You go up to your boss and say, "Hey, what happened to my paycheck?" He replies, "Well, my sister's friend does the same thing you do, and since she will only charge me half of what I pay you, I've decided to pay her instead. But.... Thanks for showing up for the last few weeks and being there to answer calls and drive me to and from work AND here's a nice Starbucks card for all your effort! You were GREAT!"
But hey, if you don't know what to tell that agent that has been giving his/her time to you, why don't you just copy/paste the above? Don't forget the Starbucks card...
Let me share a personal story with you that I think makes a great example:
A few years back I had spend quite a bit of time showing a couple numerous homes over a few month period. (This is when there wasn't a lot of inventory on the market). One day I called to tell them that I had something I thought might work for them, and the husband hesitated, then said, "Patti, you probably aren't going to like what I have to say, but we just bought a home this past weekend." Needless to say, I was stunned. I had invested untold hours in looking up properties, previewing many, taking these clients to see them, sometimes 2 or 3 times, gas..... you name it. He went on to explain to me that the reason they used this other agent was because she had the listing, they had driven by an open house, and she said that "she would save them money."
I asked if they had told her they had been working with me, and they had. The other agent had repeated that by using her they would "save."
I wished them the best, told them honestly that I was very disappointed that they had chosen to do things this way, and watched for the home to close escrow.
At that time I got in contact with them to wish them the best in their new home and he said,"Patti, we made a huge mistake. The realtor really didn't represent us well at all, we found out that she lied to us about the school district and numerous other things that were of importance, and the whole transaction was just a nightmare. We should have used you. We'll never use any other agent but you in the future. We learned a lesson the hard way."
My comment to them was "When someone starts out slimy, they usually end up slimy." This agent was slimy to take over someone else's clients. It only got worse.
Shame on your friend's father, to come in after you had spent your time with another agent, and offer to write up the offer. As you were told by others- you don't pay the commission. If he is offering to rebate you part of his commission, I would ask myself- is this the type of person you want to represent you in one of the largest transactions you are going to enter into. Always remember- people's character runs the same throughout life. If this person is willing to think only of themselves and step in where someone else has done the footwork- BEWARE! Will your best interest be kept in mind???????
I hope that you take the high road Jennifer and be a woman of integrity. There are too few left in our society.
Can Jennifer LEGALLY use her friends dad, or can Jennifer ETHICALLY use her friends dad? That is the real questions.
I assume that Jennifer is not held by any code of ethics, so she can do as she likes, it may be another story for her friends dad. If Jennifer can get a rebate, more power to her, that could be a new bedroom, or living room furniture that she wouldn't have been able to afford before.
Something that was left out is that a buyers agent is NOT ALWAYS paid by the seller. If the seller's agent will only pay the buyer's agent 2% ,the buyer might have to pay her agent the additional 1%, or if its a FSBO, the buyer might have to pay her agent the full commission. Of course this is all dependent upon the contract.
I am sorry, but I didn't read the rules and regulations about posting answers to Trulia, I didn't know that only agents could answer questions. I thought that one "civilian" would like to hear another "civilians" take on things. (Which is what I like Trulia for).
LOL! LOVE IT! Why is this so hard to understand?
Tell the real estate agent to write the offer for the home that he or she showed you. Your friend either doesn't know or doesn't care that what she is suggesting is unethical. Promise her that the next time you need a real estate agent, you will interview and consider her father (not hire, interview and consider), but that this time you hadn't known that her father was a broker, and you are already working with another agent. Best to you!
Hopefully, your friend is speaking without the input of her father.
When you agreed to allow the first agent to show you "some" homes you entered into what would be considered an implied agency agreement with them. That means that they were under the impression by your actions that they were representing you as an agent and you were behaving in a manner which would agree with their impression.
One of the things we as agents learn about is what is called "Procurring Cause". Procurring Cause means that this agent is the reason you found and viewed the home. If the agent you originally utilized located the properties for you, or just set up the appointments to view the homes and showed the homes to you then they ARE the Procurring Cause and have done their job. Therefore, they should get paid for their work. Just like you are entitled to get paid for the work that you do.
I am assuming that your friend is not a licensed Real Estate Agent themselves (as you would have used them) so they are most likely not aware of the laws governing commissions. If she is suggesting that using her father would save you money either by not charging you a commission or by giving you back whatever he received as a commission on the sale there are a couple of whopping big problems rearing their ugly heads in either option.
As Elvis stated, as a buyer you don't pay ANYTHING for a licensed Realtor's services. What really happens is that the agent representing the seller shares the commission they will be paid with the agent representing the buyer. As for rebating a portion, or all of a commission, that is actually not legal. It is against the law to pay a commission to an unlicensed person in a real estate transaction here in California.
