Okay, here's an interesting situation that my best friend (let's call him "Bob") found himself in this evening, and I'm curious what you would do if this happened to you... I'll try to keep it brief, but regardless, I think it's a VERY interesting situation...

Bob has a high-end condo that he bought in 2002 as an investment. He owes about $850K on it. He would need to sell it at $925K to pay off his loan (after all closing costs and commissions). He'd sell for this price, but for anything less, he'd rather hold and continue to rent it out.

Bob is not a big investor (it's his only property) and he doesn't have much experience with real estate agents (Bob can also be a pushover).

Bob listed his condo for sale in 2010 and didn't get any offers near his $925K price. I thought his agent (let's call him "Tim") was pretty lame -- he didn't do much of anything except put it on the MLS and hold one or two open houses.

Bob rented it out for another year and then listed it again in early 2011. Despite my suggesting otherwise, he used Tim again to list the property. Tim still didn't do much work, but this time he got Bob an offer for $910K. Bob suggested to Tim that he (and the buyer's agent) reduce their commission by about 1% total (from 2.5% each to 2% each) to get the deal done, as the buyer was adamant about not increasing his offer price and Bob really wanted to get this deal done.

Long story short, the agents pushed back against the idea of lowering their commission, went back with a $925K counter-offer and the buyer got cold feet. He walked. This was May 2011. In June 2011 (last month), Bob rented the place again and decided to wait it out another year.

Fast forward to this week. Bob gets a call from an agent who just sold the condo next door for $925K. He had a backup buyer who offered $915K and was heart-broken that he didn't get the place. The agent noticed that Bob just took his place off the market and asked Bob if he would still consider selling it to the back-up buyer. The buyer was even willing to take over the newly signed lease until it expired.

Bob said he'd consider it...bring him an offer. For some reason, instead of offering to represent Bob himself, this agent contacted Tim (they work in the same office and may be friends) and gave Tim the lead.

Tim contacted Bob today and said, "I have an offer in hand for $915K...are you interested?"

Bob said, "Nothing has changed...I still need $925K to sell, unless you guys are willing to work for 4% instead of 5% commission."

Tim said, "Instead of reducing commission at this point, let's counter the buyer at $925 and see what he says."

I told Bob, "Ask Tim to send you the written offer and tell him you'll review it."

This is where it gets good!

Tim sent Bob the written offer. But...

TIM DOESN'T HAVE A LISTING AGREEMENT WITH BOB! THERE IS ABSOLUTELY NO CONTRACT IN PLACE BETWEEN BOB AND TIM AT THIS POINT.

So, Bob has an offer in hand, but no agreement with Tim to pay any commission.

In theory, Bob could sign the offer and walk it down to the closing attorney and never call Tim back again. This would screw over both Tim and the buyer's agent, but Bob *could* do it.

What would you do?

Would you sign the offer and walk the contract to an attorney and close it without the agents?

Would you tell Tim you're accepting the offer as-is and also agree to pay smaller commission than what Tim is asking for (since this was Bob's preferred arrangement from the beginning)? If so, do you offer 4% (the amount needed just to break even) or do you offer even less commission in order to make a profit?

Would you give Tim what he's asking for (a listing agreement at 5%) and then allow Tim to counter the offer at $925K and hope the buyer agrees?

Or something else?