Real estate buyers realtor representation legal/obligation question

Asked by Ami, San Jose, CA Sun Feb 12, 2012

I have been working with a realtor (really nice & profesional) for last 3-4 years. Durring the time, the realtor has put lots of time and we have seen lots of homes. We have put offers on few houses and some reason our offers has not translated into transactions. My wife was very disappointed as we lost a deal with someone who paid cash but less money than us.

Recently ... My wife has found another realtor who is local to the area where we are looking for the house. We liked one of the house and put an offer through this new realtor. Our offer on the home is rejected and is short by 2.5% from the counter offer.

I am feeling bad as we have not informed our old realtor especially she has spent so much time with us. I told my wife that if we decide to match the asking price, I would like the offer to be submitted by our old realtor as she had put so much time with us in last 3-4 years.

My question is ... are we in mess/legally bound with my old/new realtor?

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15
John DeMarin…, Agent, Danville, CA
Sun Feb 12, 2012
BEST ANSWER
Well the answer is yes, but only if you have an accepted offer with the new realtor. Your old realtor can seek a commission if she has appropriately kept notes on the time spent with you....I will have to tell you that you are legally binded to your realtor of 4yrs. Most agents may comment on a Buyer Broker agreement, whether you have signed one, but, as long as you have had this long commitment and written several offers that is binding in itself. My best advice, have an open conversation with her, and see what you can conclude. Real estate professionals spend a tremendous amount of time with our clients and dont ask for an upfront fee like other professions do. Honesty is always the best policy and will make for a better conscience. Hope that helped
0 votes
The Medford…, Agent, Fremont, CA
Mon Feb 13, 2012
Ami:

Let me respond to a few things here:

You state: We have put offers on few houses and some reason our offers has not translated into transactions. My wife was very disappointed as we lost a deal with someone who paid cash but less money than us.
A: This is VERY common in the current market because inventory is VERY low and there are multiple offers on almost everything out there that is nice and priced right. In a market like this, you have to be willing to go higher than asking price and structure your offer terms to compete in a multiple offer scenario. Many buyers are unwilling to do this and therefore lose out on every offer they place. As for the cash offer, these are hard to compete against – 31% of the offers placed in California this past year were cash. Some sellers are willing to accept a lower cash offer because it usually represents a quicker, cleaner transaction. You certainly can’t blame your agent for that one.

You state: Recently ... My wife has found another realtor who is local to the area where we are looking for the house. We liked one of the house and put an offer through this new realtor. Our offer on the home is rejected and is short by 2.5% from the counter offer.
A: Sounds like you are trying to lowball – which may be the reason you’ve lost out on other offers. This is not the market to be offering less than asking if you really want a home. As difficult as it may seem, because of the exceptionally low inventory, this is not the time to be bargain hunting. Many buyers cannot wrap their head around this – they insist on a “deal” – and end up with nothing.

You state: I am feeling bad as we have not informed our old realtor especially she has spent so much time with us.
A: Many times it is not the Realtor’s fault offers are not accepted – if you switched Realtors and your initial offer is also rejected, this is a clue that you are probably writing your offers too low. It must have been a patient Realtor that stuck with your for so many years. You need to inform her about your switch.

You state: I told my wife that if we decide to match the asking price, I would like the offer to be submitted by our old realtor as she had put so much time with us in last 3-4 years.
A: Can’t do this – as pointed out below, the new agent has “procuring cause’ and an agency relationship with you – any subsequent counters have to be through the new Realtor.

If the new offer does not work out, go back to your old agent and have a heart-to-heart talk. Ask their opinion as to why previous offers were not selected. Ask whether of not your previous offers have been too low. An agent can only be as effective as they are allowed to be by the buyer.
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1 vote
Nina Daruwal…, Agent, Cupertino, CA
Sun Feb 12, 2012
Dear Ami,

I am writing this to you in brutal honesty, been in this situation myself!

Firstly, working with a Realtor is a relationship you build, of trust and understanding. It was not your old Realtors fault you lost offers, but circumstances....you have acknowledged that here.......perhaps you lost because you didnt offer enough in multiple offer situations....and as you say to a Cash offer.... My clients stay with me for life, knowing I will take exceptional care of them as people first, and help them though a transaction when it is right for them!
Also, did you sign a Broker Buyer Agreement with the old or new Realtor?? I sure hope not with both! You may check on that and the expiry date on it if you did so!

