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

    To expound on my comment earlier... 

    Since there are so many comments of the seller is a dirt bag and that you are too if you deal them... I disagree. 

    It is not your moral obligation how the seller treats the people he deals with.  What is your moral obligation is how you treat those you deal with.  If you gave your realtor the equivalent of what they would get had they represented you in the transaction, you are doing what is right by the people you deal with.  If the seller is not doing right by the people they deal with, it is not your responsibility to be their moral compass and enforcer.  

    If all these people took the same stance on buying any product or service from anywhere, they wouldn't buy anything because if they really dug in, they can almost always find something that someone on the other side did that goes against their moral judgement.  I would put money on that if all of them were buying something for pennies on the dollar (so long as they were treating those they deal with at a proper moral code) they wouldn't care what the other side were doing apart from true atrocities like murder.  If I told them I was a complete scoundrel in every since of the word, but was selling them something that was legitimately worth $50k for $5k, I venture to say nearly everyone would still do that deal. Why? Because it's a good deal. And at the core, they know that every person is only responsible for themselves, and only themselves. As you treat all you deal with in the correct manner, that is all you are responsible for. 

    Now, all that being said: the fact the seller is doing this means you learned he is a scoundrel. That does raise some caution flags and you'll need to be more careful moving forward.  A way you could approach it, not only cover your moral duty to your realtor, but also to make sure he doesn't pull shady stuff on you, is to say you will still use your realtor at this price, but you will pay the 3% buyers agent fee as opposed to the seller. 

    1Reply
  • Harrison Liu
    Investor · Seattle, WA · Member since 2016 · 143 posts · 68 votes
    9y
    Ethical or not, this happens quite a bit. especially in expensive markets where buyers are stretched thin and try to save money. It points a flaw in the system of buying and selling real estate. some day some one will figure out a better way to handle this.
    0Reply
  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y
    Jason Kudo Did you not see my last post? We are going about this the right way now and the realtors will be fairly compensated at the contracted 5%. Your post makes it seem like this was our idea to cut the realtors out when he was the one that approached us with it. So let me ask you this. Just because I took 24 hours to asses the situation and gather as much info as possible that makes me a shady person?? If someone read through this link and read how we ended up handling the situation in the end I would think they would assume we are people of integrity (we contacted our agent and got him to contact his agent to let them know what was going on) Now as far as moving forward with the deal and him being shady- it was a shady move but when I talked to him again he was immediately all for keeping the realtors involved. I think he though he was doing us a favor (because we will have to pay all commissions if we move forward with the deal-reread my last post) We are getting a building inspection and I plan on talking to each of the tenants individually to confirm what they pay on rent and the terms of their contract.
    1Reply
  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y
    Austin Fruechting I'm a little confused by your last paragraph about paying the 3%. In my post I'm suggesting that we pay all the commissions. We are using our agent and he is using his. The contract he signed was for 5% commission so we are offering to pay both commission. 160k x 5%= 8000 Are there some other commission numbers missing. 8000 would be the most we would pay toward realtor commissions correct??
    0Reply
  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y
    Austin Fruechting Sorry just reread your post. Are you suggesting that if he still wants to cut out his realtor he can but we should still go through ours?? Another question. He mentioned asking his realtor if they would take less commission if it meant moving the deal forward. My realtor is not going to take less. Can that happen? One realtor agree to less commission and the other not??
    0Reply
  • Austin Fruechting
    Investor · Kansas City, MO · Member since 2017 · 791 posts · 1k+ votes
    9y

    @Devin Haertling - sorry I was assuming 6% total commission since that's the standard around here split 3% each side. In my opinion your only obligation is to your realtor. What he does with his is on him. 

    As to the different commissions on the sides, yes, that happens... But never ask your realtor to take a reduced commission, at least not if you want them feeding you more deals! 

