Realtor Question

MacyPAMarch 21, 2012

I would like some advice on how to deal with this situation.

We have been looking at houses and land for about 8 months. A few months ago I saw a new development on the Coldwell website and wanted more information. So I filled out the box on their website and they turned my question over to a realtor. She called me, said that development was full and asked what I was looking for. We talked a bit and then she set up a search where I would get an email on any new property. Around September/October I inquired about some land in a great location, but felt it was not big enough for what we wanted. She is friends with the builder and called him for details on the property. She also gave me information on one or two other places that I was not interested in. Then in October I found some property we were very interested in. I asked her if she knew anything about the development or the builder. She said it was a nice location and the builder had a good reputation. My husband called the builder and set up an appointment for us. Then the realtor emailed me to say she had called the builder and he told her we already had an appointment. I had not asked her to call the builder and was surprised she did. She said she would like to come along and I said that was fine. Through some miscommunication, she went to the wrong place and apologized for not showing up. I told her we were meeting at the property the next day and she said she would be there. So she showed up and just walked around the lot and chatted with me. A day or two later she emailed to see if I was going to make a deposit on the land. I told her I was not ready. Then I did not hear from her until February. I emailed her about a house I saw at a great price. She asked how the building was coming and I told her we were still deciding. She also said the house I inquired about needed a lot of work. I have no heard from her since. All of our communication has been through email except for the initial phone call and her visit to the property.

So now we are almost at the stage where we will buy the land. The builder says either the realtor gets the commission or he takes the amount off of the land. He feels she has not done anything to earn her money and wants us to contact her and get her to agree to lower her percentage. Why should she agree to that? Did she earn her commission? What more should she have done? I�ve only worked with a realtor once about 20 years ago who took us to look at numerous houses. This one made some phone calls that I did not ask her to and invited herself to meetings with the builder. But not knowing what she should have done when looking for land, I cannot honestly say she did or did not do her job. I hate being put in this position.

Thanks for any advice you can offer.

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But she was involved. Sorry, but I don't really think you're going to be able to cut her out of this deal. And honestly? You've taken up a fair bit of her time over the past few months. She only gets paid when she makes a sale, and I'd be willing to bet she's going to fight tooth and nail to get the commission on this one. And I'm not sure she doesn't deserve it anyway. Maybe she hasn't been the best representative for you, but YOU invited her into your property search, and she did more than a lot of agents do for their clients.

Personally? I wouldn't fight her getting a fair share of the commission on this sale. It's only right.

    Bookmark   March 21, 2012 at 8:00AM
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"She asked how the building was coming and I told her we were still deciding."

This question implies to me she is trying to find out if you have entered into a contract with the builder. Does she think she is entitled to a commission on this transaction without participating in the negotiations and executing the contract?

I think the builder wants to maintain a good relationship with the local realtors by not cutting her out of commission. Ask the builder how much is the commission he has agreed to pay any realtor. Perhaps you can reach a compromise.

    Bookmark   March 21, 2012 at 9:43AM
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I agree she gets commission, if you didn't want to work with her you should have clearly, in writing, told her you didn't want her service.

    Bookmark   March 21, 2012 at 11:20AM
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I disagree. She never clearly, in writing, agreed to work with this realtor to close any transaction. The realtor invited herself into events set up by the buyer herself. YOu might have led her on a little is the only thing. If the land is a set price without negotiations, you could choose now to have your realtor involved in negotiations/your protection. Or, you could hire a RE attorney to overlook the land sale contract. One way or the other, you should have someone other than yourself and the seller look over the contract. At this point, you decide if that is the realtor, or a RE attorney.

    Bookmark   March 21, 2012 at 1:22PM
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I don't know about other areas of the country, but here, NO BUYER agrees in writing to work with a realtor. I've never heard of anyone signing such a contract.

    Bookmark   March 21, 2012 at 8:50PM
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'You might have led her on a little is the only thing.â it does not sound it is a little.

For a period of 8 months, OP received free advice and information from the realtor. If the realtor does not deserve commission, does OP deserve free service?

I have been wondering why realtors do not provide a menu of services with price tag for each, so that people could pay for the level/kind of service they need. Price tag on each service is depending on the expertise and experience of each realtor. After all time and knowledge are valuable commodities. Consumers should pay the providers for both.

    Bookmark   March 21, 2012 at 9:23PM
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I went back through my emails with the realtor. The first communication was mid-October and, except for one email in February about a house for sale, the last communication was the end of October.

