Home Buying in 90025>Question Details

Shortsale654, Home Buyer in Los Angeles County, CA

Short Sale: Agents Commission in a Dual Agency

Asked by Shortsale654, Los Angeles County, CA Fri Sep 3, 2010

I am the buyer in a short sale where we have one agent that is representing both the buyers and the sellers. The sale was approved by the bank (Wells Fargo) and we are in escrow. The agent received a commission reduction to 4% from the original commission that she agreed with the seller of 6% by the bank. I, as the buyer, don't have any agreements to compensate her or have signed any documents to pay her any commission out of pocket.
The agent wants to get the difference in commission of 2% from me and has threatened numerous times on paper to stop escrow and sell the property to someone else (that she has lined up who will pay the 2%) if we do not agree to pay her. Her broker says that they have an agreement between the seller and the real estate agency to be compensated 6%. I know that it is unethical/probably illegal for them to break the escrow because they want more money. The bank that approved the short sale does not require us to pay the 2%,but is okay if do so. Please help.

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If your agent is hanging his license with a broker, call the brokerage office and speak to manager of the office. If they operate with any high level of ethics, this agent should be repremanded. This agent's behavior is unacceptable!! Having said that, you have nothing to worry about, especially if you have not signed any agreement that states you, as the buyer, pays any type of commision. Remember, that agent is relying on your purchase for his commission...if he wants to threaten you with the stop of escrow, let him/her do it! Then go find yourself the right agent who hs our best interest.

If this deal falls through for you, don't hesitate to contact me. I'll help you find the right house for you with YOUR interests in mind.
Web Reference: http://www.ken-dang.com
4 votes Thank Flag Link Mon Sep 20, 2010
DO NOT PAY IT. And don't fall for the bogus advice in some of these answers that if it is a good deal you should go ahead and agree to the extortion. What absolute incompetent advice!!!!!!!!!!!

Here is my advice. Clean and simple.

1. Be sure to hold on to all the documentation you have regarding your transaction including e-mails. Also be sure to start a phone log in which to log all phone conversations with the agent and/or broker. Be sure to Include dates and times.

2. Don't waste your time going to your local REALTOR association. They are toothless tiger's and have no power to solve your problem.

3. Locate a good real estate attorney and spend an hour or two discussing your issue. In many cases a stern letter from an attorney can solve the issue.

4. Even if the attorney letter works, be sure to make an appointment with the local District Attorney's office to ask for an investigation into the extortion issue. And don't take no for an answer. There may even be a violation of federal racketeering laws should a conspiracy be proven between the broker and the agent.

5. File a complaint with the California Department of Real Estate. The WILL respond to your complaint. And if there are no mitigating circumstances they most likely will take action.

6. Tell all your friends what this agent is doing to you. Brokers and agents like this are what give real estate industry and bad name and they must be run out of business. Word of mouth is the best way to do this. Just be truthful in you comments. You don't need a slander or libel suit thrown at you.

7. Don't back down and be sure to pursue it until this agent and her broker are out of business.
3 votes Thank Flag Link Sat Oct 9, 2010
Contact the Escrow company and tell them you want to stay in the transaction (assuming you do). It is likely they had the Seller sign a CA Association of Realtors for SSL (Short Sale Listing Addendum) which say, basically, that the terms of the listing are subject to the lien holders approval and conditions.
2 votes Thank Flag Link Sat Sep 25, 2010
Wow, Shortsale654 - sounds like a bad situation all around. Whoever that agent is is a real shady shadster!

Have you tried speaking to the broker directly? The commission agreement is signed by the seller -- granted by the seller & lienholders involved, and shouldn't have anything to do with you, particularly since you never signed a buyer-broker agreement. Try getting on the phone with the broker/manager of the office this agent works in and have a straight talk with this person. Also, a real estate attorney making a phone call on your behalf to the broker will definitely set this situation straight. You're in the right here! Good luck!