You also have to wonder just how hard an agent who knows that they are not going to get paid anything will work for you. Especially if they are making their living in the real estate industry and not just someone who has a Real Estate License but works in another field. And no broker would be willing to allow their agent to expose their agency to all of the legal responsibility of the transaction for no compensation. Your friend's dad may indeed have his broker's license but if he is not the owner of the agency he really doesn't make the rules. And if he is the owner, it is just bad business to work for free.
I understand your friend wanting to help you and I am sure that they meant no harm but this could end really badly for all concerned. Your friends dad could get fined or sued. You could get sued, you may not be able to get the home you want since you never know who knows who, and you would be taking hard earned money out of the rightful agent's hand. Bad juju.
If you are unhappy with the agent that showed the homes to you is not to your liking perhaps you should interview other agents to find someone who you do like. Also, if you do decide to switch agents you might want to stop pursuing any of the homes that this agent showed you just to be on the safe side.
Jennifer, I am sure you are nice, honest person so do the nice honest thing and let the agent that really did the work get paid.
Take care and have a wonderful day!
Tisza Major-Posner, Realtor, Keller Williams
My question to you is Would you go into Safeway and get your groceries but pay another grocery store for what you received? Would you have the garage down the street repair your car and then go to Firestone to pay them for what the other garage did?
I feel I must address what the agent from Options has to say. As far as Jennifer "saving money"--- do we REALLY KNOW that she is saving money? Many times I have seen real estate agents who do this part time, may be new in the business, may have their license so they can transact their own deals- go and offer a "rebate" to someone on the commission they will earn. Do they save the buyer money? Not if they don't know how to negotiate the best deal for the buyer, or negotiate some buyer incentives, repairs, etc. In the long run Jennifer could end up paying more out of her pocket than if she used her original agent.
I've seen it happen. About 18 months ago I had a couple who called to see one of my listings. First question, of course, was whether or not they were working with an agent. Oh no, of course not. After showing them 3 times, the wife, wife and husband, next mom who was giving the down payment, suddenly an offer comes through from "cousin Bubba, who they forgot was in the business." It was apparant that the buyer herself had written up the contract, and didn't know what was customary in a transaction. She had them (the buyers) paying all of the title, escrow, termite, inspections, home warranty. I called her up and said it was evident that cousin Bubba doesn't really work as a real estate professional, was I righ? And that I assumed that cousin Bubba was going to give them a rebate on the commission....."Yes, how did you know?" I informed her that the contract they had written up just had cost them more than they could possibly be saving, and that if they chose not to use me, to PLEASE use an agent who was a professional in the industry. I explained that their rights needed to be protected, and they wouldn't save any money in the way they were currently proceeding. Had I let them go forward it would have cost them BIG BUCKS- so don't assume that Jennifer is saving anything here.....
Leaving it all, once again to Jennifer's integrity, not to mention Broker/dad....
Did you know that in a survey of executives of major corporations, most admitted to cheating on the golf course but not a single one admitted cheating in the accounting books?
Do you really think they were truthful in answering the second question?
Why do most agents require buyer-agent agreements? Exactly for a case like this. In other words, out of 100 buyers that did not have an aggrement signed with their broker, probably half would bail on their agent. So a good buyer's agent needs to protect him/herself in a situation like this.
If I were in Jennifer's shoes, I would ask the friend's father if they will "they will write the offer" for free or for a fixed wage rate, and kick back the commission. And then send a nice check (maybe 35% of the commission) to the original agent, as a gift. Since the original agent does not participate in the transaction, this is not a commission, and they can legally take the money as a gift. Gifts up to $12,000 per year from the same person are tax-free.
I have found for the most part that the people who have told me they don't want to sign one, wouldn't waste a person's time, blah, blah, blah have ended up running me on a wild goose chase, so to save time, if they don't want to use one, I have saved time, gas and frustration in the long run by saying...."Bye, bye and NEXT!"
Legally, she can use whoever she wants, even if she has signed a buyer broker agreement. Legally, her friend's Dad could end up paying the commission that he gave back to Jennifer, to the agent who really did the work of driving her around and showing her homes because of "procuring cause". If this were case, would she be willing to give it back if he lost the mediation or arbitration, or let him "eat it" too, like she is contemplating doing to her current agent? Not a situation I would put myself in if a buyer asked me to write an offer on something they had been shown, by someone else. Legally, if she has signed the buyer broker, she can end up paying her current agent regardless of who writes the offer. Legally, it is against the law for an unlicensed person to receive commission on a real estate sale.
You are right that Jennifer is not held to the Realtors Code Of Ethics. I do hope, however, that Jennifer holds herself to her own code of ethics. Let's not confuse being ethical with following the law. If this were the case, people wouldn't look for loopholes in the law.
