Agent negotiating commission on a 4% house

Asked by JmNYC, New York, NY Wed Feb 25, 2009

I put a verbal offer in on a house. The house was listed with a 4% agent commission. When my agent put in the offer they also asked for a 6% fee. What is the opinion on this? If a house is listed at a less than typical fee (4 vs 6%) should a buyers agent attempt to negotiate this fee?

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48
J R, , New York, NY
Sun Mar 1, 2009
Interestingly, it is precisely because the public has been mislead about buyer agent compensation for years that they will resist paying a buyers agent separately should that become the norm.

~~~~~~~~~~~~~

I think it's because, as you say later in your post, the buyer does not want to pay for anything that they have always gotten for free. This is why I find the "why don't agents work by the hour" questions a little humorous.
2 votes
;, , Riverhead, NY
Sun Mar 1, 2009
Wow- scrolled the whole thing, and saw that Deborah covered it superbly. And I agree- in real estate, if it's not in writing, it doesn't exist.
Web Reference:  http://optionsrealty.com
2 votes
Deborah Madey, Agent, Brick, NJ
Fri Feb 27, 2009
Hi JmNYC and William,

I had to look up the definition of "equivocate" because I wasn't sure what you were trying to say. The first return in the Google search results was: "be deliberately ambiguous or unclear in order to mislead or withhold information."

Ouch! I feel a bit slapped and stunned by your choice of words. If you would have said something I wrote was unclear, I will apologetically accept that as my error and try to clarify. To say that I was "deliberately unclear to mislead" ....yikes, sounds like a character assault. Attack me for poor sentence structure, disagree with my position, but please do not accuse me of intent to mislead. I am hoping you did not mean it like that.

The following numbers quoted are purely for clarification and not reflective any any actual compensation negotiations in this or any market. Please allow me to clarify the phrase you reference, "when the amount is not already included in the listing contract. " If the MLS listing contained a co-op offer of 1.5%, and the buyer and buyer agent had a buyer agency agreement for 2%, the buyer might ask the seller to pay his (the buyers') obligation of .5% to the buyer agent and include that in the offer. The buyer might also ask the seller to pay for points on a loan. The seller could counter to either of those two points, and the discussion about either of these points in the offer is not an interference with the listing contract. A seller might say, that the buyer needs to pay that obligation to the buyer agent directly. That might not be the best choice for trying to bring a contract together, but it certainly within both parties rights to make offers and counteroffers, as long as the actions are legally compliant with RESPA and fully disclose all terms to the lender and all parties.

You asked if this was legal and if I had any legal precedent. No, I don't. I am not qualified to give legal advice, and the following is only my opinion. I don't know how asking the seller to pay a buyer expense breaks the law. I tossed a few hypothetical examples around in my head, and a reflected on a few real ones I have encountered.

I once had a buyer agent present an offer to my seller that asked the seller to assist with down payment funds. Well, it's not realistic that a lender will approve a loan under those terms. The buyer made no attempt to hide or defraud (that would be illegal); the buyer simply asked for something that was not feasible.

A buyer could ask a seller to pay for a radon test, oil tank scan, termite inspection, points, title, or other closing costs. I don't know how any of those requests, or a request for the seller to pay the buyer agent fee is illegal. If I missed something somewhere, I am certainly open to hearing commentary on this.

With foreclosures, I have seen buyers pay to have utilities turned on in order to have inspections. Utility payments are generally not the buyers responsibility before taking possession or title, but it does happen. Terms and payments are negotiable, as long as they are fully disclosed, and do not violate the lenders' guidelines or RESPA.

Marc and William make a valid point about the appraisal. I do believe that we will see, over time, a division of the buyer and seller fees. I don't think it will happen overnight; it will transition. And, yes, how appraisals are handled will be a factor.

I hope this clarified any confusion. And, I can't emphasize strongly enough that I never have an intent to mislead.

Best,
Deborah

PS. You can call me Deborah. I mean, you can call me Ms. Madey, too....but no one ever does.
2 votes
Deborah Madey, Agent, Brick, NJ
Thu Feb 26, 2009
I am going to disagree with many statements made on this thread, and conditionally join in a stoning. Maybe.

Absolutely, in absence of any buyer agency agreement between JmNYC and the buyer agent (BA) which defines the buyer agent (BA) compensation, the buyer agent (BA) had no right to arbitrarily determine a commission figure in the offer presented. Such would be a gross violation of the buyer agent (BA) fiduciary responsibility to the client. No formalized written agreement is required in NJ to establish an agency relationship between a buyer agent (BA) and buyer.

FACT: JmNYC did not say that there was or was not a buyer agency agreement. JmNYC did not say whether this commission structure was ever discussed before this offer was constructed. ASSUMPTION: The BA did this on his own without the knowledge or agreement of the client. If so, I share in the outrage discussed earlier on this thread.

NOTE TO JmNYC: If you had no knowledge or agreement beforehand, please do follow up and report this to the broker. If you did have knowledge and agree to this, you omitted relevant information.

FACT: All commissions and compensations are negotiable. Discussion that suggests that a BA has no right to negotiate a compensation, or they must accept compensation as pre-determined by other parties and published in an MLS is a restraint of trade and a violation of federal law. It may, at this time, be a common practice for many BA’s to accept the compensation offered in MLS as complete payment. However, instructing the public that they must accept this is simply incorrect. Who requires that a buyer agent work for exactly and only what is offered in an MLS listing? NJAR? A local association? MLS? NJREC? Federal Trade Commission? The DOJ’s lawsuit was fueled with quotes from agents who tightly adhered to their way of doing things. A buyer agent has the legal and business right to determine the fee structure and compensation under which he/she will work, as long as the individual agent’s policy is not in conflict with the broker’s policy. An MLS may not enforce any regulation of the amount or structure of compensation. While most of the concentration of DOJ lawsuit focused on the fixing fees charged to sellers in order to be in the MLS, the same laws apply to the buyer side.

