Home Buying in New Brunswick>Question Details

Elaine, Home Buyer in New Jersey

Are realtors entitled to commission just because they sat in on an open house?

Asked by Elaine, New Jersey Thu Sep 4, 2008

My realtor went away on vacation, who is also a good friend of mine for 25 years, and I attended an open house and when my realtor returned we looked at other houses along with this one, which I decided to buy. The realtor running the open house is suing my friend the realtor for the full commission since he was the realtor during the open house

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Paul, it's also possible that the "sitting" agent was not the listing agent, and therefore dual agency was not involved.

Elaine, my guess would be that the open-house agent doesn't have a leg to stand on. Sitting an open house and greeting viewers as they come through does not, in an of itself, form an agency relationship. What has your agent said about this situation... what has his managing broker said? Are they concerned?

I'm not an attorney, and I'm not on the arbitration board, but I wouldn't be worried if I were your agent.
1 vote Thank Flag Link Fri Sep 5, 2008
Alan May, Real Estate Pro in Evanston, IL
In New Jersey it's called "Procuring Cause". The agent who makes the deal, gets teh commission.
0 votes Thank Flag Link Fri Sep 5, 2008
Agents don't have listings. Companies do.
My bad, you're right...that's how it works in Jersey... of course in this situation that would make them an "undisclosed" dual agent... which is, I believe, illegal.

In Illinois, a non-listing agent from the same office would not be considered a dual or listing agent. And, yes, I understand that would not help Elaine.
0 votes Thank Flag Link Fri Sep 5, 2008
Alan May, Real Estate Pro in Evanston, IL

"Paul, it's also possible that the "sitting" agent was not the listing agent, and therefore dual agency was not involved. "

It does not matter who the listing agent was. It only matters who the listing company was. If the "sitting" agent worked for the listing company they are either a seller's agent or a dual agent.

Agents don't have listings. Companies do.

Paul Howard
0 votes Thank Flag Link Fri Sep 5, 2008
I was sitting at one of my own listing's open houses, and a young couple came in. As I do, I thoroughly explained agency, and who I was working for etc etc. When I asked them if they had a house to sell before they could make a purchase, they said their house was already listed, with another local agent. The next day they called me and made an offer, and we went through the entire transaction, and I was paid both sides, and that was the end of the story. It turned out their listing agent was on vacation when they came to my open. The LA never contacted me, I heard she was pretty annoyed that they had done that, and I felt bad that they had just not given a hoot who they bought the house from, but then I've been on the other side of the equation also. I showed about 100 houses over 2 years to a couple who were also in commissioned sales (boats, no less, which I was too so there was a commonality there) and they walked into an open at a house that I had told them about at least 5 times but "no, we don't want to live there, we don't like he street, we don't like the school" and bought from an agent who was sitting the open for the LA. What could I do? It all comes out in the wash. Your friend either has already been on the lucky end of that stick or will be at some point in their career. You should have told the agent at the open house that you were working with an agent and if you put in an offer it would be through them. If your friend was away they should have told you they had another agent covering for them, so at least they would have gotten something. If your friend had someone covering for her, it is you your friend should be annoyed at, not the agent. If she didnt have someone covering for her and there was no way to cover what should have been your friend's side of the commission, there was nothing you could have done. Unfortunately sometimes we agents don't explain fully enough that this is how we put food on our table and a roof over our head, and sometimes even if we do our "friends" don't care enough to speak up.
0 votes Thank Flag Link Fri Sep 5, 2008

My wife was interested in a certain vehicle that wasn't at our local car dealership, the salesman there told us where to find it , but we would purchase it through him if we liked it ... so we drove the extra 82 miles to see it and make sure it was everything she wanted .. we made sure the salesman there knew and understood our intentions .. "we were buying it from another store.."

-- do you pay the salesman that was 82 miles away.? .. of course not.

Based on what you've posted, 5 years ago this would have been a rare bird ... now, you're seeing more and more of this ..

The industry is going through huge changes, many agents haven't seen a good paycheck in months, and the ones that have seen one, are slim .. so greed will raise it's ugly head..

If the agent was doing an Open House and you informed him you were working with somebody else, then they can sue all they want - little they will gain.

My question is .. have you been with your friend to discuss the facts.? ... usually a letter from the client puts this to bed.

0 votes Thank Flag Link Fri Sep 5, 2008
Elaine, When you went to the open house did the agent talk to you about they types of agency available to you:
You could work with:
Sellers Agent
Buyers Agent
Dual Agent (representing both)
Transaction Broker (representing neither).
The agent sitting in that house would be either a seller's agent or if you SPECIFICALLY agreed would be a dual agent. In either case - THEY ARE REQUIRED to disclose that to you at first contact.
If that agent did not do that - go to http://www.state.nj.us/dobi/consumer.htm and get the number to file a complaint against the agent. You could complain to the agent's company that they violated the Realtor code of ethics but I doubt it would do any good. This industry wants this issue to be as clouded as possible.

