Ok realtors I need some advice

Buying & Selling Real Estate
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Ok realtors I need some advice

Devin Haertling
Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes

@zane belden and I have been working on a deal to buy a 4 plex.  This process started 6 months ago.  We made contact with our realtor through Zillow  and she showed us 3 properties one day and we put an offer on one of them.  The deal never went through so 5 months later we offered on the same property and still no luck.  Now the seller has contacted me through facebook and wants to sell at our asking price of 160K (list price 200K) but wants to leave realtors out of the equation.  (He doesn't want to pay the commissions).  How he is getting out of his current listing with his realtor is a whole other discussion.

In a nut shell for those out there that will ask: He is transferring the title to his daughter so the current listing contract is void with his realtor.  (I know it sounds super shady) 

We are probably going to move forward with the deal but we feel bad about snubbing our realtor after the time she put in it. but if we closed the traditional way then the cost would have been bore by the seller.

My question is this: 

If we give her $1000 in amazon gift cards or something else of equal value that she would use (so she doesn't have to claim it) would that be sufficient?  Would you appreciate a gesture like that or be upset you were left out?

Let us know what you think

Thanks for the input.  

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Jason Huber
Investor · Lake Elsinore, CA · Member since 2017 · 23 posts · 30 votes
9y

My personal opinion..... I think its unethical to make this deal and bypass the realtors. They have put a lot of work in to bringing you two together. Without the two of them you two would never have met. I could not pull the trigger (even if it was the best deal ever) knowing what the seller is trying to do is wrong....Again, Just my personal opinion. 

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  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y

    @Zane Belden

    0Reply
  • Vanessa Joy Burnett
    Investor · Asheville, NC · Member since 2017 · 3 posts · 1 vote
    9y

    When does his contract with the realtor expire?

    1Reply
  • Jesse StephensonPro Member
    Property Manager · Chapin, SC · Member since 2014 · 71 posts · 43 votes
    9y
    Did you sign a buyers representation agreement with your agent? Because if you did that says if the seller doesn't pay them 3% then you owe it to them.
    1Reply
  • Jason Huber
    Investor · Lake Elsinore, CA · Member since 2017 · 23 posts · 30 votes
    9y

    My personal opinion..... I think its unethical to make this deal and bypass the realtors. They have put a lot of work in to bringing you two together. Without the two of them you two would never have met. I could not pull the trigger (even if it was the best deal ever) knowing what the seller is trying to do is wrong....Again, Just my personal opinion. 

    16Reply
  • Austin Fruechting
    Investor · Kansas City, MO · Member since 2017 · 791 posts · 1k+ votes
    9y

    So 1.5 years ago, I was informed about a single property because of automatic alerts from my realtor.  That lead to a large portfolio purchase from the seller.  I did all the work on it and and negotiated with the seller. My realtor never did anything.  I still compensated my realtor in a fashion similar to what your are talking about so he wasn't completely completely cut out (I actually just did a personal check from me to him personally).  He was happy because it was a decent amount and he didn't really do anything at all.  As long as you are compensating your realtor in a reasonable/more than fair fashion for what they have done and time spent I would be ok doing it. Never expect people to work for free for you, and never cut them out if you want to business in the future. The way the seller is treating his realtor is on his conscience and not your problem. 

    2Reply
  • Deke Belden
    Investor · Olathe, KS · Member since 2016 · 11 posts · 5 votes
    9y
    Be careful, if you do this the realtor may have a very bad taste in his or her mouth and may spread the word of being bypassed to every realtor they know. Could make future deals very difficult for you guys if you got a reputation of stiffing realtors. I would not feel comfortable making a deal with someone who is actively trying to get out of something he promised, even if he's breaking a promise with someone other than yourself
    5Reply
  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y
    Jesse Stephenson Nothing was signed with our agent about representation.
    1Reply
  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y
    Jason Huber We found the property first and then contacted 4-5 agents through Zillow and she was the first to respond.
    1Reply
  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y
    Deke Belden Hey deke. I didn't know you were on here. That's why we want to give her something so we don't burn bridges for the future. Side note how are we not colleagues yet??
    0Reply
  • Deke Belden
    Investor · Olathe, KS · Member since 2016 · 11 posts · 5 votes
    9y
    I've been lazy about networking on BP. I need to change that. What I'm saying is that the seller could tarnish your name by association among other realtors even if you've done nothing technically wrong. Remember everyone can find out who the new owner is (you). But you're right maybe there is a way for you to navigate this one. I just don't like being involved with people who may not be on the up and up, even if I'm not the one they may be short changing.
    0Reply
  • Jason Huber
    Investor · Lake Elsinore, CA · Member since 2017 · 23 posts · 30 votes
    9y
    Originally posted by @Devin Haertling:

