The call came in a few months ago - much like others I have gotten over the years. The home buyer had started out buying a house without a realtor, thinking they could pocket the co-operating commission. However, at the last minute they were running into obstacles. The listing agent intended to keep both sides of the commission for himself - and legally he was entitled to it.
I've written about this issue before: For Homebuyers That Want The Real Estate Commission For Themselves. I could have this conversation in my sleep now. This particular homebuyer had found the home online, arranged a showing directly with one of the listing agent's assistants, had his attorney help him write up an offer, and submitted the offer to the listing agent. I'm not clear on what the details of the offer were but the two sides were not coming to agreement and one of the sticking points was who would get the co-operating commission. Listing agreements often don't specify a co-operating commission - it's only specified in the MLS listing. So the default is for the listing agent to keep the entire commission in the event that the buyer doesn't have their own real estate agent. In addition, the listing agent could claim that he was the procuring cause of the transaction and therefore entitled to receive the co-operating commission for that reason also.
This homebuyer was calling me to find out if there was a way to use us as his real estate agent and have us share the commission with him under one of our rebate programs. Although the situation was indeed complicated by virtue of the fact that he had already started negotiations with the listing agent, there might have been a way for us to salvage the situation. We actually discussed a few strategies for trying to solve the problem.
However, the buyer did not engage us at this point either. I later found out that he had his attorney attempt to work out a resolution but attorneys are not necessarily best suited for this task. They are not familiar with all the real estate agent protocols. Basically his attorney rolled over and eventually they negotiated a deal. But the listing agent walked away with the entire commission for doing half the work.
My advice to homebuyers is the same as it was in my earlier blog post: 1) Never contact the listing agent directly - especially with new construction. 2) Find a realtor that rebates a significant chunk of the commission or charges by the hour in exchange for giving you the entire commission and engage that realtor early. 3) If you have already had direct contact with the listing agent and are just now reading this reach out to a buyer's agent now to find out what your options are. Even if we had been brought in right after my initial conversation with the buyer I honestly believe that we would have had a decent chance of resolving the co-operating commission to the benefit of the buyer. But now we will never know.
#Realtors #RealEstateAgents #RealEstateCommissions #RealEstate
Gary Lucido is the President of Lucid Realty, the Chicago area's full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.