Question Details

Kimberly Mar…, Home Buyer in Santa Carita

How can I get out of a buyer broker agreement?

Asked by Kimberly Martin, Santa Carita Tue Aug 19, 2008

I'm currently in a Buyer Broker Agreement and found a seller who will sell me their house personally. She has not listed the house and is trying to sell it on her own. I would save 3% if I didn't use my agent. I already have to add seller's costs and 3% down in my offer. This would save me alot of cash that would be greatly needed in a new family!!!! What do I do?

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18
Here's the thing (or, if not THE thing, "a" thing): a really good buyers agent will not have this scenario. If the relationship is understood, and the value of the agent being involved is accepted by the buyer, it would be unthinkable for this buyer to consider a purchase, FSBO or not, without the input of their advocate- a buyer wouldn't WANT to go it alone.
Evidently, in Kimberly's situtation, the benefit of the agent wasn't demonstrated- which begs the question, "why is she stuck"?
I have difficulty imagining the conversation- a buyer tells their advocate thanks, but no thanks- and the advocate relies on a contract in order to force participation/payment.
Real estate, especially now, boils down to the confidence of the consumer. Frankly, if a buyer approached me with this scenario, I'd release them without issue- while I might be hugely disappointed (particularly if time were spent) it's the nature of the business, and forcing payment would make me feel quite like a leech, insisting on payment for something that through no fault of the buyer, happened to come along.
Going back and trying to establish what could have been done to create a situation in which the buyer were not so quick to eliminate my services makes more sense, but that's just opinion. From a legal standpoint, the buyers agent may well have the ability to pursue payment.
Get a lawyer to review the agreement.
Web Reference: http://optionsrealty.com
3 votes Thank Flag Link Fri Aug 22, 2008
I decided to use my real estate agent. This is the biggest purchase we'll ever make in our life and I want someone helping me. However I would of liked a better real estate agent! I wanted out of the contract and told her nicely our personalities don't click. She didn't allow it and we agreed to disagree. Unfortunately, the contract was for a year (which I wasn't aware of) and I will have to grin and bear it. I'm hoping the our differences as agent/buyer will just make us a stronger team. Thank you everyone for your advice!!! I would never want to cheat anyone out of what was rightfully earned!
2 votes Thank Flag Link Fri Aug 22, 2008
My 7-year-old niece could find you a house, but I doubt that you'd trust her to handle the negotiations on what is likely the largest capital investment of your life. In fact, finding a house is the simplest part of the transaction. I'm sure that the agreement you have with your broker states very clearly what their duties are, and finding the house is only one small part of their duty.

From helping to assess the property's true market value to negotiating inspections, and from assisting in title services and mortgage issues, your agent is more than just a chauffeur and house finder. Real Estate professionals earn their fees by handling aspects of a transaction that (generally) a Buyer and Seller are either unqualified or unable to manage themselves. The 3% that your Broker may earn will be paid back in dividends in the work they do to exclusively represent YOUR interests in the transaction.

When do you plan to make the time to handle the 300-400 activities involved in securing a property, navigating the fine details of the agreement, processing the increasingly long paper trail that defines the deal...and then actually getting it closed?

Someone once said that anyone who is their own attorney has a fool for an attorney. The same might be said for someone acting as their own real estate broker.

Good luck...and do the right thing.
2 votes Thank Flag Link Thu Aug 21, 2008
Good morning Kimberly,


Would you pay a car salesman a commission for showing you a car that you bought from another dealer.? -- I don't think so.

Agents are commissioned sales people - it's not a mystery, they knew this going in ... if they've completed their job correctly, they'll get a check - if not, they won't ... they don't get a check for "kinda" completing their job ...

If the agent would have found you the proper home, we wouldn't be having this discussion -- that's just how it works.

You are the consumer, you did nothing wrong and everything right ... you don't need the guilt package thrown at you - that's not right.

Canceling is easy ... state (also in writing) because of the current conditions, you've found your own home and you're terminating the relationship and get it signed - period.

Keep in mind, agents aren't attorneys -- attorneys are attorneys ...

Whether you have 20 agents or no agents ... "always always" have a quality real estate attorney involved ... they will cover your back before, during and after the sale ... in your area, I would guess a quality real estate attorney would run "around" $1,500ish.

Enjoy your new home.!


PS: I've bought and sold many homes in the past .. if you feel the agent deserves "something" you might consider a $100/$200 gift certificate at a great restaurant or a Mall... no matter, enjoy your new home.