Go back 10 years, and MLSs stonewalled any discount broker from attempting to flat fee list a property and charge a pre-payment fee. Agents told the public that was not how it was done. Agents told the public that sellers did not have to pre-pay and that they only paid a standard commission of “x%” and it wasn’t paid until closing. How wrong was that? What rule mandates that a BA must be paid a commission at closing? A BA can be paid a flat fee at closing, an hourly consulting fee, a prepaid retainer that is credited to a commission at closing, or be entirely contingent upon a commission at closing. While some of these models may not be prevalent today, the statement that they cannot exist is incorrect. Rebates for buyers are most likely just around the corner in NJ.
A BA can negotiate a Buyer Agency Agreement with a buyer and that agreement can include compensation amount and structure. A BA can present an offer for a buyer which includes a provision for the seller to pay fees on behalf of a buyer. These fees might include points, closing costs, and, yes, BA fees….as per the buyer. No BA may arbitrarily add or delete terms or conditions to a contract for a buyer without the buyer approval.

A buyer agent may not present a contract that alters the commission agreement and terms between the listing broker and the seller. Example: The BA may not suggest that an existing contract at “X%” that is split between seller and buyer broker sides at 60/40 be altered to 50/50.

For those who believe that you must accept BAC as stated….What will you say when 20% of the properties in MLS offer $1 compensation to the BA? Don’t think that it cannot happen. Remember that 5 years ago the compensation structure for all listings was almost uniform. It’s not today, and it is continually changing.

To the agents who think that a BA who negotiates his/her fee up front, and who honestly and diligently represents his/her buyer client passionately carries out his/her fiduciary is wrong because they negotiate a minimum fee, I vehemently disagree. Those are our leaders who have the foresight to see the coming and continual changes in our industry. Those are the ones who have the conviction to say they, as Buyer Agents, are worth something. All of us will be the future beneficiaries of those who pave the path to a better tomorrow for consumers, agents and industry. Our future may likely hold buyers and sellers negotiating individual and separate representation and compensation agreements.
2 votes
Jeanne Feeni…, Agent, Basking Ridge, NJ
Thu Feb 26, 2009
Ah John my friend, yes, I'm ready to join the posse and deliver a proper stoning! ;-) The sad part it that disappointing behavior by one agent, tarnishes the image of us all.

JM, I'd suggest you give John a call - he is close by and has demonstrated here on Trulia that he knows his stuff.

Best,
Jeannie Feenick
Search and connect at http://www.feenick.com
Web Reference:  http://www.feenick.com
2 votes
Jeanne Feeni…, Agent, Basking Ridge, NJ
Wed Feb 25, 2009
Agree with Marc's "poison pill" analogy. It sounds to me as though the agent has undermined rather than helped your cause....not good. New representation sounds reasonable to me - I'd suggest you share your experience with your agent's broker/manager.

I'm sorry you had this disappointing experience. Good luck getting that house!

Best,
Jeannie Feenick
Search and connect at http://www.feenick.com
Web Reference:  http://www.feenick.com
2 votes
Marc Paolella, Agent, Succasunna, NJ
Wed Feb 25, 2009
JmNYC,

The other alternative is to go it alone. However, your offer has got to be less than it was 6 months ago. The market has dropped off a cliff since September when the market deflated like an Open House balloon at 4:01PM.

So, you are going to have to present the seller with a market analysis that will be convincing to support the lower offer. If you are confident in doing this without an agent, then go ahead. But i would think you would be better off with proper representation, and not like that which you received in the prior instance. By the way, the increase in commission should have been cleared with you BEFORE presentation.

-Marc

Marc Paolella
Relocation Director
Member, Worldwide ERC
Licensed Realtor NJ
Licensed Appraiser NJ & NY
Century 21 Joe Tekula Realtors
Agent of the Year 2008
Owner: Sands Appraisal Service, Inc.
Phone (direct): (973) 584-4235
web: http://www.marcpaolella.com
2 votes
Marc Paolella, Agent, Succasunna, NJ
Wed Feb 25, 2009
Hi JmNYC,

OK. We know enough. Not only is your agent being greedy, but he is jeopardizing your negotiation by throwing in a "poison pill". This can only antagonize the seller and will prejudice your offer. I would instruct the agent, actually I would fire the agent, but I would instruct the agent to remove the excess commission and resubmit the offer.

To pull this kind of crap in an already difficult market makes me want to......... nevermind.

-Marc
Marc Paolella
Relocation Director
Member, Worldwide ERC
Licensed Realtor NJ
Licensed Appraiser NJ & NY
Century 21 Joe Tekula Realtors
Agent of the Year 2008
Owner: Sands Appraisal Service, Inc.
Phone (direct): (973) 584-4235
web: http://www.marcpaolella.com
2 votes
Alan May, Agent, Evanston, IL
Tue Apr 21, 2009
The co-op commission listed in the MLS is an "offer", not a contract. And while it does represent a "contract" between the seller and his listing agency, the seller can agree to modify it.

the buyer's agent is allowed, by our code of ethics, to attempt to negotiate a different co-op commission at any time (prior to or after showing, surprisingly)... BUT, it cannot be a part of the contract, nor can it hold the potential contract hostage.

In other words, you cannot say to the listing agent "I have a contract for you, but I'll only send it if we amend the co-op fee by adding 1%". Nor could you say "Here is a contract, but it's contingent on a 4% co-op fee".

The co-op must be negotiated separately, according to the COE.
1 vote
Voices Member, , Benton County, OR
Sun Mar 1, 2009
I'm trying to think of a Topic that would inspire passionate opinions from the RE Pros. Any ideas?

Had a small fender bender so I have to go precedent out.
