Home Buying in East Lyme>Question Details

Merrifield21, Home Buyer in East Lyme, CT

What's a fair price to pay my Realtor if the seller won't pay the Realtor commission and I found the property on my own?

Asked by Merrifield21, East Lyme, CT Wed Aug 17, 2011

I found a house on my own which is for sale by owner. The seller refuses to pay my Realtor's commission since she's under no legal obligation to do so. I too am under no legal obligation to pay my Realtor since I don't have a contract with him. However I feel like I have a moral obligation to pay him for the time he's spent with me up to this point. What's a fair percentage to offer since he didn't find the house? Should I still provide the 2.5 - 3%?

What would be a fair offer if I moved forward with the buying process without his assistance? He's been with us for about a year but has only showed us about 7-8 houses which is mostly due to my pickiness and unwillingness to expand my search to new areas.

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Some true, some not. We are allowed to show a property to a buyer that is not under contract, but can only be our own brokers listing, and a disclosure must be given to the buyer that the agent/brokerage represents the seller.

The contract does not need to be specific to a city or area.

Legally, you don't have to pay him anything, because you were never under contract with him, and he didn't do his job by placing you under contract.

Easy fix to avoid all this, would be to write in the contract for the seller to credit the buyer X dollars for closing costs, and then you use that money to pay commission...... it would be your closing cost...
1 vote Thank Flag Link Thu Aug 18, 2011
You could always ask your realtor if he or she is willing to reduce his or her commission. But - usually your realtor is only getting 2 or 3 percent, minus his or her broker expenses and in the end never making as much as you would think. Also you are probably represented in a transaction agent arrangement. Sounds like your agent has helped you with your needs and has invested time with you as you requested. Stick with the 2.5% and you wont regret it at closing.
0 votes Thank Flag Link Wed Aug 24, 2011
I would advice against buying through FSO without having a realtor involve. There is to many legal issue you have to worry about. Buying a house is one of the largest investment one takes, do you really trust a guy too cheap to have a professional help him when it comes to disclosures. Its a mess I would stay away from. Have your realtor earn the comssion by going out and finding you a better house.
0 votes Thank Flag Link Wed Aug 24, 2011
Merrifield, You wrote "He's been with us for about a year but has only showed us about 7-8 houses." Only is the word I challenge. If your agent was doing his job, they were also doing research about those props before showing, such as how do their asking prices compare to recent sales. Is the info disclosed in listing match info about prop in public records. Showing a home is the easy part. Using the word " only" diminishes the work we as realtors actually do. Due diligence requires hours of work and research. We don't just show homes we counsel based on sound research.

Enough said and I am sure others are saying thank goodness.
Web Reference: http://candylipirahomes.com
0 votes Thank Flag Link Thu Aug 18, 2011
Your contract to show sounds very much like our Buyer's Agency agreement.

In Florida there are 3 forms of agency offered to Buyers. Single Agency, Buyer Agency and Non Representation. The forms are signed for disclosure purposes

The Buyer's Agency Agreement specifies the duration of the agreement, terms of Broker compensation and the duties of both Agent and Buyer.

If the Buyer in this posting has not already presented the seller with a contract to purchase, I would think it would be wise to allow his Agent to represent him. His agent will be much better at negotiating a fair price, favorable terms, necessary contingencies closing cost and his commission if you want it to be paid at closing from seller proceeds. It could be made clear that the offer INCLUDES a commission to be paid to the Realtor from the Seller's proceeds at closing. If the seller protests, the price offered can be reduced and the Buyer will pay the Broker
0 votes Thank Flag Link Thu Aug 18, 2011
Sorry, one other thing. When a buyer Rep agreement is signed, it also must contain specific areas. You can't just state for instance, Fairfield County or State of CT. It needs specific towns or specific addresses.
So again an attorney would need to be consulted if the buyer bought a home that went outside the specific areas written in contract. Merrifield wrote "due to my pickiness and unwillingness to expand my search to new areas."New areas is the key phrase, esp if those new areas weren't covered or written specificaly in the contract.


Candace Lipira, Realtor
Keller Williams Platinum Properties
203-856-8501 cell
203-544-9786 home
candylipira@optonline.net
candylipirahomes.com
CT Licensed Realtor
Web Reference: http://candylipirahomes.com
0 votes Thank Flag Link Thu Aug 18, 2011
Hi, It should be a mutually agreed upon percentage. I would pay him whatever the average is for your area. As for an offer, you will have to analyze and interpret the local sales data and then detrmine what you feel the home is worth. Not knowing anything about the home nobody can properly guide or advise you regarding a purchase offer.

Chris
0 votes Thank Flag Link Thu Aug 18, 2011
Yes contracts are required and a specific time period is required to be filled in. When a contract expires, the original can be extended for whatever period of time is agreed upon. We all have experienced contracts expiring during the contract period for the purchase of a home. It is the responsibility of the buyer agent to make sure the buyer rep contract is extended to at least the date the prop closes. If the contract expires and the agent can prove procurring cause that a specific property was shown to the buyer by them during the active contract time an attorney should be consulted
This is a legal question beyond my scope and depth of knowledge.

We also have forms that when a buyer wishes to view a prop, but doesn't wish to sign a buyer agency, the buyer needs to sign an Unrepresented Persons Disclosure. This isn't a contract, it does tho alert the buyer that the agent showing the prop represents the seller. Meaning the agent does not have a fiduciary obligation to the buyer, but does have one to the seller.

