|
You must first be logged in to post a new topic.
If you are not registered, please click "Create Account".
| Posted By |
Message |
Deeluvsvinny
DONE
Member since 10/08 4952 total posts
Name:
Whatever
|
R.E. Agent Question...
A friend of mine is looking for a house..very early stages. She met with a realtor this weekend and even though she didn't want to, she signed an agreement with the Realtor. Basically it states that the realtor will get a 3% commission on any house she buys- whether or not the realtor shows it to her. If she buys a house she sees (with or without the realtor) during the time of the agreement (it expires in February), she will still have to pay the commission- no matter when she enters into contrct on house. It also states something about if the seller's commission does not pay the buyer's agent the 3%, my friend has to make up the difference.
I know that it's a binding agreement, but I don't get it. Maybe one of our realtors here can explain it?
I've been in the real estate business in different capacities for the last 13 years, and I've never seen this with one of my own clients/customers.
Message edited 10/22/2012 12:09:56 PM.
|
Posted 10/22/12 11:51 AM  |
| |
|
Prudential Douglas Elliman Real Estate
Long Island's Largest Bridal Resource | Long Island Weddings |
marianne13
LIF Adolescent
Member since 6/10 887 total posts
Name:
|
R.E. Agent Question...
I believe the name for the contract that your friend signed is an "exclusive right to buy" contract. The buyer's agent will get a commission regardless of who found the house. So if your friend finds a FSBO on craigslist, then her realtor is still entitled to a commission.
So you say the commission per the contract is 3%. I believe that if your friend buys a house that is a FSBO, her realtor will have to get paid by your friend or will have to negotiate her commission into the purchase price.
I'm not sure about houses listed on the MLS though..If a seller agrees to list their house with a listing agent for 4%, and that listing agent is willing to give 2% to the buying broker, then I'm not sure if your friend will have to make up the 1%.
|
| Posted 10/22/12 2:25 PM |
| |
|
|
|
Re: R.E. Agent Question...
Yes, it's an exclusive buyer agency agreement.
A buyer has the option of working with a realtor in a traditional capacity (where the agent helps the buyer find a home, but is still working for the seller as an agent of the seller) OR hiring a buyer's agent (where the agent helping the buyer find a home is actually an agent of the buyer). In the traditional scenario, the buyer is just a customer of the agent, not a client, and the agent acts more like a middleman or a liaison for the buyer. If the agent is a buyer's agent, working FOR the buyer, they safeguard the buyer's interests, advising them on a variety of due diligence items and helping them to negotiate. In that scenario, the buyer is the agent's client, and the agent is an advocate for the client.
Buyer's agency is very popular all over the U.S., but has been slow to take off on Long Island. Many LI agents don't understand buyer agency and don't like to do it, becuase it involves more liability.
Many agents on LI that do buyer's agency will require that the buyer sign an exclusive right to buy, meaning if they buy a house at all during the specified period (including MLS listed houses), the agent is entitled to a commission. They can fill in whatever percentage they want for the commission, but 3% is common as the buyer broker's fee. The contract is designed to prevent a buyer's agent for working day in and day out with a buyer for months, only to learn that they went to an open house without the agent, and put an offer in without them. If that should happen, the agent who has the contract with the buyer can still collect the commission.
Listing agents typically offer out some percentage of commission to buyer's agents if the property is listed on MLS. It varies. But it's negotiable. So the buyer's agent can try to negotiate a higher fee (a buyer's agent does take some liability off of the listing agent and the seller). If the seller refuses to pay the fee set forth in the buyer agency agreement to the buyer's agent, the buyer's agent has the right to ask the buyer to pay the difference (under the contract). But in most cases, it's understood that the fee will come out of the sale proceeds, not be paid separately by the buyer. The buyer's agent may just accept what is being offered out by the listing agent, even if it doesn't match the fee in the contract, if they can't negotiate otherwise.
Hope this makes sense!
|
| Posted 10/22/12 3:18 PM |
| |
|
Deeluvsvinny
DONE
Member since 10/08 4952 total posts
Name:
Whatever
|
R.E. Agent Question...
thanks, Ladies. I get how it protects the agent, just wasn't really sure how it would benefit the buyer.