For more from the US Department of Justice read this white paper:

You might also want to read "One date You're Married" by Tom Wemett at:

Now, IF YOU DID AGREE to dual agency you scr**ed your agent. If you did not, the agent sitting the open house is trying to sc**w your agent.

Paul Howard, Broker
NJHomeBuyer.com Realty
0 votes Thank Flag Link Fri Sep 5, 2008
Hi Elaine. Wow? Why do I sense there is more to this story than meets the eye or as stated in your question? Knowing all the facts might make answering this question accurately a better possibility. But, we will wing it anyway.

Let’s see. You had an agent. Your friend of 25 years. She went on vacation. YOU looked at other houses while she was gone. Now, so far, this happens all the time in this business. But, the plot thickens. You went to an open house. You liked it. Not unusual.

Stop. Now what was said at this open house by you to the other agent COULD be relevant to this question (of whether the other agent has a leg to stand on – grounds for a legal action). And THAT is missing from your question. Example: “I love this house. I want to buy it. No, I don’t have an agent. Yes, I will use you as my agent”. Let’s write up the contract”. Now if that was conveyed by you to the other agent, that MIGHT make a difference (depends what else was said, time spent, documents prepared, etc). Might not. But, we will go on.

So, your friend returns. You look at more homes together, but THIS HOME is the one. Your agent makes an offer on your behalf at your request. A contract is later consummated by your agent with the seller. The contract is closed. You are (at this moment) the owner. Is this what you are saying? OK, we will go on. After the sale closes and title is transferred to you , NOW you are saying the other agent wants the commission paid to your agent paid to him/her because …… WHAT? You promised to use them? Was this a new construction home or a re-sale property? Was the other agent the LISTING agent? I have Lots of questions. So would an attorney.

That said, my fist reaction is that the other agent (listing agent or another buyer’s agent) did NOT have a business relationship with you simply based upon the way you met. Then, because you ultimately chose to purchase the home you first saw when they were holding the home OPEN. Now, as Joan stated below, the fact that the OTHER agent claims they are going to sue your agent and that actually becoming a reality may be two different things. Everybody seems to make threats they never carry out these days. Keep this in mind. For a legal action to be taken and a judgment rendered against your agent, their has to be legal grounds to support the plaintiff’s position. Only you would know that answer.

In conclusion, ask you agent to set up a meeting between you, her and her Broker. Have them give you the lay of the land. That may help put things into perspective – for you, for all. Put your mind at rest.
0 votes Thank Flag Link Fri Sep 5, 2008
Elaine: Just image this: You went through the deal from start to closing day with the “sitting agent” and then decided to give the commission to your good friend. Would the other agent feel entitled? I hope that you will agree that they should. This becomes a matter of where do you start counting who is the agent. Each case is different and in an action at the realtor association, it gets straightened out. It is not a suit in a court of law.

A rule of thumb is that the agent "just sitting" an open house is providing you, at no salary, something of value. They have started a process leading to a transaction. This is they key step, don't you agree? If they were willing to continue, your "friend" should have had enough experience and ethical consideration to back off, don't you think? If the agent claiming the commission can be proved to have been unresponsive or if so much time went by (say a year) before you decided to start a serious purchase, they may not have a claim. In many cases though, it come out that an effort was made by the agent who first got the commission to purposely "steal" the commission from the agent who started the process. Do you want to abet a thief?

Your "friend" (I almost typed "fiend") should have explained all this before you set out with her. You have a right to know what you agent can and can't do and what services they offer. Obviously, the service of cutting out another agent is not one that appears on any brokerage's list of services offered.
0 votes Thank Flag Link Fri Sep 5, 2008
It's never fun to be sued, even if you win eventually. You (and your friend) could have saved yourselves a lot of heartache if you had signed a buyer agency contract with your REALTOR before she went on vacation, and if you had identified yourself as a client of that REALTOR when you visited the open house. If you had entered the public open house, handed the agent your friend's card and said, "My agent is on vacation. Here is her card. May I view the house?" The agent would have either honored the relationship or asked you to come back when your agent was back.

We often work with our friends, and, sometimes, we get a little lax with the paperwork because we know and trust each other, but, you can't expect others to know about our relationships. (That agent at the open house couldn't know you had an agent unless you told him.)

In NJ, you have a right to be represented by your own agent. If you have a buyer agency contract and your agent writes the successful contract on the house and follows the deal through to closing, she will be entitled to at least part of the "buyer side" commission. She may have to compensate the other agent in some way, though.

This problem will be worked out by the REALTORS after the closing (there is no commission to dispute until the property has sold.)

What YOU can do is ask your agent for some of her business cards and recommend her to other buyers. That way you will also be able to go into an open house confident that YOU can disclose that you are represented and her commission will be protected.

Joan Prout, MBA
Broker Associate
Jersey City, NJ
Web Reference: http://www.JoanProut.com
0 votes Thank Flag Link Fri Sep 5, 2008
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