1 vote
Deborah Madey, Agent, Brick, NJ
Sun Mar 1, 2009
Bill,

If the combination of guidelines, rules, and laws state that buyer agents (BA) are supposed to show all properties, regardless of compensation, and buyer agents (BA) should never negotiate the Buyer Agent Compensation (BAC) with the buyer; why should ANY seller ever authorize the seller agent to coop and pay more than $100 BAC? What's wrong with $1? Do I hear a quarter?

Time and time again, I have seen agents on this Q&A board and others advise the seller to make sure and pay a competitive buyer agent compensation. Why?

Am I the only one who sees a disconnect between the following frequently reiterated pieces of advice?

1) Buyer agents will show all properties, and not ever ask their buyers to pay, because buyer agents work for whatever the seller and seller agent predetermine.

AND

2) Sellers - make sure you offer a competitive buyer agent compensation.

If BAs really do not discriminate against low paying BAC's, why SHOULD a seller pay anything more than a token payment. For what reason does a seller need to offer a competitive BAC?

Some sellers seek to save expenses by hiring a “discount broker” who discounts the “listing side” of the fee to a minimal flat fee paid up front. Perhaps a better route to savings would be to pay more on the “listing side” to ensure broad based aggressive marketing so the property being offered was extended to a larger pool of potential buyers and all buyer agents. Instead of the seller looking to cut expenses on the listing side, wouldn’t it be more productive for the seller to cut the BAC and focus on hiring a good marketer? The BA is not going to negotiate a higher fee with their buyer.....because it's unethical (per some reports here.) The BA is supposed to accept whatever is decided in the listing contract (per reports here.) The BA is not going to "not show" because the BA has a fiduciary to the buyer. If a seller is going to pay “X” total between seller agent and buyer agent, why would the seller not allocate those payments where he was going to get more?

The above is cited more to illustrate the inconsistencies and flaws in advice, than it is made as a sincere suggestion that sellers pursue this route.

Where do I stand? I stand for consumer choice. I have seen plenty of poorly managed listing campaigns where a consumer paid a mighty hefty fee. Now, that's unethical! Premium fees for listings with no MLS pics, no listing sheets at the property, no brochure to be had anywhere, poorly written descriptions on MLS, no internet presence, desk agents unfamiliar with the property, and a big fat commission charge. Unethical! I have also seen a lot of agents work their tails to the bone for no money. Sometimes it just happens. I have also seen agents be "used" by consumers, providing advice and services for free when the consumer knew they were being deceitful for self-serving gain. Now, that's unethical!

If JmNYC’s did not agree to pay his buyer agent a set fee, and JmNYC did not authorize the request for the seller to pay this to be included in the offer, it was not only unethical, it was violation of fiduciary.

A buyer agent and buyer mutually agreeing upon their agency representation and compensation…perfectly ethical. Interfering with that, unethical.

I support honest pay for honest work, acceptance of various role models, the reality that the way things were formerly done may need to be changed, full disclosure, consumer choice, competition and respect.

Deb
1 vote
;, , Riverhead, NY
Sun Mar 1, 2009
JmNYC, what was the fee that you and your buyers agent discussed and agreed to (in writing) before this offer was presented?
If it was $1000., and your buyers agent is attempting to secure $2000., they are not operating with your best interest ahead of all else (as required).
If, on the other hand, you agreed to $2000., but the seller was offering $1000, it would seem to be in your best interest to request the difference of the seller, saving you the out-of-pocket. As long as your offer is not predicated on this increase (and that would need to be made clear to the seller), your buyers agent is operating with your best interests in mind (and required fiduciary in NY).
Bottom line: you shouldn't even have this question; your agent should inform you immediately as to the mechanics of doing your transaction this way, because in the end it's your choice (and purchase).
Web Reference:  http://optionsrealty.com
1 vote
William Leigh…, , New Jersey
Sat Feb 28, 2009
JmNYc: Sorry but I'm really trying to conclude peripheral items to the original question. I would rather have this conversation be just between Ms. Madley and myself but I did want anyone who was following the thread to know that I was not accusing Ms. Madley of duplicity but do have some real concern about an issue that, in my opinion, deserves more clarity.

Aside to Ms. Madley: No I did not mean, by using "equivocate" to mean, "be deliberately ambiguous or unclear in order to mislead or withhold information." But rather the number 2 definition in the Webster's Third New International Dictionary, (Unabridged) "to avoid committing oneself in what one says: Speak evasively." In point of fact, even that is a bit too far for what I meant. What I was trying to say was that, by the structure of your sentence, you seemed to be avoiding committing yourself with an exact statement. The duplicity part did not enter my mind. I sort of read into the "equal" part of the word, the stating of both sides of a decision or argument without stating what the best answer or, at least the answer you favored, should be. Does that sound like most of the advice we get in life, far beyond the discussion at hand? We never seem to get a firm statement that "A" is better than "B" because...

Anyway, you have nicely filled in the gap that appeared to exist. You have no legal president to cite, such as a court's decision. I know another broker (beside myself) with long experience, who has discouraged this business of asking for more commission by the buyer's agent. I still believe that he is at least half right. How can an agent put his client up to asking for more for that very agent and still be upholding his fiduciary duty to put his client's interest above his own? Obviously, asking for more concessions of ANY sort weaken an offer. Can an agent encourage his client to weaken his offer to the further benefit of his agent?

Ms. Madley, I'm not asking you to answer that question but just posit it as food for thought.

Again to JmNYC: There has been more than one Realtor join in this discussion only for the purpose of helping you and any other reader to understand the intricacies of how our contracts are written and how our contracts are meant to work. If you have personally received less that what has been advanced as good business practice, I, for one, apologize for our industry (although no one has appointed me spokesman) and point out to you the fact that most agents are not only honest and hard working but also scrupulous in ferreting out the fine points, in order to make our service the best it can be.

Once again, best wishes in you attempt to get the property that you feel is best for you.