Ethically you should have informed the old Realtor, you would be stopping looking with her, before you started looking with another person, but this is done now. Your disappointment in not getting your homes had you looking for someone to blame, and your realtor copped it :O(
You should seek Legal council before you write another offer on the SAME property with your old Realtor, when you have already written it with another realtor....The New Realtor has a right to this commission, as she/he showed you this property, and wrote an offer for you......you made this choice......if you are going for this same home, and have been countered, and want to accept the counter price, my thinking is you would have to go with the new realtor.
Sadly, your old Realtor, who put in all this work, time, energy, and has had so much patience to be with you for so long, will not get paid at the end of the day if you go for this home. We only get paid when we close on a transaction! If you are not being served well, and you change realtors thats understood.....but politely end with one, then start with another so you leave no one with any false expectations.......your old realtor, sadly, still thinks you are working with her!
You are at a decision point, only you can make that choice, and do what you think is right for you.
I give my all to my clients, give loyalty, and expect loyalty from them........but sadly this kind of thing happens to the best of us due to different reasons......people walk away, and sometimes make bad choices.....but then, thats a choice made and they have to live with it, whether they may acknowledge it privately, or not...............your husband is right in feeling he would like to do right by your old Realtor!
Talk to a Real Estate Attorney, and then move, its worth it!
All the Best,
Nina Daruwalla
DRE# 01712223
Web Reference:  http://www.ninadaruwalla.com
1 vote
Karen and Pa…, Agent, Cameron Park, CA
Fri Feb 19, 2016
Ouch! What a mess. Before anyone uses a new realtor after that many years of service there should be a talk with them first. Maybe your old realtor wasn't giving you the proper advise in the offers written, Maybe you weren't listening to her advise. Why did your wife choose to work with another realtor? If there is tension there between them maybe it was a good move. Clearly you were feeling guilty of using another realtor. We all need closure on both sides. Nobody wants to be fired, just as most people don't want to do the firing. But both of you will feel better after it is done.

You also can not have the property shown to you by 1 agent and have a different agent write the offer, You are stuck dealing with that agent on that property.
0 votes
Ali Qureshi, Agent, Pleasanton, CA
Thu Nov 13, 2014
Ethically, you should contact the old agent and have them write an offer. Agents do not work on a salary and a good agent goes out of his/her way to help a client find a home. An agent's job is not only showing houses and writting offers but there is a lot they do and a good agent can do.
0 votes
Dorene Slavi…, Agent, Torrance, CA
Wed May 29, 2013
Dear Ami,
Probably not legally, but it would be very kind if you would take the time to let the first agent know that you are going with different representation and the reasons why. There is no way to improve our service if we are not given the opportunity to. You could put it into a letter if you don't feel comfortable taking directly to the person. I'm sure your first agent will appreciate the feedback and that you took the time to inform them.
0 votes
Doug Buenz &…, Agent, Pleasanton, CA
Wed May 29, 2013
I think Carl answered this perfectly. My question would be: Did you follow your agent's advice in terms of how to structure your offer? If your old agent gave you great advice, but you did not follow it, then you only have yourself to blame. And in this market, often it just comes down to how many buyers want it, and how strong your offer is (in terms of price and terms) relative to the other offers.

I think you should be honest with both agents and choose the one you feel will give you the best chance of getting your offer accepted.

You might find this useful:

http://www.680homes.com/blog/2012/07/03/5-strategies-that-wi…

Good luck!

Doug Buenz
The 680 Group at Alain Pinel Realtors
(925) 463-2000
Web Reference:  http://www.680homes.com/
0 votes
Bob Georgiou, Agent, Danville, CA
Wed Feb 15, 2012
Ami,

When buyers get frustrated the person they first direct their frustration at is the agent. It's not just buyers but its sellers as well. The sources of your frustration are clear, this is a tough market. Financing is hard competition for all inventory is high, cash is king to REO's and those with the green have a steep advantage.

Let me assure you that your situation is not a result of the agent. Buyer's want a deal, no one want's to "overpay", and everyone is looking to screw a bank if they can... these last perceptions prevent people from getting into a good homes because these perceptions are all wrong.

Our market is depressed. By definition its impossible ot overpay for a home. Values are down 50% so what is 2.5% more in the greater scheme of things? The property values have to increase by 200% or more to get back to the 2005 highs.

Our market will recover long before you read it in the papers. One law of buying in the bay area is that we have a structural housing shortage and supply and demand will never meet. Its simply a function of price. even though some who bought in 2008-2010 are down a little bit there are still buyers who don't want to pay today's prices or overbid into multiple offers?!?!?! Most of the difference is as much a 30-50k or less than $100 per month in mortgage. If these numbers make that much difference to your lifestyle you may want to consider your purchase.

You see, from where we sit this is simply luncay... but buyers are not overpaying... because they are writing unacceptable offers, wasting their own time and becoming frustrated.

These words has no meaning in this market. Next time you find a home you like have whoever you use go back 3 years comps and if the propery is below those numbers, stop speculating, open up your checkbook and pay a good price for the home that meets your needs.
Web Reference:  http://bob2sell.com
0 votes
John Juarez, Agent, Fremont, CA
Tue Feb 14, 2012
You have been working with a Realtor for 3-4 years and have written a succession of offers that did not gain acceptance. Didn’t you and/or you Realtor learn anything from those failures?

Now you have complicated the matter by using a new Realtor to write another offer that has, so far, failed to gain acceptance. BUT…you are thinking about meeting the counter offer!