    0Reply
  • Tim Hall
    Flipper/Rehabber · Tallahassee, FL · Member since 2014 · 462 posts · 237 votes
    9y
    Hey man, without the realtor there would be no deal. So if you feel it's ok to step on people to get where you're going then ok. However if you want to stay in this business, in the place where you make deals. Then think twice about what you're considering. If the deal is so slim that you've got to cut people out of it maybe it's not the right deal or a deal at all.
    0Reply
  • Brian Egr
    Flipper/Rehabber · Lincoln, NE · Member since 2016 · 144 posts · 71 votes
    9y
    I am an investor with a Realtor's license. If you signed a buyers agreement and it has not yet expired you will legally owe the buyer side commission to your realtor. My bigger concern would be what the hell js this guy doing transferring title to his daughter just to avoid paying a few thousand in commission. Then FB stalking you to try and cut a deal?
    1Reply
  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y
    Everyone please read my last few posts!!!!! The realtors are not getting cut out of the deal!!!!!! This is his current stance. He has dropped the asking price $40,000, and compensation for that on his part he wants us to cover all costs including commission. At this point it is pretty cut and dry we accept those terms or we walk
    1Reply
  • Brian Egr
    Flipper/Rehabber · Lincoln, NE · Member since 2016 · 144 posts · 71 votes
    9y
    You can't be serious, nobody in this day and age has the patience or attention span to read any more than the first few comments before forming an opinion. LOL
    1Reply
  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    9y

    Hey @Devin Haertling,

    Good to hear you are working through it. I will say though that it is all negotiable. He says he won't take any less than, but you may still get some concessions. He has had it on the market, he has dropped the price, he is a motivated seller (So motivated he was going to quit claim the deed and has been trying to peddle it off market). He still has payments to make and he wants that money from the sale. Now you have a nice motivated agent and since they all talk I am guessing his is less than motivated to protect his interests. He doesn't want to lose you any more than you want to lose this deal because nobody else is even talking to him.

    Release the hounds!!! 

    Oh and

    "Can that happen? One realtor agree to less commission and the other not??"

    Sure, he can ask his agent if they will, that's between them. It is never a fun conversation but it happens. Make sure you don't get wrapped up in his piece, that's his problem don't make it yours. Like taxes or other things that pop up. He will try and make everything your issue and showing you are willing to walk brings a lot of people back to the table. Often times just simply restating their problem back to them quizzically works. "I'm not sure what I am supposed to do about the contract between your agent and you"? or "I can't fix the plumbing leak in your basement, it's not my property"?

    Good Luck!

    2Reply
  • Joshua S.
    Vendor · Charlotte, NC · Member since 2015 · 18 posts · 3 votes
    9y
    You are right to say that is super shady! I wouldn't do the deal with a shady seller like that. Wonder what else he is hiding. Bad deal!
    0Reply
  • Adam Trotter
    Rental Property Investor · Wayne City, IL · Member since 2016 · 3 posts · 0 votes
    9y

    Devin, I'm in your backyard and you know it isn't a big yard.  If the seller is shady, don't participate in this deal.  Your reputation can and will be affected.  

    0Reply
  • Matthew Olszak
    Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
    9y

    @Devin Haertling I'm going to go a bit against the group here and say it doesn't matter if this guy is the world's biggest shyster, as long as you do your due diligence on the property you'll be protected. And that should be done anyway no matter how nice or ethical a seller is, we should always be verifying all data provided by the sellers.

    As for the commissions, your agent is aware of the situation. So either have her agree to run this like an fsbo where she'll issue a notice of no agency to the seller, and you can pay her brokerage a commission the 2 of you agree upon, whatever that may be, or have her work something out with the other agent who will likely have to go after the seller after closing like @Mike Cumbie explained. 

    Its not your responsibility to pay his agent anything unless you agree to it, and even then you'd be better off just increasing your purchase price by that amount and having the commissions come off the seller's side so everything stays clean. He is essentially telling you he wants to NET $160k, so you'll need to back out of that number to add in the 5% commission, tax prorations, survey, title costs, etc. There are some wacko sellers out there that don't care if the net is the same, they don't want commissions taken off their side, but it doesn't sound like that is the case here.

