Limits of Buyer Responsibilty to Buyer's Agent
Santa Barbara, CA · Member since 2015 · 75 posts · 17 votes
A couple months ago, I made an offer for a house via my buyer's agent. This was the first deal this agent and I worked on together. Throughout the process, I have been disappointed with this buyer's agent's lack of timely response. The seller accepted another buyer's offer. As of today, the house has fallen out of escrow and is back on the market. If I restart the offer process with a different buyer's agent and I win the house, can the first buyer's agent demand a commission even though she did not successfully negotiate for the house the first time? Or do I have to work with her on this house until my offer is accepted, or the house closes for another buyer? California law prevails.
A couple months ago, I made an offer for a house via my buyer's agent. This was the first deal this agent and I worked on together. Throughout the process, I have been disappointed with this buyer's agent's lack of timely response. The seller accepted another buyer's offer. As of today, the house has fallen out of escrow and is back on the market. If I restart the offer process with a different buyer's agent and I win the house, can the first buyer's agent demand a commission even though she did not successfully negotiate for the house the first time? Or do I have to work with her on this house until my offer is accepted, or the house closes for another buyer? California law prevails.
I'm not familiar with CA law but the question is did you sign anything with the agent to work exclusive with you on deals?
I've never signed anything like that but I know it exists.
If you are that dissatisfied with the agent perhaps have a discussion with the agent to voice your concerns. It seems that if you didn't sign an exclusive contract you could use another agent. The question though is are you ethically bound and could that agent ask for commission. How about a split since you initially used that agent but went with another agent-don't know how that would go over.
There is no contract. The whole system needs to be redesigned to better align the agent's interest with the buyer's, especially in high priced areas. It seems to me the agent who gets 6% for a $150K house in Wisconsin earned it, while the agent who gets 6% of a $1M house in CA ends up with a huge bonus for very little work.
I still do not know what to do in this situation, but splitting does not seem fair to the agent who actually gets the job done. I am not sure what a discussion with the first agent would accomplish. She must certainly be aware of her lack of timeliness.
I'm from MD but here's how it works here. I always have my buyers sign an exclusivity contract when writing an offer. I would pick through the copy of your previous offer with a fine tooth comb and if you aren't sure, call the old agent (or their broker) and ask. They have an expiration date, and outlines what you need to do to terminate. All agents fill them it differently, so you likely signed one with their typical terms. Terminating should be easy - most agents will willingly (and should!) let go of clients who don't want to work with them. You definitely don't want to work with a different buyers agent without finding out first what your obligation is to the old one. If you signed **anything** while working with the old agent, there's a good chance they included the exclusivity agreement when you signed - especially an offer. There's the very very real possibility the seller and or most likely you would be on the hook for their commission.
ps - my exclusivity agreements last for 12 months and have to be terminated in writing 7 days before putting in another offer.
Also, once you terminate the agreement, your new agent gets all the commission regardless of who showed you the house many months ago.
Again, I am going to say the system needs to align more with buyers.
I have no legal obligation to the first buyer's agent, but if I had, that 7-day window would irritate me. Supposedly, this house had already been sold. If I wait another 7 days it may be sold again. When I provide client services, I never ask for exclusivity. If I am doing my job, the issue never comes up. If I am not, exclusivity lets me do a crummy job and still get paid. I prefer to let my work and results speak for themselves.
Buyers also need to be told that buyers pay the commissions. Nearly every agent I know says buyer's agents are a great deal because the seller pays for them. Not precisely true. The seller pays the commissions out of the proceeds from selling the house. Those proceeds come from the buyer. I always structure an offer so that I pay all commissions separately. It is stupid to pay interest and/or property tax on somebody's commissions for what could be 30 years.
Agents do not like this kind of offer because it reduces the amount of the comp. Agents want the comps to be as high as possible, even buyer's agents. I really dislike comps because they are nothing more than instances of self-reinforcing confirmation bias. The problem with comps became really obvious during the bubble.