Caroline Choi
Broker Associate/EcoBroker Certified
http://www.CarolineSellsTheCity.com
2 votes Thank Flag Link Wed Sep 15, 2010
The bank is the party that will pay the commission, the buyer has no obligation to pay the realtor. Many times the bank will not pay the same realtor both the buying and selling side. Usually only one side of the transaction. All banks and policies are different. Just because she had a seller who was selling short sale sign and agreement for 6%, she needs to be aware of how short sales and commission splits work.
If the agent is threatening you for the commission, then they are totally unethical and you should not work with them. They should be aware of what the bank will or will not pay them.
It all boils down to an agent being greedy, they should know that we are in a tough market and will not always get paid the full 6%. She can either take the deal or not. Good Luck.
2 votes Thank Flag Link Tue Sep 7, 2010
My first call would be to your real estate broker. The next place to call is the Board od Realtors and then the DRE. You have a fully ratified contract with terms approved by the seller. It is her fiduciary responsibility to equally represent both parties (buyer and seller).
1 vote Thank Flag Link Mon Oct 11, 2010
I'd contact the broker. Please let us know the outcome.
1 vote Thank Flag Link Fri Oct 8, 2010
As an agent I agree that the work on a short sale is very time consuming and difficulty. However from your point of view I can see how you as the buyer would not want to pay anything extra as well.
This is a tough situation. Are you getting a really good price on this house?
Sometimes I think buyers in this market might loss track of the pricing they are getting compared to the market prices. Putting all the commission and drama aside.
Are you getting a deal on this house based on the work of the agent?
If you are getting a great price then that means the agent worked extra hard for you to negiotate with the bank.

Would you buy the house for 1% more if it was requested by the bank?
If you really like the house and you are getting a good price I think you should pay the agent.
If you are getting the house at a high market price then I would say you should stick your ground even if it means walking away to purchase another property.
The question becomes can you find another house that would make you just as happy for a similar price?
If yes walk away, if not Pay the agent and THANK them for all their hard work.
1 vote Thank Flag Link Thu Oct 7, 2010
Dear Shortsale654,
Your agent is behaving in a shameful, unethical, and greedy manner.
I am very sorry that she is subjecting you to this & I, as a REALTOR, am very embarrassed by her actions and want to say that she does not represent the rest of us in this profession.
You are correct, the commission agreement is between her, her seller & the lien holder & if she has a problem with that she needs to speak to them.
Call the local association of REALTORS (she should be a member) & make a complaint & that should take care of it.
Tell her that if she continues harassing you regarding this matter that you will hire an attorney.
If you call me with her name & company, I can look up her association # up for you.
Best of luck,
Trevolyn
1 vote Thank Flag Link Sat Oct 2, 2010
This agent should brought up on ethics violations, this is the type of agant who give the one out there doing there job correctly a bad name. If the broker supports her in the request from the buyer they to should be brought up on charges and reported to the Realestate board in that state.!!!!!!
1 vote Thank Flag Link Fri Oct 1, 2010
The commission agreement is between the seller/bank and the agent's brokerage. You are under no obligation to pay the additional 2%. The agent has a fiduciary responsibility to both the seller and you -- since she represents both parties. I'd recommend that you speak with her broker and if that is not successful, her local association. Best of luck!
1 vote Thank Flag Link Thu Sep 30, 2010
I agree with everyone else, this agent is being greedy and gives all Realtors a bad name. You have no obligation to pay this agent, the commission reduction in a short sale is common. This agent should be happy to be earning 4% since she is the dual agent! Most agents work their butts off getting short sale deals to happen and are normally paid 2 - 2 1/2%. I serioulsy doubt she would do anything to cause the deal to fall out of escrow. She would have to start the process all over again with a new buyer, plus she would be putting herself in a potential lawsuit with you.
1 vote Thank Flag Link Thu Sep 30, 2010
This is so wrong.....,illegal Greed! This agent needs to have her licensed pulled. It's because of agents like this, that we have such a difficult time in earning the public's trust. I am disgusted with the agent's that don't care about their Client....only what they will pocket. We all took an oath to "put all client's interest above our own"....."illegal to interfere with a transaction". Commission is never to be a part of the transaction between Buyer/Seller...it is a separate consideration between Broker's. Unless you have a signed Buyer's Representation (with Client agreeing to pay a commission) it's a dead issue.
1 vote Thank Flag Link Thu Sep 30, 2010
I am so sorry to hear about how this agent has treated you and your situation! Short sales are never easy and whenever there is a contract on a short sale property, there is always the possibility that the bank will cut the commission in order to approve it! This agent should have known the risks when they took this short sale listing! Not all Reatlors are like this agent, but I would certainly hold firm & refuse to pay the 2% (unless you have signed something saying you would pay the difference in commission!), get a real estate attorney to do your side of the closing (and to make sure you don't get charged that 2% commission) and then certainly report that agent not only to the local Realtor association, but also possibly even to the state agency who regulates their license! This behavior by this agent is totally unacceptable and does not reflect upon the many, many Realtors out there who are ethical and honest and do the right thing by their clients & customers! Good luck to you on your new home purchase!
1 vote Thank Flag Link Thu Sep 30, 2010
Congratulations on finding a home, bad manners and rude behavior is never ok. It's agents like this one that give us all a black eye. She knew going into the deal who was going to pay her commission.
1 vote Thank Flag Link Thu Sep 30, 2010
WOW! I think this agent is in for a rude awakening! The should be ashamed of their behavior. This agent must not have been a good negotiator if they were willing to give up 2% of their commission, I wonder how much they have given up to get to the sales price. Was there even any negotiations of the sales price or just the commission reduction.

