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Mandy, Home Buyer in San Francisco, CA

Handling dispute with agent on payback of buyer agent commission

Asked by Mandy, San Francisco, CA Sun Jun 29, 2008

After a year long search,I finally bought a home. Last year , when I started the search, I had agreement with my agent about partial commission payback within 7-10 days of closing. I have an e-mail confirmation of that discussion

We have closed for over a week but haven't heard back from my agent on this in spite multiple reminders via e-mails/phone.

I had used this agent few yrs back to close a deal. And my intentions regarding the commission requirement was one of the foremost discussions that we had when rehiring her. At this point I feel misled and misrepresented and am leading to see this as violation of a real estate agent's duty of the utmost care, integrity, honesty and loyalty to client.

I would like to close this on friendly terms. However will not refrain from any actions needed to expose the agent and the brokerage firm if they do not comply.

What is the best way to approach this and my options?

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Answers

21
If your agent wanted to give you some of the commission he received, he should have done so in the purchase price, or a credit on the HUD, if lender allows. No commission can be paid to anyone except the broker...
1 vote Thank Flag Link Mon Jun 30, 2008
Mandy,
Goiing to the escrow company after the escrow closes isn't going to do you any good. All the money has been distributed and the tilte has been recorded. The brokerage fees are paid to the brokerage and the agent per instructions from the managing broker of each office. Fees are paid to the brokerage and then to the agent. To be very clear the the broker is the only legally authorized entitiy that can be paid a real estate commission. The agent is supervised by the broker/manager.
Make the appointment with the broker/manager and bring all your documentation.
1 vote Thank Flag Link Mon Jun 30, 2008
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
Was your agreement in writing?
I would talk to his/her broker about this first as agents must be under a broker's supervision.
A lesson learned for you here so its not all bad.
everything in writing upfront makes for a better transaction (even if it seems like endless paperwork)and that you would think you could trust long time business associates?

I feel strongly you will get the money after turning up the heat.
maybe your agent is fighting to save a home from foreclosure and is temporarily in a bind.
1 vote Thank Flag Link Mon Jun 30, 2008
Mandy,

One thing to keep in mind that receiving your paycheck after a closing can take a bit of time especially if you are the buyer’s agent. I am personally waiting for a check for a closing that I had on June 13th, it just happens sometimes. The check has to be sent from the escrow or title company to the listing brokerage, the accounting department will need to review the HUD and process the check. The listing brokerage will then send a check to the buyer’s brokerage who will also have the accounting department review the HUD and process the check. Once processed the agents will receive a check that will need to be deposited. Unfortunately, all of this can take a good deal of time.

It would seem that such an arrangement would need to have been written into the buyer's representation contract. The one complicating matter is that you have a part of a discussion recorded via email. I am not sure how the courts would view such evidence and whether or not it would be admissible or not. However your question was how to handle such things.

My recommendation would be to call your agent and request an appointment to meet face to face. At that meeting I would bring a copy of the email and have a simple, calm discussion about what transpired. If she is non-responsive to that I would then request a meeting with her broker and ask him/her to invite your agent. I would once again present my case in a rational, calm manner. If neither party is responsive to your request I would calmly end the meeting and retain legal counsel and should you choose, pursue your legal options via the court system.

You might also have a case for a violation of The Realtors Code of Ethics, but this will do nothing to recoup any finances for you. If found in violation, an agent is disciplined by an ethics panel but no damages are awarded to the complainant. I hope that helps.

Cameron Piper


I am not an attorney so please don't misconstrue this as legal advice. I would
Web Reference: http://www.campiper.com
1 vote Thank Flag Link Sun Jun 29, 2008
Since your agreement was in writing, you can go to small small claims court. In New York you can find small firms that specialize in these like http://www.realplus.com . This is all they do so they are definitely reliable. I am sure that you can find some reputable firms in California as well.
0 votes Thank Flag Link Wed Mar 16, 2016
Do you have these statements in a formal executed buyers rep agreement OR just an email exchange?

