[photopress:blog.jpg,thumb,alignright]I’d like your opinions on this one. Still scratching my head over this scenario. Five brokers got together after it closed and had FIVE DIFFERENT opinions! That’s the day I realized that NONE of us seem to agree on “THE RULES” anymore and hence the day that I started supporting alternative business models. When five real estate brokers can’t agree on the rules, then it’s a free for all and anyone can play it any way they want, is how I saw it at the end of this scenario. What do you think?
Brand new agent is working with a buyer friend/client who lives in her building. They see each other most every day, though they first met at an Open House in the same building where they both live. Agent wrote an offer for this buyer on the property where they first met, but that buyer didn’t get it. So they continued to look at property together for weeks, maybe months.
Since the agent was new, never sold a house, the broker and associate broker of the company often accompanied the new agent and buyer when viewing property and always when the buyer was interested in the property and ready to write an offer. So the buyer was well served and well covered on all fronts and had even been to the home of the broker and the home of the agent.
One day the associate broker suggested to the buyer and the buyer’s agent, that the buyer sign a Buyer Broker Agreement so that the agent could solicit For Sale By Owner and unlisted sellers on behalf of the buyer. This way the seller would know the agent was not representing them, but the buyer, when asking if they might be interested in moving and selling. Since the buyer knew pretty much exactly where she wanted to live, the associate broker felt a little “door knocking” was in order and a Buyer Broker Agreement needed since the door knocking was in the building where both the agent and the buyer lived. Both agreed and the buyer signed a buyer agency agreement.
One day the Broker received a call from an agent regarding a property that had been on market a very long time. Three brand new townhomes that no one seemed to want to buy for many months in a hot market. The agent wanted the broker to come and see that one with her and the buyer, but the broker had already seen it and felt the agent could “handle” showing it on her own, which she did. While the agent was showing, the associate broker contacted the listing agent regarding the availability of the townhomes and to ask some other questions. The listing agent replied saying “Please bring your clients!”
The buyer that same day decided to make an offer on a different property, and she got beat out by a cash buyer. The day the buyer found out she was beaten by a cash buyer, she called the listing agent to see if the other new construction property was still available. She could pretty much see the sign from her window and just picked up the phone and called from the sign before bothering the broker (agent having gone on vacation).
OK – here’s where you have to start paying close attention.
Buyer calls listing agent to see if it is available.
Listing agent says “Yes, but you better HURRY and get your agent to write that offer.” (8 months on market and 3 of them for sale)
Buyer says, “I just wanted to know if it was available, I can’t afford it anyway”.
Listing Agents says, “What can you afford?”.
Buyer says “$90,000 less than the asking price.”
Listing Agent says “I can’t let it go for that, but I can do it at $60,000 less than asking price.”
Buyer almost falls on the floor and says…OK…
Listing Agent again says “hurry”.
Buyer starts to say, thinking to herself, “My agent went on vacation…” before she gets to “I’ll need to call the broker…”
Listing Agent jumps in and says…”No problem, I’ll write up, I’ll even come to your house and do it.”
Listing Agent gets to buyer’s house
Buyer starts backpeddling, “I really can’t afford more than $90,000 less than asking price…”
Listing Agent says, “I can’t let it go for less than $60,000 under asking BUT the seller can pay 2% of the sale price toward your closing costs,IF we only pay your agent 1% of the 3% commission.”
Buyer says, “Can you do that?”
Agent’s says, “Sure, it’s called a ‘referral fee’ and I do it all the time.
Listing Agent writes into the contract…”Selling Office Commission of 3% to be divided as follows: 1% to Buyer’s Agent and 2% to Buyer to pay closing costs.”
Basically…listing agent “pulled a Redfin” our of her hat.
In doing so, the listing agent sold all three of the townhomes for the seller, as everyone was waiting for someone to buy one. Once he had a contract on one, he was able to get all three in contract within 48 hours.
So Listing Agent did a GREAT job for his seller client, by getting all three that had been on market for 8 months SOLD in 48 hours by twisting the arm of someone else’s client. Some say that was his job and a good thing.
Buyer was left totally unrepresented and didn’t realize that “a referral fee” did not give her representation AND she didn’t notice that the contract she signed with the Listing Agent to buy the house said “NO ONE is to REPRESENT the buyer and ONLY the seller is represented”. It didn’t state it that clearly. Two little blocks were checked where it said SELLER, leaving the buyer unrepresented. But the buyer chose to live with that in the end, after it was explained to her by the associate broker of the buyer’s agent a week later, in exchange for 2% of the buyer agent fee.
Your thoughts? A lot of agents know who the Listing Agent is, because the agent does this a lot. Please do not use the agent’s name in your comment. I will have to delete it if you do. Let’s keep this “generic”.