    Jason Huber

    We found the property first and then contacted 4-5 agents through Zillow and she was the first to respond.

     That is my point. You contacted an agent. She was the one that responded because that is her job. I get that you are trying to make it right on your end and I think that is noble. However, the person you are making this deal with is transferring title to their daughter to avoid paying commissions on a contract they signed.  I wont do business with people like this and I feel that by accepting that deal you are somewhat of an accomplice since you are aware of the situation. 

    5Reply
  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y
    Let me throw this into the equation. She works though a large realty company and she is pretty young (meaning I don't think she is a partner) so of her commission part would go to the company and she would pay taxes on the rest. So if we asked her what her take home pay would have been on the deal and we give her that does it make the situation better on our end.
    0Reply
  • Susan K.
    Real Estate Agent · Palm Beach Gardens, FL · Member since 2017 · 205 posts · 124 votes
    9y

    The seller is going to great lengths to get out of paying a commission of most likely under 10K.  Definitely unethical.  I agree with the other poster, I would be hesitant to do business with a guy like that because you don't know what he will do to you.  Since he is "cheap" would he strip the property too?

    And the daughter, is she unethical too?  because now it looks like you will be doing a contract with her.  

    As an agent, I've had other agents on occasion try to screw me out of commissions and it's not a good feeling. 

    2Reply
  • Susan K.
    Real Estate Agent · Palm Beach Gardens, FL · Member since 2017 · 205 posts · 124 votes
    9y

    As far as taxes if she is 1099ed (and most likely is) often you can have enough expenses to run against the income to zero out paying taxes on much of it. Did you happen to see the % on MLS? Was it 3%?

    Can you talk the seller into paying your agent at least?  He should be paying this instead of circumventing.

    0Reply
  • Lynn McGeein
    Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    9y

    Not sure how it works in your state, but if he is under contract with a real estate firm, unless they've already negotiated that if he transfers it to his daughter he doesn't owe commission or it's not an exclusive right to sell, he'd still likely owe the commission due to safety clauses built into the standard listing agreement.  As far as paying an agent directly, that would be a violation of our state laws and the agent could lose her license.  You must pay the broker directly, and the broker will pay the agent per their agreement, whatever it may be.  Also, there are protections built in, for instance, if you purchase a property she has shown you within 6 months, the selller or you would owe the commission, depending  on  the agreement in place.   It should be somewhere  in  the paperwork you signed when you made the offer, as most brokerages do not allow an offer to be put in without designating agency, that she represents you, even if it is only for that one property.    

    4Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    9y

    When the money is dirty I won't want to do a deal.

    I value going to sleep at night with a clear mind over the almighty dollar.

    160,000 sales price at .06 commission is just 9,600

    If this seller wants to sell that bad they should just pay the 9,600.

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    7Reply
  • Christopher Phillips
    Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
    9y
    Devin Haertling Your agent risks her license and her position with her brokerage if you pay her off to the side. Commission checks have to be paid to office first. I just had this same conversation with a broker in my office and he said management is aware that some investors try to pay agents off to the side and the agents never report the payment. State licensing laws to prevent "Accepting, giving, or charging any undisclosed commission, rebate, or direct profit..." If the agent is caught, they'll be ejected from the firm at a minimum. Penalties and fines would be a lot more than the secret commission is worth. How would the office find out? Probably when the listing agent sues the seller for doing a run around. When else? Maybe when either party is upset post transaction about an issue and sues everyone involved.
    4Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    9y

    @Devin Haertling Obviously you know stiffing the realtor and giving her anything less than a full commission is not the professional thing to do otherwise you would have never posed the question on the forum in the first place.  Is that fair?