If executed agreement terms and conditions you may have action with buyers agent
HOWEVER
If you only have an email exchange you MIGHT NOT have any action against this Realtor

BEST confer with her broker, then no action CONTACT THE STATE

Recommend to forward a certified return receipt to her attention outline exactly what course of action(s) you will take against her .

You can also file a small claims against her if all is true

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Sat Aug 21, 2010
This is a somewhat delicate topic, and one that by now you no doubt resolved to your, and the other party's satisfaction given the fact that the question was asked more than two years ago. However, for posterity's sake, I'll share a few observations of my own.

Agreements for commission rebates and/or discounts, or any other such arrangement can pose problems, not unlike the one you've cited here, but have frequently lead to complaints with the department of real estate, or worse, legal ranglings that leave all involved worse for the wear.

Agents have a hard enough time earning a living on the basis of serve first and get paid later, as the business is geared for. Making arrangements of this sort, depnding on wht was involved in getting the transaction concluded, that same agent may feel justified to get every penny's worth of the commission. However, fair is fair, and if you and s/he made a legitimate arrangement where you and s/he would comply with ALL regulatory rules and requirements, and fully disclosed such arrangements, then you not only should expect that agent to live up to their part of the bargain, but have every right to demand the same from the broker, or to seek the help of the Realtor trade association arbitration committee, the department of real estate (they may not get involved in resolving the dispute, per se, but they will investigate and discipline the errant agent -- assuming they have a license), and lastly, seek legal recourse through the courts,

These issues complicate life, but as I started out, fair is fair and agents who promis as much should deliver "gladly".
0 votes Thank Flag Link Sat Aug 21, 2010
Jed,

I created a new thread for my response to avoid any continued agrivation of our fellow realtors, and since the conversation has turned so off topic at this point.

http://www.trulia.com/voices/Home_Buying/Continuation_of_off…

Cameron Piper
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Wed Jul 2, 2008
Cameron,
Thank you for your thought provoking response. The document you supplied is dated 1994 is there anything newer?
In my years here and working at various levels of our local and state organizations "procuring cause" has come up infrequently. When I was being trained our manager broker would tell us to let it go if we lost a client to another agent.
So to respond I dug around and found the following CAR guidlines dated 1/30/06. Everything in quotes I've cut and pasted.
"The term, “procuring cause” has taken on a life of its own, however, and many lists and memos have been developed to try to predict the outcome of a given dispute. There are a few key concepts that serve as a baseline, however.
Procuring Cause is a factors test that doesn’t necessarily have one triggering event that will give a sure result.
NAR policy prohibits local associations from adopting a rule that “predetermines” outcomes in commission disputes.
While a number of definitions of “procuring cause” exist, NAR defines procuring cause as the uninterrupted series of causal events, which results in the successful transaction"
It goes on to say that the guidlines are created so that managers can train their agents and "avoid the filing of such claims"
" the broker who does not have the commission in-pocket will have to prove that he or she is entitled to it"
The article has a table that lays out factors that lend weight to the "intro broker" and the "closing broker" (CAR's legal team love tables) and two important factors weigh against your argument that the open house broker is the procuring cause for a buyer that attends the open house. Both of the following favor the closing broker
"Intro Broker is the listing broker. As a result of Intro Broker providing agency disclosure, the buyer elects to have separate representation"
Which goes directly to my point of the three steps of agency, the second of which is choice.
"Closing Broker instructed a buyer to go to open houses, or made appointments for the buyer, or was aware that the buyer would be going to open houses, and instructed the buyer to inform open house brokers of the buyer’s relationship with Closing Broker."
Here is a link to the entire table http://www.car.org/index.php?id=MzY1Mw==
If it's member only access let me know and I'll pdf it and e-mail it to you.
Obviously all of this are based on our code of ethics and the NAR MLS rules. But in Mady's case or in the case of the limited service brokerages all they have to say is I told her to go to open houses and you'd have to prove that they didn't. Awfully hard to prove a negative.
0 votes Thank Flag Link Wed Jul 2, 2008
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
Rebecca,

I don't recall weighing in on your laws or customs. Procuring cause, since you don't seem to understand it either, is a national issue. Procuring cause and the arbitration panels that are convened are set up and run on the state level with rules put together at the national level. This is the same reason that person who trained our entire professional standards committee on the matter was from Cincinnati, not Minnesota.

