After moving to the area and looking around at properties for a while, I saw one place I was interested in and contacted the seller’s agent directly. She agreed to show me the property, and since she was located out of town encouraged me to find a local agent who could show me more things in the area. After looking for a while with another agent and not finding much that I was interested in, I told him about this place that I had already seen and we went and looked at it together.
My question:
-Is there any reason that my agent would like me to buy another property instead of this one? Is the sellers agent entitled to more of the commission? I get the impression that he was hesitant to show me this property again and that he is trying to steer me toward other places.
-Also, would it be unreasonable to ask that he reduce his commission since I was the one that found this place?
You have a small predicament here that I’ll try to explain.
The listing agent who showed you the first property did so in the interest of selling her listing… but not to pick you up as a client, as you are geographically undesirable… hence why she recommended you find a local agent who could show you more listings.
When she showed you the property, she became the procuring cause of your interest in purchasing the property… and as such, she might try to deny a commission to the subsequent agent who has been showing you properties that you don’t want to buy.
The reason why this subsequent agent is hesitant to show you that property again is that he fears he will not get paid to represent you… which may happen should he write an offer and take you through to closing.
If I were the listing agent, I would pay the new agent… and so would Bloodhound Broker Greg Swann, as well as many other brokers. Ultimately, we want our listings sold, and many of us prefer the buyer to have an agent represent them.
Unfortunately, we are not typical.
Here’s what I would do if I were you:
I would call the listing agent and tell her that you have entered into a buyer brokerage agreement with an agent who has shown you several properties. Explain your dilemma of wanting to put in an offer on her listing, but you don’t want to have to pay your buyer’s agent out of your pocket if she doesn’t agree to pay the co-broke – and see if she’ll agree to pay the co-broke. By presenting it this way, she is likely to pay the co-broke. After all… she sent you out to find another agent.
I don’t know about asking for a reduction in commission, as it is likely that the listing agent may agree to pay the co-broke – but it may be reduced since she showed you the house, first. I suppose if she paid a full co-broke, your agent may not mind rebating you a portion.
Of course, there are other ways to handle this, but this method will keep an agent on your side representing YOUR interests… with no money out-of-pocket.
Other options include:
paying the buyer’s agent separately for representing you;
allowing the listing agent to write the contract with you getting NO representation;
or allowing the listing agent to act as a Dual Agent, representing both you and the seller.
I’ll invite my fellow brokers to chime in with their opinions, and wish you good luck.
Doug Quance says:
It just dawned on me that you might in a state where buyer agency doesn’t exist.
Real estate laws differ from state to state, so it would be helpful if we knew what state you are in.
January 20, 2007 — 9:00 pm
Greg Swann says:
In Arizona, the listing agent recommending that the buyer seek a different agent is arguably an abandonment, which would break the procuring cause chain. But that’s a matter for arbitration after close of escrow, and maybe not a slam dunk in any case.
It’s a tough spot…
January 20, 2007 — 9:35 pm
John L. Wake says:
I had something similar. A future client saw a home she liked but didn’t like the first agent’s discouraging her from making a low ball offer. No offer was made.
She then contacts me. (After hearing her story, alarms went off in my head…)
My DB didn’t seem concerned about procuring cause. She told me to get something in writing from the client explaining why she didn’t want the first agent to represent her. I guess clients get to choose their agents.
(By the way, I ended up having to fire that client. She wasn’t looking for a house, she was looking for a time machine to go back to 2003 prices.)
January 21, 2007 — 1:14 am
NVmike says:
Ask The Broker – Why Is My Agent Steering Me Away From This House?
Could be not enough under-the-table cobroke.
Which brings up another issue … These days, even in states where it’s not required or considered typical, you probably want a lawyer working for you and present at the closing to review the package of closing documents.
There are so many ways to bury a cobroke or other kickback into the closing documents that most people wouldn’t even notice them … but a RE lawyer would.
When builders are offering 10-15% cobrokes, these are dangerous times to be a buyer w/o expert counsel.
January 21, 2007 — 12:51 pm
John says:
No, NVMike, there’s no way to bury it, unless a builder does it. When advertised through MLS, the co-broke is out in the open and part of the sales contract, at least here in TX.
That brings me to my suggestions for this buyer. Get a buyer agency agreement, specifically covering this home. The listing agent showing this home is all verbal, she has no proof.
Next, write the offer and in the contract where the buyer agent commission is, write the amount they offer. The listing agent will be forced to present this offer, and she’ll have no proof of procuring cause, since the buyer has a Buyer Agency Agreement. I doubt she’ll argue with the seller that they should decline the offer just because she doesn’t want to pay commission.
Besides, the way she sounded, she might encourage a buyer’s agent anyway.
January 21, 2007 — 10:47 pm
Kris Berg says:
If you are in California, the agent who writes the offer is largely held to be the procuring cause. Could it be challenged? Sure. Practically speaking, would it be? I have never seen it happen. Since the listing agent effectively sent you packing, it would appear that you are on solid ground in moving forward with Agent 2, at least in my neck of the woods. Absent a buyer-broker agreement or signed agency, she wouldn’t have much of a case.
January 22, 2007 — 7:43 am
Brad Nix says:
Doug,
You have a great understanding of agency relations as it pertains to Georgia law and I would advise my customers/clients to do the same things you have suggested.
Also, if I were the Buyer’s agent in this case, I’d be sure to get a Commission Agreement signed by the Listing agent prior to contract acceptance.
January 23, 2007 — 8:43 pm