Before I worked with this one, I worked with another one in looking for a house. When I mentioned building to her, she said she did not want to get involved in that, so I had to find someone else when we decided building was the way we wanted to go. But for a time the first one called often, took us to see 3 or 4 houses and also investigated some others she thought we would be interested in. I don't want to cheat anyone out of their money, but the first one did much more for us and gets nothing. It doesn't seem fair, but I guess that is the way the business is.

Also can someone explain how commission rates work. On the property I am considering buying, the builder has his own agency and listed the property. If I remember correctly from buying a house many years ago, the commision rate is split between the two. Is that true? What is the standard rate? It has never been mentioned to us.

    Bookmark   March 22, 2012 at 12:20AM
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An agent is obligated to a commission when she/he was the procuring cause of the sale as defined:

"Procuring cause" may be defined as a series of events, unbroken in their continuity, that result in the desired objective (i.e., generally, the sale of property).

Black's Law Dictionary, Fifth Edition, defines procuring case as: The proximate cause; the cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime object. The inducing cause; the direct or proximate cause.

Here is what you posted in your first post:

"Around September/October I inquired about some land in a great location, but felt it was not big enough for what we wanted. She is friends with the builder and called him for details on the property. She also gave me information on one or two other places that I was not interested in."

So,IMO, she was the first step that will cause this sale to happen. Even if you would argue the procuring cause, what about the ethical part of it all. After all, you called her concerning information on this particular lot. If you did not plan on using an agent, you should have been upfront with her in the beginning.

    Bookmark   March 22, 2012 at 6:35AM
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I agree, ncreguy, & if the builder didn't intend to pay the Realtor, he should have said so at the first meeting so the Realtor & buyer could have worked it out;
he shouldn't have sprung this surprise on the buyers without their Realtor present.

"The builder says either the Realtor gets the commission or he takes the amount off of the land."

He's not only putting you in a very uncomfortable position;
he's trying to separate you from your representative, & you can bet that he's built the Realtor fee into the price of the property/home, so he isn't putting the fee in your pocket, he's keeping it in his own pocket.

What on earth is he thinking?

When builders bad-mouth Realtors to the Realtors' clients (she hasn't "earned" her fee), those Realtors will never again tell *anybody* that "he has a good reputation".

The seller doesn't get to determine whether a buyer's representative has earned her fee;
the representative's job is to help her clients get the best price & terms *from a seller*, & she's earned her fee when her clients make a purchase.

I wish you the best.

    Bookmark   March 23, 2012 at 5:56PM
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Thank you all for your comments. It is a sticky situation that I do not want to be part of.

I really did not know what role the realtor should have played in all of this. She was not involved in negotiating a price. I did not ask and she did not volunteer. Since meeting her, I just got the one email asking if we wanted to make a deposit. Maybe if I would have said yes, she would have offered to be involved, but it never came up and I did not realize that was part of her role.

Can someone tell me what the average rate is for realtors?

    Bookmark   March 23, 2012 at 7:02PM
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2.5% - 3,0% here for a new home deal.

    Bookmark   March 23, 2012 at 9:36PM
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One more thing... when you run into trouble during the home build, the builder is a lot more willing to work something out in your favor if he is dealing with an agent than if he is dealing with you. Builders view agents as repeat business; they look at homeowners as a one time deal. Therefore a good agent has much more leverage.

    Bookmark   March 23, 2012 at 9:40PM
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what ncreguy said.

people show their best side when they're trying to get you committed to doing business with them;
they never get more amiable as time goes by.

when someone starts "surprising" you early on...

    Bookmark   March 24, 2012 at 12:14PM
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I think the realtor is entitled to a commission. email evidence shows that she is the procuring cause of your interest and the Builder is very sneaky trying to circumvent. You might get into trouble if she sued both you and the builder.

not helping buyer to negotiate is not a defense of cutting commission to a procuring broker.

    Bookmark   March 29, 2012 at 11:19AM
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If the realtor sued the OP, what would be the basis? I don't see breech of contract since I don't think there was any verbal or written contract. No commission was discussed, no discussion of what services would be provided.

The builder may be obligated to pay a commission. What he pays is a matter between him and the realtor. If the builder is paying the commission, then what is the incentive for the realtor to fight the builder in the event things are not going well for the buyer? Isn't this biting the hand that feeds you?

In my opinion, if a realtor expects to be paid a commission, then it should be stated up front to all parties. In my area a 3% commission on new contruction would be at least $25,000. People deserved to be paid, but the terms and amount need to be made clear.

    Bookmark   March 29, 2012 at 1:17PM
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