The commission that the listing agent is receiving is between the seller and the agent, not the buyer and the agent. Unless you signed a separate agreement with the agent stating that you are going to pay them, they should have nothing to stand by.

I want to see this one go before a judge and see what they have to say about this agent. Who's interests were they looking out for, the seller's (NO!), the buyer's (NO!), their own (YES!!).

I think the agent should hire someone with real negotiating skills to get back the 2% of their own commission they gave up.

Did you sign a dual agency disclosure? This agent is not representing you at all and I believe they can get themselves in hot water.

Best of luck! I would talk with this agent and have them get to work on negotiating this transaction better with the bank instead of you.
Web Reference: http://www.jameswehner.com
1 vote Thank Flag Link Tue Sep 28, 2010
Absent of any buyer agency agreements between you and the realtor, the realtor's compensation is based on her agreement with the seller and /or third party bank. You have no obligation to compensate her.
1 vote Thank Flag Link Mon Sep 27, 2010
I would contact the California Board of Realtors. In Florida it is not legal for a broker or an agent to let compensation interfere with closing of escrow. Fist off the contract for compensation is between the seller and the broker. Unless you signed a buyers brokerage agreement insuring a certain amount be paid you, at least in Florida, have no fiduciary relationship with the agent.

If you lose the deal over the commision I would consult an Attorney to determine potential liability of the Agent and Broker. Those of us who run professional Real Estate practices put the client first and make our commisions based on refferals and repeat business.

Good Luck
1 vote Thank Flag Link Thu Sep 23, 2010
66 answers so far, and Shortsale654 has never responded.
1 vote Thank Flag Link Tue Sep 21, 2010
Just as the broker said, they have an agreement between the seller and the agency for the 6%. Where does it state the buyer is responsible for any commissions paid. Unless you agreed in writing to pay the difference there is no basis for her to cancel the transaction. Besides, the contract is between you and the seller and both of you have to agree to cancel. If, she keep this up she'll end up loosing the deal altogether. If she had any experience with short-sales, she would know that its very common for commission to be cut to 4% on dual agency and reduction shouldn't come to as a surprise.
1 vote Thank Flag Link Sun Sep 19, 2010
it is not unethical or illegal if you are not comfortable cancel your offer go find an agent you can trust and go find another property
1 vote Thank Flag Link Wed Sep 15, 2010
Folks -

Let's get back "on topic". And continue to answer the original question.

