Is The Realtor I'm Dealing With Unethical/Sloppy, or Am I Wrong?
Investor · Chatham County, NC · Member since 2014 · 89 posts · 20 votes
Is The Realtor I'm Dealing With Unethical/Sloppy, or Am I Wrong?
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Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
10yOriginally posted by @Patrick M.:
The form is the NC Association of Realtor's standard form. His filled-out form has me listed as entering into a "Exclusive buyer Agency Agreement" and under section 4, COMPENSATION, it says "Buyer agrees that Firm's fee for services hereunder shall be in the amount of 3% of the purchase price." It has a subclause stating that if the compensation offered by the listing firm is less than the fee, that the Buyer and the Realtor's Firm agree the Buyer will pay the difference.
Under the Dual Agency section, he is encouraging me to check the box authorizing him to act as a dual agent. The section below that states: "Dual Agency Compensation. If the Firm acts as a Dual Agent (including designated agency) , the total fee the Firm expects to receive for its services in representing the buyer and the seller shall be 5% of the Purchase price. THIS WILL IN NO WAY AFFECT OR MODIFY THE AMOUNT OF FEE SET FORTH IN PARAGRAPH 4 ABOVE THAT THE FIRM EXPECTS TO RECEIVE FOR ITS SERVICES IN REPRESENTING BUYER UNDER THIS AGREEMENT." (That is the section in the above paragraph)
I've bought my current home and prior home FSBO with my lawyer, so I'm not interested in paying for handholding I don't need. Should I just tell him I am not interested in him being a Buyer's agent or a dual agent?
I'm familiar with this form. This is just the buyer's agency agreement, and he can not submit an offer for you without you signing it. The 3% commission he is referencing is what the SELLER usually pays, but if the seller does not pay, then you are on the hook for it. If the seller only pays 2.5, then you are on the hook for .5.
He likely wants you to agree to dual agency in case you decide you want to buy any of his listings. This would be rare. When I am working with retail buyers, I usually have them check exclusive agency because the likelihood that my buyer would buy one of my listings is very small. However, when I am working with investors, I usually have them check dual because I often list rental properties from my PM clients. I doubt any of my investor buyers would want to be excluded from me contacting them about it, simply because they don't want to be in a dual agency situation.
I'm not totally clear what the $300 fee is, but it sounds like something the site is charging him to submit, and he is simply passing that fee along to you. This is not something that is a standard part of the agency agreement.
21 Replies
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes10y
Are you sure the form said he was charging you 3% in addition the price, or that he would be entitled to the buyer's commission, which is paid by the bank? The $300 fee is becoming more popular, probably offer submission.com, which is a platform some banks use for offers/counter offers, and is pad by the buyer. And why "line up your inspector and lawyer" when you haven't even made an offer, on an overpriced property?
- 10yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
Are you sure he is charging YOU the 3% fee? Its almost always charged to seller out of seller's proceeds from sale.
Broker can not represent both seller and buyer as agent for both. He can act as an intermediary, while actually representing NEITHER party as their agent in the transaction. Reread the form he sent you. Also, the commission in a real estate transaction is earned when the agent produces a buyer willing, ready and able to purchase at a price agreed to by seller. There is no requirement for hours worked, number of properties shown, educating principals, or anything else you may think is or should be required for a broker to earn his commission.
Real estate commissions are paid for results only, not effort.
- Investor · Chatham County, NC · Member since 2014 · 89 posts · 20 votes10y
The form is the NC Association of Realtor's standard form. His filled-out form has me listed as entering into a "Exclusive buyer Agency Agreement" and under section 4, COMPENSATION, it says "Buyer agrees that Firm's fee for services hereunder shall be in the amount of 3% of the purchase price." It has a subclause stating that if the compensation offered by the listing firm is less than the fee, that the Buyer and the Realtor's Firm agree the Buyer will pay the difference.
Under the Dual Agency section, he is encouraging me to check the box authorizing him to act as a dual agent. The section below that states: "Dual Agency Compensation. If the Firm acts as a Dual Agent (including designated agency) , the total fee the Firm expects to receive for its services in representing the buyer and the seller shall be 5% of the Purchase price. THIS WILL IN NO WAY AFFECT OR MODIFY THE AMOUNT OF FEE SET FORTH IN PARAGRAPH 4 ABOVE THAT THE FIRM EXPECTS TO RECEIVE FOR ITS SERVICES IN REPRESENTING BUYER UNDER THIS AGREEMENT." (That is the section in the above paragraph)
I've bought my current home and prior home FSBO with my lawyer, so I'm not interested in paying for handholding I don't need. Should I just tell him I am not interested in him being a Buyer's agent or a dual agent?
- Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes10y
Originally posted by @Patrick M.:
The form is the NC Association of Realtor's standard form. His filled-out form has me listed as entering into a "Exclusive buyer Agency Agreement" and under section 4, COMPENSATION, it says "Buyer agrees that Firm's fee for services hereunder shall be in the amount of 3% of the purchase price." It has a subclause stating that if the compensation offered by the listing firm is less than the fee, that the Buyer and the Realtor's Firm agree the Buyer will pay the difference.
Under the Dual Agency section, he is encouraging me to check the box authorizing him to act as a dual agent. The section below that states: "Dual Agency Compensation. If the Firm acts as a Dual Agent (including designated agency) , the total fee the Firm expects to receive for its services in representing the buyer and the seller shall be 5% of the Purchase price. THIS WILL IN NO WAY AFFECT OR MODIFY THE AMOUNT OF FEE SET FORTH IN PARAGRAPH 4 ABOVE THAT THE FIRM EXPECTS TO RECEIVE FOR ITS SERVICES IN REPRESENTING BUYER UNDER THIS AGREEMENT." (That is the section in the above paragraph)
I've bought my current home and prior home FSBO with my lawyer, so I'm not interested in paying for handholding I don't need. Should I just tell him I am not interested in him being a Buyer's agent or a dual agent?
I'm familiar with this form. This is just the buyer's agency agreement, and he can not submit an offer for you without you signing it. The 3% commission he is referencing is what the SELLER usually pays, but if the seller does not pay, then you are on the hook for it. If the seller only pays 2.5, then you are on the hook for .5.
He likely wants you to agree to dual agency in case you decide you want to buy any of his listings. This would be rare. When I am working with retail buyers, I usually have them check exclusive agency because the likelihood that my buyer would buy one of my listings is very small. However, when I am working with investors, I usually have them check dual because I often list rental properties from my PM clients. I doubt any of my investor buyers would want to be excluded from me contacting them about it, simply because they don't want to be in a dual agency situation.
I'm not totally clear what the $300 fee is, but it sounds like something the site is charging him to submit, and he is simply passing that fee along to you. This is not something that is a standard part of the agency agreement.
- Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes10y
Originally posted by @Tracy D.:
Id not use his services.
Every agent in his market uses the same form
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Patrick M. what on earth would you use a lawyer for in a simple house purchase.
whats the lawyer going to do .. meet you at the house and walk through it with you
is the lawyer going to write the contract and present it to the listing agent.
I just don't get this lawyer stuff.. @Dawn Brenengen help me here why a lawyer?
- Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes10y
@Jay Hinrichs I assume he means the closing attorney. Here we use attorneys and not title companies like most states.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Dawn Brenengen Ok got it... not like a Escrow officer at First American is going to help you buy your property.. just like a Lawyer that is a closer is simply pushing paper has no clue to the merrits of the deal.. We just never talk to attorneys in RE transactions like this so its foreign to us Left coast folks. If you have an attorney involved means your in a lawsuit LOL>
- Contractor · Rockville, MD · Member since 2014 · 423 posts · 135 votes10y
Originally posted by @Dawn Brenengen:
Originally posted by @Tracy D.:
Id not use his services.
Every agent in his market uses the same form
Yes, can you elaborate Tracy? I don't know that I've read anything damning against the agent so I'm curious what your reasoning is for advising the OP not to use him.
- Investor · Independence, OR · Member since 2015 · 70 posts · 26 votes10y
So it sounds like he's asking you to cover the 3% commission if the seller doesn't cover it, but he should know if the seller will pay that or not and be upfront with you about the exact amount you would be asked to pay.
It also sounds like he is passing along the $300 charge for the 3rd party service to submit the offer to the seller.
Are both of those things customary in your area? I can tell you where I live neither of those things would happen. Seller always pays the buyer's agent's commission and I have never heard of a fee required to submit an offer. That being said, that doesn't mean that isn't normal in your area. Have you talked to other investors or agents?
If these things are completely normal then it is probably what you would run into with any agent, but if other people say that isn't right then you have 2 options - you can call a different agent and ask them to represent you, or you can talk to this guy and ask him to explain the contract and fees.
- 10yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
Does the Broker advertising the property on Zillow have an exclusive listing, exclusive agency agreement, general listing agreement, or no listing agreement at all?
- Investor · Neptune Beach, FL · Member since 2015 · 143 posts · 172 votes10y
Originally posted by @Marc M.:
Originally posted by @Dawn Brenengen:
Originally posted by @Tracy D.:
Id not use his services.
Every agent in his market uses the same form
Yes, can you elaborate Tracy? I don't know that I've read anything damning against the agent so I'm curious what your reasoning is for advising the OP not to use him.
