Agent Intervening in For Sale By Owner

7 Replies

Did the real estate agent violate any code of ethics or standards of practice under the following fact pattern:

Seller listed a property online as a for sale by owner.  Without the aid of a real estate agent: the Buyer saw the listing, arranged a viewing directly with the seller, and made an offer on the property directly to the seller. Subsequently, a real estate agent who knew the buyer drew up a contract for the buyer and listed herself as the buyer's agent on the contract. (Agent told buyer that she (the buyer) had nothing to lose by formally submitting the offer contract with a buyer's agent listed since the seller would be responsible to pay the commission to buyer's agent.)

Thank you for your input!

Typically the legal arrangement for the seller to pay the buyer's agent is contained in the listing agreement, which is the contract signed between the listing agent and the seller, and which does not exist here. 

If there is no listing agreement or any other arrangement by which the seller has agreed to pay a buyer's agent, there is no obligation that I know of for the seller to pay the buyer's agent. When I represent buyers on a FSBO I reach an agreement with the seller ahead of time that they will pay my commission out of their net proceeds and the buyer agent's fee is part of what's written into the offer - our MLS has a form for that. Sometimes that does not affect the contract price, however if it is appropriate based on market valuation to offer the seller list price then the buyers can increase the offer amount over list price by the amount of the commission so that the seller nets their original list price.

I hope this makes sense, and laws do vary by state, but here in WA the seller would not have to pay a commission based on the situation you described.

Whether or not the agent violated a code of ethics depends in part on how correct their advice to the buyer was, and whether or not they failed to adhere to any 'reasonable skill and care' requirement your state may or may not have, as we have in our Law of Buyer Agency. There's no benefit to the agent for them to write up a deal knowing the seller has no legal obligation to pay them, so the agent may just be misinformed and not understand there is a problem. And again, your state may have some kind of different regulations - but I don't see how a buyer's agent can force a seller to pay a commission just by writing up a contract, I'm pretty sure that is not a 'thing' anywhere.

@Yehuda Richman

I don’t see what your questioning as unethical. Why the seller would agree to the second contract makes no sense. The seller has the ability to redraft the contract and let the buyer know that they aren’t paying commissions on this transaction. If the seller wants a representative so be it they can pay for it.

On the surface I don't see anything unethical in this situation, but of course the devil is in the details.

That said, the agent is very misinformed if seller is going to automatically pay them a commission. @Irene Nash 's post spells this point out perfectly so I won't repeat it.

If the agent has No commission agreement signed by either the seller or the buyer, then No One owes them any commission. The sounds either like a dummy or trying to insert himself in the deal fir a commission. 
BTW, even if the seller signed the purchase contract, with a commission listed, he is dtill under no obligation to pay it....a purchase contract between a buyer and a seller can’t dictate a commission...that is Only dictated by a commission agreement between either party and the agent’s Brokerage company. 

The property was already under contract, so the agent's commission should be paid for by the Buyer unless the Seller is willing to agree to pay it. I don't know why they would agree to something like that unless they're really desperate to sell.

Is it unethical? Not much is unethical when all parties agree to it.

Nothing unethical in having an agent assist with a contract -- most people prefer to have an agent represent them. Although without a commission agreement, I would not do any work for either party!  

If the property was in the MLS with a commission advertised (limited service), then the seller has already agreed to pay a commission and the agent would be correct. Without that, someone has to agree to pay; commissions don't just appear out of thin air!