Thom
1 vote Thank Flag Link Mon Sep 13, 2010
Unless you signed a separate agreement with this agent you have no obligation to pay the 2% and I am dismayed to read that an agent would hold your transaction hostage to receive additional compensation. Talk to her Broker immediately and if that doesn't work spend the money to get a strongly worded letter from a real estate attorney--trust me, it will do the trick.
1 vote Thank Flag Link Mon Sep 13, 2010
I repeat my answer from below;

1) The Commission issue is NOT "YOUR" issue.
2) In the past 3 months, I have not seen ANY commissions reduced - even on Double Ends and most ESPECIALLY Wells Fargo.
3) The Purchase Contract is between YOU and the SELLER - The Agent + Broker are NOT a party to the contract and therefore CANNOT CANCEL the escrow !
4) Tell your agent / broker that if they continue along this line, you will contact your Attorney and the County District Attorney's Office (they would love this case) as well as the CA-DRE.

Also, contact the local Association of REALTORS and file a complaint.

Best of luck,

Thom Colby
Broker / Owner & Certified HAFA Specialist
Thom Colby Properties
Newport Beach, CA
Moving Lives Forward (TM)
We NEVER DOUBLE-END a Transaction in our Brokerage. There is NO benefit to the Seller or Buyer but only benefits the Agent. Also, NEVER use your RE Agent / Broker as your Lender!
888-391-5245 Direct Cell
THOM@THOMCOLBY.COM
DRE# 01398570
1 vote Thank Flag Link Sat Sep 11, 2010
The one thing I haven't seen in any of the answers (unless I glossed over) was the first thing that came to my mind:

THE AGENT HAS NO POWER TO CANCEL A TRANSACTION on their own. They are not a principal.

The buyer or the seller may ATTEMPT to cancel the transaction but there are consequences for that, per your contract. Check the 'Remedies' portion.

Contact

1. The (agree with the others, creepy/piggy/uneducated/unethical) agent's BROKER to communicate with the seller directly. Make them aware you do not want to cancel the transaction.

2. Escrow - and make them aware that you have NO intention of cancelling the escrow.

3. A CA RE attorney, if need be.

and stop the insanity.

I'm really sorry this has happened to you. These kind of stories are very distressing to brokers who are trying so hard to raise the bar in our industry.
1 vote Thank Flag Link Sat Sep 11, 2010
Read the contract. In a short sale, the bank reserves the right to change the realtors compensation. However, your contract should state somewhere, perhaps in an addendum, that you agree to pay the difference. If there is no WRITTEN agreement, it really is not enforcible.
1 vote Thank Flag Link Sat Sep 11, 2010
Art, we could argue about this forever. Yes, as a seller's agent you have a fiduciary to the seller UNTIL you become a dual agent. If your state doesn't allow dual agency then you do have a ficuciary to your principle. However, I stand by what I said, which is most important: you CANNOT have fiduciaries to two parties at the same time AND the seller's agent NEVER has fiduciaries to the buyer, regardless of agency. And if California states that a "Dual agent has ficuciaries to both parties" then California agency is incorrect. The very nature of a fiduciary relationship doesn't allow you to give fiduciary representation to two different parties in a transaction with competing interests. "Loyalty, confidentiality, obedience, accounting, reasonable skill and care." How can I be obedient to a seller and a buyer if they give me opposite instructions? I.e., the buyer says "get me the lowest price on that house" and the seller say's "get me the highest price on that house." There is no possible way that any single agent can truly say that they can do both of those things at one time. It's impossible. That is why many agents do not understand the nature of dual agency. Dual agency is, at best, a limited form of agency. It cannot be a fiducary relationship btween the buyer and the seller at the same time. It doesn't matter what a specific state's laws says. Philosophically speaking it can't be done.
1 vote Thank Flag Link Sat Sep 11, 2010
James,
Dual agency is a state by state deal - some allow some don't.
In Washington there is fiducuary duty if you are the listing agent and that's to the seller.
The buyer signs off allowing you to represent him as well but you are still bound to the seller!
Check the requirements for California and see what the law says.
That's the best way to handle dual agency - and it works pretty well if the law is followed.
1 vote Thank Flag Link Fri Sep 10, 2010
Plain and simple...what a shame!