It sounds to me like the agent is asking for $$ to submit an offer. Where Im from, that is simply not normal. Additionally, it also sounds like the agent is asking the buyer to pay part of a commission if the seller doesnt pay enough. And since this agent already represents the buyer, he can only be a transactional agent in the deal or non representational for the buyer. Typically, an agent can not be a dual agent on a simple residential transaction, at least where I live. In Florida, this agents license would be at stake if he pulled this with me. But i do realize different areas have different standards so maybe its normal somewhere else. Certainly not here. Thats why i didnt elaborate earlier. Some things i read shock me and i just keep my opinions to myself
- Residential Real Estate Broker · Fort Lauderdale, FL · Member since 2016 · 33 posts · 21 votes10y
I am confused based on the statements. However the 3% is generally the commission that is paid by the seller. Some companies has a transaction fee associated with the deal. What is most disturbing to me is that the realtor showed the house and provided information to make an educated decision and someone thinks his time is not worth compensation. Time is money and people don't work for free. If you don't want someone to be paid don't ask for there assistance
- Investor · Chatham County, NC · Member since 2014 · 89 posts · 20 votes10y
First, thanks to the group for all the replies and perspectives! Let me try to answer some of the questions raised above.
@Dawn Brenengen - The realtor did submit my offer to the bank without me signing it. You are correct that I am not interested in his other listings; I am focused on this property as an investment. Also good to know that the fee pass-along is not standard.
@Jay Hinrichs - Yes, my lawyer is a closing attorney.
@Tracy D. - Thanks for letting me know the fee pass-along is unusual in your area, too.
@Don Konipol - I am attaching a screenshot of the agent section of the Zillow page below that lists several realtors. The one I am dealing with so far has been named as "Listing Agent" while the others are "Premier Agent." Would you recommend I contact one of the others and see if I can submit an offer through them to the bank and get better disclosure behavior at least, and perhaps get someone who isn't going to try to pass along the fee? At the end of the day, I don't really feel that I need an agent for negotiation. I've done this twice before without agents and gotten prices I wanted and I have a tightly wound spreadsheet telling me my deal works; I'm comfortable owning my risks on the deal. What I'm trying to minimize is a third party getting into my interactions with the owner and driving up the transaction costs.
Thanks again to everyone for their insights- you guys are great!
- Investor · Chatham County, NC · Member since 2014 · 89 posts · 20 votes10y
@Account Closed - I hear you. I recently worked with another realtor who helped me with a search on two properties that didn't work out. In sharp contrast to this deal, he was conscientious, timely, and anticipated many questions I had, and disclosed impacts to my potential deal up front. I would gladly have paid him a fee at closing.
In this case, I found the property myself and only asked to be shown it by someone who I presume is representing the seller. Without telling me ahead of time, he waited for me to submit an order and told me I would need to pay a strange (to me) $300 fee only after I submitted the order and before the bank replied (they rejected that offer). He also sent me a form for me to sign designating him as my agent as well when we never discussed that. His email did not draw my attention to any of the financial obligations he was asking me to sign onto, nor explain them in any detail.
- Real Estate Agent · Berkeley, CA · Member since 2016 · 67 posts · 6 votes10y
In California, it's standard that seller pays commission to listing agent. Listing agent then splits profit with the selling (buyers) agent. In our MLS there's usually always a clause in the listing that if the bank lowers the listing agents commission (due to low offers, banks will do that) the selling agent shares the reduction in commission. If he is double ending the deal, (which it sounds like he is) it doesn't make sense for you to pay him any fees. YMMV I would contact a second realtor in your area.
Best of Luck,
XW
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes10y
@Brandi Carballo @Tracy D. You guys simply aren't aware, or mistaken, about a couple of things. This "$300 fee for submitting an offer" is the fee charged by offersubmissions.com, an online contract management platform some of the banks are using now. It's payable only upon closing, and the fee is paid by the buyer, as the bank won't pay it......adjust your offer accordingly if you wish. I just had a closing on Wednesday with both of these issues....PNC REO, paying 2%, the buyer made up the other 1%, and paid the $300 fee. This was on a $525k condo. But be aware, this can be a Good thing for the buyer.......most agents simply don't tell their buyers about properties offering 2% to them, so the property gets a Lot less traffic, which happened in this case since we got the unit likely cheaper than had they offered the 3% to the buyer's agent. Don't miss getting the dollars, by refusing to pay the nickels. The "buyer's rep agreement" is stating the agent works on a 3% fee, so if the bank/seller is only paying 2 to 2.5%, the buyer would pay the difference. In Florida an agent Can represent both parties, as a Transactionall relationship.
