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Angel, Home Buyer in Michigan

Seller's Agent wants buyer to pay commission shortage

Asked by Angel, Michigan Fri Jan 21, 2011

This is a short sale of course, the seller filed bankrupt, the bank approved the sale of the home even though the seller's filed chapter 7, now the seller's agent threatens to let the home go to foreclosure if we the buyer's don't give him 1200 additional dollars for his commission. What should we do?

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The listing contract controls commission and is an agreement between the Seller and the agent. Not the buyer--meaning he can't compel the buyer to pay, nor does he have any power to "kill" the transaction. That would be an agency violation. The agents option is to take his client the seller to court if he doesn't get the commission called for in the listing agreement after closing. Commissions are not earned or due until closing--point being he can't be short since he hasn't earned the commissions yet (what's likely happening is the bank on the short sale has "capped" is commissions at a percentage less than is called for in the listing agreement)
1 vote Thank Flag Link Fri Jan 21, 2011
i will be more than happy to help.
0 votes Thank Flag Link Sat Oct 20, 2012
Angel,

First off, Laugh! take a deep breath and relax. The advice below seems to be substantial with lots of good varied feedback from my fellow agents.

It seems to me that you understand that you have no contractual obligations to the sellers agent, his agreement lies with the sellers. And your agreement lies with your buyers agent.

If you have a buyers agent they can simply address the issue with their broker. The brokers on both sides of the deal can contact each other then come to terms. Let them deal with the headaches and figure out the best path.

Should nothing come from the " broker meeting of the minds", in my mind there are three options:

1. Call the agents bluff. If they already have sooo much time invested in the short sale, some pay to sellers agent is better than none and having to start the whole process all over again. tell them you are out of money.

2. Pay the $1200, get the house you want and then file a complaint afterwards. The reason I advise pay first, is because you do love the home, you still want the home. I know this because you are here asking us other agents for advice.

If the agent is already playing foul, If you complain first there is a chance you could lose the home if they choose to blow the deal, in addition you have lost your inspection fees and any additional costs you already have invested and you have to start all over again. Trust me after all this no home with ever compare to this one.

Yes it stinks because it is $1200. But if it were me in this situation it would be more important to secure a deal and attempt to recoup my $1200 once the home was already mine than to give up and start back over looking for a new home.

3. Consider contacting an attorney to advise you further. Keep in mind this is time consuming and can be costly which is why #1 or #2 may be a more sensible answer. Make sure you have documentation of the threats made to you by the sellers agent.

I hope this helps you sort things out. Whatever your decision we know it will be a wise one.

We are always here to help should you have more questions.

Best Wishes

Jeremy
0 votes Thank Flag Link Sun Feb 27, 2011
Hi Angel

In a short sale , the banks determine the commission.
Short sales result in reduced commissions, is the selling agent a new agent.

Ask your agent to take it up with the banks.

Good luck.
Perry
0 votes Thank Flag Link Thu Jan 27, 2011
Angel - does the bank holding the mortgage know that the listing agent has threatened to void the sale unless he is paid more commission? Does the seller know their agent's stance? It would be interesting to see how those conversations might play out.

In my experience, short sale listings are generally subject to a possible commission adjustment by the seller's lender(s), and our MLS co-operative compensation field serves notice to buyers agents as well...that the commission offered might end up having to be reduced. Agents have the right to choose if they want to list short sales, because they may/may not be paid in full (or even paid at all).

If you are using an attorney, I'd suggest getting a light shined on the agent's actions - and again, as suggested, if the agent isn't the owner/managing broker of the listing office, I'd suggest your agent/agent's broker and/or your attorney reach out and let them know what's going on, too.

By threatening to push his own client into foreclosure, IMO he's also assuredly acting in a manner to cause harm to his clients. That certainly could be a license violation and/or Realtor Code of Ethics breach, too and could open his brokerage up to a lawsuit by the sellers.
Web Reference: http://www.kimnoonan.com
0 votes Thank Flag Link Thu Jan 27, 2011
angel,

consult a real estate attorney or the board.

Good luck

Vera
0 votes Thank Flag Link Thu Jan 27, 2011
Angel, what is the accepted offer on the property? That would help me make a decision.
0 votes Thank Flag Link Fri Jan 21, 2011
Wow! It is stories like this that get me fired up and is why I am the vice chair of the Grievance Cmte for our board of realtors.

The listing contract controls commission (as stated), and what is in the MLS is an agreement to cooperate between brokers for an established amount.

Agents MUST represent their clients' interests before their own. I hope this turns into an ethics/grievance and/or licensing issue. Please keep us posted.
Web Reference: http://DoorToDreams.com
0 votes Thank Flag Link Fri Jan 21, 2011
Get it in writing! If he does it, take it to his broker and or the local board of Realtors. You don't owe him a dime. If there is a shortage in the commission, it was up to him to negotiate that with the bank during the short sale process. If the bank didn't pay enough, that is his problem, ot yours.
Good luck and I hope you get your home.
0 votes Thank Flag Link Fri Jan 21, 2011
That is up to you, but this is a great example of why I steer my clients away from shortsales, they are listed at a price no one knows if the bank will accept. I would need to see it, the comps and etc, but is it worth $1200 out of your pocket? I suspect there are others available, look for REO or Estate Sales which typically are better deals.

As a Realtor, I wont even list Short Sales for this very reason. It is not your "duty" to pay the agent BUT if you "love" the house and are emtionally involved then YOU need to decide. I mean, you would not really make the decision based on what someone else would do on a forums board would you? It is an opinion, and you have yours. If you must have it, consider it the cost of getting the house you always wanted.

Best of luck.
Spirit Messingham
Tierra Antigua Realty
Tucson, AZ
0 votes Thank Flag Link Fri Jan 21, 2011
Sounds like the seller's agent is out of luck. Do not pay him anything. Those are the pitfalls of the job. It is completely out of line for him to ask the buyer for money. It's people like that, that give the rest of us a bad name. I'm sorry this is happening to you.
0 votes Thank Flag Link Fri Jan 21, 2011
First, ask the Seller's Agent to put that demand in writing. Don't wait. You should immediately contact the Seller's Agent's Broker to report the situation. If that doesn't work, then immediately contact the governing body in your state that licenses agents and brokers. Create a sense of urgency, as you do not want to delay your closing.
0 votes Thank Flag Link Fri Jan 21, 2011
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