1 vote
William Leigh…, , New Jersey
Fri Feb 27, 2009
JmNYC: Wow! You've got a full length "how to" book going. You've had one recommendation to consult Jon Sacktig and I'll second that. He' a good agent and he should be able to guide you in the best course to achieve your goals.

An aside to Mr. Paolella: One of the real dynamics that agues against buyer agency and a commision paid by the buyer, especially for the first time or marginally capitalized buyer, is that they are struggling to get up the down payment and move-in expenses. The seller often has the flow of cash in his favor to begin with and a profit to pay it out of to end up with. Finally, the seller's price is negotiable and, as you say, at least to some extent, he can build the buyer's agent commission into the deal. That is only PARTIALLY true, because you can't get a deal for more than total appraised value (unfortunately, an unknown amount until the mortgage company's appraiser weighs in, ex-post facto to the selling agreement.) So the seller may not be able to just charge off a buyer's agent commission and still acheive the over-all proceeds that he wants to get for the house. Just sayin".

To Ms. Madley: You still equivocate somewhat in the line, "when the amount is not already included in the listing contract. " Since just about all listing contracts do contain such a line, are you therefore saying that in almost every case, it is not correct to add an additional commission amount to an offer? I'd like to see some legal precedent for this and you seem to be good at coming up with them.
1 vote
Deborah Madey, Agent, Brick, NJ
Thu Feb 26, 2009
Hi JmNYC and William,

William is correct in stating that no one, not a buyer and not a buyer agent, has the right to alter an existing contract that exists between a seller and the listing broker. My post even addresses this, and states that a buyer agent may not suggest any change to that, nor interfere with that contract.

When an offer presented to a seller on behalf of a buyer includes an ask for the seller to help pay the buyer agent fee, the buyer is not asking the seller to modify his listing agreement. The buyer is asking the seller to help the buyer with acquisition fees. Similarly, a buyer may ask a seller to pay points on a mortgage on behalf of a buyer to bring down an interest rate, or to pay for title insurance on behalf of the buyer. A seller can counteroffer to all points of a contract, price, closing date, deposits, concessions, etc.

Whether the buyer pays the buyer agent cash, or it comes from the seller proceeds as a concession, it is a buyer agent fee, not part of the listing contract, when the amount is not already included in the listing contract.

There are many who support the separation of buyer and seller agent fees. There are many who support the separation of compensation from the MLS. I am still gathering more information to determine my position on these matters. I see benefits and drawbacks and need a deeper study before establishing my stance.

I fully respect the existing contract between listing broker and seller, and make no suggestion that any third party attempt to interfere with that agreement. I have read suggestions from buyers that the seller should reduce the fee paid to the listing agent and pass on the difference to a buyer. No. The contract for the listing is between the seller and the listing broker. Third parties have no standing to re-negotiate the terms.

Best,
Deborah Madey - Broker
Peninsula Realty Group
732 530-6350
1 vote
Deborah Madey, Agent, Brick, NJ
Thu Feb 26, 2009
JmNYC,

My prior post addressed general issues previously discussed on the thread. Thank you for allowing me to borrow your thread for general discussion. Now, please allow me to specifically respond to your situation.

As a broker-owner for several years in multiple states, I stand firm on a policy that we deliver all offers I writing. The absence of a written document makes it difficult to know what was represented to the seller through their listing agent. Even if the BA (buyer agent) did something that hurt you, it becomes difficult to prove.

Most listing agents are quite skeptical about verbal offers. Once in a while, as a listing agent, I do get verbal offers via the phone, when they are very low. The reluctance of the buyer agent (BA) to formalize the offer in writing is an immediate signal that the BA believes the offer has little chance of acceptance. Even it that is not the case, it’s the position that is implanted. In many cases, a verbal only offer will put the buyer at a disadvantage. Without knowing the details of your circumstance, I will not attest to that as fact. I once had a buyer deliver an all cash offer verbally, and it was real, and it closed. But, I was skeptical…until I spoke w/ his accountant and attorney. What if I would have dismissed that buyer? The fact is, a seller or listing agent might not take verbal offers seriously.

Our office is very near the Colts Neck/Tinton Falls border. I am loosely part of the horsey set, meaning I ride and stable horses. Although, I have been “horseless” for a few months now, I have spent many years engulfed in everything Colts Neck. I know this market, the streets, and many of the agents here.

There is a part of me that believers in preserving some “old school” real estate practices when it comes to the role of the BA. Today, few BA’s present offers in person. I ask for the opportunity to present in person, when feasible. Many times a seller will decline. Some listing agents encourage their sellers to meet with the BA; others discourage it. This can help bring about a meeting of the minds. The listing agent is always present. The BA is often better able to grasp issues that divide the buyer and seller in this meeting, and potentially bring about a meeting of the minds.

My discussion in the prior post describes the fact that BA’s can negotiate a representation and compensation agreement directly with a buyer. We do execute Buyer Agency Agreements with many of our buyers, but it is not necessary to do so in order to work with us. It is rare that a buyer pay us, directly, or through the seller proceeds as a concession. since we are generally paid in full through co-op offered via MLS, or negotiated agreements directly with the seller when there is no listing agent (FSBOs.) I would be happy to discuss this with you privately, but choose to limit fee discussions in a public atmosphere.

Earlier today, I wrote a post on Trulia in response to an inquiry about a relo from NY to Howell. Some of that info is relevant to Colts Neck. Here’s the link:
http://www.trulia.com/voices/Home_Buying/I_am_interested_in_…

Here is my advice for you:

Choose an agent who is committed to fully representing you as a buyer. Directly ask why that agent is a good choice as your representative and how they will represent you. Are they good negotiators? Can they provide you meaningful answers and advice? Do they know what they are doing? Understand dual agency and what will happen if you identify a property of interest that is listed by your BA’s firm. Choose an agent who can help you with a relocation from NY to the area of NJ that interests you. Have your offer prepared in writing. Choose an agent who will present offers in person, if possible.

