My buyer agent did not disclose to me that 0.5 % of the broker fee was my responsibility until 6 days before

Asked by Herstrom Investments, Philadelphia, PA Sun May 24, 2009

settlement. When should he have disclosed this information to me?

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Keith Sorem, Agent, Glendale, CA
Mon May 25, 2009
H
I would suggest that you review your buyer broker agreement.

It seems odd to me that you would simply "overlook" this matter. OTOH if the Realtor did not tell you personally, I am surprised it was not on an estimate of buyer's expenses. Did you receive an estimate?

Most Realtors are interested in long term business relationships. It seems odd that this would not have come up initially.
0 votes
Chris Mabry…, , Tucson, AZ
Sun May 24, 2009
Hi Herstrom,
This sounds to me like a breakdown in communication. There is a lot that happens during a transaction and it's easy to become overwealmed. Now, that being said, it is your agent's responsibility to make sure his commission is covered. It is just not good business practice to surprise you at the last minute. Believe me, every agent knows the co-op commission on every home they show, much less write a contract on. Many homes out there have discounted commissions and your agent should have known and disclosed it to you when you wrote the offer. You are correct, if you had know about the extra costs you would have negotiated differently. If your agent knows what is good for him/her, they will eat the 1/2% and learn their lesson. That's what I would do in order to close the deal and keep you from stringing me up! Your good word and future referrals would be much more valuable to me in the long run than a measly 1/2%. But, if you did sign a buyer/broker and your agent wants to hold firm, then chances are that yo will be responsible for the extra commission. Talk to your agent, if they don't feel like they missed an important detail and aren't willing to accept responsibility, then you may want to involve their broker. Best of luck to you and congrats on the purchase!
0 votes
Alan May, Agent, Evanston, IL
Sun May 24, 2009
In my opinion, you are correct. Your agent should have told you that the seller was only offering a 2.5% co-op prior to your placing your offer... or at least while you were still in negotiation.

It's unacceptable to wait until 6 days before closing to notify you of that. Many agents and agencies have the ability to "negotiate" that "uncovered percentage. I agree with Jim. In order to keep my client happy... (or at least not "tick them off") I would absorb the extra .5%.
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Jim Cheney, Agent, Santa Rosa, CA
Sun May 24, 2009
Herstrom, after reading your question several times, I imagine what happened is that you signed a buyer's representative agreement with your agent, and in the agreement it states that you will pay him/her 3% following the purchase of any home during a certain time period. It probably states that the 3% can also be paid by the seller (which is usually the case). I'm guesssing that in this case the seller agreed to pay a 5% commission when he listed his house for sale 2.5 for his agent and 2.5 for yours. Now your agent is going after you for the additional .5%.

I would read your buyers representative agreement closely and see if it indicates that your agent must disclose to you if and how much the sellers are paying. I'll tell you right now, a client should never be surprised at closing!!!

Personally, I'd eat the .5% if it meant making my client mad. I'd rather chaulk that up to a lesson learned then have a client who does not hire me in 8 years when they are getting ready to move again! Or risk a client who tells the world that they felt cheated by me.

Good luck
0 votes
Fred Glick, Agent, Mountain View, CA
Sun May 24, 2009
If you do not have that in writing, then you don't have to pay it.

That's the bottom line. Too bad for the agent that he or she is trying to allegedly extort you and that you will never use him/her again!

If it was in writing, was it on the good faith estimate that he/she provided you when you signed the agreement? What? He/she did not give you one? The real estate commission would like to know that!

Bottom line, if it's not in writing and signed by you in real estate, it does not exist.
Web Reference:  http://fredglick.com
0 votes
Herstrom Inv…, Home Buyer, Philadelphia, PA
Sun May 24, 2009
It is true that my broker buyer agrees guarantees the broker's 3%. However I was not informed that the seller was only picking up 2.5% until 6 days before settlement. Had I known, I would negotiated differently with the seller regarding estimated cost of repairs to the property. I still feel the agent should have disclosed this information to me, as my representative.
0 votes
Vicky Chrisn…, Agent, Purcellvile, VA
Sun May 24, 2009
Herstrom, start with reviewing your brokerage agreement to ensure that it is owed, and what, if any, disclosure is required by the agent.

There are several times my buyer clients have been responsible for all or part of my fee. Only once, however, were they surprised. Their surprise had nothing to do with me not telling them, they just weren't listening.... and upon reviewing the file in their posession, it was written 3 places.

Last comment - if you have a VA loan, you can't pay any commission.
0 votes
Michael Rayno, Agent, Cape May, NJ
Sun May 24, 2009
Unless you signed some type of agreement where you agreed to pay a commision to the"buyer" agent you should not have a fee to pay. All commissions are usually paid by the seller never by the buyer. Are you sure that the .5% fee is not for something else look on the good faith estimate HUD1 sheet that you should have received. it should explain all the charges that are involved in purchasing the home.
Also talk to the agents Broker ask him what this fee is about.
Hope this helps
Mike Rayno
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