In my experience, usually the buyer's attorney advises them on due dillegence items (inspection, title, etc) and assist with the mortgage application process.
|
| Posted 10/22/12 4:03 PM |
| |
|
Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
|
Re: R.E. Agent Question...
I don't charge my buyers the extra point to represent them- mpst of my buyers are refferals or people asking me to represent them based off my zillow reviews- so I would rather keep getting refferals
I will represent them for what the listing pays
however- I have yet to meet an attorney that wants to get involved with inspection items- I have some that I work closely with that will assist if I run into a road block- but generally I handle all that
and answer questions up until the closing- from mortgages to title issues etc
I love representing buyers- it's my true passion -
but to me the transaction is only begining once the offer is accepted- not the end of my role
|
| Posted 10/22/12 5:41 PM |
| |
|
|
|
Re: R.E. Agent Question...
I agree with Beth that a good agent will be proactive in handling things related to inspections, communications with the lender (including the appraisal), etc. The buyer's agent should basically be the "project manager" for the entire purchase, coordinating with all of the relevant players to make sure everything moves along and that the buyer's interests are protected.
The buyer's attorney will deal with review/signing of the contract, run title, and handle the closing, but they typically don't see the house, and so they basically rely on the information that is provided by the agent (and buyer).
I work with some great attorneys, but most of the time, it's faster and easier and more productive for buyers to resolve issues that inevitably crop up and get answers to questions by going to the agent, not the attorney.
|
| Posted 10/22/12 6:45 PM |
| |
|
ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
|
Re: R.E. Agent Question...
Posted by Deeluvsvinny
A friend of mine is looking for a house..very early stages. She met with a realtor this weekend and even though she didn't want to, she signed an agreement with the Realtor. Basically it states that the realtor will get a 3% commission on any house she buys- whether or not the realtor shows it to her. If she buys a house she sees (with or without the realtor) during the time of the agreement (it expires in February), she will still have to pay the commission- no matter when she enters into contrct on house. It also states something about if the seller's commission does not pay the buyer's agent the 3%, my friend has to make up the difference.
I know that it's a binding agreement, but I don't get it. Maybe one of our realtors here can explain it?
I've been in the real estate business in different capacities for the last 13 years, and I've never seen this with one of my own clients/customers.
That is a ridiculous contract that your buyer signed, and the buyer probably signed it out of ignorance.
It's bad enough that this RE is locking this "new" house hunter in a contract, but this Realtor knows that it's VERY rare to get 3% on a buyer's agreement. Talk about taking advantage of the unknowing.
Who is this Realtor? Somebody that pushes contracts like this should be outed.
|
| Posted 10/22/12 10:50 PM |
| |
|
ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
|
Re: R.E. Agent Question...
Posted by Century 21 Dallow - Christine Braun
Buyer's agency is very popular all over the U.S., but has been slow to take off on Long Island.
It's been slow to take off on Long Island because Long Islander's are smart people! It's most definitely NOT advantageous for a buyer to sign a contract like this (implying that things like this are popular outside of Long Island). Buying houses without representation is also popular outside of Long Island, again not a wise move and Long Islander's are smart regarding this.
If a RE agent wants to get paid, they need to earn the sale. Doing the legwork to find someting for the buyer should be considered cost of doing business. If you find a house for the buyer and a purchase is made, the RE deserves to get paid.
While I do understand that a buyer can at anytime decide to go with another agent and all your work may go unpaid, its the fact that a RE shouldn't get paid until a sale is made which ensures that the RE is always working 100% in the buyer's best interest.
To make a comparison, there have been so many stores on here of RE listing agents who sign listing agreements with posters on here and after that contract is signed, they do a CRAP job and that homeowner is locked into that contract.
I understand there is a difference between a listing agreement and buyer's agency. But IMO buyer agency contracts should not be required and it's a shame more potential homeowners don't realize this.
And pushing a 3% buyer's agency contract makes me sick to my stomach, mainly because as I said in my PP most listing agreements don't even offer 3% for the buyer's RE.
|
| Posted 10/22/12 11:10 PM |
| |
|
|
|
Re: R.E. Agent Question...
Posted by ave1024
Posted by Century 21 Dallow - Christine Braun
Buyer's agency is very popular all over the U.S., but has been slow to take off on Long Island.
