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I need advice
I will try to keep this as short as possible
Recently we signed an agreement with a real estate agent and brokerage to represent us as buyers. Before we signed we asked the agent if she was entitled to a commission if we found a private sale and did not use her to represent us - she said no she is not entitled to one. We are signed on until for four months (I know stupid, but we are first-timers and didn't realize how long that is).
In the agreement there is a section on commission, that basically says that if we find a property on our own then we owe the brokerage "the above stated commission" or the commission listed on MLS. The contract we signed has no stated commission - it was left blank.
Hopefully I haven't bored you and you are still with me. We looked at properties with her, but have not really seen any we though suited us. We went to an open house this weekend for a private sale, and the house suits us perfectly. We want to make an offer, but we are worried that we may owe the agent something. She did not show us the property or "procure it" in any way. I should also mention the property was not listed on MLS.
My question is do you think that we will end up having to pay any type of commission to the brokerage based on what I have explained? TIA for any advice you can give.
Re: I need advice
I just checked with a good friend, who is a REA and this is what she had to say:
The brokerage can go after the buyer for commission as stated on the Buyer's Brokerage Contract. However, the brokerage is entitled to the commission agreed upon by both the agent and client. If this was left blank (should be a $ or % amount) then I'm not sure what they can pursue if it is 'nothing'? The agent made a mistake by not filling this out in my opinion, as they never agreed to an amount. There is another clause in the agreement, "...purchase of a property which was introduced to the Buyer by, or through the efforts of, the Buyer's Brokerage....". I have had Buyer's find their own property through personal contacts and still called upon me to represent them (because I had worked hard for them and they were loyal to me) however I always factor my commission in by the seller paying it and not my Buyer (this is the way I work, everyone is different).
It sounds like they aren't happy with their agent also. If this is the case, they can call the agent's Broker and ask that the contract be cancelled. Its the Brokerage that can go after commission, not the agent. If they try, they are going after $0 anyway because that was what was agreed up on!?
On a different train of thought - as first time buyers do you have someone to guide you through the buying process? A good agent is more then just showing properties, they provide advice, spot things you may not and ensure your best interests are protected in any offer - so advising you to include certain contingencies, help you work through any inspection issues, etc.
If you have a good real estate lawyer you can get around that, but if you don't have anyone then your agent is your advocate. A lawyer would also be the best person to advise you in this situation.
Maybe I'm just risk adverse, but as a first time buyer I would not make an offer without assistance from someone who knows what thye're doing.
I can't see how they can come after you for money if the amount was left blank.
I am trying to figure out if I ever signed a contract when I was just buying a property and not selling. I don't think I ever did.
Thanks everyone for the advice, and thank you Melozia for checking with your friend.
It isn't that we are completely unhappy with our agent (although we are unhappy with some things and feel like we are doing a lot of the work that she should be doing), but the sellers stated that they do not want to deal with an agent. If we did have her represent us, then it would drive the price of the house up into a range we are not comfortable with. I do have my own issues with going behind her back and being disloyal, but we really want the house and the housing market is just awful right now for buyers.
As for representation, we do have a lawyer and we made sure to have a condition about having our lawyer look over the contract when we do make an offer. I will be asking the lawyer about this issue when we do talk to him, but thought I would check with you ladies to see what you think. Thanks so much!
Melozia previous post is pretty much dead on. If it?s blank then they cannot go after you for anything. It should have said 2.5%. Also, if the agent did tell you that you didn?t owe them anything if you purchased a private sale then they lied to you so it would be stupid for them to try and go after their commission of nothing when they had you sign a contract under false pretences.
Personally, I?ve represented buyers that have purchased private sales. But if a buyer ever came to me and said that they were going it alone I would never try to get commission out of them.
That being said, if the contract was filled out correctly and they explained it to you, then yes they would be within their rights to go after you for the commission but their Broker would have to do so on their behalf.
The reasoning for this clause in the agreement is really to protect the agent from a situation where they introduced you to a property and then you bought it directly from the seller after it expired. Not to get paid for doing nothing.
For future reference, you are not required to sign a buyer representation agreement.
I?m a Realtor so let me know if you have any other questions throughout the process.