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2 votes Thank Flag Link Thu Aug 21, 2008
You may want to speak to an attorney, Kimberly. You're asking advice on how to break and/or circumvent a binding legal agreement and an attorney will be able to give you the best advice in that arena.
2 votes Thank Flag Link Wed Aug 20, 2008
Hi Kimberly,

Do you think it is morally right to back out of the agreement with the Buyer Broker? If this Buyer Broker has done little for you since you entered this agreement, then you might feel comfortable approaching this person and explaining honestly and directly why you do no want them to represent you in this transaction.

If this Buyer Broker has taken you to see many other homes, and in the process of taking you to homes discussed the market, comps, trends, discussed the visited homes as compared to other properties that were currently or recently on the market, and invested many hours of their time and energy in good faith, it might be awkward to be honest.

What it comes down to is integrity. If the Buyer Broker acted in good faith and worked hard for you, can you sit down with that person, look them in the eye, and say……..”I know you have invested many hours with me, given up time that you could have spent with another buyer who may have written an offer where you would have earned compensation, but I simply want you to simply terminate this agreement.”

In contrast…..if the Buyer Broker did little or nothing, you should sit down and say, “I entered into the agreement believing that what each of us would do is different that what materialized. This is what I expected from you that did not happen…………I have now found a home on my own and do not want you to be my representative. I believe the right thing for you to do is to voluntarily terminate this buyer broker agreement.”

If you deceive that agent by saying, “I’m not going to buy now….and go behind their back and hope they do not find out, chances are, they will, and you will be held liable for the fees and perhaps, their legal costs.”

I support consumers when they want to terminate relationships with agents who are failing to service the client well. I support agents when agents have invested their time, energy, and put out financial expenses in good faith for a customer who seeks to use the agent for free.

It boils down to integrity and what is morally right. I took 2 opposite positions in my explanation. If your situation falls somewhere in between, perhaps you can discuss that openly and honestly with your agent and seek a modification.

Without an agent you forfeit the protection that having an agent would provide. Did the seller suggest that you eliminate your agent? Cindi addressed this and I agree that a transaction started without integrity may carry many hidden issues down the road. The fees saved in buyer broker fees may cost you more in the end. Be careful.

Good luck in finding your way to do the right thing.

Deborah
2 votes Thank Flag Link Wed Aug 20, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
BE CAREFUL!!!!! Have you ever negotiated a real estate contract? Are you familar with all of the disclosures and inspections that are needed or available? Who is writing your contract? Who is writing the sellers contract? Have you pulled comps on the home...looked at recent sales in the neighborhood....to make sure it's priced correctly?

This seller is asking you to back out of an agreement which you entered in to with you Realtor in good faith. She obviously knows you have an agreement? If she's doing this upfront...what will she pull once you get into contract?

Proceed with extreme caution. If nothing else, hiore a real estate attoerney to look over all of the documents and represent your best interest.

I am curious...are you going to be upfront with your agent when backing out of the agreement? Have you been advised not to? It all comes down to integrity. If there is no integrity up front...there will be no integrity within the transaction.
Web Reference: http://www.cindihagley.com
2 votes Thank Flag Link Tue Aug 19, 2008
The Hagley G…, Real Estate Pro in Pleasanton, CA
MVP'08
Contact
Kimberly,

I am so glad to hear your input. And, I am glad to know that you fall in the majority who really have no desire to ever cheat anyone. The cheating group is the minority if real estate, and in other biz, as well. Unfortunately, a the minority can make lasting impressions and cause people to be guarded.

You are entitled to have good representation. Don't hesitate to firmly communicate your needs and expectations. If necessary, take your concerns to the managing broker.

Deborah
1 vote Thank Flag Link Fri Aug 22, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
Ethics and law do not always run parallel. There are times when a consumer, whether it be in a real estate transaction or other business transaction, is held to the legal terms of an agreement, when that same consumer may have been morally and ethically wronged. Likewise, there are times when a legal loophole allows things that shouldn’t be.

I have seen several buyer broker agreements enforced, and I have seen those that were not enforced.

I do not agree w/ Laurie that all consumers will be honorable. Some will and some will not. When I was an agent, I had more than one unsolicited offers to help a consumer “off the books” with their contract so there would be no broker split, and the consumer could simply pay me directly. I spoke with another agent, who I still hold out as one of the most admirable Realtors in our biz, and she told me this had happened to her, too. I have had contractors, innocently, suggest that they will pay me a commission if I refer them to work. When I explained that I am not interested, nor can I do that legally, even if I were interested….I have had contractors suggest that “no one would know.”