Don't worry, the listing agents troubles will be much deeper if she cancels your escrow!

Let her/him cancel, you'll have their license revoked quickly!
1 vote Thank Flag Link Thu Sep 9, 2010
What happens to pigs? (they get slaughtered!)

This agent is being a pig! As you didn't sign any written agreement with the broker to ensure the 6% compensation, the agent is out of bounds for demanding it.

(Actually the agent is likely only getting 4% because she has both ends of the deal as this is the way many lenders work in a short sale)

The brokerage is in BIG trouble if they try to hinder your deal. (it's called something like contractual interference)

I assume you are in a designated agency state, so the agent has a fiduciary obligation to work in your best interest. And threatening to under mind and terminate your transaction is obviously not in your best interest!

Make sure you have a good real estate attorney to get you thru this agent's threats..
1 vote Thank Flag Link Wed Sep 8, 2010
you are not required to pay the agent unless you have an agreement regarding compensation... and the seller on a short sale is only liable to what the bank agrees to pay, this is not a standard sale an standard terms do not apply... you may wish to call the DRE and complain.. and the escrow company is a 3rd party for you and the seller... the principles (and the sellers bank on this one) ... call the DRE... the agent will make hell for you... but they should have raised hell with the sellers bank and gotten their commisisons the standard way... I get 6% all the time representing both sides... the agent is just not knowing how to negoicate and caved early on thinking you would pick up the pieces...so sorry to hear about your issue...
1 vote Thank Flag Link Tue Sep 7, 2010
SO, not cool! Try this:http://www.dre.ca.gov/cons_home.html

Agents (and apparently the broker) like this give all of us a bad name. Please follow through.
1 vote Thank Flag Link Fri Sep 3, 2010
If you signed a buyers agency agreement that specifies commissions paid to the agent then you are bounded by that agreement, if there is no commission specified on the agreement it's just another negotiation between you and the agent on fees. You can still counter and get the 2% back another way, remember the short sale approval specifies you as the buyer. If the agent gets another buyer in replacement, it will take another 30 days at least to underwrite, especially if there are loans involved. You also have to weigh in your love factor for the house your are buying. IS it worth it?. I don't see why a Realtor would threaten you in writing to sell to another unless he/she knows exactly the agreement you both signed. Go and check your Agency agreement, your defense is there.
0 votes Thank Flag Link Thu Oct 21, 2010
When an agent takes on a short sale listing, they know that the commissions may be reduced by the bank. It is not your responsibility to pay your agent because they want more money. 4% is a pretty good commission and most likely, they do not have someone else lined up who will pay this. It's most likely a sorry attempt to extort more money out of you. Contact the Department of Real Estate and report this person right away.
0 votes Thank Flag Link Wed Oct 13, 2010
Hello,

If you belly up to the plate to pay this, you are part of the problem. Stand your ground be part of the solution as we move into a more honest and ethical way of approaching real estate. You have no agreement with this agent, her agreement is with the seller. What goes around comes around. Stand your ground.
0 votes Thank Flag Link Wed Oct 13, 2010
What they wanted to do but did not do was to execute a Buyers Brokerage Agreement. That document would have outlined their compensation from you as a Buyer. In Florida the Statures of Frauds states it must be in Writing to be enforceable. Demanding compensation without a prior agreement from by way of the Buyers Brokerage Agreement is indeed not onthe up and up, but they have nothing to hold you to in writing.
As for their conduct and unethical behavior, there is a Real Estate Commission (FREC) which handles these complaints IF they impede the sale of the property you can report them. Hope this helps
0 votes Thank Flag Link Sun Oct 10, 2010
OMG!!1 I can not believe some of the anwers on here. I guess there is a HUGE diffrence in law from state to state. If there is no written agreement for compensation with the buyer and agent then the buyer can not be forced to pay. The agreement is with the agent and seller, the seller is her only recourse. As a buyer, I would not pay and I would fight her tooth and nail.
0 votes Thank Flag Link Sun Oct 10, 2010
Wow, dual agency in a short sale without designated agents is not a good way to do business in my opinion. If you have nothing in writing promising to pay any shortage in the approved compensation from the short sale lender then you have no legal obligation to pay. In VA the agent can not stop a sale over compensation issues. I would report her to the board of Realtors, DPOR and NAR. If you have a ratified contract on the property and you are in a position to close escrow and the Realtor stops the sale then you may have a law suite against the agent and broker in charge. My advise is to get a Real Estate attorney involved and file a lease pendance on the property.
0 votes Thank Flag Link Sun Oct 10, 2010
Thom:
Good Point!
We all probably need to move on.
0 votes Thank Flag Link Fri Oct 8, 2010
FOLKS

