Am I obligated to use an agent to buy a house if I have no signed contract?

Asked by Akhosravi, Minneapolis, MN Sat Jun 2, 2012

I found a listing on zillow that I really liked and called the listing agent to try and see it as I didn't have an agent at the time. He referred me to another agent in his office to show it to me. After seeing the home twice with that agent I've decided I want to make an offer. However, this agent has done a poor job of showing comps and provided other "bad" advice. I've been talking with another agent I know and they have done a much better job of showing me comps and coming up with a viable offer price. I'd rather use the 2nd agent to submit the offer than the first as they've done more useful work. I was wondering if I have a legal (or ethical) reason to use the first agent if I have NO signed contract? One knowledgeable person says no contract, no obligation. Another says I crossed the threshold so I'm obligated. Advice?

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Debra (Debbie) Rose’s answer
Debra (Debbi…, Agent, Livingston, NJ
Sat Jun 2, 2012
Do not be frightened by an agent telling you what legal consequences there may be for you.......we are not attorney's.

The agent (#1) will not go after you for the commission - you had no written agreement - should you buy the house in question, if they go after the commission, at all...they will try to get it from the second agent.....its NOT your concern.

Just be honest with your current agent.
1 vote
Dean Gupta C…, Agent, New Hope, MN
Mon Jul 23, 2012
Yes, if the first agent who showed you the house, then you went to see the same house again with listing brokers agent, then you are obligated to buy it through that agent. Because if the dispute goes to MLS Arbitration then listing broker make your Beloved agent will pay have to return or not get his commission .The law says "Cause of Procurement). Whether you signed up any agent or not. Who ever can show that they worked to make you like or/sold you on the home, will get the commission. The first agent did not show you the comps because you never came to that stage of writing the offer.

Dean Gupta,CRS,SFR,e-Pro, Broker
Serving Home Buyers and Sellers for Full Satisfaction since 1991.
For Personal Attention, Call 763-537-8382
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0 votes
Dean Gupta C…, Agent, New Hope, MN
Mon Jul 23, 2012
It depends on how did you see the home? Did that particular agent show you the home you want to buy? if yes, then you have to buy the home with that agent.( with in the 60 or 90 days of when you saw the home) More over if buy that home without the showing agent, then you or the listing broker may be liable for the commission) .
0 votes
W2amit, Home Owner, Plymouth, MN
Wed Jun 6, 2012
Legally you can ask the agent to stop being your agent at any point "unless you have signed a piece of paper". If the other agent is still ok to continue business with you after you have removed the first agent, then go ahead and start interacting with him.

Both Legally and Ethically, the agents are supposed to be nice enough to let you go with no hassle, but if they have not been ethical then sometimes the word of mouth passes on and they give you a run around. Ethically the customer is not at fault most times.

Just because you went into a shoe store and the salesman tried to sell you a few pairs of shoes that you did not buy, wouldn't mean you have to pay the sales man for showing you shoes. He is a salesman he gets his commission when he makes a sale not when "trying" to make a sale. Same goes for the realty agent - both buyer and seller agents.

My agent has been very nice to me, he was involved from the start and was open to me using any agent at any point of time (that speaks of confidence he had in his service - don't want to mention the realty firm he was in else this would sound like an advertisement). He used to refresh our list and shortlisted homes every week and set our appointments appropriately etc.. etc... well i thought this was about your question... :)
0 votes
Also as you mentioned --> I found a listing on zillow that I really liked and called the listing agent to try and see it as I didn't have an agent at the time. He referred me to another agent in his office to show it to me.

This is one of the worst way to find an agent, "to be referred by the seller agent". In a usual transaction 3% goes to the selling agent and 3% goes to the buying agent, they just wanted to split up the commission within the same realty company - it is just their business. It is not the selling agents fault to refer you to an agent in his own office as professionally he is not going to refer you to any one else outside his office. You need to do your due diligence to find an agent.
Flag Wed Jun 6, 2012
Chris Block, , Saint Paul, MN
Sun Jun 3, 2012
This is a perfect example of why Realtors need to enter into an exclusive rep agreement when they choose to show buyers a home! Geez I just answered another question on Trulia about representation and it is still amazing to me on how this practice goes on.