As a broker, I have had a buyer call me and tell me that one of my agent’s sellers was trying to contact them directly to work out a deal directly that would avoid the Realtor commission. It was the integrity of a buyer who brought to light that our firm’s seller was doing this. The buyer was not interested in the property, and was surprised that this seller tracked them down via their name and published phone number to solicit them in this manner. I called the seller, as the broker for the company, and asked if his agent and our company were servicing his listing properly, and he said yes. When I told him, with the buyer’s permission, of the news I had heard….he laughed, and said, “Can’t blame me for trying to save a buck.“ He thought it was funny. An prime example of both good and bad behavior. While I would like to look at the world with rose colored glasses and assume that all people willingly do the right thing, the fact is….many will, and some will not.

There are also numerous situations in every walk of business and life where any one of us might initially have one position or opinion, but after thinking things through, or hearing other input, may alter our opinion or position. One might not have intent to wrong anyone, but simply forget to consider all the facts. Upon such evaluation, they may stand on their original position or see things in another light.

I agree w/ Laurie that I might well simply release the agreement. (We have easy exit releases for both listing and buyer broker agreements and we explain that to clients in the beginning.) Nordtroms has a different return policy than Target or Macys. Each broker and agent (within the guidelines of their brokerage) makes their own release policies.

There is no insinuation about Kimberly. I do not know enough details. I stand on my original advice.

Kimberly,

If you believe you should not be held liable for buyer brokerage fees, and you do not want this buyer broker to represent you, review your agreement, have a candid discussion and seek a release. If both parties agree to a release, and you are confident that you understand the terms, you might still choose to have an attorney review the documents to make sure. Even if you get a voluntary release, you will need to clearly understand if that applies from the date of signing forward….or it will release you from this FSBO which was discovered while the agreement was in place. That clarification is necessary, and for that reason, the posters who have advised you to consult an attorney have provided worthwhile advice.

If the broker will not agree to a voluntary release, you can seek legal advice on your options.

Before you make a decision, review the facts of what services were provided, what was not, what you agreed to and if the buyer broker fulfilled, in your mind the terms of the agreement. Asking you to review the facts to determine what is right, ethical, and fair is not an anti-consumer statement. And, finally, do give thought to the value of representation through the transaction before deciding to try to go it alone.

Deborah
1 vote Thank Flag Link Fri Aug 22, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
It is rare that a broker will pursue legal remedy for a buyer who defaults on the buyer's agency agreement. Legal fees would be much more than the realtor commission; not to mention time-consuming. Realtors must work within the law; unlicensed consumers are not held to the same standard. Although I believe everyone should honor their word, the sad truth is that the general public often shafts realtors.

As to purchasing a property sold by owner, only 10% of all real estate transactions without realtor involvement make it through to a successful closing. Beyond finding the right home for you, the realtor makes sure all documents are filled out and processed correctly; all documents conform to your state's laws and guidelines; follows the mortgage lender's processing of documents; makes sure the title company has all documents on time; etc.

It is in your best interests to use the realtor to purchase the home. That is why Consumer Advocacy groups petitioned the government to institute the Buyer's Agency Agreement in the first place; for the buyer's protection.
Yes, realtors are paid to do their job just as you are paid to do your job.
Many years ago, I purchased a property directly from the owner without using a realtor. It was a mistake I will never repeat.
And I hear stories from people at least monthly about houses they bought without representation; they are rarely happy with the "deal" they got. Why? Either they overpaid, didn't get inspections, bought problems that were not disclosed, the paperwork was not legal so their ownership comes into question, documents were not properly filled out, filed, recorded...the list goes on.

Buying a house is not like buying a vacuum cleaner; it is an involved process and you would be well advised to have representation in the purchase. On a $200,000 home, 3% equals $37.92/month. That seems a small price to pay for assuring one of your largest financial investments is handled correctly. I would also be interested in knowing exactly what "seller's costs" consist of and why you should be paying them.
1 vote Thank Flag Link Fri Aug 22, 2008
I didn't call anything gospel and neither did anyone else, but I know what flaming is.

Kimberly you have gotten good advice from everyone. If your agreement says you have to pay them if you find a FSBO, you are going to need an attorney, but if your agreement says you have to pay them if you buy a FSBO, you're just going to end up paying the attorney AND the agent. Use the agent to negotiate your purchase.
1 vote Thank Flag Link Fri Aug 22, 2008
Kimberly,

It's always fascinating ...