Ethically, she should use the agent she started with unless that agent wasn't doing her job. Ethically, her friend's Dad would say no. Ethically, renaming the giving an unlicensed person commission a
'rebate' is well, unethical. Ethically, it's scary that this question is even being asked. Is treating other people how you would like to be treated something that should be pondered??? Ethically, well, it sounds like ethics are sprouting wings and heading for the window...
The real question is, does Jennifer jump?
I'm sure you'd agree it certainly feels bad, to take a client to see properties, spend time, effort and money on that process, only to find some other agent in position to take over, and leave you holding the bag, paid absolutely nothing for your efforts.
While "playing fair" isn't a "legal opinion", it's a good way to live. And if Jennifer's friends father is any kind of RealtorÂ® he'd agree. Kharma's a tough mistress and what goes around, comes around.
A gift basket, LOL! Leave it to a "buyer" to say this. Just as some people object to agents giving advice in areas they are not familiar with, or giving legal advice, I have to say that a buyer giving agency law advice has to be the most offensive. The sad thing is, there's no punishment for giving the wrong advice.
Before you make any decisions have a talk with your friends father and see how he feels about the situation. He will probably not be comfortable with it(especially if he has had a similar experience).
Were you asked to sign a buyers agency agreement? If you signed papers before you went out looking at homes with your agent, he or she would be entitled to the commission at closing.
Did the agent do a good job for you? If they did a good job, don't you think they deserve the commission they worked for? Just a few things to think about.
I'm am not a lawyer so what I am telling you next is ONLY how I handle the Buyer Broker agreement, if Jennifer or anyone else has signed one and you want out, consult a real estate attorney.
- The time frame and commission rate of the buyer broker is negotiable. I base the length of the agreement on the BUYER'S time frame of when they want to be in their new home and always a minimum of one year. Once the year is up, an additional 190 days if they purchase anything I have sent them or shown them which I keep a log of or email record. (This prevents what is happening with Jennifer's dilemma and your potential "How long do I have to wait it out?" question.)
- I write a minimum of 3% on the buy side as my fee. This allows me to show EVERY property including FSBO's and I have yet to have a buyer have to come up with it on their own. The seller's have all willingly paid to have a buyer brought to them in this market. If a seller is only offering 1%, then we immediately know that we are going to come in at whatever price the buyer wants to start, minus an additional 2%. You can usually get a killer deal on these properties because no one is showing them and the sellers are freaking out. You save a lot more than the commission earned. Again, these sellers have had no problem when an offer is actually in front of them.
As far as Jennifer's friend or father giving her a "gift", they can probably do whatever they want, they are friends. I've given gifts to clients. Never a plasma TV or a couch, but it's one of my favorite parts of closing a deal. I gave one client who moved here from out of state a gift basket for each of their kids with beach towels and all the sand toys a kid could need as well as gift certificates from some of the local restaurants and frozen yogurt shop. They had moved here from the snow and didn't have these things. It just depends on who it is.
* I asked some of the other agents in my office if they knew the legal limits and one of them said ithe limit was "$25 or whatever was appropriate" I don't know if this is correct or if it has changed.
Since you didn't understand the comparison, maybe you don't understand how real estate agents get paid. We are considered, in California, "Independent Contractors". This means that we are not on salary or an hourly wage and our companies do not provide any insurance coverage. (There are a few exceptions, usually assistants who may show property, etc...)
We do not earn a DIME until we close a deal. I would like to say that we do a lot of work for free, but the truth is, we do a lot of work at a LOSS until a deal closes. We have to pay gas, insurance (which we must carry a larger policy than most individuals because we have clients in the car), hundreds of car washes each year, desk fees, advertising fees, education fees, MLS fees, and all of our other living expenses just like you do.
So, for the duration that Jennifer had this agent driving her around, the agent was working at a loss which is why she should file grievance if the father writes the offer. (If the agent didn't have her sign a buyer broker, that wasn't very smart, so all of the blame can't be on Jennifer who may not have known the nature of how we earn our living.)
This is why we ask buyers to sign a buyer broker. It isn't to trap you, we just can't afford to run a business at a loss. I hope you wouldn't sign a buyer broker if you weren't comfortable with the agent. I would also hope that you would be honest and let the agent know that you won't be working with them, get out of their car and find someone you do trust. The right agent will save you more money that the "rebate" that seems so tempting. Not all agents are created equal. (Just like mechanics, if I use your example.)
Not only do the agents lose the money they've spent driving you around, they've lost the opportunity to work with other potential buyers that they could have met say, holding an open house the weekend they were driving you around. It is fairly standard in most states to sign a buyer broker, but California for some reason has access to the forms but they are rarely used. I don't know why...
