Would we owe the realtor anything?

Question

My brother, sister and I inherited a house and it's been on the market for over a year now (it's in a smaller town in which real estate has not improved). We recently got a low-ball offer, went back and forth a couple of times and then the buyer walked. My sister mentioned to me that maybe we should have just sold for his last offer.

So, I'm considering buying out their shares of the house at the last price point the last potential buyer offered. Then, I would rent it out.

My question is, we wouldn't owe the Realtor anything if we did this, correct? The house is in probate and my Dad's estate has a lawyer, who I believe would handle the details if we did this (probably a quitclaim deed?). I am one of the personal representatives of the estate so I wouldn't imagine it would be complicated. I'm prepared to pay them cash for their shares.

Amie D. · Answer

Yeah I don't have the paperwork in front of me, but it's been just over a year now. If the contract extends beyond that, I would find that odd.

Elizabeth Colegrove · Answer

I know when we were selling my parents house they only a 6month listing contact. Therefore after 6 months we were free to no longer use them. Honestly I think you should be fine.

Brett K. · Answer

I have a real estate license also, but again I'm not in your area so I don't know what local practices are.  Having disclosed that, I do know that real estate brokerage laws are very consumer friendly.  Unless the contract specifies any payments for marketing or an additional fee it should be as simple as firing your agent.  You can do that at any time.  To be compensated for the title transferring the agent would have to prove 'procuring cause'.  You're fine.  I wouldn't tell the agent he/she is 'fired'.  Just tell them you've decided to keep the property and to take it off the market.  If your contract calls for recompense or paying for marketing expenses I'm sure the agent will let you know.

Amie D. · Answer

@Dawn Anastasi it's in South Bend, IN (actually Mishawaka technically). I think the pricing on it needed to be adjusted a long time ago. Even in a slow market a house shouldn't sit for over a year, when other houses are selling in ave 144 (or 80/median) days. There's always a buyer for a house at the right price - for example how many offers would we have had if the house was priced at $1? Not saying that is what it should have been priced at, but still. We were getting showings but no offers, and then the showings had dropped off as well, only picking up when we lowered the price, and now aside from the one low-ball offer (brought in by another agent) it's been dead again. As an aside, I think it was probably an investor trying to get a probate sale cheap - was a single guy with an all cash offer. Maybe not but I had a hunch.

Good ideas for the "why", thanks!

Dawn Anastasi · Answer

@Amie D. what city is it in?  Maybe someone nearby on Bigger Pockets could weigh in on the market?  If it hasn't sold in over a year then that's the "why" you're taking it off the market.  Another way to phrase it, "we're going a different way."  And if the realtor is really pushing it, "it's a family decision".

Jb Espiritu · Answer

You probably have signed a listing agreement. That agreement usually gives exclusive rights for Realtors to list your property but since you dont plan on selling the property anymore through the seller, you can simply terminate your agreement with the Realtor.

Amie D. · Answer

@Jb Espiritu , @Darrell Shepherd  good point, I will review the contract. I don't recall there being anything out of ordinary when I read through it initially. I know some people just change agents during a sale so this would seem a similar process... he obviously didn't bring me in as a buyer or introduce me to the property.

Amie D. · Answer

@Darrell Shepherd  Well, as that what sort of job he did, even if the market is slow, we're sort of upset it still is on the market, and had considered changing realtors. We are all out of town, so he was our main contact as to what was going on. He insisted the pricing was right, and though we got lots of views, we'd gotten no offers in the year (besides the low-ball one.) We only got that offer after I insisted we lower the price. He just kept saying the market was slow in that area, but when I recently asked what exactly was the average time on the market was, he said it was 144 days with a median of 80. I will partially take the blame because perhaps I should have been monitoring things more closely albeit I was in the middle of several other things across the country, but I felt as the realtor, that was his job.

Now, we're going into the snowy winter when almost no one buys homes around here. Not a great time to rent, either, but I figure I can get it rented faster than it would sell, and at least I'd be making some money while waiting for the market to improve rather than it just sitting there. I was surprised when my sister referred to selling it for the low offer price, which is what made it attractive to me because the profit margins make more sense. Small 3/2 on a double lot with a large detached garage that possibly could be rented separately, middle of the road neighborhood.

Jb Espiritu · Answer

I don't think you'll need to pay the realtor anything if you simply purchased the house yourself then rent it out. Of course, it all depends on the contract.

To be extra sure, I would recommend for you to tell the Realtor to take the property off the market and for you to sign a Termination Addendum to that effect.