Let me ask you this. If procuring was a local issue found only in Minnesota, why does Realtor magazine (written by the National Associaiton of Realtors, see the link in my previous post) write articles about it? Don't you think that would confuse the agents in the other 49 states and show blantant favoritism to the agents in Minnesota?

I understand very well that we are now off of topic from Mandy's original questions.

Let’s recap; I posted a very pertinent response to Mandy's question (after allowing 5-10 posting from local agents, none of whom touched on procuring cause) regarding an issue that might well apply to her situation. Jed joined in with a good response but there were some inaccuracies in his post. In order not to allow your beloved citizens to be misinformed, I corrected some of those inaccuracies. You then jumped in and not so politely asked me to "BUTT OUT". I would be happy to do so if someone local could explain these concepts to our friend Mandy but absent their input I am happy to fill the void for you. No thanks necessary.

Cameron Piper
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Tue Jul 1, 2008
Cameron,
I can see that you are well-intended but we're talking apples and oranges here and getting away from Mandy's question.

I know Jed personally and he is a licensed real estate broker in the State of California, very involved with SFAR (San Francisco Association of Realtors), extremely knowledgeable and very conscientious.

No offense—but BUTT OUT!! NOTHING (or very little) in Minnesota applies to here. The state of California has its own forms and we in San Francisco have our own. Unless you’re a member of our Boards, you can’t even write offers here.

So please don’t confuse our residents when you don’t know our laws, rules and customs. Much of everything done in SF is done according to custom—very provincial and chauvinistic at times—but that’s the way it is. We are our own little world.

Rebecca—Proud to be a San Franciscan
0 votes Thank Flag Link Tue Jul 1, 2008
Jed,

I want to start by stating that I am not the world's expert on procuring and that my experience with the matter is limited to my service on the MN Professional Standards Committee (the group that oversees commission disputes), the arbitration panels that I have served on, and the commission disputes that I have been involved with personally (as the complainant, not the respondent).

I can't help but agree with you that these types of brokerages will work some of the time. My submission is that they are problematic when viewed under the scrutiny of the concept of procuring cause. As a buyer I don't know that I would be basing a multi thousand dollar decision on the hope and promise of money that may or may not come through. I do however have problems with companies that take these risks and don't disclose them to buyers.

I doubt that the majority of these companies have the liquidity to pay the commission rebates to the buyer regardless of whether the listing broker pays them or not, I would be presently surprised to be wrong on this point though. If they don't get paid right away and the buyer's broker still wins the dispute, it will take months for the commissions to be disbursed. All the while leaving the buyer without a potential important check for some time.

Jed - "if Mandy found the property on her own but chosses to use Aunt Saly to represent her that is her right. Remember the three steps to the creation of an agency relationship - Disclose, Choose and Confirm."
*********************************************

Sorry friend, representation status has nothing to do with procuring cause. This is the first thing you learn when you are training to oversee these types of disputes. All consumers are entitled to representation of their choice, I can’t be certain of all states but in MN. The buyer agrees to pay the broker a certain percentage of the sale price for their services. If and only if the listing agent is offering sufficient compensation is the buyer relieved of this obligation. In other words the buyer owes the broker the commission regardless of whether the listing broker is paying out or not.

Jed – “So what does procuring cause mean? Is it the person that held the property open or the person that got the buyer to write an offer?”
*********************************************

Each arbitration panel is different and I would postulate that the same case presented to two different panels might end up with differing awards. That said, procuring cause is awarded to the person who starts an unbroken chain of events that leads to the consummation of an offer. NAR gives the following guidelines to panel members to help them determine the outcome of a dispute.

http://rodomino.realtor.org/rmotoolkits.nsf/pages/close28?op…
There is more information at Realtor.org for realtors who are members are NAR and have a password. You should read it; it really is useful information to know.