    0Reply
  • Richard Keeperman
    Real Estate Agent · Boca Raton, FL · Member since 2016 · 2 posts · 0 votes
    9y

    Good luck, and you gained respect with your broker, Now that she knows you are a person of intergrity you will see more deals miming your way. Good Luck!!!

    Keep this in mind, your seller is trying to cut corners perhaps his renovations cover up

    Something he did not want you to see.

    Due double DD before you move forward.

    Richard Keeperman

    0Reply
  • Karen S.
    Investor · Sewickley, PA · Member since 2017 · 59 posts · 32 votes
    9y

    I have read through. I think it's a good idea that the OP consulted the BP crowd. It seems that it would be hard to avoid any and all deals that have a whiff of shady around them- in some places you might not make any deals at all. Still, from what you have written this guy sounds like just too much work. I am happy to do my due diligence on a property, but I would feel like I had to investigate this guy, his daughter, and his realtor on the side. Even if it's irrational, that is how i would feel and so I would probably be out looking for the next place. 

    BTW, I own several buildings built in the 1920s. It seems like between 1925 and the present people in our area were in the walls doing just crazy stuff with the plumbing, the electric, and even the structure itself. I'm not in your area, but anymore we are looking for houses that are not updated because there are so many obvious mistakes out there. What is underneath the granite and exposed brick. And how is the pointing on that exposed brick?  Good luck with whatever you decide.

    0Reply
  • Kelly G.
    Florissant, CO · Member since 2013 · 184 posts · 69 votes
    9y

    haven't read all of the replies - not sure you're still interested in comments

    IMHO - the price the seller set for the house already includes the commission(s) they will be paying.  So actually - it is the price you will be paying as it's wrapped in the sale price.  If the seller suddenly doesn't want to use agents (which many others have replied to) - then you should not be paying your original offer; you should be paying 6% less - or whatever the commissions would have been.  

    I never understood why buyers always think the seller pays the commission;  I have always considered that I - the buyer - am always actually paying the commission. 

    just my 2 cents

    Kelly

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  • Jason Kudo
    Real Estate Agent · Pasadena, CA · Member since 2017 · 274 posts · 255 votes
    9y

    @Devin Haertling, I understand the situation and I understand that you feel you're attempting to do the right thing. I understand that the shade is being cast by the seller.

    These are the thoughts and questions that my mind raises: 

    Every time a weed gets watered, it grows stronger allowing it to choke the flowers around it.

    Are you rewarding and enabling his behavior by going through with the deal? 

    You must have heard the phrase "guilty by association"

    Are you associating yourself with a known shady person by going through with this deal?

    The intention behind an act is just as or more important than the act itself.

    Are you trying to pay off your guilt or are you trying to do the right thing?

    Real estate is a business based on relationships and through those relationships we find our deals.

    Are you in the business of finding deals anywhere you can or are you in the business of building relationships?

    There is no need to answer these questions for me as they are questions I have posed that will hopefully bring some clarity to your vision.

    Best of luck to you.

    0Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    9y

    @Devin Haertling I suspect that the seller is engaging in fraud by transferring title in order to avoid paying the compensation that is owed to the listing agent.  It certainly doesn't pass the smell test.

    Don't forget - you are playing with your reputation here.  Bad news travels fast.

    The fact that you're on a public forum, stating that you're willing to screw your realtor already would make me think twice about doing business with you.

    As others have mentioned, only the broker can handle funds - at least in every state that I know of.  For the realtor to accept a direct payment from you is illegal and unethical.  It could result in fines and loss of license.  

    But hey, you're offering a $1,000 Amazon gift card in place of the $5,000 or so commission that was probably due.  That seems fair, right?

    So how would I feel as the realtor?  I'd haul your butt to small claims court in a heartbeat.  And the seller's agent should do the same to the seller.

