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Jonathan Bow…, Real Estate Pro in Dorchester, MA

Real estate agents, what are your opinions on receiving offers from agents who do not contact you prior to...

Asked by Jonathan Bowen, Dorchester, MA Wed Oct 17, 2007

a showing or open house? Do you recognize those offers? What strategies do you employ to help discourage this practice? Personally, this is the script I include in all of my MLS listings:

Agents must accompany open houses, unless arranged, for representation and compensation eligibility.

This helps deter the discount brokers from engaging in their lax practices. Let me know what you think. Thanks, Jon

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Jonathan,

Are you asking about a brokerage that offers rebates to the buyers? Are you talking about the buyer who comes to the open house, or asks you to show them property, only to go to a rebate company as a buyer agent? That is the only discount scenario I can assume you mean on the buy side. I am in NJ and rebates are against the real estate code here, although legislation has been introduced to change that.

I believe in honest pay for honest work and do not ethically or morally support a seller and a seller agent paying a commission to a buyer agent if the buyer agent does not fulfil the work expected. The seller and seller agent discuss commission at the time of a listing contract. The co-op compensation is predicated upon the fact that certain duties and work will be performed. MLS rules were written without consideration of the various forms of new business models. Many of the MLSs will need to update their rules to recognize variations of compensation that are reasonable, ethical, fair and legal given the developments of non-traditional brokerages. A free market society is a great thing, and new business models will bring both positives and negatives. Consumer choice is fine. Taking payment for work not performed is not fine; it’s dishonest. When a buyer agent does not perform their duties, it is a violation of both the seller and the seller agent. Exploitation is wrong.

I will accept a buyer who comes to an open house, from any source, and recognize their buyer agent. This would include any discount broker/rebater. My complaint with discounters or lazy full service agents is only if I am expected to do their work for them. I don’t consider allowing a buyer to tour my open house a fact of me doing their work for the buyer agent, whether they come from a discounter or a full service traditional brokerage. I welcome all buyers to come to my open house. I advise them I am the sellers agent and working on behalf of the seller. I provide them a written disclosure on agency relationships. Then I ask the buyer whatever questions I think are reasonable about their intentions, motives and capabilities. I have already disclosed my role as sellers agent, so I am now free to ask away.

I do not accept that same buyer, post open house, contacting me to open the home for inspectors, appraisers, and follow up visits. Nor do I accept the buyer calling me for information for comps, or answers to questions that should be directed to the buyers agent. Unfortunately, for listing agents in this predicament, they often absorb the buyer agent duties in order to make the sale work for their seller. I consider the pawning off of buyer agent duties on the listing agent as theft by deception. It may not meet the legal definition, but it meets my ethical definition.

We do not have rebates in NJ. I have worked opposite on a transaction of agents who were less than diligent in their efforts and have had to pick up the ball as a result. :( We have all been there. I anticipate, in the near future, that we will see changes in how compensation is defined in MLS. Previously, ‘duties’ have not been defined, as we all assumed we knew what a buyer agent would do. Maybe, we can no longer make that assumption. Maybe we need to now spell out this is what you get paid for doing X.

Yes, I still welcome all to my open house.

Deborah
6 votes Thank Flag Link Wed Oct 17, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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Hi Jonathan,

I agree w/ your view as it applies to having a listing agent set an appt and show a property to buyer for a buyer agent. I agree that the question of procuring cause is raised. Although, procuring cause is far more complicated than one random act. I have far too often heard agents claim one individual act determined procuring cause. But, ethically and morally, I am 100% in agreement that a buyers agent owes it their buyer to show them the property, be there for them, know the inventory, and represent the buyers interest in order to claim the right to be paid. The act of showing a buyer a property for a buyer agent may be one factor in the determination of procuring cause, but may not stand on its own as procuring cause absent any other follow through w/ the buyer.