Jed – “The procuring agent for the seller is the agent holding it open and doing the marketing of the property. They procured for the seller. The agent that gets the buyer to write has procured the offer from the buyer.”
*********************************************

I can’t think of an instance where procuring cause would apply to the listing side of the commission, regardless it really is immaterial to this conversation. Your statement about the buyer’s agent having procuring cause simply because they wrote the offer simply isn’t true, sorry. The link above should convince of the fact that it really isn’t that simple.

Moral of the story: The MLS forms a basis of cooperation among all of the competing broker members through the rules. These rules assure every buyers agent that they will be compensated based on the published information if they follow the rules. The broker models in question face serious challenges in light of the correct understanding of procuring cause, and while I have no firsthand experience with it, I would assume that they aren’t disclosing the challenges to their buyer’s. Buyers take a large risk doing all of the work and hoping for money back that their agent may or may not get.

Hopefully these ramblings make some sense to you. Let me know if you have any other questions about procuring cause. I am always happy to help.

Cameron Piper
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Tue Jul 1, 2008
Cameron - "This is one of the many reason's that these "you do the work and I'll give you a portion of the commission back" setups just don't work. At their very core, they violate the cooperative agreement that is the MLS."
~~~~~~~~~~~~~~~~~~~~
They do work and it is a fact of life that they will be in business with us. California allows any arrangement between principals and agents that they agree on. The MLS in San Francisco has definitions and notations for the type of brokerage service that has posted the listing. The CSO is offered clearly on the MLS. We have buyer/broker greements that we use if the agent feels that and can negotiate to receive a fee higher than the co-op.
As far as procuring cause - if Mandy found the property on her own but chosses to use Aunt Saly to represent her that is her right. Remember the three steps to the creation of an agency relationship - Disclose, Choose and Confirm. I just searched through our MLS rules and the term procuring cause isn't in the document anywhere. The term procure shows up whenever an offer is discussed as being procured from the buyer. So what does procuring cause mean? Is it the person that held the property open or the person that got the buyer to write an offer?
The procuring agent for the seller is the agent holding it open and doing the marketing of the property. They procured for the seller. The agent that gets the buyer to write has procured the offer from the buyer.
Since, by law, all commissions are negotiatable every agent has the right to establish what they are worth and then what they charge for their services.
When you talk about a place with no MLS and no cooperation you are talking about the commercial real estate market place right now. Everything you describe is going on all the time.
Mandy needs to talk to the agent and the agent's manager. If what she says is true then they are the ones that have her money.
0 votes Thank Flag Link Tue Jul 1, 2008
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
Mandy,

There might be bigger issues here at work than the agent giving you a piece of the commission back. If you went to the open house and did the research yourself, procurring cause may be an issue for your agent. In other words, since your agent wasn't the person to start the chain of events that lead to a successful purchase agreement, the listing broker may not be paying them anything. I can't be certain, but if there is a commission dispute at hand, it will be a long time before anyone receives any commission from the listing broker. (these things take a while)

Now before we all jump in and say that that isn't fair. The rules of the MLS are well established and nothing is forcing you to be a member, if you disagree with how things work take your bat and ball and go home. If you want to play in the game you need to obey the rules. Failing that you can always convince the leadership to change the rules, but until then, they are what they are.

Speaking of fair, is it fair for the listing agent to do the work of holding an open house, while the buyer's agent sits at home, only for the buyer's agent to swoop in when it is time to get a check?

This is one of the many reason's that these "you do the work and I'll give you a portion of the commission back" setups just don't work. At their very core, they violate the cooperative agreement that is the MLS. And before we all hop in and say that that isn't fair, lets all imagine a market where nobody cooperates with anybody. Do you really think it would be good for consumers to only be shown the listings of the listing broker? If you want to talk about something that will force concolidation in the marketplace, leaving only one or two large companies for consumers to choose from in any one area, that would be it.

Cameron Piper
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Tue Jul 1, 2008
Hey Mandy,