    PS - just for fun, transferring the title to his daughter may well trigger commission being owed.  I think a court would see right through the silly title transfer charade and make the seller pay commission on the full listing price of $200,000.

    Ethics before profits.  Treat others as you would want them to treat you and you won't go wrong.

    0Reply
  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y
    Charlie MacPherson Just wondering if you read my post about letting our realtor know what's going on and if we move forward with the deal it will involve the realtors??
    0Reply
  • Devin Haertling
    OP
    Investor · Nashville, IL · Member since 2016 · 79 posts · 51 votes
    9y
    Charlie MacPherson And this was a territory I have never been involved with. Thus the post to BP. All the insight has been great and there was never any intention to screw over our realtor. This was all proposed by the seller. After gathering all of this great information we made the decision to contact our realtor. Which by the way she was supper appreciative of and it actually strengthening our relationship with her. I have had 10+ phone calls with her in the last 16 hours and she is even trying to come up with ideas and solutions for us. So for those out there who continue to attack my integrity and willingness to still proceed with the deal let me ask you this: If you were my realtor would you drop me and never talk to me again or would you still work with me trying to get the deal done??
    0Reply
  • Erik Hallingstad
    Tacoma, WA · Member since 2016 · 1 post · 0 votes
    9y

    you guys are asking to get sued.

    Lynn said it, theres a safety clause in play. That if u buy or sell even after ur contract ended, Somebody still owe's the agent a commission. You can not pay a agent directly, or rather they cant except payment. All funds go to and are distributed by the brokerage. 

    Do not burn bridges in this game.

    Stay sharp, stay ethical.

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  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    9y

    @Devin Haertling  Yes, I read it.  

    So to answer your last question, if you "went around" (screwed) me as your realtor, I would drop you like you were radioactive.  I'd make sure all of my agents knew about the fact that you "went around" me, so they too don't end up getting screwed.

    If you told me that the seller was going to screw his realtor, but you would ensure that I was paid what I was owed, I would have immense respect for that.  

    I'd also notify the other agent and let them deal with the seller.  That falls under my "treat others the way you would want them to treat you" doctrine.  

    I'd wait until after the sale closed though, because doing anything sooner could jeopardize the sale, and my job is to represent you and to get you the property that you want.

    Glad to hear that you eventually decided to do the right thing.

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    9y

    One thing I love in my state for commercial is as a principal broker there is a (broker's lien waiver) that has to executed. I have language that commission is (paid at closing, as a CONDITION of closing). This way title or if a closing attorney won't touch it unless I am paid at closing.

    With this brokers lien I can stop the whole process of selling the property.

    -------------------------------------------------------------------------------------------------

    On this forum topic they need a copy of the listing agreement that spells out the co-broker fee that was agreed to by the listing brokerage.

    I don't do residential but I see sometimes where an agent agrees to take less commission without telling their broker. The broker then takes what their split would have been off of the 3% total for example versus what the agent agreed to.

    Example: 200,000 at 3% is 6,000. Agent agrees to 2% without telling broker to try to close a deal. Agent thinks 30% split is coming off of 4,000 or 1,200 so they get 2,800. Actually what happens is 30% comes off of the 6,000 estimate for 1,800 to brokerage. Then agent gets 2,200.

    There needs to be some kind of agreement in writing about this commissions so it is ultra clear. You do not want listing broker claiming they are owed more than 5% per the listing agreement. You might could put as a special stipulation in the purchase and sale agreement.

    -----------------------------------------------------------------------------------------

    As far as verbally getting tenants to tell you things are accurate that can be a waste of time. Sometimes owners will throw money at them to keep quite and say whatever. You need Estoppels in writing executed by the tenants with a notary. Verbal is legal or not in some states but generally unenforceable in a court of law. So for legal standing and precedent you need things documented in writing. The notary is for proof that person signed the document. Some sellers are known to forge documents and do all kinds of crazy things. Make sure you have reps and warranties that extend past the closing ( most try for 1 year but many get at least 6 months) where you can legally pursue the seller.

    No legal advice given.   

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