Whoot! The Listing Contract Expired. Let's Buy It Without The Realtor! Whooo Hoo.. Saving those $$$
Pete, from Harrisburg, PA asked a question on Trulia Voices today, and then removed the question after a short while.Â Â Pete also changed his/her profile to Sally.Â I considered Pete (or Sallyâ€™s) discussion worthwhile for agents to explore as an agent-to-agent discussion, and am putting a recap here.
Hereâ€™s the summary.Â Â Sally (formerly Pete) wants to buy the neighborâ€™s property for an amount near another offer received but less than the Realtor commission.Â The seller had their property listed and received an offer just at the end of the listing period.Â The offer continues to be negotiated, although the listing is expired.Â Pete (formerly Sally), also claims to be a an attorney, just not a real estate attorney.Â Â Pete/Sally wants the neighbor to sell to him, advising the neighbor should not have to pay the Realtor fee because an offer w/ acceptable terms was not achieved before expiration.Â The neighbor is concerned they could owe a Realtor fee.Â Â Pete/Sally, in his/her own words, admit that they wanted to rent first to avoid the appearance of impropriety.
Hereâ€™s the thread, with the question removed, and my comments about this:
Law and ethics do not always travel parallel.
PROTECTION PERIOD:Â Most listing contracts contain a clause that defines a protection or obligation period.Â Â An earlier poster on the thread supported short protection periods.Â For the very dialog on this thread, our company has protection periods that can extend to 1 year.Â Â Hereâ€™s how we determine the length of a protection period at our company.Â If our firm is going to invest heavily in terms of both time and money, the protection period is longer.Â Â If a property is an unusual property with a focus on a unique or niche buyer pool that traditionally carries a longer marketing period, the protection period is long.Â Â If we contract with a seller for a limited marketing package, we may have no protection period at all in the contract.Â In other words, we negotiate fair contracts.Â Â
MOTIVE:Â It read to me that Pete/Sally was encouraging the seller to use innocent buyers and the Realtors as pawns to set the benchmark for the highest and best price the property can achieve, and then swoop in to gain at their expense?Â Â Is this ethical?Â Â Hmmmmâ€¦Â No.Â Is it legal?Â I am not qualified to give legal advice because Iâ€™m not an attorney.Â Â But, I am a broker owner, and I know what flags alert me to refer situations to our company attorney for a legal opinion.Â There are flags and questions here.Â Does the seller want to work out a deal with the buyer?Â Â Â Was Pete/Sally trying to dissuade the sellers from doing so?Â Â If the buyers can perform, and their contract fulfills the need of the sellers, then any attempt by the sellers to thwart that contract in favor of trying to sell to Pete/Sally without a brokerage fee is ethically wrong.Â It may also legally bind the sellers to pay any fees associated with the listing contract.
WHEN IS COMMISSION EARNED?:Â I do not have a copy of the listing contract.Â Â Â I can tell you that when we work on commission (we donâ€™t always work on contingency), our commission is deemed earned at the time a ready, willing, and capable buyer is produced.Â Â If those terms, or similar to the same, are included in the listing contract between the seller and the listing broker, the seller could owe a commission.
EXCLUSIVE RIGHT TO SELL -Â ARE PETE/SALLY BUYERS UNDER THAT PROVISION?Â Â Regardless of the fact that Pete/Sally knew the sellers before the house was listed, the terms of many listing contracts contain a clause for the exclusive right to sell.Â Â Since Pete/Sally had dialog with the property owners during the time it was listed, in my lay personâ€™s broker owner, just an ordinary person trying to make an honest livingâ€™s opinion, any dialog Pete/Sally had w/ the property owner while it was listed established them as â€œbuyerâ€ under the existing listing contract.
THIRD PARTY INTERFERENCE - ARE THERE DAMAGES?Â WHAT IS TORTOUS INTERFERENCE?Â If I were faced with a situation where a seller dismissed a viable buyer in favor of selling to their friend, I would refer it our attorney for legal review.Â If the sellers were attempting to act in good faith, but a third party interfered with that process, and the actions of the third party caused a loss or damage to the seller, buyer, or real estate broker, I guess our company attorney would evaluate that situation and any potential liability.
WHAT DO YOU THINK?Â Pete/Sally believes that the contract expired, the Realtors didnâ€™t sell it, the sellers owe nothing to the buyers who made the offer, and that Pete/Sally should gain from this exercise.Â What do you think?
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