Buyer agency agreements offer much good for buyers. Make sure that yours is easily cancelable if you enter one if the agent fails to perform. Buyer agency agreements can be a very good thing for you. And, no entering a buyer agency agreement does not mean that you have to pay anything. Have your prospective BA review with you how he/she will be compensated and what, if any, your financial responsibility is to the BA.

If you remain interested in the same property, and it is still available, the agent who previously represented you may, or may not have a claim to compensation, even if you secure a new agent. You have the right to return to the BA who delivered the verbal and continue to work with that agent. If you choose to have a different BA represent you in pursuit of this same property, fully disclose all this information so it can be handled smoothly. You have the right to choose your BA.

Regards,
Deborah Madey - Broker
Peninsula Realty Group
732 530-6350 Direct
732 530-7755 Front Desk
1 vote
Harrison K.…, Agent, Irvine, CA
Thu Feb 26, 2009
JmNYC ... Interesting question about whether your agent (you are the buyer) should be able to or has the right try and negotiate his fee upward from what was offered in the listing.

Do you have a written and signed buyer broker's agreement with your agent? If so, and if that agreement states the agent is entitled to six percent fee, it is possible that you as buyer would be responsible to pay your agent the difference between what the listing states and his written broker agreement with you.

If you did not have a signed buyer broker agreement with your agent, that agent has the responsibility to present your offer for purchase in the best possible way ... without asking for an increase in the fee to be a contingency of the offer and purchase.

Please be careful with this and contact your local association of Realtors and ask for reference to a committee there that handles such questions. Best wishes on your purchase transaction.

Harrison K. Long, Explore Group Properties, Coldwell Banker Previews, Irvine, CA.

For a good California property search please check out
1 vote
William Leigh…, , New Jersey
Thu Feb 26, 2009
JmNYC: I'm not fully conversant with the exact "why" and I am not an attorney but I understand this much: Your agent was WAY, WAY out of line. Some of the reason is legal, in terms of contracts and interfering with an existing contracts and a lawyer might have a better answer than I on that point.

Let's start with the agent's action of negotiating ANY commission with the seller. This is TERRIBLE. The agent was supposed to represent YOU not himself! If he declared that he was not your agent but a mere bystander, may it would be ok but then there is the problem of practicing without a license.

If there is a contract between the seller and a seller's agent, (still unclear at this point) it should contain the terms under which the seller will allow any commission that he pays to be shared. That is ALL the seller's agent can spit! If there is no seller's agent, then any advertised commission is up for negotiation by the buyer, NOT the buyer's agent on his own. The agent has NO business negotiating anything about the deal except with your instruction. You may, of course, be liable for any commission that you agree your agent deserves and, if you are not dealing with a contract in place already, I presume you can negotiate a higher commission for your agent, if that is what you want to do.

Now, the other thing that we should discuss is the continuity of agency. In most cases, real estate contracts have a termination date and a clause that states that after that date, a commission will be earned if a deal that started before the expiration is concluded afterward. This keeps buyers and sellers from waiting for the agency contract to expire and avoid commissions that have truly been earned. The post expiration time is rarely more than six months. Do you have a contract with your agent and does it contain these things?

If the answer is yes, be careful to observe the contract. If it doesn't or if you feel that the contract was voided by the agent for any reason, you can look at the continuity of the agent's actions. If the agent didn't contact you and didn't keep in contact with the seller, the agent may have lost any reason to claim a commission. The agent just wasn't working on the job. Sort of the same thing as your showing up on a job after being absent without explanation for six months. You wouldn't have the job any more.

Finally, you can always formally dismiss an agent, especially for cause. (Negotiating terms that you had not authorized or failing to contact you in a reasonable amount of time, for example.)

Anyway, if you are still interested in the house, (and I went through the same thing personally many years ago and, guess what, I got the house months later and kept it for over 25 years!) then you can negotiate with the seller's agent on your own or, if he doesn't have one, with the seller yourself. You can also hire another agent, one who follows your instructions and operates by the book (There are many of us who do) but you may end up paying your agent's fee yourself.

At this point I'd really strongly recommend getting a real estate lawyer involved. You should get professional advice on past contract status to begin with and will need to have the future contract (if any) reviewed, especially if you are not very adept in this kind of transaction. Finally, if anything gets sticky later, you will already have counsel who knows the outlines of any problem that may arise. A good stiff letter from an attorney turns away almost as much wrath as a soft answer.

Good Luck.
1 vote
Heather Dacc…, , Monmouth County, NJ
Thu Feb 26, 2009
Hi,
Yes, your agent was completely wrong! You should definetely find another agent who will represent you appropriately and look out for your best interest.

Right now your buyers agent is being unethical and only representing themselves and their pocket.

Your best chance at this house is to terminate your relationship with the buyers agent, withdraw your offer with that agent, find a new agent who will represent your best interest and re-write the offer. You should not "go it alone" because you need someone on your side to remedy this and work out the details of the transaction.

Let me know if I can be of further assistance.

Thanks,
Heather Daccurso
Weichert Realtors
626 Route 9 South
Freehold, NJ 07728
Office: 732-577-0440
Cell: 732-580-5309
Email: heather@heatherdaccurso.com
1 vote
Francesca Pa…, Agent, Manasquan, NJ
Wed Feb 25, 2009
P.S. I couldn't agree more with all of Marc's comments "the open house ballon @ 4:01 p.m. (I luv that one, Marc)," "cleared with you BEFORE presentation," Your offer needs to be carefully and diplomatically sold to the seller," "this kind of crap in an already difficult market makes me want to......... "

What u need now is someone who can, for lack of a better term, "suck up to the seller" as your name will now be in the forefront of the sellers mind!

Give me a call and let's make ti work!