On the subject of open houses, I don't see the purpose of the open house an act on behalf of the buyer, but rather a promotional activity on behalf of the seller. I am one person, and I might be doing a public open myself, or with other buyer clients. I would not want my buyers to be snagged by the open house host simply because I did not accompany them to an open house. I might have invested months of work with the buyer and I realize the same may be true for buyers of agents who come to an open house that I host. I wouldn't want to tell my buyers, "You can't go to an open house unless you call me ahead of time." And, really, would you want to pass up a possible contract for your seller based on that?

In the spirit of good working relations with other agents and on behalf of the seller, I welcome any buyer to attend an open house, and will respect their relationship w/ their agent. I also remind them that I am the sellers agent and working on behalf of the sellers interest. After providing that disclosure, I will listen intently for any clues that will help my seller in the event the interest is serious and an offer materializes.

Now, if you want me to arrange me schedule to make an appt to show you property, I do that only for my buyer clients and on occasion for a Realtor who has reason why assistance is needed.

Deborah
5 votes Thank Flag Link Wed Oct 17, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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John it seems like you are fighting a fight that is not yours to fight. Your words on MLS guidelines are "I don't think" Well if you plan on telling a judge that if you ever have to go to court. That is not a valid argument. You are an agent that represents a seller that put you in the highest position possible, to sell there house. Not to use a listing as a tool to get at discount agencies or practices that you feel are not in your liking. If you presented in your listing presentation that you will be not accepting all offers and using your personal judgement to play with there lives. Then by all means go ahead.

I know we all face growing business practices that we all think are unethical, but it is not our job to use are clients to fight our battle. There are other ways, and you are behaving just as badly as any agent that doesnt show up. Your clients come first.
4 votes Thank Flag Link Wed Oct 17, 2007
I am 100% fine w/ any buyers coming to my open house without a broker or agent. I do ask them to disclose their agent. I will even call their agent and let them know their buyer was there, if I know the agent and the buyer seemed interested.

When I host an open house, I am there for my sellers benefit. As such, I have not made an appt or taken my time time to meet a buyer and do the work of another agent.

If a buyer called me and wanted me to show them a property I have listed, I would explain that I only work with buyers with an excecuted buyer agency agreement. If they are unwilling to those terms, I am unable to show them the property, however, they are more than welcome to arrange a showing through a buyers agent. (I also disclsose this fact to sellers when I list a property.) As a courtesy to a professional agent who needs assistance, I will show a property if the agent calls and requests and I consider the reason for the request reasonable.

I have a sincere desire to work in my sellers best interest. I follow the guidelines above so I can meet my fiduciary obligations to my seller and preserve good business practices, time management and self respect for myself.
4 votes Thank Flag Link Wed Oct 17, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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If the agent that I am negotiating against has not viewed the property ... advantage, me! I wouldn't want restrict offers from my seller, and I'll eat the uninformed agent for lunch. I loathe working with lazy or intentionally hands-off agents, but the poor representation is the other party's problem, not mine.
3 votes Thank Flag Link Wed Oct 17, 2007
I think we all need to keep the Seller in focus with this question. Ask your Seller? This offer is from a discount broker--do you think we should look at it? They really don't care! We get agents who send their clients up from the "Bay Area" and then call us to get all the details as they don't have access to our MLS. Yes, this really fries me! But I have to keep my client's interests and needs ahead of my own feelings for my slothful brethren!
In the greatest state of California, even though we follow NAR MLS model rules, we cannot start adding these type of instructions in our confidential remarks. Let it go Johnathan! As all the others have stated, how DOES a client find out about a property? If they come to my website and I have IDX am I procuring cause? Buyers love to look at open houses. Heck, your Sellers where probably out looking at houses before you listed their house. Do you owe those other agents a piece of your fee?
The constant discussion of commisson on this site is somewhat disturbing. It would make great fodder for the boys at Justice!! Alternative models all sprang up as the market allowed and wanted them. The market giveth and the market taketh away!! After "Black September" we shall see who will be standing come the spring market!!
2 votes Thank Flag Link Wed Oct 17, 2007
Hypothetically my answer still remains the same. I am not trying to attack you, but i see no reason why anyone would react to enethical practices with another unethical practice.