So, I compared the agent working at a loss for three weeks, or however long it was (with Jennifer working at a loss as well.) Both would have showed up for three weeks and neither would be getting a paycheck even though they both had put in the time, effort and more. And neither would be making their pay because someone came along dangled a carrot in front of the face of their "boss", which Jennifer would be the agents boss because she is in charge of the check.
:) FYI - That thumbs down was just a lucky guess...
Do you really believe that it was a coincidence, that at the last minute a friend shows up with a discount father.
Let`s read another one of Jennifer's questions....
"m I obligated in any way to let the Real Estate Agent that showed me the property write an offer for me when?"
What I am saying is she knew from the start the the father was going to write.
Now Rebecca ( Who is licenced in CA ) Has a great answer.
"Sorry..in California, if an agent was the one to show the property, he/she would be due a commission. If you signed a Buyer/Broker agreement...definitely..if you did not..they can still go after you in court for a comission. It's a slippery slope. You are best to be upfront with that agent and let them know you'll be using someone else and the reason to try to avoid problems."
Yes the consumer should get the best deal all around, However it is wrong to just use someone and not pay them.....Just my opinion.
I`d pay $10. to hear from Jennifers Buyers agent. " Some Homes" might be 30 homes.
If I am following what you say correctly...
Let Jennifer buy her house. For the best deal she can get.
Let the Realtors fight it out later.
Jennifer has nothing to do with our ethics.
OK I agree.
3 way split? The money would still have to go through a broker. That could solve the problem.
Personally I dont think the father or Jennifer will give up a dime.
If I were the buyers agent, I would not interfere with the deal, However I would file every grievance I could find against the father.
With all that said I think everyone here is missing the real truth.
"showed me some homes "
" I have found out that a friend of
mine's father is a broker and she said they will write the offer and I won't have to pay as much in commission."
I believe that Jennifer knew the father was going to write the offer the whole time.
Com`n folks.... Hello!?.... anybody in there?
So why is she asking this question ( and her other 4 ) on this Forum?
" I don't know what to tell the real estate agent"
That`s it ,she wants to know what to tell her real estate agent?
That`s all, How do I get rid of this Realtor?
What do I say to make them go away?
She knows what she is and has done is wrong, and she is going to do it anyway.
In most cases, I'd agree with you, that the client shouldn't be burdened with the internal workings of referral fees, and percentages and how we divvy those up. The client should get work with the agent they want to work with and we'll sort it out in the background.
In this case, however, what Jennifer's been offered is akin to "I know you've agreed to purchase this flat-screen TV from the local Best Buy, but my uncle works for Best Buy in the next town over, and I can get him to drop one off the back of a truck for you, and then you'll get a 40% discount".
Yes, Jennifer would save money, but there's clearly an ethical choice. You'll notice that Jennifer is not asking us "should I save the money or not"... she's asking us "how do I tell this 1st agent, 'cause she recognizes that there's something... "not quite right" about having used him up 'till now, and dropping him, for some backdoor credit. She may not have been totally aware of the ethical dilemma she was dealing with, and the posts below have now shined a clear light on it for her.
Now we find out about Jennifer's character. Does she take the shortcut to savings, or does she take the high road. It's up to her.
Do you now use the Buyer/Broker agreement with your buyers? I have used it a couple of times but am not consistent with it.
The bottom line usually comes down to the client. Does the client have integrity to do what is right? Does this "friends father" have any sense of ethics or integrity? Unfortunately for us- in this industry if people want to take advantage of a Realtor it is very difficult to protect oneself. The only opportunity to do so comes with the buyer/broker agreement- and sometimes even then it is difficult to persue.
In the end, doing the right things boils down to Jennifer and her character.
This is a very interesting discussion over ethics, but I am fascinated with the legality over the issue. (I am not a lawyer, by the way). Most of the discussion has been on ethics, and not the legality of the issue (which may in itself, be unethical).
I think everyone would say what her friends dad would do, is unethical, according to your (agents) guide book. For Jen, her ethical dilemma would be answered by how well she could sleep at night. So to ask some legal questions:
How long would Jen need to wait, after firing her agent, until she could buy her home using her friends dad? Would she have to fire her, wait a month, then put an offer in on the house? Or is it once an agent has shown you a place, that agent retains procuring cause until the house is sold? I am sure there is some time limit?
Since legally it is against the law for an unlicensed person to receive commission on a real estate sale, would it be illegal for her friend (along with her friends father) to give Jennifer a Plasma TV, couch, bedroom set, (it would be a housewarming gift, of course).
I had to give you the thumbs down, because your comparison doesn't make much sense to me, although I am glad that you didn't compare an agent to a doctor, which I have heard on some postings. I would compare agents to car mechanics, both have a very important job. Both skills take a long time to master, but both need customers who don't have the time, skill, or understanding to do a job, that they might be able to do themselves.
By the way, I wish I was in SoCal again, it really is the best place to live...you are lucky!!!