It's been slow to take off on Long Island because Long Islander's are smart people! It's most definitely NOT advantageous for a buyer to sign a contract like this (implying that things like this are popular outside of Long Island). Buying houses without representation is also popular outside of Long Island, again not a wise move and Long Islander's are smart regarding this.
If a RE agent wants to get paid, they need to earn the sale. Doing the legwork to find someting for the buyer should be considered cost of doing business. If you find a house for the buyer and a purchase is made, the RE deserves to get paid.
While I do understand that a buyer can at anytime decide to go with another agent and all your work may go unpaid, its the fact that a RE shouldn't get paid until a sale is made which ensures that the RE is always working 100% in the buyer's best interest.
To make a comparison, there have been so many stores on here of RE listing agents who sign listing agreements with posters on here and after that contract is signed, they do a CRAP job and that homeowner is locked into that contract.
I understand there is a difference between a listing agreement and buyer's agency. But IMO buyer agency contracts should not be required and it's a shame more potential homeowners don't realize this.
And pushing a 3% buyer's agency contract makes me sick to my stomach, mainly because as I said in my PP most listing agreements don't even offer 3% for the buyer's RE.
You are entitled to your opinion, of course. But I really think it's a disservice to people who are reading these boards to paint buyer's agency as a bad thing.
I am an attorney, as well as a real estate agent, and I take my ethical obligations as both very seriously. I act as a buyer's agent regularly, including for members of this forum, and there's nothing inherently wrong with it. It's actually a more intuitive way for buyers and agents to work together. But posts like yours can really add to the confusion and misunderstanding.
I want to clarify a few points:
1. Buyer's agency is popular everywhere else other than the NY metro area because it IS advantageous to the buyer. You can have buyer's agency with or without signing a contract, by the way, but it's common to have a contract. So you shouldn't paint buyer's agency as synonymous with an exclusivity contract.
But if a buyer opts to go the traditional route and NOT retain a buyer's agent, the services an agent (any agent) can perform for them are limited. If a buyer opts for buyer agency, they have an advocate by their side who will point out the pros and cons of any house, who can pull recent comps for them based on real market data that only real estate agents have access to (zillow is not accurate, and neither are the fair market values listed on the tax page of my nassau property), and can advise the buyer on offering strategy, negotiate FOR them, help them verify key information, etc. If a buyer doesn't have a buyer agent, any agent they are working with has the obligation to act in the SELLER's best interests, including trying to get the seller the highest price. To me, this doesn't really make sense! I'd rather help my buyers, who I know, 100% than have to worry about the interests of a seller who I often have never met and have no relationship with.
2. On the issue of an exclusivity contract - When a seller wants to sell their house, they interview agents, select the one they think can best represent them, and then sign an agreement with the agent they choose. It's understood that if the agent is going to spend time and money marketing their home, that they will have the exclusive right to sell. No one argues that sellers shouldn't be signing listing agreements with agents, and they of course routinely do.
Why is that a bad thing if a buyer -- knowingly and in an informed manner -- does the same thing? If buyers interview agents and find one they want to work with, I don't see how hiring an agent to represent them and signing an agreement to that effect is a bad thing. As long as the buyer knows what they are signing -- and since LI'ers are so smart, that knowledge shouldn't be an issue!  --I don't see the problem. They are hiring someone to do a job for them, and that person is going to do a lot of work upfront. As with all agreements, the terms (length of contract, fee, etc) are negotiable, and not imposed on the buyer, and as with any contract, the terms aren't ironclad. There are ways to terminate.
An agent should explain all options to a buyer upfront of how they can represent them and let them decide, but many buyers on LI DON'T understand that the agent they are working with is typically working for the seller, not for them. And THAT is a shame!
3. As far as the fee - Not sure what you are basing your statement on more than 2% is rarely offered out to selling agents. It's common for short sales and REO properties to offer out more than 2%, and there are various other reasons it's done. With harder to sell listings, listing agents will typically offer out higher compensation to draw more traffic to the house. There are no "set" fees in real estate (that would be illegal price fixing, as I am sure you know)... every situation is different. And what type of fee a person may agree to -- in a buyer or seller situation -- is really up to the buyer or seller and will depend on what type of service they want and if it's worth it to THEM. I don't think there's any "right" or "wrong" fee.
