What is your opinion of this realtor question?

Question

Ok a quick question for you guys.

I am buying my first property from a Realtor. I have been working with her a lot and enjoy her as a person and as a Realtor.

I have found a second home on my own. I dont know if I should put my offer in with the listing agent or if I should bring my current Realtor in on the deal.

She didn't find the deal I did. So would it be bad to leave her out or not.

Opinions.

Jake Kucheck · Answer

Travis,

It depends on your arrangement with her.  If you were up front and said "if I find the deal, I'm going to write with the listing agent" then there isn't a problem.  Since you're asking though, I'm guessing you didn't.  I think you're probably better off using her for this and for future deals for the following reasons:

1) The internet doesn't make you better than her at finding homes.  It just means that you happened to be at a computer when she wasn't.  Also- there's more to "finding a deal" than happening across an attractively priced property.  You also have to run comps (for both value and lease rate), physically go to the property, and determine where you should submit your initial offer.  Agents do these things all day every day, it sounds like you have done it once.

2) Like it or not, you have a relationship with your Realtor.  Just like you have one with your significant other, your doctor, your dentist, etc.  I doubt you would cut any of these people out of the picture because you happened to find another person that could provide the same service somewhere on the internet.

3) Procuring cause.  If you signed an agency agreement, buyer's rep agreement, or she did anything to facilitate your offer (call the listing agent to set up a showing, run comps, etc) then she will likely have a case for procuring cause, especially since you've bought a home with her in the past.  I'm not saying she will or won't win, but who wants to get litigious with someone they  plan on doing future business with?

Curt Davis · Answer

Travis,  if you feel confident enough in your ability to negotiate by all means bid on it yourself, or better yet let the selling agent act as duel agent, this will make them more likely to help get your offer accepted.   If you bring your Realtor into the picture you might hurt your chances of getting the home as the selling agent will only get 3% commission.

Angela Gennari · Answer

Hi Travis,
Jake had a fantastic, thorough answer, and I echo what he advises. In my opinion, this is an ethical question, because at the end of the day, you are probably not going to be coming out ahead financially by NOT using a realtor, because the commission was already determined in the listing agreement. However, you will not have anyone protecting your interests in the transaction (dual agency is in most cases not a good idea, and the listing agent's broker may have rules prohibiting it, as many of them are doing now for ethical and liability reasons). Tons of buyers find properties on their own online now, but that is by far not the only reason to use a Realtor. If you have a good relationship with your agent, I say you bring them into the deal. Loyalty, trust and ethics are an essential part of this business if you are interested in investing long-term.

Joel Owens · Answer

Buyer Rebates ARE NOT legal in all states just some.

http://www.justice.gov/atr/public/real_estate/rebates_details.htm

For more detailed info on each state:

http://www.justice.gov/atr/public/real_estate/states.htm

Also the agent does not have the authorization in most states to rebate a commission.In some states there are only brokers or broker associates but in a majority of states you have a principal broker,associate brokers,and agents.

The commission belongs to the brokerage and any agreement on rebates has to go through the brokerage and not the agent.

A few reasons:

1.The commission structure will be spelled out in the independant contractor agreement the agent has with the brokerage.

Example commission is 2.5% and you the agent are on a 50/50 split.You want to rebate 1% to the buyer.If the broker allows this the 1% will come off of your total.

Example: 1.25% to the head broker,and Merry Christmas after your 1% back to the buyer a whopping .25% to you the agent on the deal minus franchise fees and desk fees of course  if any.

2.The broker might not allow you to rebate even if legal as they do not want it to affect the other agents or they might allow you to rebate but not advertise it.

So agents need to understand the brokers who own the company have the say and the agents are just authorized to work on behalf of the broker.This is the way it is in most states but not all.

Steve Babiak · Answer

Be careful that you did not sign an "exclusive representation" agreement of some sort with that first agent - it is very common for brokers to send sales agents out with exclusive agreements so that all your purchases will have to go through that one agent.

Michael Quarles · Answer

I think youâ€™re obligated to use your Realtor Buddy with the nice personality... Certainly arent legally unless you did sign a BBA.

With that said legal isnt always the best rule to follow. Things like ethics and morals should trump it.

A buyer who uses a Realtor INHO I think it is also the Buyers responsibility to notice the Realtor of a property theyâ€™re interested in. Most buyers never disclose the "True" wish list to an agent to use as search criteria therefore it becomes very difficult to match us the ultimate choice.

As for commission they are already set on the listing contract and the reality is that in a bidding market youâ€™re always better off dealing with the listing agent and having them double the thing. As long as you understand that their fiduciary responsibility isnt in your favor.

As for the art of negotiation. Second homes typically dont carry with them the mind frame of "Falling in love" buy the buyer so it makes negotiating a little easier and less stressful.

As for the docs and disclosures. Most agents dont know exactly what they mean when they point and say sign here. 
However we arent in a bidding  market unless youre after down and dirty REOs.

Joel Owens · Answer

Hey Patrick,

I own my company and I am the principal broker.

I made no mention of an employee status.

The broker saying what you can and cannot do for an employee status has to do with set hours worked and a bunch of other conditions.

The Independant Contractor agreement the broker makes up for their company will depend on what you can and cannot do.You are working for yourself but on BEHALF of the broker.

Just like the buyers and sellers are not your clients.The contracts signed will show the relationship with the brokerage and the agent is working on behalf of the brokerage.

In the IC agreement it will spell out what happens to active listings and buyers and sellers when you want to leave the company.

As long as it's legal and does not create an employee status I can put whatever I want into my contractor agreement.

I can say my company does not allow rebates of any kind and I can change the IC agreement at will.You can choose to accept it or go to another company without the requirement.

A brokerage for instance might not let agents rebate commission,might not let them do bpo's as their E and O policy doesn't cover it,and might not let them do property management because of more frequent litigation than traditional sales and increases to the brokerages E and O premiums.

So what you are allowed to do will depend on the company you are an IC with and what you signed when you joined.

With rebates the company might let you do it as long as you don't advertise to affect the other agents business.It also depends what type of structure the company has.If you belong to a per transaction fee company and you don't advertise it then many won't care.

Anything you do in question should be ran by the head broker.You don't want rouge agents creating rules as they go along or find out later they were doing something you didn't authorize or weren't comfortable with them doing.

Hope it helps from a broker/owners perspective.

Patrick K · Answer

Good info Joel....the fact that only 10 states in the country do not allow rebates leaves a pretty good chance he is in one.

My understanding of the agent/broker relationship is as independent contractors, not employees. Do you see different.

As an independent contractor any agent should have the ability to rebate their client out of their own pocket to reciprocate business. This would be independent of the agent/broker relationship, and simply be an agent/investor relationship and business arrangement.

That is the way I understand it anyways.

Sam Rymer · Answer

Use your Realtor... your not saving money by using the listing agent. He will be a dual agent and just take both commissions. So he would get 6%, and really there is no benefit to you. Itâ€™s like going to court and using the other guyâ€™s lawyer. The only thing youâ€™re doing by not using your agent is hurting his feelings and trust.

I will not friend you if you leave your realtor in the cold like that

Donâ€™t be that guyâ€¦.

Mitch Kronowit · Answer

I'm curious if you found the second property while you were still in escrow on the first? I can see how you might have hurt some feelings if you entered into a second transaction before the ink was even dry on the first, however, if there was a certain amount of time elapsed between the two deals, I wouldn't fret about it. I mean, if you work with one Realtor or agent on one house, are you supposed to keep coming back to them for every subsequent purchase? How long a period is acceptable before you "strike out" on your own?

What is your opinion of this realtor question?

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