Francesca
1 vote
Marc Paolella, Agent, Succasunna, NJ
Wed Feb 25, 2009
JmNYC,

Yes, your agent did you wrong. If you still want the house and you want representation, contact me via my profile. Your offer needs to be carefully and diplomatically sold to the seller now because the market has dropped and it will undoubtedly be lower than it was. This can be done by presenting the offer with sufficient market data to demonstrate to the seller that you are trying to obtain the house for a fair offer. Also, the agent you utilize now should be willing to take less than 4% to remediate the bad situation.

-Marc

Marc Paolella
Relocation Director
Member, Worldwide ERC
Licensed Realtor NJ
Licensed Appraiser NJ & NY
Century 21 Joe Tekula Realtors
Agent of the Year 2008
Owner: Sands Appraisal Service, Inc.
Phone (direct): (973) 584-4235
web: http://www.marcpaolella.com
1 vote
Jeanne Feeni…, Agent, Basking Ridge, NJ
Wed Feb 25, 2009
Hi there JmNYC, John's spot on - the commission rate is negotiated between seller and broker/agent and the commission agreed to is "published" on the agent copy of the MLS. If that is the case, then it would be unusual for the buyer's agent to try to negotiate a higher rate as a part of the contract. The agent may be disappointed by what has been negotiated and generally I find 5% all in to be more customary (ie 2.5% to listing side, 2.5% to buyer's agent) - but it is what it is.

Good luck.

Best,
Jeannie Feenick
Search and connect at http://www.feenick.com
Web Reference:  http://www.feenick.com
1 vote
Lori Jeltema, Agent, Suffolk, VA
Tue Apr 21, 2009
JR, I wasn't referring to you. there was a comment several posts ago in this string about some agents not wanting to show houses with reduced fees being offered by another person.

If you guys don't do buyer agency agreements, what do you do when you come across flat fee listings or comp of a few hundred dollars or for sale by owners that will not pay? How is the agency relationship and duties disclosed to the buyers? If a lot of agents are not going over this with buyers, maybe that's why we have so many people posting here about 'my agent this' and have no idea who is representing who. Do you just do the disclosure but no buyer broker? How is agency done there? Also, is there some symbol that you use on email to show that you are truly asking a question and not being sarcastic? I don't want to have to resort to smiley faces.
0 votes
J R, , New York, NY
Tue Apr 21, 2009
One thing I want to make clear (because Lori mentioned agents not showing houses that offer a low commission) is that there are hundreds of homes available. It isn’t too difficult to pick out 5 suitable homes for each trip and avoid one that is paying 1%. If a buyer asks to see a home, I’ll show any home to them, and make sure I am compensated, but if I am suggesting home I feel are suitable to them, I can probably find 50 homes that are suitable. Do I bring them into all or send them a selection. They can certainly search on their own also. Just FYI we rarely do buyer agency here.
0 votes
Lori Jeltema, Agent, Suffolk, VA
Tue Apr 21, 2009
I'm pretty amazed at all the agents bashing the agent referenced in this post. A verbal offer? Listed at 4 and the agent asked for 6? It seems that the facts are not clear here and the buyer not understanding what is going on is probably the biggest problem.

For all the agents saying that agent should just take the fee offered in the MLS and not be greedy - what if all the homes you sell for 2 months do not have a bac fee offered? Will you work for nothing? If someone has a buyer broker and has established a fee w/the buyer and the fee being offered is less, they can ask the seller to pay the difference. No, you can not negotiate it in the contract but you can get it paid by the seller.

I saw a comment about agents only showing houses that were offering the fee they want to receive. Is that the way people want it to work? Are agents actually avoiding telling their buyer clients about listings that offer no or little compensation? We should be showing our buyers everything, regardless of what the compensation being offered is. Give them a list of all the houses that meet the criteria and show them what fee is being offered compared to what your agreed fee is and explain that the difference will need to be made up. For all the people screaming 'bad agent', 'call me I'll do a better job', what would you do if you showed JMNYC property for 3 months and she found a house offering you a dollar? Or, would you not tell her that you are avoiding showing her homes that are not offering you enough? Maybe her agent was doing the right thing by showing her all homes, regardless of compensation and she misunderstood (obviously, from her original numbers in her post) what was going on. Her not understanding is probably the biggest thing this agent is guilty of.

I agree with 98 percent of what Deborah posted - because I didn't actually read every word in all her posts, I'll leave out the 2% just in case. I also think that JR covered the compensation issues well in some other string i read.
0 votes
J R, , New York, NY
Tue Apr 21, 2009
REALTORS®, acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an offer to purchase/lease to attempt to modify the listing broker’s offer of compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing broker’s agreement to modify the offer of compensation. (Amended 1/04)
~~~~~~~~~~~~~

Perhaps it was a different thread where I mentioned there is wording that avoids this situation.
0 votes
Harrison K.…, Agent, Irvine, CA
Thu Apr 16, 2009
Deb ... at one of several prior answers here ... provided a good analysis of fiduciary duty in this and other situations involving buyers agents.

... "I support honest pay for honest work, acceptance of various role models, the reality that the way things were formerly done may need to be changed, full disclosure, consumer choice, competition and respect."

Good work, Deb, and best wishes.

Harrison K. Long, Explore Group Properties, Coldwell Banker Previews, Irvine, CA.

http://www.BuyersExploreHomes.com
0 votes
Carol Donate…, Agent, Colts Neck, NJ
Thu Apr 16, 2009
Code of Ethics Article 16

Standard of Practice 16-16

REALTORS®, acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an offer to purchase/lease to attempt to modify the listing broker’s offer of compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing broker’s agreement to modify the offer of compensation. (Amended 1/04)

Best Regards,
Carol Donatelli, CRS
http://www.crs.com/msite/6575289
0 votes
William Leigh…, , New Jersey
Wed Mar 4, 2009
JmNYC: I'm the guilty one! Yep, I sent an answer with "president" in it when everyone realized that "precedent" was the word I should have used. This is an example, I THINK, of bad typing and whizzing through spell check. I think that spell check’s answer to a garbled word was "president" and it forthwith replaced it and I let it pass. The only thing I can say, besides "oops!", is that in my first response, I did use precedent correctly, so I can state without "equivocation" that I do know the meaning of BOTH words!
