Trp124, Home Buyer in 55378

What is the agent entitled to for commission?

Asked by Trp124, 55378 Mon Dec 30, 2013

I had an exclusive right to represent with an agent to sell my house. The agent sold my house and was paid 6% commission. I then went out and found a vacant lot that I used the agent to purchase. No new agreement was signed and I paid the agent 2.5% commission on the vacant lot. On the day I closed on the vacant lot, I also opened a construction loan and worked with a local company to build a house. Now that the house is built, the company is getting emails from the agent saying they owe a commission on the finished house? I think the agent is down right greedy but where do I stand?

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Susan Hoffla…, Agent, Shoreview, MN
Sat Jan 4, 2014
Hi, Trp124!
OK, you say here that you signed NO additional paper work other than your listing contract to sell your house.

You also say that you PAID a commission on the purchase of the vacant lot, of 2.5%. Is that correct? Did you have a contract saying that or you just paid it because you said you would?

Then, you decide to hire a builder and build on your lot that you've purchased. Did your agent have anything to do with that?? Did the agent help you find the builder or negotiate with them in any way??

These are important points should this come to litigation. The agent has to prove what's called "procuring cause", in other words THE AGENT was the reason you found this builder and did the deal with them. That would suggest you had contracts in place that spelled out those terms.

It sounds like you have no such contract, and, ostensibly, no liability. As for the builder, that's on them to resolve. I would suggest consulting a good attorney just to know where you stand in case the agent decides to pursue legal action.

Good luck~
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Thank you for the responses. I signed an exclusive right to represent for the agent too sell my house. After paying her the 6% commission! I found this vacant lot and went with this agent to purchase the lot. She used the original right to represent and put in 2.5 % commission that she was paid when I closed on the land. She is now trying to claim a referral fee/commission from the builder. Prior to building, she gave me 3 company names from the area that she heard good things about. 1 of which I was already talking to about building my house. She never met with them, she never met with me and she certainly didn't refer me to them other than to give me a "what I've heard" about multiple companies. After closing on the land, I never seen or heard from her the entire 6 months it took to design, budget and build my house. Now I get an email stating that she hasn't been paid her referral/commission on the house.
Flag Sat Jan 4, 2014
Christopher…, Agent, Bloomington, MN
Tue Dec 31, 2013
The bottom line is that it always needs to be in writing. The contract outlines exactly what the compensation is.

And quite frankly the buyers agent is trying to get paid twice for the same transaction. You could call that greedy!

Christopher Block
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Cameron Piper, Agent, Forest Lake, MN
Mon Dec 30, 2013
There is an old adage in real estate "if it isn't in writing, it didn't happen." I would ask the agent to very simply to show you the written and signed agreement stating that you owe him/her a commission. If they can produce something, you likely owe them a commission, if they can't, tell them to take a hike until they can.

As far as the agent being greedy, it is very common for an agent to work with a seller on the sale of their home and to work with that same seller when they become a buyer. It is only natural that if they did a good selling the home, that the seller (now buyer) would want to work with them on their next transaction. Bear in mind that the 6% listing commission was split between 4 parties.

Best of luck in the resolution of this situation. Be sure to post back if you have additional questions.

Cameron Piper
Keller Williams Premier Realty
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Ann Ryan, Agent, Doral, FL
Mon Dec 30, 2013
The agent is trying to get commission from the construction company? Did they have an agreement? Do you have any language in the land contract that might have authorized such commission?

In any case, greed or no greed, as long as they're trying to get the commission from the construction company, you should probably let them duke it out.
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Blake Hanson, Agent, Minneapolis, MN
Mon Dec 30, 2013
If there was no Buyer Representation Agreement signed then it is in my opinion that your agent is not entitled to anything. I assume when you say you worked with a local company to build that they weren't the one selling the lot? If it continues to be an issue, speak to the agent's broker (call the front desk and ask for the broker).

When you purchased the vacant lot, it would have been best for your agent to have a Buyer Representation Agreement or Facilitator Agreement signed in order to clearly define the agent's role. If the property was listed for sale on the MLS, then there was already an advertised cooperating broker (buyer's agent) commission that was previously determined between the seller and listing agent. The seller's paid that 2.5% buyer's agent commission with the assumption you were under contract and they technically weren't obligated too (although your agent could fight for entitlement to the commission with Procuring Cause because he or she wrote the offer and went through to closing with you).

A Buyer Representation or Facilitator Agreement would have also outlined what types of property the agent was representing you on (e.g. only the lot or new construction and vacant lots). Since there wasn't one in place and you built the property yourself, there is no obligation to pay the agent. This could have been built into the end loan that you get when construction is finished. Unlike when a builder has a lot for sale with new construction on the MLS, that cooperating broker commission comes back into play.

This was a lengthy response but I wanted to outline the whole scenario. It's a situation that the agent should have made sure was avoided by completing the proper contracts that protect everyone's interests.
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