You are stuck with the new Realtor for this transaction. That Realtor showed you the house (apparently) and wrote an offer for it. That transaction is not dead and a new Realtor (in this case, your old Realtor) cannot be inserted in the middle of the transaction without creating a mess about which Realtor is due to be paid the commission if you buy this house.

If I had worked with you for 3-4 years only to see events unfold as you have described them, I would not be sad to see the last of you.
0 votes
Barbara Wils…, Agent, Danville, CA
Mon Feb 13, 2012
i would be wondering why you have been unsuccessful in getting your offers accepted or countered! You should let you old agent know that you are working with someone else, but for this house, i think you are obligated to use the new one. S/he helped you find the house and wrote the first offer; we call that procuring cause and is due the commission should you be successful in getting the house. there is more to an offer than the price, and i think your agents should be telling you why you are not getting the houses. I almost always know why and when the buyers are motivated, my clients get the house they want. Call me if you want to be a successful buyer,
0 votes
Anna Campbell, , Pleasanton, CA
Mon Feb 13, 2012
Hi Ami,

Yes, the current Realtor you are working with has helped you find the home and submit the current offer. That Realtor is now tied to you and that specific property.

If you decide to go back to your older Realtor and look for another home you are fine.

However, if you decide to raise your purchase offer price on this existing home, you need to use the new Realtor.

I know this can be hard since you are trying to be loyal.
Anna Campbell
Web Reference:  http://www.AnnasHouses.com
0 votes
Laura Coffey, Agent, Santa Clarita, CA
Mon Feb 13, 2012
You are legally bound unless you signed a buyer/ broker agreement with either agent. Regarding your old agent representing you on a house that another agent submitted an offer it is possible if you are in an area that has precurring cause your new Realtor could sue your old Realtor for the commission because she showed you the home and already put in an offer.
If you want the house you need to stick with the new Realtor. If you don't you can go back to looking with the old one. Sounds like it wasn't her fault that you lost the houses. You are even having trouble securing with the new Realtor. I'm curious if you are not realitic in your pricing considering you are in an area where you are up against multiple offers all the time.
Web Reference:  http://www.laura4homes.com
0 votes
Lance King, Agent, San Francisco, CA
Mon Feb 13, 2012
Ami,

There are three main parts to an offer:

Price
Terms
Positioning (how your agent sells your offer)

Without knowing any of that it's hard to say if the deal for less money being accepted was your agent's fault or not. That said, someone who has put in that much time with you should have warranted enough respect to let her know that you decided to switch teams, or better yet, let her know what your issues were on why you wanted to change.

That agent put in a LOT of time for you, but there is nothing wrong with switching teams if yours is not performing - we have a client who got outbid 9 times with another agent and we got them into a house within 2 months of hiring us - but it seems to me that should have known long before 3 or 4 years were up if she was right for you.

That's the moral part. As for the rest, the new agent will likely claim to be the procuring cause for this house, so you are asking for lots of trouble if you have the old agent submit on the same house - you may end up paying both agents' commissions.

If you do not get the new house, moving forward the right thing to do is to let both realtors know what you are doing, whatever that is, and use whoever you choose going forward.
0 votes
Marie Souza…, Agent, Centerville, MA
Mon Feb 13, 2012
Morally, yes, you should inform your "old" Realtor, who at this point after the ridiculously LOOOONNNGGGG time you have been looking & submitting offers, would just be covering her costs. I can't even imagine how many homes they have shown you & offers they have written in 3-4 years...

She doesn't get paid until you buy something, so all her effort, time, patience (extreme patience) etc, goes out the window when you decide to use a "new" Realtor.

Legally, you need to speak with an Attorney, as we cannot give legal advice. Check all the paperwork you have signed with the "old" & "new" realtors, as now you could be obligated to both.

This whole situation could have & should have been avoided.
0 votes
Rhonda Fee, Agent, Pleasanton, CA
Sun Feb 12, 2012
Hi Ami,
Since you won't or shouldn't find a realtor willing to give legal advice, here is my opinion. If you did not sign a Buyer Broker Agreement with the original Realtor, in my opinion you don't have a legal obligation to her; whether you have a moral obligation is another question. This market can be tricky and the fact that you made offers and they were rejected certainly didn't mean she did anything wrong. Cash usually wins, especially when up against an FHA buyer, but even conventional as well. Your price point might also be a difficult market. Right now, anything under $400k is pretty hot (not sure of your price point).

With this said, it sounds like she put a lot of effort into finding you and your wife the right home and I'm sure she took time away from her family and spent gas money, etc working with you.If you stood in her shoes, you'd be pretty disappointed to have put such effort into someone to have them go with another agent, especially without having the conversation with her first.

As for whether you have an issue going back to her after having the new agent make an offer,if they countered you, you either need to counter with the agent that wrote the contract or decline the counter. I won't even touch that question about going back to the original agent on this particular property (yes, a messy situation). Again, this is just an opinion, not to be confused with legal advice. For the lawful answer (not my opinion) you should check with an attorney. I'm sure there are attorneys here on Trulia. Best of luck to you.
Web Reference:  http://www.rhondafee.com
0 votes
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