Question Details

1stime Hb, Home Buyer in Folsom, CA

legal question about buying home

Asked by 1stime Hb, Folsom, CA Sat Aug 11, 2007

I'm a first-time home buyer in california without a real estate agent. I found a home which I liked & spoke to the listing agent & he agreed to be a dual agent. I signed an agreement with the real estate agent regarding this property. My offer for the home was rejected by the seller last month & the deal fell through. A couple of days ago, the seller contacted me directly & told me that he is not with his agent anymore & that he wanted to sell the home directly to me at a reduced price. Are there any legal complexities which will arise if I go ahead with this since the buyer is bypassing the real estate agent who was involved earlier?

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10
Yes, there are potential problems. Most listing agreements specify that the listing broker is entitled to
a commission if a buyer with whom he/she had a relationship ends up buying the property, even after
the listing agreement expires or is cancelled. This is to protect Realtors from exactly what is happening
in your case. The Realtor most likely spent a good deal of time and money marketing this home, and
the seller used the Realtors skills, time and up-front money, and is now trying to avoid fairly compensating
him or her. I personally would not get involved with a seller who would do something so underhanded as
this. Since you have no representation, what other tricks might the seller have up his or her sleeve? Proceed with caution!
4 votes Thank Flag Link Sat Aug 11, 2007
I agree with the previous answers that is is asking for trouble to proceed directly with the sellers.

Have you considered talking with the listing agent that showed you the property and wrote the offer for you? is it possible for all parties to be upfront and negotiate a transaction with the Realtor?

It was just a thought.
Web Reference: http://pamwinterbauer.com
2 votes Thank Flag Link Sat Aug 11, 2007
Pam Winterba…, Real Estate Pro in Danville, VA
MVP'08
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I agree Dave and Sheila, you are looking for trouble if you proceed. Since the agent showed you the home, he would be considered the procurring cause of the sale. On each agreement there is an amount of time after the listing agreement expires or is terminated that gives that agent rights to any interests that may come about due to actions he took when the property was listed. After that time expires you would have less ramifications.

I would strongly caution you from doing business with someone that would so easily cut out his agent. What will he do to you!
Web Reference: http://carriecrowell.com
2 votes Thank Flag Link Sat Aug 11, 2007
The other answers are all valid ones, and I would also advise you to proceed with extreme caution.

I would also suggest you contact the real estate agent and see what might be negotiated. Perhaps he or she would agree to represent only you in the transaction and could be paid out of the transaction.
1 vote Thank Flag Link Sat Aug 11, 2007
Roberta Murp…, Real Estate Pro in Carlsbad, CA
MVP'08
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The seller of that house is proposing that you conspire with him to commit fraud. Conspiracy to commit fraud is a felony. Since prosecution for that crime is highly unlikely, the biggest legal concern is that the seller is legally obligated to pay his agent for having brought you as buyer. If the frraud is discovered before the close of escrow the agent can stop the sale with a liz pendens. If the sale completes and is subsequently discovered the agent can go after the seller and/or you as co-conspirator. A third fact is that the seller is a morally repugnant person who cannot be trusted to honor a contract. You cannot expect him to deal fairly with you if you join him in his deceit. My 4th concern, is the most important: Are you "1sti me HB" a decent and moral person. You asked about the legal complexities, you did not mention you had any concern about whether the indecent proposal was moral or ethical. You should examine your own code of morality. It should be clear to you that even if the seller's proposal were somehow legal, that it is immoral.
1 vote Thank Flag Link Sat Aug 11, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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Wow! What great answers you've received Mr. or Ms. 1st time homebuyer. I am in agreement with the majority that you should seek legal advice and counsel. As many have mentioned, there is little doubt that the seller will likely have a contractual obligation to pay the listing agent a brokerage fee (at least for some specified period of time after the listing expiration date). However, your obligations are less obvious. I am curious to know exactly what type of agreement you as the buyer signed with the seller's listing agent. Was it a customer acknowledgment or an exclusive buyer's agency agreement? If the latter, was it disclosed and explained to you that a dual agency relationship was being formed? Not all states offer dual agency as a form of real estate brokerage (Georgia is one that does; not sure about California). If the parties mutually wish to work out an agreement to purchase, I would highly recommend that you (a) seek legal advice from a licensed real estate attorney; and (b) try to work out a fair and equitable arrangement with the former listing agent with the goal of making it a win-win for all parties involved.
0 votes Thank Flag Link Mon Aug 13, 2007
Vicki Masell…, Real Estate Pro in Duluth, GA
MVP'08
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Yes, most likely there is a "holdover" clause. This states that for a specified period after the end of the listing, the seller will be responsible to compensate the broker.

You will need to read your agreement with the broker as well, because chances are there is a holdover clause there too.

Basically what the seller is doing is trying to go around the broker and not pay him.

Both of you could get caught in a mess, owing compensation to the broker and rightfully so.

There's a reason we have contracts, it's to keep everyone's memory fresh and protect the parties who have sincerely done their job when others disagree.
0 votes Thank Flag Link Mon Aug 13, 2007
If the seller is going behind the back of the agent that represented you when making the offer...why would you trust him/her enough to deal direct with him. Dishonest is dishonet. What woulld he/she potentially withold from you?
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Sun Aug 12, 2007
The Hagley G…, Real Estate Pro in Pleasanton, CA
MVP'08
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My take on this is that the seller was fighting with his agent over reducing his asking price to be competitive. The seller probably refused and the listing expired. Now all this time has passed and he needs to sell his home. He probably doesn't understand that even if he sells to you, he probably still owes the agent commission. As suggested, I would contact the agent. The agreement you signed with the agent is much more user friendly to understand, so read it over. The listing agreement is very complex and I'm sure the seller doesn't realize what he is doing. Good for you 1stime HB for asking us for help!

A loophole is if the seller signed up with a flat rate MLS co-broke agency. The original listing agent is no longer entitle to the listing commission. So, the original agent would be your buyer's agent and entitle to the co-broke commission. The problem you face by pursuing this isn't just the warning of the seller being unethical but anger and irrationality. So, try to think the best of people but it's not a good situation.
Good luck,
Ruth
Web Reference: http://www.oak-park-il.com
0 votes Thank Flag Link Sat Aug 11, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
Contact your attorney. If you have a dual agent....you likely still have an agent. If not you are going to use an attorney to write your contract aren't you??? You both need to review the agreements you signed with the agent. Usually there are time limits involved. I'll guess either you or the seller will owe the agent a commission. Here in Texas we have provisions for "procuring cause" of the sale and also protection periods built into the listing agreements and also on the buyers representation agreements. You certainly should review what your obligations to the agent are based on what you signed. If it is possible you should also ask to review the sellers listing agreement. Even if your agreement with YOUR agent (you said they were a dual agent-that means they are your agent) might not obligate you to pay a commission to them, perhaps the sellers contract does. Why get in what's could be a messy situation trying to cut out the agent who introduced you? I think there is more downside in trying to cut out the agent if they have a valid claim to a commission than trying to save a few bucks to cut them out. I think worse case senario is....you two write a contract. Seller breaks even at projected closing. Seller has no money to pay comission. Past agent finds out about the deal (and there are a million ways for them to find out.) and blocks the sale. Maybe they threaten or actually file a lien against the home for the comission so that the seller can't sell without paying them. The seller can't complete the sale with you as they are breaking even and don't have cash outside of closing to pay the agent. Where does that leave you? Good luck with this one.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Sat Aug 11, 2007
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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