Agent's Role in a Private Sale

Buying & Selling Real Estate
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Agent's Role in a Private Sale

Harrison Harner
Rental Property Investor · Danbury, CT · Member since 2014 · 43 posts · 22 votes

Hello BP,

I have my first deal under contract!

This is a great feeling, however something was keeping me up last night...

I have a buyer's agent, but my current deal is a private sale that I marketed for and found. The agent is a personal friend (I know, first mistake) and set me up with access to the MLS and showed me a property. I was simultaneously sending letters to owners of unlisted properties in order to find a deal, which he was aware of. When I did find a deal this way, he was disappointed , especially after having a couple other friends go to other agents in the last year or so. I told him that since it was my first purchase, I still wanted him on my team to help through the process and that I could still pay him his commission.

He provided me with a standard contract and set up an inspection. I've handled everything else. Now I'm having second thoughts about the value of this arrangement. We don't have any sort of written agreement and my mortgage broker says it's best to drop him altogether. I think he has done some work and deserves some compensation, but I don't think I could help but be bitter about handing over $3,600 for this service. 

What additional help can he provide at this point? I'm inspecting the house on Wednesday.

What would be a fair price for something like this?

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  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    11y

    Well, you probably need to call him an ex-friend IF you go back on your word. 

    Your greed will come back to haunt you IF you cut a "friend" out of a deal AFTER the fact. Don't use your friend's services next time around, but this time around you should think long and hard if $3,600 is worth losing a friendship after you told him he is part of your team.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    11y

    Harrison to be clear is the property under contract listed on the market??

    From your post it seems the agent gave you MLS access but this was an unlisted property correct??

    If it was unlisted WHAT are you trying to do with the property?? For instance are you a wholesaler and trying to assign this and make a fee with the intent to never own it?? Are you going to close on it as a real buyer but rehab it to flip or are you going to rent it out and hold long term??

    If this is off market did you write in the contract that the SELLER was going to pay the buyers broker commission OR did you not do that and said you would just come up with the cash to pay your friend??

    If you are not paying all cash for the property and getting a loan the lender generally will not want to pay or roll in the buyers broker commission.

    The agent is likely having to split the total commission with his broker so they are not getting all of the 3,600. In some cases it would be as little as half of that amount.

    If this is a long time close friend and not just  a passing acquaintance the friendship is worth more than the money. Also you might not even buy this property upon inspection and need to find another property and you have burned that bridge.

    You could sit down with your friend and explain you feel like he could be doing more to help you in this transaction for his services. Be specific and put the items in writing. The delivery of what you are trying to say with voice and gesture is very important.  

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  • Harrison Harner
    OP
    Rental Property Investor · Danbury, CT · Member since 2014 · 43 posts · 22 votes
    11y

    @ Guy Gimenez

    Thank you, Guy.  This personal advice is valuable for piece of mind. I had that very view until my mortgage broker made me second guess it. I will stay the course and chalk it up to an expensive lesson learned. I'm sure it won't be the last.

    @ Joel Owens

    The property was never on the market. It was found through a direct mail campaign. I was simultaneously looking on the MLS for a deal as well, but am not buying a listed property.

    The property is a duplex for buy and hold.

    The agent's commission is not written into the contract at all. I am getting a loan, but planning to pay his commission out of pocket.

    I agree that the money is not worth a falling out. I appreciate the advice.

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