not necessarily the one who winds up making the sale). We have no agreement, either verbal or written, with any broker. It wouldn't have surprised me had this broker/agent brought such an agreement for us to sign before presenting the sales offer from her investor, if she expected us to pay a commission, but she didn't. I don't know if she thinks she did back when we first started talking (about a year ago), or if she realizes she didn't and is sort of dropping hints to see if it will fly now.

     

  • Wed, Dec 2 2015 10:56 AM In reply to

    Re: Do we owe this broker/agent a commission?

    You misunderstand.  The typical fee is 6% of the sale price.  If you had an agent as well, then your agent and the buyer's agent would split the fee which comes out of your proceeds.  You don't have an agent so the buyer's agent is the only one that gets paid and apparently they've agreed to 2.5% instead of 6.

  • Wed, Dec 2 2015 11:48 AM In reply to

    • cathammer
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    Re: Do we owe this broker/agent a commission?

    JamyeP:

    You misunderstand.  The typical fee is 6% of the sale price.  If you had an agent as well, then your agent and the buyer's agent would split the fee which comes out of your proceeds.  You don't have an agent so the buyer's agent is the only one that gets paid and apparently they've agreed to 2.5% instead of 6.

    I know, but my point is that, total commission and split (and the source), as I understand it, are usually specifically set out (no matter what might be "typical") in the seller's listing agreement. There is no listing agreement at all, so no agreement that any commission comes from the proceeds of the sale.  In that case, I don't see how a buyer could commit the seller to paying any percentage he might have agreed to with his agent, if he didn't include that in the sales agreement.

    That being said, I'm sure I'll have to bring this up at some point with the closing attorney so they arrange for the buyer to pay his agent, rather than paying from the sales proceeds.

     

  • Wed, Dec 2 2015 12:48 PM In reply to

    Re: Do we owe this broker/agent a commission?

    What's going to count is the PURCHASE CONTRACT.

    On the last page of the contract where you sign that you accept the deal, there is usually a standard paragraph over the signatures in which the realtor's commission is addressed with the percentage filled in and that it comes out of the sale price. If you signed the contract without understand that provision then the commission WILL BE PAID out of the sale price and you will be paid net by the escrow company and nothing you or anybody else SAYS after you sign will change that.

    If you manage to catch that before you sign and get the commission provision completely crossed out and initialed by the buyer and realtor as well as the seller then the next document you have to be careful of is the instructions to the escrow company as to how the money gets distributed. The realtor may try to sneak the commission in to that document.

    Bottom line: READ, READ, READ every document concerning the transaction and make sure you understand everything you are getting into.

    Doesn't matter what you "point out" to anybody if it's not in the signed written document.

    Also make sure there are duplicates of every document provided WHEN you sign them. Don't rely on anybody to send them to you after you sign.

    Your leverage is your possession of your signature. Once your signature leaves your hand you are stuck with whatever you agreed to in writing no matter who said what to who when.

     

     

     

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  • Wed, Dec 2 2015 12:49 PM In reply to

    • Drew
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    Re: Do we owe this broker/agent a commission?

    Squabbles are not rare...I suggest you NOT stir the pot until and unless it is necessary to do so ..and if you do..youmhave multiple,copies of every relevant docuement at your finger tips...but yet. Estate counsel to back you up ...lest you get bowled over by others who have other interests ....

    In my state my lawyer could act as my agent for,that cut of customary fee .but I don't know your rules ....

     

    I take  it you want the deal,DONE and Wo giving away the store to,added new fees.....me, I sort of want folks to be there to close .....

     



  • Wed, Dec 2 2015 1:58 PM In reply to

    • cathammer
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    Re: Do we owe this broker/agent a commission?

    adjuster jack:

    What's going to count is the PURCHASE CONTRACT.

    On the last page of the contract where you sign that you accept the deal, there is usually a standard paragraph over the signatures in which the realtor's commission is addressed with the percentage filled in and that it comes out of the sale price. If you signed the contract without understand that provision then the commission WILL BE PAID out of the sale price and you will be paid net by the escrow company and nothing you or anybody else SAYS after you sign will change that.

    If you manage to catch that before you sign and get the commission provision completely crossed out and initialed by the buyer and realtor as well as the seller then the next document you have to be careful of is the instructions to the escrow company as to how the money gets distributed. The realtor may try to sneak the commission in to that document.

    Bottom line: READ, READ, READ every document concerning the transaction and make sure you understand everything you are getting into.

    Doesn't matter what you "point out" to anybody if it's not in the signed written document.

    Also make sure there are duplicates of every document provided WHEN you sign them. Don't rely on anybody to send them to you after you sign.

    Your leverage is your possession of your signature. Once your signature leaves your hand you are stuck with whatever you agreed to in writing no matter who said what to who when.

    Hi Jack,

    Thanks.  There is no deliniation of a specific realtor's commission in the sales contract.  The closest things are notations about the listing broker being paid "full compensation under the listing agreement" in a section addressing the event of breach by seller, and the wording in the "Compensation" section I noted in my first post, which, again, references a listing agreement or other offer.