181 answers and the original author has never responded to any of your answers; Here are some of his other questions:

http://www.trulia.com/voices/Foreclosure/Short_Sale_in_Bankr…

http://www.trulia.com/voices/Foreclosure/Short_Sale_and_Chap…
0 votes Thank Flag Link Fri Oct 8, 2010
Actually, the entire question could be reduced to the following.
1. I have a valid purchase transaction, and no written obligation to pay any agent commission.
2. The sales person and the broker are threatening to interfere with my purchase transaction if I don't pay them money I am not obligated to pay.
Help!

Answer:
Turn in the broker and his licensed salesperson in to the Department of Real Estate for breach of fiduciary, and make an ethics complaint to the local Association/Board of Realtors. Send a copy of both complaints to the broker and his salesperson, and let them know that you intend to pursue your rights to close your transaction.

Note that everything else in the question is absolutely irrelevant to the answer... all we need are items 1 & 2 to answer the question. Even if there were an actual breach by the seller in paying the commission due the broker, this STILL would NOT excuse the broker for interfering with you closing your purchase. (In this case, there probably is no breach, anyway, because of the short sale.) Naturally, you should consult with your legal advisors on this or any other any legal matter.
0 votes Thank Flag Link Fri Oct 8, 2010
I am the agent at New Jersey and had certified at SFR 9Short Sale & Foreclosure Resource by NAR)
A: What I understand, the agent can not back to the buyer to request the difference at commission.
B: Get MLS report, you might need agent report instead of client report to verify the commission percentage.
If it is short sale, the listing agent must disclose at listing and mark various commission (But it has been changed last year - not sure time - the regulation changed by Fed)
C: yo umay clian to your state real estate committe about the case (keep any evidence - paper, letter, answer machine message,etc)
D: This is short sale, you stil have legal attorney to serve you the all process. Make her / him involve this case.
Good Luck and Best Wish to Make your Dream Come Through.
0 votes Thank Flag Link Fri Oct 8, 2010
First I AM NOT A Real Estate agent or broker. I am Bob Ferguson, not Deborah. However, I do work for a broker and agent as a business manager and marketer and I get involved with many of their short sale, business issues.
So that said, what the agent is doing in unethical at the very least. In a short sale the seller of the property really has no say in what the commission paid to an agent is. The seller who lists the property doesn’t have any money coming to them at the close of escrow as it is NOT THEIR MONEY. It's the bank’s funds, and any commission paid is paid from the bank’s funds at the close of escrow. So, they have every right to say what they are willing to pay.
Now when an agent is acting in the roll of a dual agent as is the case here, they are the person responsible for negotiating with the bank to obtain the sales price the bank will accept from the buyer and their own commission. It is not unusual for Wells Fargo to only want to pay a 4% commission. They are one of the hardest banks to deal with in short sales as they are trying to maximize their income from the sale and minimize their or their client’s loss.
As to whether you need to pay the additional 2% commission or not, NO, YOU DO NOT! If the contract is in escrow and signed by both you and the seller and the lender has accepted the offer to release their interest in the property, the agent has no legal ground to stand on. If for some reason that agent tries to change anything in a signed contract without your full authority and agreement (done by either an amendment of a new contract), they can and probably lose their license.
And, if what they do negatively affects you (such as you not being able to purchase the house or you losing your escrow funds), you can sue and win. It would not necessarily need to be anything with the contacts or escrow either. That is why all agents and brokers carry insurance.
Did the agent have you sign a dual agency agreement? Is that agent an Accredited Buyers Representative, or an Accredited Sellers Rep? It sounds to me as if the agent is inexperienced and is trying to work more for him or herself and not for either you or the seller.
0 votes Thank Flag Link Fri Oct 8, 2010
Joan