    What I think you are missing in this equation is getting into a purchase contract with a seller that used his current realtor as a way to spike interest in the property and bring potential buyers to him with the plans to cut them out of the deal after their contract was up.  Personally that is not someone I would want to get into a transaction with.  Pretty clear he is not interested in being fair or professional.

    6Reply
  • Micheal Reinier
    Investor · Charleston, SC · Member since 2013 · 13 posts · 0 votes
    9y

    Contact your attorney and compensate the agent for the work they have put in

    0Reply
  • Amy Webber
    Investor · Simpsonville, SC · Member since 2016 · 135 posts · 73 votes
    9y

    Read the small print in the contracts of course but I would start by saying don't stiff the realtor and don't try to do a side deal for all the reasons mentioned earlier. Run the deal numbers with paying the full realtors commission on top of the deal to see if it still works.

    If the deal was still good enough after due diligence, title search, and paying the realtor commission etc, then keep negotiating with the seller but try to split the realtor commission with the seller or plan to pay it yourself. Then I would let the realtor know (in person if possible), that you appreciate all they have done and you will make sure that they do get paid so the commission check will be at the realtor's office as normal if the deal closes one way or the other.  It is to your advantage for them to know that you want to make sure they get paid ahead of time.

    Who do you think they will call the next time they have a good lead or off market pocket listing that meets your criteria? Their whole office and all their friends will know that you are a buyer who doesn't screw over the realtors by the end of the day.

    I would not knowingly cut them out after they have held up their end of the process. Real Estate is a local and full of gossip so be careful - maintaining your reputation as a decent and fair person to deal with is critical in my IMHO.  

    We've got a house under contract that was never listed, and its because we treated that realtor well in a prior deal.

    Good luck!

    Amy

    1Reply
  • Mark Gallagher
    Flipper/Rehabber · Allentown, PA · Member since 2011 · 1k+ posts · 701 votes
    9y

    @Devin Haertling

    If he's willing to be this shady to the realtor, break contracts, etc. who's to say he won't do the same to you? Something like "Oh, you thought all of the appliances were included? No, they weren't, sorry." 

    Get him to pay the Realtors at your price point. 

    1Reply
  • Chad Mayo
    Real Estate Investor · Greenwell Springs, LA · Member since 2013 · 37 posts · 2 votes
    9y

    What @Devin Haertling said. I'm in Louisiana and if it were here I could charge her for accepting compensation from someone other than her broker. 

    "An active real estate licensee shall not accept a commission or other valuable consideration for the performance of any act herein specified, or for performing any act relating thereto, from any person, except their sponsoring or qualifying broker."

    0Reply
  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y
    I agree with all of your above posts and it is a real concern that if he is willing to do this then he is willing to screw us over as well. What about going about it this way. I tell him to continue listing with his agent until the contract is up. If he hasn't sold then he could get back with me about selling it to us "for sale by owner"? If this happened could I still get my realtor a "gift" in the form of a gift card and her not risk her license by accepting it?
    0Reply
  • Account Closed
    Real Estate Agent · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
    9y

    realtors cannot accept any compensation that is not thru their broker  It is more strict then the politicans get away with  DC lobbyist .

    4Reply
  • Ross Ayesh
    Real Estate Broker · Coppell, TX · Member since 2016 · 9 posts · 3 votes
    9y

    @Devin Haertling Let me tell you something.

    When the owner acts like this, feel free to assume that they treated their property the same way they are trying to skimp on commissions. Beware of deferred maintenance.

    I bet you that there are skunks that will come out of the woodpile.  What is the condition of the property?  

    As far as the realtor is concerned, if you signed an agreement, you have to honor that agreement. However, I'd be concerned about the seller who obviously way overpriced and now he is desperate to contact you over facebook to sell to you.

    1Reply
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