- Rental Property Investor · Asheville, NC · Member since 2015 · 307 posts · 127 votes10y
Originally posted by @Wayne Brooks:
@Brandi Carballo @Tracy D. You guys simply aren't aware, or mistaken, about a couple of things. This "$300 fee for submitting an offer" is the fee charged by offersubmissions.com, an online contract management platform some of the banks are using now. It's payable only upon closing, and the fee is paid by the buyer, as the bank won't pay it......adjust your offer accordingly if you wish. I just had a closing on Wednesday with both of these issues....PNC REO, paying 2%, the buyer made up the other 1%, and paid the $300 fee. This was on a $525k condo. But be aware, this can be a Good thing for the buyer.......most agents simply don't tell their buyers about properties offering 2% to them, so the property gets a Lot less traffic, which happened in this case since we got the unit likely cheaper than had they offered the 3% to the buyer's agent. Don't miss getting the dollars, by refusing to pay the nickels. The "buyer's rep agreement" is stating the agent works on a 3% fee, so if the bank/seller is only paying 2 to 2.5%, the buyer would pay the difference. In Florida an agent Can represent both parties, as a Transactionall relationship.
I 100% agree with Wayne! Most of the banks and reo servicing companies (hubzu, auction.com, etc.) are now charging technology fees, buyer's premium fees, breathing fee, stupidity license, etc. All kidding aside, as an agent, I refuse to show these properties without first getting a signed compensation agreement A.) Passing those fees to the buyer, and B.) Ensuring I make my expected full commission. As an investor, it makes all the sense in the world to make up the difference in my commission, and/or pay the additional fees to see these (USUALLY) deeply discounted properties - that being said, when I put a compensation agreement in front of an investor, to a man they howl about how I want to get "overpaid" for just "doing some paperwork". My answer is always very simple, if you don't want me to get paid, I won't work for free...go find a newbie who's willing to work for nothing, and watch how fast he shipwrecks your deal!
I'll leave you these two:
Good service isn't cheap, and cheap service isn't good.
&
If you think my fees are expensive, just wait to see what my fees are when I fix your SNAFU!
-Ben
- Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes10y
Originally posted by @Patrick M.:
First, thanks to the group for all the replies and perspectives! Let me try to answer some of the questions raised above.
@Dawn Brenengen - The realtor did submit my offer to the bank without me signing it. You are correct that I am not interested in his other listings; I am focused on this property as an investment. Also good to know that the fee pass-along is not standard.
@Jay Hinrichs - Yes, my lawyer is a closing attorney.
@Tracy D. - Thanks for letting me know the fee pass-along is unusual in your area, too.
@Don Konipol - I am attaching a screenshot of the agent section of the Zillow page below that lists several realtors. The one I am dealing with so far has been named as "Listing Agent" while the others are "Premier Agent." Would you recommend I contact one of the others and see if I can submit an offer through them to the bank and get better disclosure behavior at least, and perhaps get someone who isn't going to try to pass along the fee? At the end of the day, I don't really feel that I need an agent for negotiation. I've done this twice before without agents and gotten prices I wanted and I have a tightly wound spreadsheet telling me my deal works; I'm comfortable owning my risks on the deal. What I'm trying to minimize is a third party getting into my interactions with the owner and driving up the transaction costs.
Thanks again to everyone for their insights- you guys are great!
I think I understand the situation a little better now. You are submitting the offer through the listing agent. In that case, why don't you go back to the agent you liked before and use him to submit? The listing agent can typically submit for you without the buyer agency agreement, you would just be a customer, not a client. Is the agreement for this deal only or does he have a wider geographical base written in? I imagine he is trying to sign you on as a buyer-client in case this one doesn't pan out.
The bank or offer submission website may have their own rules about how the agency situation needs to go. I can't really speak to that. They make require that whoever submits for you be YOUR agent.
Passing along extra fees is totally normal. It being already written into the agency contract is unusual, but if the contract is just for this one deal, and he already knows there is a fee to submit offers, I can see why he would go ahead and include it.
As far as the 3% goes, you should also receive a confirmation of compensation form with any offers you submit so you know how much the seller's agent is offering the buyer's agent. If it's less than 3%, you need to know that ahead of time. I usually won't make my buyers make up the difference (and I don't put 3% in my contract), but if someone wanted to bid on a $50k auction.com home that pays 1%, I would definitely have the buyer make up the difference to add up to my normal fee.
It's VERY common for this websites to have lots of additional fees to the buyer beyond the offer price, and each site is different.
- Wholesaler · Austin, TX · Member since 2016 · 7 posts · 1 vote10y
This almost sounds a little fishy on YOUR end. Lawyers, really? A little overkill.
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