Most of what you're saying is valid. And, there is no justification for the actions of the agent. All I'm saying is the broker has the choice to accept or reject brokering the deal for any reason. If they don't like the compensation they should just reject it. So, if a subagent of the broker does something funky, the broker can during his or her review process say "no way-I'm not doing that".
0 votes Thank Flag Link Fri Oct 8, 2010
Wow, that broker and agent both seem, given the facts you have related, to be "walking on the wild side"! Killing your purchase to get the additional compensation would likely be "license time" at the Department of Real Estate (DRE) and such a failure to properly discharge their broker fiduciary duties to you (i.e. keeping your sale together) would likely subject them to a losing lawsuit from you.

There seems to be little chance that the broker could cause the transaction to be voided if the only "defect" :) in the agreement is less commission than the broker might be able to earn with another buyer, even if they were foolish enough to kill the transaction.

If I were you, I would immediately complain to the DRE.
My attitude is tha if you can't get the broker and the agent to love you, then the next best thing is to have them fear you! Turn the spotlight on them, and maybe we can get rid of some of the bad apples in the industry.
Web Reference: http://www.USRiviera.com
0 votes Thank Flag Link Fri Oct 8, 2010
report that agent to the state commission immediately.
0 votes Thank Flag Link Thu Oct 7, 2010
Call the the BROKER TO REVIEW THE PAPERWORK.IF YOU DID SIGN AN EXCLUSIVE RIGHT TO REPRESENT THEN REVIEW THAT ASPECT TOO...IF both parties cannot resolve the issue then contact the Dept. of Real Estate in the state you reside in and file a complaint pertaining to the issue at hand regarding legality etc.....or call a Real Estate Attorney.
0 votes Thank Flag Link Thu Oct 7, 2010
Regardless of the steps you decide to take, make sure you do your "homework" before you make a move. Good luck in this ever changing market.
0 votes Thank Flag Link Thu Oct 7, 2010
Derek,
The bank paid out 4%, not $500. If the agent has a 50/50 split with the broker, the compensation went from 3% to 2%, not half. The agent knew what she as getting into when she entered the dual agency situation and the liability that may be incurred from willingly entering into a dual agency situation is the broker's issue, certainly not the buyer's.
If, as has been stated numerous times prior, the buyer did not sign an agreement prior to entering this arrangement agreeing to make up any difference between the seller's agreement and the bank's decision, how can the agent justify threatening this ridiculous action against the buyer?
0 votes Thank Flag Link Thu Oct 7, 2010
Another technical point... I am not sure how the earnest money is handled in escrow closing states, but in Illinois typically the listing brokerage holds earnest money and holds back the gross commission amount from the earnest money and pays out the co-op agent. If the earnest money is too low to pay out commissions, the title company cuts a check for the balance. My concern would be that the broker might not release that portion of your down payment to the closing company. Escrow closing might mean that a title company holds your earnest money and it is not controlled by the listing brokerage.

If this is consented and disclosed dual agency, and you had a 2nd buyer agency agreement with a minimum co-op defined, you might be held to that agreement. So if the bank allowed 5% gross commission, and your signed buyer agency had a 3% minimum that would mean the split would not be 50/50 after the bank modified the gross commission. In this scenario, I could see the basis for wanting you to kick in half percent only if signed both a dual agency consent form and had a minimum co-op buyer agency agreement in force at the same time.
0 votes Thank Flag Link Thu Oct 7, 2010
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