I have to agree with what the majority of others are saying below me. You personally can choose whoever you want to represent you in this transaction since you did not have a contract.

The threshold question and procurement is about the WHOLE TRANSACTION. The simple fact you are looking at using another realtor, on top of the agent not using a contract, will make it very difficult for him to gain a commission out of this.

Go ahead and use the 2nd agent with confidence.
0 votes
Donald James, Agent, Edina, MN
Sun Jun 3, 2012
Hi Akhosravi,

The "threshold rule" is a thing of the past and tells you that Realtor is not as up to date as they should be. You want a buyer's agent to represent your best interests. You should interview three agents, ask them how familiar they are with the area in which you want to buy, how many deals they have completed in the past year in that area, how they will communicate with you, and ask for references and check them out. This is too important go on feelings alone. Good luck with your new home!
0 votes
Cameron Piper, Agent, Forest Lake, MN
Sat Jun 2, 2012

You bring up a couple of concepts that are confusing even for agents to keep straight. I will do my best to be as clear and direct as possible.

1. Can you work with X, Y, or Z agent? Yes - you can work with any agent that you like. Nothing precludes you from picking any agent and then working with them.

2. Keep in mind that whomever you hire, will have a reasonable expectation of being paid. Once you sign a contract with an agent, YOU are responsible for paying that agent a commission - not the seller (or their broker).

3. The MLS has rules that outline how an agent can and sometimes is compensated by the listing broker (seller if you will). The concept is difficult to pinpoint because it is decided by a different panel of agents each time and the same case heard twice by two different panels could very well have two different outcomes, and as Debbie pointed out, procurring cause disputes are often handled between the agents. There is however no longer a threashold rule as another agent has pointed out here.

4. The reason procurring cause is important to you is because the MN buyer broker representation contract states that YOU owe the agent a commission (technically the broker). It goes on to say that sometimes (depending on how the contract is written) if the listing broker pays your agent, you won't have to. If the listing broker is challenged and pays the first agent that you worked with, you may end up oweing money to the second agent out of your pocket. Whether they will ever pursue you is an argument for another discussion.

5. The first agent can't ask you for compensation without a contract. However, if you purchase the home, they can make a claim against the commission that would otherwise be reserved for the agent that you chose to represent you.

Cameron Piper
Coldwell Banker Burnet

licensed MN Broker
0 votes
Vipul Goel, Agent, Plymouth, MN
Sat Jun 2, 2012
First agent was the procuring cause for that house. Legally, first agent can ask you for compensation.
0 votes
Elizabeth Fu…, Agent, Wayzata, MN
Sat Jun 2, 2012
You are not obliged to do anything you feel is contrary to your best interests. However, there is a threshhold rule and if the agent showed you the property and can probably prove he or she was the first to take you across that threshhold, your chosen agent, with whom, presumably you will sign a representation contract, should know about it. The representation contract is for your benefit; there is a right to cancel in such a contract if the agent fails to act as you wish. I won't go into it here, but get the agent you want too explain the details. Tell him or her everything. That representation contract is asking an agent to be your confidential representation and he or she accepts responsibility for his or her agreed tasks and fiduciary responsibiloities. Liz 612-986-4105
0 votes
Steve Vennem…, Agent, Pine Springs, MN
Sat Jun 2, 2012
It is totally up to you. Do what ever you feel is best for you.
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Sat Jun 2, 2012
You are free (especially in the absence of a written agreement) to work with whomever you choose, and you have listed understandable reasons for your desire to go with agent #2.

That being said, you need to be upfront with agent #2 in regard to what has already transpired.

The agents should work this out between themselves. Agent #2 should be proactive in speaking with agent #1, but you are free to proceed with your offer.

Don't get confused if others mention the term "procuring cause", as that is something worked out between the agents (under that term, agent #1 might be entitled to a portion of the commission), but it should not stop you from moving forward with an offer.

Best wishes!
0 votes
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