Should I back out of a sale in Missouri?

3 Replies

I am curious about the possibility of backing out of selling my 4 plex. I understand there is a 5 day period after contract execution that would allow me to do this, without reason, and without penalty, in Missouri. This is my main question here, the rest is a bit of a read I suppose. 

I bought my 4 plex in Jan 2020 for $320K and fixed up 3 of the 4 apartments as tenants have been cycling through. I've spent maybe up to $20K in repairs and rehab. I said to my agent I'd like to sell it. He said he'd list it for 4.75%, and his listing contract with me reflected the same: "owner agrees to pay realtor 4.75% commission".  He also said he would pay a buyer's agent 2.5% commission on the sale. I assumed that meant 2.5% to the buyer, 2.25% to his office. I've bought and sold a lot of real estate in the last 15 years of being an American, and that's what that has meant every single time.

So we got a contract 3 days ago for $470K, and we are working through the process now. I am looped into his email late tonight where he tells the title company that 2% commission is going to him, and 2% is going to his broker. I'm thinking that sounds odd. That's 4%; where is the other 2.5% for the buyers agent coming from? 

I look back at the listing contract to clear this up and I find a whole paragraph on commission. The first sentence loud and proud states "Owner agrees to pay realtor a commission of 4.75%". And 12 lines below that it further states "compensation...to be offered as follows: 2.5% to buyers agents, 2.5% to transaction brokers, and 2.5% to subagents." Should these numbers add up to the 4.75% first listed? 

Is this an "I've got him" situation? I believed I was signing up for 4.75%, but according to what I read here I see either a total of: 

6.5% (2+2+2.5?) per his email to the title company, or 

7.5% (2.5+2.5+2.5) per what I think the contract says, or

4.75% as originally advised, and also what the first line of the contract says. 

Where have I gotten confused? And if I'm mad enough about this, can I back out of the deal? I scoured the contract looking for a backout option but didn't see one. No earnest money has been received, no inspections have been made, it's now April 21 and I signed the contract on April 18, 3 days ago. 

I know the best advice: talk to my agent. I will, but I suspect he's got one on me here. When a guy I do regular business with tells me a number, I don't expect him to slip me a mickey. And I should have been more attentive to detail. I have had a good business relationship for a while, he's a fellow Aussie in St Louis....and Aussies are usually trustworthy. For the reason of saying one thing and doing another that holds a large financial hit to me, I would drop this contract. 

Then of course there is the price appreciation I have gained if I sell now. Approximately $130K increase that I could be throwing away because I'm mad at an extra $8k or $13k in commission. Do I swallow that knowing I'm getting a great sale price on it? That $6K is a lot of money to me, and I'm in this business to make money for me and my family, not an agent - although I'm  more than happy to pay a fair compensation. 

First world problems hey? I'd love to hear some thoughts about this. Thank you for reading. 

Mike

Okay so an update in the AM. My realtor says he made an error. It's a pretty good one, but we are all human. If anyone is reading. 

Seems to be much ado about nothing. My wife says I overthink things.Being up late is usually my clarity time; perhaps not this time.

Originally posted by @Karen Tsoka :

@Michael King. Glad everything was cleared up! Hate to see relationships ruined over money! It’s just not worth it!

Thank you. Yes it would have been bad. He said he didn't know what he was thinking when he said that. I for sure over reacted; more the fool me I would say. It was a close one, and I kept thinking that buying and selling real estate is emotional, and that I needed to stop being emotional about. But then, I've been ripped off too many times and the slightest red flag pops up, I'm ready with a mallet to whackamole.