It's fairly unusual for the agent to give you any money directly. Obviously you had an agreement and the agent should keep the agreement but "off the record".

For example, I sold a good friend a condo. I agreed to "rebate" him 20% of my net commission and did so by taking him shopping for things for his new home at Costco. I also paid his moving expenses. (This was a good friend by the way.)

For another client, I paid to have her placed cleaned (over $500) before she moved in and for some new toilets later.

Another client who needed some help and had chosen me over Zip, I paid for a re-inspection fee and credited some money at escrow (totaling around $1000).

There are ways that we as agents can be creative in "giving" you a "rebate" but as Jed mentioned, it is normally done through escrow as a buyer credit. I think that technically we're only allowed to “gift” clients a total of $500 (or can only write off this amount—I’m not sure).

I doubt that any contract you have is enforceable as the subject (involving real estate) has to be in writing to be enforceable (something about contract law and the Statute of Frauds I vaguely recollect from some pre-law classes 30 years ago.—I am not an attorney—so don’t quote me). That being said, from an ethical standpoint, your agent should follow-through on what she committed to—especially as you did most of the work.

I would speak with her directly. As you have used her before, I’m assuming you have a friendly relationship. Maybe she has a valid reason for not “paying” you yet. I would email to her the link to your question as well. Proceed with caution and be polite.

Good luck.

Rebecca

P.S. When sifting through all of your responses, feel free to ignore anyone who is not local. For example, southern California has separate title and escrow companies so their closings are different. Listen to Jed, who is a broker in SF, or someone else who works in The City.
0 votes Thank Flag Link Mon Jun 30, 2008
Go directly to the broker with proof of the agreement you made with your realtor. I am sure he / she will take care of this matter immediatly.
0 votes Thank Flag Link Mon Jun 30, 2008
Do you have a signed agreement for the commission agreement? If you do, just give it to your agents broker. I would imagine they would work it out quickly.
Web Reference: http://GetPrequalified.com
0 votes Thank Flag Link Mon Jun 30, 2008
Mandy, I would definitely speak to the escrow officer (not sure they will do anything because they are a neutral party and only do what both sides tell them to do - this is a dispute between you and your agent). I think you will get the best response from your agent's broker and/or office manager.

Good luck to you!
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Mon Jun 30, 2008
Thanks for the responses. Yes, the agent was involved in reduced capacity. The arrangement was that I will look for houses in MLS and check out open houses on my own and the agent will only have to help with any extra showings, if needed, and making offer and the negotiations needed to get to closing.
In the last one year, I would have seen over 80 homes of which we made only 4 offers, all of these homes I found myself and the agent would have been involved in 4 offers. We always agreed on the price and never gave her a hard time. Yet, we were over bid and/ rejected till the last one.

For example, even for the one that I finally bought, I went to the open house myself and checked the comps and disclosures myself and involved the agent in the offer process only.

If I needed to mention this to the escrow officer, I believe we should be able to do that even now. Its been 10 days since closing. Is that right? Also since the agent was in the closing sign up, I had sent a copy of the agreement to her around closing. My expectation was that she would have given the right amounts to escrow officer. Well.... I trusted her too much :(
0 votes Thank Flag Link Mon Jun 30, 2008
Make the appointment to sit down with the agent and the manager of the office. If you can persuade the manager that the facts and iintention are as you say then it will get dealt with. If the agent agreed to give you a rebate it should have been done through escrow other wise the agent will be paying income tax on the money that you are receiving. It also should have been disclosed to the lender that you were being paid money out of the seller's proceeds and the lenders appraised price of the property. If it was not disclosed to your lender you could be in jepordy of lender fraud.
I am not an attorney and this opinion does not create or imply an agency relationship or legal advice.
0 votes Thank Flag Link Sun Jun 29, 2008
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
Mandy, I'm so sorry to hear of your troubles. I agree that you should speak to the agent face to face, then speak to his/her broker and then take it to the Association of Realtors in your area.

I don't believe she is actually allowed to give you a rebate although there are some companies that advertise they give money back to the buyer.

Did the agent offer you less service for his/her work in order to split the commission with you? In the end did he/she do a good job for you?

The agent splits his/her commission with the broker...

Hope this helps a bit. Good luck
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Sun Jun 29, 2008
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