Question About Real Estate Agents/Contracts

we have our home for sale with an agent. A family friend may be interested in buying. If this happens to be the case, would I still have to give my agent the agreed percentage, even though the person found out about it through word of mouth (not an open house, mls, etc.?

Re: Question About Real Estate Agents/Contracts

Yes because your agent is still going to "work" for you to close the house.

So the answer is yes.

Re: Question About Real Estate Agents/Contracts

It depends on what your contract with the agent says.

Typically, the listing is "an exclusive right to sell," so that if the house is sold to anyone during the contractual period of the listing (regardless of the source of the buyer), the listing agent gets paid. But there are some circumstances in which an agent may agree to take "the exclusive right to list," meaning the agent's company is the only real estate company who can list the property on MLS, but the owner can also sell it on their own.

This is pretty uncommon, because a real estate agent works for free until a deal closes. So why would the agent want to do all of the upfront work, investing in marketing, servicing the listing, etc., if there's a chance they won't get paid at all?

More common is that an agent takes the exclusive right to sell, but will carve out a specific circumstance under which they will take a reduced commission -- e.g., "If seller's neighbor's nephew Paul Smith buys the house before October 1, 2012, listing agent agrees to take commission of x%" (x being some amount less than the full negotiated commission).

It sounds like you didn't negotiate any exceptions, in which case, the agent is entitled to the full commission. But you can always try to see if he/she will give you a break (keep in mind that this is likely something the agent would have to get her broker's approval for, unless your listing agent owns her own real estate company).

Also, keep in mind that it's very hard to prove where a buyer came from. Who's to say that the family friend didn't see the house advertised on MLS or some other website, and then later realize they have a personal connection to you? It's hard to establish that the agent's marketing played no role in the sale.

And as the previous poster said, the listing agent's work is not just marketing your home to find a buyer, it's doing everything to manage the entire sale process -- being their for inspections and appraisals, coordinating with the attorneys, the buyer's bank, etc. So imo, it's fair to compensate the agent not just for the upfront marketing work she did, but for the work she will continue to do to close your sale.