But the buyer is the ONLY party bringing money to the table in a real estate sale, and they are sometimes the only one who is not represented at that closing table. In any scenario, the seller will take the money the buyer has brought -- the sale proceeds -- to pay the seller's attorney, the seller's agent, etc. Instead of having two seller agents get paid with the BUYER's money, which is what usually happens, doesn't it make sense to have one of those agent's be a buyer's agent?
I don't know why the OP's friend signed a contract she didn't want to sign...that doesn't make sense to me, and a buyer should never feel pressured to make a quick decision by an agent, NEVER. So I would say her friend should go back and talk to the agent, get more explanation, and find out her options.
|
| Posted 10/23/12 9:01 AM |
| |
|
Deeluvsvinny
DONE
Member since 10/08 4952 total posts
Name:
Whatever
|
Re: R.E. Agent Question...
Posted by ave1024
Posted by Deeluvsvinny
A friend of mine is looking for a house..very early stages. She met with a realtor this weekend and even though she didn't want to, she signed an agreement with the Realtor. Basically it states that the realtor will get a 3% commission on any house she buys- whether or not the realtor shows it to her. If she buys a house she sees (with or without the realtor) during the time of the agreement (it expires in February), she will still have to pay the commission- no matter when she enters into contrct on house. It also states something about if the seller's commission does not pay the buyer's agent the 3%, my friend has to make up the difference.
I know that it's a binding agreement, but I don't get it. Maybe one of our realtors here can explain it?
I've been in the real estate business in different capacities for the last 13 years, and I've never seen this with one of my own clients/customers.
That is a ridiculous contract that your buyer signed, and the buyer probably signed it out of ignorance.
It's bad enough that this RE is locking this "new" house hunter in a contract, but this Realtor knows that it's VERY rare to get 3% on a buyer's agreement. Talk about taking advantage of the unknowing.
Who is this Realtor? Somebody that pushes contracts like this should be outed.
I don't know the realtor..they are looking in the Bronx. It's strange to me that she signed the contract because when she decided she was ready to buy, she emailed me and we went over a ton of things together...she asked so many questions, and seemed like she was hesitant to commit to anything. She said she didn't think it was smart to sign the contract, but she felt pressured. I don't know the specifics of why she felt pressured.
|
| Posted 10/23/12 11:39 AM |
| |
|
Domino
Always My Miracle
Member since 9/05 9924 total posts
Name:
|
Re: R.E. Agent Question...
I dont know whether it is because our law firm represents wealthy clients purchasing east end properties, but we handle all title/inspection/zoning/closing issues. In fact, we and our clients have very little broker contract.
|
| Posted 10/23/12 2:01 PM |
| |
|
GoodThoughts
Dreams do come true
Member since 2/12 2259 total posts
Name:
|
Re: R.E. Agent Question...
Posted by Deeluvsvinny
A friend of mine is looking for a house..very early stages. She met with a realtor this weekend and even though she didn't want to, she signed an agreement with the Realtor. Basically it states that the realtor will get a 3% commission on any house she buys- whether or not the realtor shows it to her. If she buys a house she sees (with or without the realtor) during the time of the agreement (it expires in February), she will still have to pay the commission- no matter when she enters into contrct on house. It also states something about if the seller's commission does not pay the buyer's agent the 3%, my friend has to make up the difference.
I know that it's a binding agreement, but I don't get it. Maybe one of our realtors here can explain it?
I've been in the real estate business in different capacities for the last 13 years, and I've never seen this with one of my own clients/customers.
Someone correct me if I am wrong, but isn't there a set amount of time (3 business days comes to mind) within which any contract can be cancelled?
|
| Posted 10/24/12 5:50 AM |
| |
|
ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
|
R.E. Agent Question...
Yes three days in new York state right to cancel.
|
| Posted 10/24/12 7:22 AM |
| |
|
marianne13
LIF Adolescent
Member since 6/10 887 total posts
Name:
|
Re: R.E. Agent Question...
Posted by ave1024
Yes three days in new York state right to cancel.
I thought you could cancel a contract at any time?
|
| Posted 10/24/12 10:55 AM |
| |
|
Potentially Related Topics:
Currently 1718915 users on the LIFamilies.com Chat
|
Long Island Bridal Shows
|