There are 3 types of buyer rep as there are listing contracts. Exclusive Right, Exclusive Agency and Open. You can search the net to see differences.

Any other CT agents have further thoughts to add. If I have mispoken or wrote in error, please let me know.
"Your Beacon to Fairfield County Lifestyles"

Candace Lipira, Realtor
Keller Williams Platinum Properties
203-856-8501 cell
203-544-9786 home
candylipira@optonline.net
candylipirahomes.com
CT Licensed Realtor
Web Reference: http://candylipirahomes.com
0 votes Thank Flag Link Thu Aug 18, 2011
One other fact. If you do decide to compensate "your" Realtor you cannot just write a check to agent personally. It must be written to the company that holds their license. Their company will then base the agents compensation based on their contract with their company. So, after all these answers, I hope you understand CT law a little bit more.

If you wish to have your agent guide you through the purchase process and do what is required according to CT law and ethics, a contract will be required. There is that section "If owner doesn't pay" buyer would be responsible to pay the Broker a certain amount, percentage or flat fee.
.
This was a very poignant or relevant question during this challenging market environment. As Anne wrote, agents beware. Buyer Rep.contracts can be ammended stating if buyer finds a prop on their own, a FSBO, a specific fee for compensation, in writing, would be paid by buyer to their agent.
Web Reference: http://candylipirahomes.com
0 votes Thank Flag Link Thu Aug 18, 2011
Candice

Interesting that a contract to show property is required in CT. Is the contract time specific? Is it possibe that the Realtor had a contract with the buyer that has expired?
0 votes Thank Flag Link Thu Aug 18, 2011
"I found the house myself"

"He's been with us for about a year but has only showed us about 7-8 houses which is mostly due to my pickiness and unwillingness"

"I feel like I have a moral obligation to pay him"

When you first met your real estate professional can I assume to advised him compensation is based on your moral obligation?
0 votes Thank Flag Link Thu Aug 18, 2011
Candice answered your question very well. In CT we are not allowed to show homes without some form of contract. This should be a wake up call to the agent !!
0 votes Thank Flag Link Thu Aug 18, 2011
Did you sign an exclusive buyers agent agreement when you began working with your realtor? If so you should take a look at it and see if there is anything on the agreement that states how much the realtor would be compensated in the event you purchased a home that is not in MLS. sometimes there is a percentage or a fllat fee on the agreement that would answe ryour question. However if you did not sign anything and you really want to buy this house and want your realtor to represent you throughout the sales processup until closing then it would be honorable to include a commission in the contract. The amount you offer can be a flat fee or a percentage of the price, whatever you feel is fair. Just make sure it is noted that you are paying the fee so that there are no issues with the seller.
0 votes Thank Flag Link Thu Aug 18, 2011
There is a lot more to representation than to just find the house. There is the preparation of the forms, coordinating between lenders and lawyers, negotiating the price, arranging for inspections, negotiating any issues or problems found, handling the deposits, etc.

To be honest, you must have realized that this realtor does not work for free and has bills to pay just like anyone else.

Since you asked, 2.5% is fair.
0 votes Thank Flag Link Thu Aug 18, 2011
Well, in CT,agents, by law, aren't allowed to show a prop without a contract. Normally in contracts there is a section that the Realtor will have you acknowledge that will be filled in with a percentage amount or flat rate stating that if the owner doesn't pay, the agent's company could go after you for that amt. If you had a contract, I think, I could be wrong, they would have had to file at least 3 days before closing. A lien, that could prevent sale to close.

Since that isn't the case, it's commendable you are willing to compensate the agent. There is no set amount. The agent from what you describe doesn't have a leg to stand on since they chose to work without a contract. I would recommend you decide an amt you feel is fair. Your attorney could help you with that.
2.5% would be norm with a contract in place. Your call. Only you can judge how much.

Good luck,

Candy Lipira
Web Reference: http://candylipirahomes.com
0 votes Thank Flag Link Wed Aug 17, 2011
If you contacted the Seller on your own, of course he is going to say they will not pay a Realtor. It woulod have been nice if you could have allowed your Realtor to make the contact.

If you have not already presented the seller with a contract, you can ask your Agent to write the offer for you and carry on with his duties to you his buyer and pay him as a Buyer' Agent and allow him continue with the transaction.

If you are already in the process and will no longer need his services, your Realtor will be grateful that you have the ethics and moral character to compensate him. At this point, his job was not fully completed. You might say half done. I would expect your Realtor would be very pleased with 1% to 1.5% and would never expect a full 2.5 % or 3% commission since he could not complete the task.

You could ask you Realtor if he would consider 1.5% fair compensation for his time.

Merrifield21 you are to be commended on you ethics and moral fiber.
Web Reference: http://mov2jacksonville.com
0 votes Thank Flag Link Wed Aug 17, 2011
It's nice of you to be concerned about your Realtor.

You're right... the seller isn't obligated to pay your Realtor's commission. But sometimes they will understand that you have a "need" to be represented, and might be willing to chip-in, if not the entire commission, a portion of it if you explain that you don't feel comfortable going forward without your Realtor.

It's not uncommon for a Realtor to find themselves "uncommissionable" when a buyer finds a FSBO home... so anything, at this point, that you consider reasonable.. would be fair.
0 votes Thank Flag Link Wed Aug 17, 2011
Alan May, Real Estate Pro in 60201
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