    There's also the typical "This contract incorporates all prior agreements between the parties, contains the entire and final agreement of the parties and cannot be changed except by their witten mutual consent.  Neither party shall be bound by any terms, conditions, oral statements, warranties or representations not herein contained."

    What I meant by "pointing out" is that I would need to be sure (before closing, to avoid a possibly unresolvable battle then, if it is an issue) that the lawyers preparing the  documents realize, at least a couple of days in advance, that there is no provision in the contract to pay the agent from the seller's funds, so they avoid having the escrow documents set up that way, as you said.

    Cheers!


     

  • Wed, Dec 2 2015 2:27 PM In reply to

    Re: Do we owe this broker/agent a commission?

    You wrote that the agent/broker "sent [you the investor's offer] on a boilerplate Mississippi real estate contract form," but I didn't see anything (either in your original post or in any of your other posts in this thread) that indicates whether or not you signed the offer/contract.  Did you?  If you did, why didn't you clarify the existence and terms of "any other negotiated agreement"?  According to the paragraph you quoted, the obligation to pay, pursuant to "any . . . negotiated agreement" falls on both parties jointly.

  • Wed, Dec 2 2015 2:31 PM In reply to

    • cathammer
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    Re: Do we owe this broker/agent a commission?

    Drew:

    Squabbles are not rare...I suggest you NOT stir the pot until and unless it is necessary to do so ..and if you do..youmhave multiple,copies of every relevant docuement at your finger tips...but yet. Estate counsel to back you up ...lest you get bowled over by others who have other interests ....

    In my state my lawyer could act as my agent for,that cut of customary fee .but I don't know your rules ....

    I take  it you want the deal,DONE and Wo giving away the store to,added new fees.....me, I sort of want folks to be there to close .....

    Hi Drew,

    I've contacted the lawyer who handled probate to discuss thngs with him.  Will talk it over with some agents/brokers we know here, too. 

    I do want to be done with this, but it's not even close to being a financial necessity.  Like you, I figure there's no need to stir things up just yet and possibly poison the deal or cooperation of the other parties over a period of weeks.  Because of the situation described, and the sales offer, we didn't factor in a commission in our decision on the offered price.  I could be wrong, but guessing the agent (and maybe the investor) will be more eager to close than I am when the date is impending, and if it comes down to it (and buyer isn't paying her commission), be more likely to accept a lower or split offer of compensation, if we choose to make one, rather than walk away with nothing. 

    Thanks!

     

  • Wed, Dec 2 2015 3:28 PM In reply to

    • cathammer
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    Re: Do we owe this broker/agent a commission?

    ca19lawyer2:

    You wrote that the agent/broker "sent [you the investor's offer] on a boilerplate Mississippi real estate contract form," but I didn't see anything (either in your original post or in any of your other posts in this thread) that indicates whether or not you signed the offer/contract.  Did you?  If you did, why didn't you clarify the existence and terms of "any other negotiated agreement"?  According to the paragraph you quoted, the obligation to pay, pursuant to "any . . . negotiated agreement" falls on both parties jointly.

    Hi ca19,

    Yes, we did sign; sorry for not being clear....there's always something.

    Interesting, I'd have thought what you note was meant to bind whatever parties made whatever agreements to the particular ones they made. If not, might such (if they exist) still be excluded under the "Ageement Complete" clause ("This contract incorporates all prior agreements...Neither bound...not herein contained") I also mentioned since it isn't "contained" as an attachment or something to the sales contract? ... Or would you consider it "contained" in the wording of the Compensation clause you noted?  Gets rather circular, doesn't it? ;-)

    Even if it's as you surmise, however, I wouldn't kill the deal over paying half of 2.5% if it came to that.  That might even be a reasonable approach to take with the buyer, if he isn't expecting to pay a commission either:

    "Hey, we don't have a contract with the agent; we thought she was acting on your behalf, per the sales contract. Apparently, this wasn't made clear to either of us. Rather than spoil things now for both of us, why don't we split it?". 

    Of course, I'd ask him what he would suggest, and see if he made that, or a better offer first ;-)


     

     

     

     

  • Wed, Dec 2 2015 3:40 PM In reply to

    • Drew
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    Re: Do we owe this broker/agent a commission?

    In general as to RE deals, only things inside the 4 corners of the docuements count ......and if the agent didn't get it covered, the agent has a bit of a problem.

    There is no automatic standard fee.

    If the buyer engaged the agent and the agent represented the buyer..it may lean towards the buyer pays the fee

    Usually Even a green agent wHo brings a prospect to the table they are smart enough to get a signed representation or fee arrangement first ..are youn SURE as executor you never executed any such paper? ...



  • Wed, Dec 2 2015 3:57 PM In reply to

    • cathammer
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    Re: Do we owe this broker/agent a commission?

    Drew:

    ..are youn SURE as executor you never executed any such paper? ...

    If I did, I have absolutely no memory of it, nor does my wife.  Agent didn't even discuss listing the property, and we were struck by how she seemed mostly focused on getting us interested in an offer from her investor friend. None of our interactions with the agent ever really took place in conjuction with handling or signing any other estate-related business.

     

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