Good Luck though and i apologize if you took it directed at you.
2 votes Thank Flag Link Wed Oct 17, 2007
Hi Jonathan. I am not sure why I would not recognize an offer just because the agent who wrote it did not make prior contact with me. It is probably a smart thing to talk to the listing agent prior to writing up any offers, but it's not up to me to recognize or not recognize offers. That's my client's job.
I also don't understand why you'd not want buyers without agents at your open house and why would an agent not be eligible for compensation unless he/she accompanied the client to an open house. Aren't you required to pay compensation to anyone who participates in your local MLS? In my area, your MLS script would be a violation of MLS rules as you are attempting to modify the compensation rules that are part of the MLS rules. All offers from participating brokerages are entitled to the commission that's published through the MLS whether or not they were there during the open house. Since you ask about opinions, I have to say I don't think it's a good idea as I don't think it helps market your client's property.
Web Reference: http://www.theMLShub.com
2 votes Thank Flag Link Wed Oct 17, 2007
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
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I think what Jonathan is saying is that he is informing discount brokers than unless an agent arranges to have a customer or client scout out open houses and then have their agent put in an offer beforehand, they will not compensate that agent.
1 vote Thank Flag Link Mon Feb 4, 2008
Speaking of questionable scripts in MLS listings, there is a broker in our town that has all his agents put this line in the agent remarks of every listing they have:

WE WILL ONLY COMPENSATE BUYER BROKERS WHO HAVE A BUYER AGENCY AGREEMENT EXECUTED PRIOR TO THE PROSPECTIVE BUYER VIEWING THE PROPERTY.

This sounds alot like what Jonathan is trying to do, but a little different. Would this stated policy fly in other MLS boards?
1 vote Thank Flag Link Mon Feb 4, 2008
I've sold some of my own listings as a result of open houses and I put similar language in the MLS remarks and on the sign in cards. As for doing whatever is in my clients (the seller's) best interest, my strategy is to cover myself and take it up with the brokers or the board or realtors, there's no need to involve the seller.
1 vote Thank Flag Link Sun Feb 3, 2008
In my opinion as a listing agent I would have to ask, "Is this in the best interests of my client?" The client hired you to sell their property. This includes marketing, showing and negotiation of offers and the proper navigation of the property to close. Instead of looking at it as a negative perhaps you should look at it that you might have superior control of the situation. I wouldn't add your script without the explicit understanding and approval of the seller and what those ramifications could be. I work for a "full service" brokerage and dealing with other agents no matter they're affiliation is my job and the job my clients rely upon.
Web Reference: http://www.Medfordhouse.com
1 vote Thank Flag Link Sat Feb 2, 2008
Hi Jonathan, for an open house its all fair game. But if you show the home to the buyer and the buyer doesn't say anything about an agent, then you should be compensated all the commission. When I get a call from a buyer, one of the questions I ask is, "Are you working with another agent." If he/she says yes, then I say why don't you have your agent call me and stop doing all the work because your agent is going to make the money. If they say no, then I'll go ahead and show it. Good luck.
1 vote Thank Flag Link Thu Oct 18, 2007
First of all, I welcome and review all offers.

But I see where you are coming from. I had a buyer in one of my open houses recently that asked me to gtive him a 1% rebate back since I was double ending the deal. I saId "NO."

He went out, found an agent that was willing to do this, and she called for more info on the home without ever seeing it. I asked her if she was giving the buyer a rebate and she said she was. (Why would you even admit to this?) Good for me and my seller! I knew if an offer actually transpired, I was in the winning seat. (If she would give away her own commission, how hard would she fight for her client?)