If it benefits the agent it's called "gospel" ...

But if it benefits the consumer, it's called FLAMING...

Like I had mentioned, get the attorney and you'll do fine ....


-- by the way, enjoy that new house.!


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1 vote Thank Flag Link Thu Aug 21, 2008
they don't get a check for "kinda" completing their job ...
~~~~~~~~
Au Contraire, mon frere.

They DO get a check for "kinda" completing their job... IF you've signed a legal contract stating that "they do get a check for kinda completing their job". You signed a legal document... go back and read it and see what protections if offers you, should you decide to cancel.

It's not a guilt trip, it's not a punishment... it all depends on what's in that Buyer Broker Agreement. Cancelling may be easy, but the terms for cancellation will be spelled out in the agreement.

Good luck.
1 vote Thank Flag Link Thu Aug 21, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Kimberly,

My first post states you could have liability. I suggested that you approach the broker for a voluntarily release if you felt it was appropriate.

Jonathan advised you to have an attorney review your agreement…..very good advice.

Tman suggests that you have the right to unilaterally cancel the agreement.
~~~~~~~~~~~~~~~
No Deborah, like the devil on Kimberly's left shoulder, Tman gives Kimberly encouragement to break a legal contract she entered into and in the process posts insulting inflammatory remarks about realtors. But since Trulia's guildelines say nothing about FLAMING, the post is not against the TOS.
1 vote Thank Flag Link Thu Aug 21, 2008
Kimberly,

My first post states you could have liability. I suggested that you approach the broker for a voluntarily release if you felt it was appropriate.

Jonathan advised you to have an attorney review your agreement…..very good advice.

Tman suggests that you have the right to unilaterally cancel the agreement.

None of us have read the agreement, so we cannot know or understand the terms that allow one or both parties to terminate the relationship. I have seen a number of buyer broker agreements, but have no idea what yours said. Most that I have seen do have a termination clause, and the agreements that I have seen generally include all properties seen before the date of the termination. Whether yours does or not….??? Whether yours includes properties you have located only with the buyer broker or those properties found without the buyer broker…??? Regardless of how many buyer broker agreements I have seen, I cannot know what yours said.

Deborah
1 vote Thank Flag Link Thu Aug 21, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
Kimberly,

I'm a Consumer Advocate, not a realtor (read my profile) ... I've bought property up and down the east coast for 29 years, so I've seen a few things that most consumers might find unpleasant.

Thats why I try to make sure consumers don't make major real estate mistakes .. because once they do, they are usually irrevocable and massively expensive ... look around you, there is tens of thousands that have.

You're right, this "is" the biggest purchase you will make for some time, maybe for all times ... but being bullied into something is an act you might pay for many many years ...

Spend the extra $150/$300 and speak with a quality real estate attorney (you'll need one anyway to go over the paperwork on this next purchase) ... show him/her the contract and let a professional guide you ...

$300 is cheap insurance compared to a $130,000 mistake -- it's your future.



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0 votes Thank Flag Link Sat Aug 23, 2008
I am sure when you read your contract you understood that, should this situation come up, your broker would represent you in such a deal. And that if you opted not to have them represent you, you would still owe 3%? You should have someone represent you buying FSBO. You have no idea what can happen, and I don't mean that to say you are ignorant. I bought FSBO myself (once, and the last time) and I've been on the outside looking in on many FSBO transactions, and believe me, it will be worth it to have someone else deal with the homeowner instead of you. I would also question the integrity of a person who knows that you are in a contract and has no problem with breaking a contract.
0 votes Thank Flag Link Wed Aug 20, 2008
Unfortanately because you were under contract when you found this home you would be liable. However yiou need to gove your buyer broker some credit and ask them to assist you in this purchase. They should be able to save you more than the 3% cost of their services, however seeing you found the house ask them to cut the fee to 1.5%. either way 1.5-3% is at least what you would spend on an attorney to review the transaction for you anyway. Why woul dyou pay the sellers costs, most buyers ask sellers to pay for the buyers costs, not the other way around. You wouldnt go to a gun fight with a fly swatter so dont go into negotiations on the largest purchase of ones life without someone looking out for you. good luck with your purchase..

Scott Godzyk
Owner/Broker
Godzyk Realty Group

Manchester NH
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Wed Aug 20, 2008
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