0 votes
Alan May, Agent, Evanston, IL
Sun Mar 1, 2009
Had a small fender bender so I have to go precedent out.
~~~~~~~~~~~~~
LOL...!
0 votes
Deborah Madey, Agent, Brick, NJ
Sun Mar 1, 2009
Dunes,

Thanks for the smiles!

Deb
0 votes
Deborah Madey, Agent, Brick, NJ
Sun Mar 1, 2009
funny... :-)
and no l
deb
0 votes
Alan May, Agent, Evanston, IL
Sun Mar 1, 2009
Okay... I just can't help myself....

President: the elected head of a republican or democratic society

Precedent: an earlier event or activity cited as an example
0 votes
Bill Eckler, Agent, Venice, FL
Sun Mar 1, 2009
JmNYC,

You have the benefit of many excellent points of view.
We feel that by attempting to increase the commission at this point, the agent is deminishing your ability to negotiate a purchase price that is acceptable to you.

Since the fee for professional services will come directly from the sale price one would not expect the seller to be overly receptive of this opportunity. Legal or not, we would not consider this approach as ethical.

Good luck
0 votes
Deborah Madey, Agent, Brick, NJ
Sun Mar 1, 2009
Hi William,
Tx for the clarification. Deb

JmNYC,
Ck out the existing inventory and prices. There have been several price reductions on many of the Colts Neck properties. Most buyer agents (myself included) would not have attempted to alter the MLS offered coop in the example you provided. Please know that my discussion had much more to do with the call to attention that mandatory price fixing is illegal. Sorry to hijack your thread, but incorrect assumptions on the part of the industry led to a costly DOJ vs. NAR lawsuit. Most, not all, of the changes in the recent years have benefited the consumer. It is a long way away, but imagine that a buyer negotiates his own fee with his buyer agent, and, as a result saved money.

Deb
0 votes
Lisa Tempesta, , Parsippany, NJ
Sat Feb 28, 2009
JmNYC,
I see all of us seem to be in agreement on your situation. Even though your agent put you in a bad position, *** and even if you may not signed an exclusive buyer's agency agreement with him/her, your agent has written an offer for you and in effect created an agency relationship with you for this particular transaction. His or her fiduciary relationship is to you (unless this is a disclosed dual agency situation), and is supposed to represent YOUR interests, not THEIRS. So they should not have tried to negotiate the commission (although in NJ commissions are negotiable-but not usually by the buyer's agent; the listing agreement between the seller's agent and the seller determines commission). The first thing I would do is contact the agents broker/manager to step in. You need to put feelings aside and get down to business, if you want to try and still get this house. Explain to the broker what has happened and how you were put in an awkward position. If you still do not get satisfaction with this transaction, it is your right to hire another agent to help you purchase this property. But you will need to put that in writing, as the original agent has what's called 'procuring cause', and you would not want to have your purchase finally move forward only to have this person hold up the closing because they felt that they were 'owed' a commission for just bringing you to the property.

After all this, if you still feel like you have been 'wronged', consult an attorney. Us real estate agents can give you real estate advice, but not legal advice.

Good luck!
Lisa Tempesta, Broker-Salesperson
Realtor® -Associate
Coldwell Banker Residential Brokerage / 2200 Rt. 10 West, Parsippany, NJ 07054
(973) 267-3030 x 129 / (973) 267-4161 fax / (973) 668-6322 cell
skype id lisa.tempesta / text 9736686322
connect with me on linkedin.com / plaxo.com / facebook.com
0 votes
John Sacktig, Agent, New Jersey, NJ
Thu Feb 26, 2009
JM -

This seems to have brought up a lot of indepth discussion, all which has been very interesting to say the least. but as it stands now, Do you want to buy this house? If this was 6 months ago and a verbal offer
that was not responded to...

Call my office in the a.m. and we get your offer written and presented to the seller.
Send me the address so we can pull other comps, active and sold to get a good idea of what the area is
doing as of today.

If you are serious and want to move forward, I am in my office by 8:00 a.m.

John Sacktig
Broker / Manager
Orange Key Realty
Office: 732-863-6969
Cell: 732-213-1409

JSacktig@orangekeyrealty.com
0 votes
Marc Paolella, Agent, Succasunna, NJ
Thu Feb 26, 2009
Interestingly, it is precisely because the public has been mislead about buyer agent compensation for years that they will resist paying a buyers agent separately should that become the norm.

How many times have you read here on Trulia something like this: Why NOT hire a buyer's agent? Their services are free to you anyway, the seller pays the commission.

WRONG. This has never been true. Buyers have always paid the commission. It is, and has always been, built into the price of real estate. But buyers don't think of it that way. And mostly due to fallacious statements by Realtors who do not understand their own business. And should buyer agency and seller agency be completely divided, as some now propose, buyer's agents will have the impossible task of trying to convince the public to pay their commission. The public will not want to do pay for what they have always been getting for "free". Even though it hasn't been free and will never be.

-Marc
0 votes
William Leigh…, , New Jersey
Thu Feb 26, 2009
JmNYC: I mostly agree with Ms. Madley but I think that there is one point that she sort of clouded rather than cleared. She states that the commission share posted in the MLS for the buyer’s agent is not a commission that the buyer’s agent MUST accept and alludes to an issue of restraint of trade. While it is true that a buyer’s agent can ask his CLIENT for a larger or different commission, if the MLS reflects the listing agreement (and it should or we have a problem of misrepresenting the seller's intentions by the person doing the MLS posting) it is a statement of an existing contract term that I believe a third party can neither modify or interfere with.