After several phone calls telling me the contraact was on the way, it never materialized. Would I have been upset if the deal went through? Ultimately I would have been paid. But I would have been upset that the other agent would have made $$$ for doing very little work.
Web Reference: http://www.cindihagley.com
1 vote Thank Flag Link Wed Oct 17, 2007
Cindi Hagley, Real Estate Pro in Pleasanton, CA
MVP'08
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Hi Jonathan:

I don't think as a listing agent representing the sellers that you get to set the rule on whether a buyer agent can receive commission or not.

Did you sign a listing contract with the seller saying that you would be entitled to the whole commission, or the agent would not be paid a commission if the buyers walked into your open house and the buyers agent were not present? Did the sellers agree with that?

If a buyer’s agent lead a legitimate buyer to your open house, whether it's by emailing the listing to you, or calling them on the phone to let them know about the listing, or even if they have worked with the buyers on and off and the buyers just so happened, walk into your open house all on their own and decided to buy the home that day through their agent whom you have never seen or heard of; as long as it's a successful sale, your sellers are obligated to pay the commission through you to the buyers agent as defined on the MLS. Did you write the offer for the buyers or did the buyers agent do that? Did the buyers agent negotiated on the buyers’ behalf? You have to pay the commission whether you personally like the idea or not.

The only time I rejected an offer is when an agent from Los Angels called me (in Marin) and wanted to make an offer on my new listing. While talking to him, I found out that the agent is a new agent in L.A., does not know anything about Marin; and the best thing is; his clients only saw my web listing and never saw the house. I told him that it’s not wise to make an offer without seeing the house. He insisted that his clients saw the pictures, and wanted to buy the house so he wanted to send an offer over. Knowing that the property is quite unique, I told him to send his clients over to my open house, and if they really wanted to, bring the offer at the same time and give the offer to me after seeing the house. The agent was very upset with me but said he’d do that. Well, his clients came, and the house did not fit their needs. This is different from what you are asking, but just some related but quite ridiculous, irresponsible real estate practice by a discount (yes, he was going to give rebate to his friends/clients) broker who you would not want to give commission to. But if his clients did present an offer and they did the due diligence, I’d slip the commission with him – My sellers would have sold their house and his clients were the ones who wanted to use him, not my choice.

Best,
Sylvia
1 vote Thank Flag Link Wed Oct 17, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
Contact
My attitude is live and let live. I personally think there are some people who get the license just to get a commission like this every now and then. Let them have it, there is so much money in this business that we can afford to share.
1 vote Thank Flag Link Wed Oct 17, 2007
Hello again. I would not want to throw the baby out with the bath. I think there are definitely some lazy agents, but they are not all discount brokers. There are also lots of buyers who prefer driving around without their agents and they go to open houses alone not because the agent was too lazy to come along. In this day and age of everything being on the Internet, we really don't have control over where our buyers go to look for homes. That's why I think you'll have to look at each case individually and don't put an agent into the lazy category quite so swiftly.
Web Reference: http://www.theMLShub.com
1 vote Thank Flag Link Wed Oct 17, 2007
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
Contact
Hi Deborah, good answer. Yes, that is specifically what I am talking aobut. Discount brokers and/or brokers that offer rebates. I think these brokers are leeches, riding on our coattails, etc. I just can't bare to give a commission to an agent that hasn't performed their duties. And these type of brokers are the worst offenders!
Web Reference: http://www.bowenboston.com
1 vote Thank Flag Link Wed Oct 17, 2007
Jon - I am a full service broker (and brokerage.) Perhaps the discounters aren't as bad in Austin (we don't see a ton of discounters on the buyer side,) but I really don't mind if someone's buyers go unaccompanied to an open house. Personally, I wouldn't enjoy asking my buyers to ONLY visit open houses if I were present. Just my opinion...
Web Reference: http://www.ericbramlett.com
1 vote Thank Flag Link Wed Oct 17, 2007
See, I didn't get that from what he said. Rarely do we get someone in NY with a pre executed buyer agency agreement (or any buyer agency agreement, for that matter.) So you might be right, too.
0 votes Thank Flag Link Tue Feb 5, 2008
JR,

