Is this a normal contract to sign with a buying agent?

madtownmamaAugust 2, 2009

Our buying agent (we never worked with one before. We bought a house 7 years ago and went through a Realtor that time) is saying that we have to sign a contract stating that they get 6% commission on whatever house we buy. That gets split 50% with the mortgage company and then he, the buying agent will give us part of his commission.

*side note. We first contacted a local mortgage company to see where we stand with buying a house (we haven't owned for a few years. A year after we bought our first house we accepted a promotion to another state and have been promoting up every year to a new state. Because of our constant relocation we only rented places. Now we are staying place for a long time, so we want to buy.) The mortgage company we went to is the one that recommended we go to this buying agent.

Researching it 6% sounds about normal. However what I'm reading is that the seller's agent gets the 6% commission it then gets split 50% with the buying agent and then, 50% of what the seller is left with gets split between the mortgage company.

So what I'm afraid of, is that he is asking us to sign a contract stating that they get 6% and this is on top of whatever the seller's agent is already getting and therefore in order for someone to accept an offer from us they have to also accept those terms.

The contract that he wants us to sign also says that we can not buy a house FSBO or one that has to be financed by a different bank. Also if we do not buy a house through them we are still responsible for paying their commission. If we go to open houses without our agent we have to go to the seller's agent at that house and tell them who we are working with. We cannot talk to another agent without disclosing who are agent/company is.

My husband just explained this to me last night. I knew he set up an appointment to sign paperwork on Wednesday. We both thought it was weird since we never had to sign contracts with our previous Realtor but was thinking maybe it had to do something with buying in this state. We both do not feel comfortable with this at all. Is this normal for what any of you had to do?

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cmarlin20

Never sign that contract, it is not normal.
It is not normal to pay commission to a mortgage company.
6% commission total may or may not be "normal".
Find another agent, without a contract, find your own lender.

    Bookmark   August 2, 2009 at 4:56PM
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choochnbob

From experience buying twice, once with a buyer's agent , all I can say is Run from this guy and this mortgage company...and fast! I would NEVER sign anything requiring me to use a specific mortgage company. Ever! That so sounds very wrong to me.
I second what cmarlin20 said. Also here in southern NH, our local selling agents get anywhere btwn 4.5-7% commission which they split up anywhere from 50/50 to 60/40 with the buyer's agent. No part of it is specified to go to any mortgage company. I wouldn't speak further with this guy of I were you. Good luck!

    Bookmark   August 2, 2009 at 7:59PM
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cordovamom

Agree with above posters -- do not sign this agreement !!

    Bookmark   August 2, 2009 at 8:09PM
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weed30

This guy sounds more like an Agent's Agent than a Buyers Agent....RUN!

    Bookmark   August 2, 2009 at 9:30PM
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mariend

I agree with others. Find another agent. You can do better as this person seems to be getting too many kickbacks. You go with the bank or loan company you want to, you find the home inspector, not who the RE agent wants, you choose the title company or lawyer you want. You pay your agent nothing. If you want FSBO, it is your choice. As I see it your agent helps you buy the house you choose.

    Bookmark   August 3, 2009 at 1:14AM
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ncrealestateguy

So, let's see.
The seller is offering 3% to any buyers agent to bring in a buyer... 50% of that goes to the lender, which takes it down to 1.5%, then the buyers agent is going to split that with you... takes him somewhere close to being broke!

First off, no seller is offering 6% to a buyers agent, more like 3%. So if he states that he is to get 6% commission, guess where the difference is gonna come from?... you!

Git rid of him now, and please tell him exactly why... because he represents the slime of the industry.

    Bookmark   August 3, 2009 at 8:00AM
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rachelh

I know everyone else has said it already but do not use this agent!!! Listen to everybody here. In my area buyers agents don't usually expect you to sign a contract. And telling you you cannot buy a FSBO? Who in their right mind thinks they have a right to tell someone what houses they can and cannot buy? There are so many houses for sale right now including FSBOs, some even offer buyers agents a little $. This guy is a control freak!! I can't imagine how many people have actually signed with him. This is the craziest thing I've heard of in a while.

    Bookmark   August 3, 2009 at 9:54AM
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Billl

Like others have said, steer clear of this guy and the mortgage company.

Basically, you went in to talk to a broker about a mortgage. He set you up with an agent that was going to give him a kickback for referring business to him/her. At best, that agent is going to have divided loyalties.

Below is a sample contract. Note the wording on how the agent gets paid.
http://reddoorrealestatevt.com/virtualoffice_files/Sample%20Buyer%20Agreement.pdf

    Bookmark   August 3, 2009 at 10:28AM
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susana_2006

The normal situation that I've encountered is that the listing agent splits the commission with the agent that the buyer has. In the past, it wasn't common for a buyer to have a contract with a realtor. Now, it seems to be more common (and certainly is something that the buyer's realtor wants). Be careful with this. After spending over a year looking for a specific type of property in a specific area, we finally found the right home. The seller was doing it FSBO and didn't want to pay any commission at all. I did have our agent "help" us and I did pay 1/2 the commission. I didn't have to, but did feel obligated. Had I signed a contract, the commission wouldn't have been optional for me.

Good luck
Susan

    Bookmark   August 4, 2009 at 3:20PM
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dreamgarden

rachelh-"In my area buyers agents don't usually expect you to sign a contract. And telling you you cannot buy a FSBO? Who in their right mind thinks they have a right to tell someone what houses they can and cannot buy? There are so many houses for sale right now including FSBOs, some even offer buyers agents a little $. This guy is a control freak!! I can't imagine how many people have actually signed with him. This is the craziest thing I've heard of in a while."

My thoughts exactly. Can't buy a house FSBO? Yikes. This mortgage company sounds like an awful company to do business with. If your having this much trouble with them BEFORE you sign anything, imagine what you might have to look forward to if a house were to go into foreclosure......

A link that might be useful:

Lucrative Fees May Deter Efforts to Alter Loans

www.nytimes.com/2009/07/30/business/30services.html

    Bookmark   August 5, 2009 at 9:59AM
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mariend

New poster, no follow up? Are you really here?

    Bookmark   August 5, 2009 at 10:27AM
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sweeby

If you're still here, please post the name of the mortgage company and real estate agency that asked you to sign this lop-sided contract. They deserve to have their actions exposed.

    Bookmark   August 6, 2009 at 10:51AM
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