This leaves the buyer and his agent in the position where they can discuss the commission amount stated in the MLS and further discuss any addition that the buyer make wish to make to the agent’s commission but the buyer will have to pay for that increase..

I am led to believe that most buyer agents getting a commission share have been willing to take what is offered in the MLS, although some agents would not really try to show those houses offering them only one percent.

JmNUC: You may wish to have this little bit of commission strategy in mind when establishing an agency relationship, either by merely going out with an agent or by signing a formal agreement. The dynamics of the business result in a pull between getting too little in commission to support the effort and the temptation to flout the rules of the game that proscribe cutting deals that impinge on others lawful rights, not to mention the laws of the state. The honest answer, in my opinion, is to communicate the way the agent is willing to work before establishing any kind of agency relationship.
0 votes
John Sacktig, Agent, New Jersey, NJ
Thu Feb 26, 2009
There is a lot of "lets kill JM's agent" talk going on... Funny stuff.
I am visualizing we chase him down with fire torches and get him cornered some place and string him up.

JM - Yes, by all means get away from that agent and get another agent! If he has an issue, let him take it to arbitration, which has nothing to do with you... go buy the house you want.

Better yet, call me I am 3 minutes out of Colts Neck!
I will take you to the house, apologize for the behavior of some Realtors and get the deal done.


John Sacktig
Broker /Manager
Orange Key Realty
Office: 732-863-6969
Cell: 732-213-1409

JSacktig@orangekeyrealty.com
0 votes
Kenneth Verb…, Agent, PRINCETON, NJ
Thu Feb 26, 2009
Jim, I havent seen this mentioned but if you have a buyer broker agreement with your agent which stipulates what they will be paid, then negotiating this term into your offer is not only prudent but advised. (If you have no such agreement with your agent then yes they are hurting your case)
0 votes
Francesca Pa…, Agent, Manasquan, NJ
Wed Feb 25, 2009
Pardon about all the posts on this one, but as you can tell we are all fired up by this one.

To respond to:
More info: The offer I put in a few months ago was never responded to. The house has since dropped to what my offer was. The seller never contacted me after they dropped the price. I did go back and see the house again. The seller was agitated at my agent. This was 6 months later. So did my agent do me wrong? Should I go back to the seller - and bypass my agent - and make an offer. The seller told me they would never deal with my agent due to them negotiating the commission.

A seller represented by an agent would typically not be the one to contact a buyer about a price decrease. A good sellers' agent, would make personal contact with previous offers and a good buyers agent might recognize and bring the price decrease to their previously interested buyers (especially if the decrease could potentially produce a further savings to the buyer). It appears as if with the price reduction, the Seller may have instructed his/her agent not to have any further dealings with your agent.

The end, I'm off to bed, but I hope this helps!
0 votes
Francesca Pa…, Agent, Manasquan, NJ
Wed Feb 25, 2009
Dear JmNYC,

Wow, I've never heard of such a thing. I certainly would never jeopardize my client's opportunity to secure the home of their dreams by including an increased commission in the terms of sale (which as stated earlier is set forth at the time of the listing agreement).

I certainly would have no problem respresenting you with the stated 4% commission, provided that you terminate any Buyers' Agency Agreement that is currently is existence with your current agent as it appears as if this Seller is going to be resistant to working with this buyer's agent.

Colts Neck is within my selling area. Please feel free to give me a call to discuss.

Sincerely,
Francesca Patrizio, Realtor Associate
NJAR Circle of Excellence '06-'07
Cell: 732.606.2931
Web Reference:  http://www.PatrizioRe.com
0 votes
JmNYC, Home Buyer, New York, NY
Wed Feb 25, 2009
So did my agent do me wrong?

More info: The offer I put in a few months ago was never responded to. The house has since dropped to what my offer was. The seller never contacted me after they dropped the price. I did go back and see the house again. The seller was agitated at my agent. This was 6 months later. So did my agent do me wrong? Should I go back to the seller - and bypass my agent - and make an offer. The seller told me they would never deal with my agent due to them negotiating the commission.
0 votes
JmNYC, Home Buyer, New York, NY
Wed Feb 25, 2009
The house is listed on MLS - it is not FSBO.
0 votes
Heather Dacc…, , Monmouth County, NJ
Wed Feb 25, 2009
As the others have said, if the home is listed on the MLS than the buyers agent should accept the commission listed. It is not typical for the buyers agent to try to negotiate a higher commission rate.

Even if this is a For Sale By Owner and the owner is advertising a 4% commission the buyers agent should accept that.

Let me know if you have any other questions.

Thanks,
Heather Daccurso
Weichert Realtors-Howell
626 Route 9 South
Freehold, NJ 07728
Phone: 732-577-0440
Fax: 732-580-5309
Email: heather@heatherdaccurso.com
0 votes
John Sacktig, Agent, New Jersey, NJ
Wed Feb 25, 2009
JM -

When you say the house is listed with a 4% commission, where is this informtion coming from? Is this a FSBO? Or multiple listing ? Is it a Bank sale? there are different answers depending upon the actual situation.

But typically, no. If it is a MLS listing, the commission has been negotiated between the seller adn the lsting agnet and what they are "paying out" is set. If this is a FSBO.. then a 4% out to the agent is great.. I can,t see someone doing this. If it is a short sale.. then maybe the commission has been put at a full commission pending the bank approval. Sometimes with a short sale the bank decides how much is being paid out .. and if you list a house with a 6% commission,they can say.. sorry 4% is the number..

A few more details would help.
0 votes
Marc Paolella, Agent, Succasunna, NJ
Wed Feb 25, 2009
Is this home a FSBO?

-Marc
0 votes
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