Cutting out a realtor??

Question

We have a house on the market in Minneapolis.  We got a cash offer from a young guy who is being financed by his father.  The father is on the hook out east somewhere for a condo he purchased his kid and it's now underwater so he's gunshy.  Prior to making us an offer he hired an appraiser who lowballed the value of our property so we didn't accept the offer.

Now he's back, he's raised his cash offer by 15k which is still a bit shy of what we'd need.  He then said that he'd let his realtor go and that he didn't sign any contract with him any way so we'd save that $7500 commission.  He also want's to slide us an additional $5k without his father knowing to get this deal done.  We're a fsbo listing so we don't have any representation ourselves.  Probably won't do this again.

$27,500 up from the original offer and the numbers are now workable but I don't like the arrangement.  Contract or not, this feels unethical to me.  I don't think I would have any interest in the offer without first contacting the original realtor and getting his feedback.  I'm also a little unsure about the 5k after closing portion of this offer.  I'm treating this as a no-brainer both legally and ethically but I'm interested in feedback.

Chris Christianson · Answer

@Jeff N.  there is no listing agent as we listed through forsalebyowner.com so the only agent involved is the buyers agent.  The law states that we can not circumvent a buyers agent if the home was located while the buyer was under contract with the agent.  Two things are important here.  One is the buyer claims he wasn't under contract.  Two, I will take no part in hosing the realtor contract or not so without his consent, the deal won't happen.

@Joe Gore ,how do I know the appraiser was low?  For one, the buyers agent was arguing our point.  That's a pretty decent sign.  Second, the house is in one of the hottest neighborhoods in the Twin Cities.  It's on the edge of the Uptown neighborhood.  It's also close to the freeway which separates a not so valuable neighborhood.  All the comps the appraiser used were for homes in that direction.  All of them.  Third, we have had two other offers that in hind site, we should have taken.  This offer is still 15k below the best offer which was 35k over this appraisers appraised value.

Was I off in my original ARV?  Apparently I was.  Was I off by more than 20%?  Not a chance.

I'm going to counter with another 5k to make it worth the hassle.  I doubt he'll take it which is fine with me.

Brie Schmidt · Answer

First of all, your contract with your Realtor is for X% - half to the buyers agent and half to themselves.  You need to first check your contract to make sure that even without a buyers agent you would not still pay the entire fee (Most contracts I have seen you pay X percent regardless as long as they bring you a buyer even if they are not represented)

Secondly, even though he dropped his agent he did represent him when he first learned of the deal.  This is called Procuring Cause and that agent is legally entitled to the commission.  Might he never find out? Sure.  But most agents watch homes they have shown.  So if the agent checks the public records you will still owe them the commission

http://homebuying.about.com/od/realestateagents/qt/Procuringcause.htm

Chris Christianson · Answer

@Brianna S. thanks for pointing me to the actual directive.  Now I have a name for what I already new to be the ethical option anyway.

@James Wise , fsbo actually sets you up with a low cost broker so once things are rolling, the listing is technically no longer a fsbo.  We do have a 2.7% commission listed on mls and that is reflected in our asking price.  There will be no lawsuit however as there will be no deal without consent from all interested parties and the realtor in question, is an interested party.

James Wise · Answer

Do you have an agreement on fsbo.com to pay a buyer agent 3%?

I'm guessing you do as the agent wouldn't have brought them to the house if you didn't unless the buyer has a contract with the agent to pay them a commission.

Case and point if the agent brought the buyer and gets cut out he's gonna sue somevo

Jean Bolger · Answer

I'd say don't do it, wait for a better buyer. Not worth the karma. Plus -it's best not to enable jerks in getting their way ;) 
	You might be doing him (and everyone he deals with later on) a favor by showing how to do business ethically

Account Closed · Answer

Jump on the phone and call the father and lose the deal. How do you know the appraiser lowball the value? There is a chance you jack the price or think it is worth more then it is.

Joe Gore

Account Closed · Answer

@Chris Christianson

IKES... Not sure about your laws so you better check them out with your attorney. That said I had started a recent post here named "am I steeling from a Realtor" I make sure the realtor that listed the home gets paid as if not for them (I) the buyer may never had shown up. You might be able to re-negotiate the commission but try to be fair.

Bill Gulley · Answer

I'd play along with the jerk and let his  father know!

I'd say you already know what is right. :)

Cutting out a realtor??

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