Specifically, you are correct about what Jonathan is saying. Generally, he is stating that under certain circumstances, he will not pay a coop. That was my point about the pre-executed agency statement being similar to what Jonathan was stating.
0 votes Thank Flag Link Tue Feb 5, 2008
Good point Dan, wonder how they verify that part. Ask to see your contract? Wonder if they'd show you their listing contract quite so freely.
0 votes Thank Flag Link Mon Feb 4, 2008
It's news to me if an agent doesn't have to be present. I believe here in Wyoming that procuring cause boils down to who showed the property. If they're not there and didn't arrange with you prior, I would say YOU showed the property and would thus be procuring cause.
Doing what's best for the seller is clearly priority #1, but what kind of agent would send a buyer alone to an open house is my question??? I don't think that sort of thing would fly here, but every market and its practices and rules are different.

Brendan Murphy
Broker, CRS, GRI, ePro
Raving Real Estate
Laramie, WY 82070
0 votes Thank Flag Link Sat Feb 2, 2008
Mansur wrote:
Showing a property does not equate to procuring cause.
~~~~~~~~~
What is to stop someone then, from lying saying afterwards that the other agent sent them? If they don'tmention when they come to an open that they are working with another agent, then it is procuring cause.
0 votes Thank Flag Link Sat Nov 10, 2007
Mr Melby, As I said in another thread, in NYS if we double end we don't "represent" both sides, we represent the seller unless we are dual agents when we represent neither. We can always have our manager or another agent handle the other side of the negotiation.
0 votes Thank Flag Link Sat Nov 10, 2007
Jonathan, I actually think that the state and/or MLS should prohibit double-ending deals for individual agents. In short, it would be great if someone else in your brokerage could earn your firm the other half of the commission, but full commission for listing agents should be outlawed. No agent should be allowed to "represent" both "clients." Trying to grab the whole pie causes a lot of deceit, pocketing other agents' offers until the agent's offer is accepted, bad blood, and agents deciding for their clients which offers they decide they will present. Bad news all around.
0 votes Thank Flag Link Sat Nov 10, 2007
Those agents lack professionalism and are not serving the best interest of their clients. Usually they are poorly written and do not have the necessary information to respond to the offer.

More often than not even when they are contacted the offer will not come together.
0 votes Thank Flag Link Wed Oct 17, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
"...you are behaving just as badly as any agent that doesnt show up." Realtyexec, this is all hypothetical at this point because this hasn't happened to me, but it has happened to agents at other local real estate offices. Please do not tell me that I am "behaving just as badly." I am bringing an argument and am trying to gauge sentiment at this point.
Web Reference: http://www.bowenboston.com
0 votes Thank Flag Link Wed Oct 17, 2007
Hi Deborah, what if a buyer walks into your open house and you later see an offer from that buyer through one of the discount brokerages, knowing that the discount brokerage has no intent of ever accompanying that buyer to any open house? Did that discount brokerage procure that buyer although that buyer probably never spoke to that discount brokerage specifically about your open house before entering the property?
Web Reference: http://www.bowenboston.com
0 votes Thank Flag Link Wed Oct 17, 2007
Ute, here's the rule concerning compensation from MLSPIN (my MLS): "Such offers (of compensation) shall be unconditional, except that entitlement to compensation shall be conditioned on the Cooperating Broker’s performance as the procuring cause of the sale or lease."

So, we're back to the old "procuring cause" argument. I don't think an agent who does not contact me prior to sending a buyer to an open house or having that buyer set up their own showings with the listing broker is the procuring cause. I think that agent needs to do a basic amount of work tin order to be compensated. If you're interested in reading this compensation rule from my MLS, here's the link: http://www.mlspin.com/rules_regs/ViewArticle.asp?SectionId=3… Thanks, Jon
Web Reference: http://www.bowenboston.com
0 votes Thank Flag Link Wed Oct 17, 2007
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