Avery long story about a nasty agent. Please give advice.

Avery long story about a nasty agent. Please give advice.

SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes

This is a long story that just happened yesterday. And I really hope somebody can advise me what to do here.

Yesterday, I was interested with a 2-bed room condo, and I called the listing agent to see if I can take a look at the property. During the house showing, he said I don't need to use him as my agent, at least twice. After I went home, I made an offer to him by email, stating that "It is up to you and the seller to share the commission fee that would be paid to buyer's agent if we use a third agent. Let me know if you want to go ahead to prepare a PA for us. The offer will stay valid for today.".

At night, the agent called back and said the seller accepted the offer. Here is frome the seller to the agent""Can you please secure a "verbal/electronic" agreement with Wendy today as follows: We (Seller) accept her offer at $78,500 with Seller contributing 2% to her Closing Costs, with $2,500 deposit and closing within 45 Days. If she accepts either verbally or electronically, please send her a PA to sign immediately."

The next day, he emailed me a few documents to sign in order for him to get the PA ready. I looked at those document and feel uncomfortable about some items. One item is administrator fee he wants me to pay to him. I called to ask him if this can be waived. He got emotional and the conversation ended like " ok, I will give you 5 minutes. Yes or no. If no, the deal is off. ". I said I need time to think about it. And he realized I won't make a commitment over the phone, and said "ok, before 12pm then".

After the phone, I sent him an email, said "Did you forward my original email offer to the seller(s)? In which, it mentioned the commission that's supposed to pay to buyer's agent (since there is no buyer's agent here) will be shared between the seller's agent and the sellers? All I am asking is to waive the administrator fee. If not, I am going to go ahead and submit an offer myself."

And then he called back and said the seller agree to pay for the administrator fee. And then I asked if I have to sign an exclusive contract with him ( it is one of his documents that needs me to sign). He tried to talk me into sign the document. So after the phone, I emailed to him " As we talked over the phone, I am willing to sign a broker's contract with you, just not exclusive one. If this is required by law as duel agent, I would understand and sign it, otherwise I think I have the right to opt out the exclusive contract. Anyway,I don't see how this affects the PA. And if you do decide not to represent me, please still present my offer to the buyers."

And then he called back again, and said he would make the exclusive contract limited to the specific property only. And he even said that it would be easier for me to get another agent to represent me. But after I got the udpated documents by email, I just don't feel right to have him represent me, then, I sent him an email " After thinking about this dual agency issue for a while, I think it is not a good idea to have you represent both me and the sellers. It could be a big hassle for you, if any argument happens in between. So, I will find a agent and draft a PA. I hope that's fine with you.".

And he called me back, and got very emotional again. And he claimed that he is going to kill the deal if I use any other agent. The only way it is going to work is either to use him, or I represent myself. ( I should have recorded the whole phone conversation ). He said he is going to tell everything to whatever agent I choose to use to represent me, "really fight for it" ( I don't know what he wants to fight here) and said he documented everything that he showed me about the house. ..... And in the end I said it would be fine with me if I lose the deal, but I cannot use him to represent me., and hung up.

So, anyway, the end of story is that I think he is totally unprofessional, and based on his attitude to me, I don't think he represented the seller's best interest at all. I decide to walk away from the property, but I feel his behavior should get disposed, at least to the seller and his broker. Should I let the sellers all about this, just so that they know what kind of agent they got. I think bad agent like this should get punished. Where is consumer's right here? Or, is there something I did wrong here?

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y

    Sorry, but based on your writing and description of events, it's difficult to tell what's really going on here...

    I will offer this though -- if you're not comfortable representing yourself in a transaction, you should have your own agent.

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    Hi Scott,
    Sorry for my bad writing. Long story short, the seller's agent tried to force me to use him as my exclusive agent to buy the property. Even we had an email offer accepted by the seller, he said he is going to reject my offer if I use any other agent.

  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    13y

    Perhaps this is because he wants to ensure he gets 100% of the commission and doesn't have to split it with anyone?

    He cannot reject your offer, it's up to the seller to reject your offer. If he does not present your offer to the sellers then he is not being ethical.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y
    Originally posted by Wendy BK:
    Even we had an email offer accepted by the seller, he said he is going to reject my offer if I use any other agent.

    Just to be clear, you didn't have an accepted offer...you had a verbal agreement, which is meaningless in a real estate transaction. If the other agent isn't appropriately representing the seller, that's wrong, but it's unclear if that's the case or not. There's no way to know.

    Regardless, the right thing to have done would have been to submit a formal offer (either yourself or through another agent) and if the seller agreed, there wouldn't be a lot of verbal back-and-forth...they would have just signed the offer and you wouldn't be in the middle of all this.

    So again, in the future, either be able to handle your side of the deal yourself (without an agent) or use your own agent. There's never a good reason to put yourself in a dual agent situation as a buyer or seller.

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    Yes, I know the offer is not valid. All the back and force emails and phones are between the agent and me, that he is trying to having me sign an exclusive agent contract before he is willing to draft a PA for me. I had several transactions in the past and always used a agent before. This time my agent I usually use is on vacation, and I thought I could just use the seller's agent. Where can I get a PA if I want to represent myself ( I am not a real estate agent)? Is hiring an attorney the only way?

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    Can somebody take a look to see if this even a good deal? It is a 2-bedroom condo in a good location. The mortgage + association fee + tax + insurance is about $730. The rent can go about $950. I think the average maintenance cost would be around $50 since it is a condo. It is not much cash flow, but I think the condo itself will appreciate reasonably.

  • Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    13y

    In my experience, its not unusual to have to do an exclusive buyers agnecy for a specific property when you get to the point of actually buying one. I wouldn't do one of these that's not for a specific property, but if you have a property and have an agent (which I think you do in this case), then this agency agreement just protects the agent from you going around them. You've already agreed to buy the property and they're already getting paid. Not sure why you wouldn't just sign the agreement, as long as its limited to the specific property.

    What's the P&I payment on this property? Are you going to use a PM? How much cash are you putting down?

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    I plan to put 20% down ($15700), so no P&I. And I will manage myself. I originally would have had no problem to sign an exclusive contract with the agent for this specific property, but during the whole time he made me feel that he is just not trustworthy at all.

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    13y
    Originally posted by Wendy BK:
    I plan to put 20% down ($15700), so no P&I. And I will manage myself. I originally would have had no problem to sign an exclusive contract with the agent for this specific property, but during the whole time he made me feel that he is just not trustworthy at all.

    By P&I, Jon meant Principal & Interest, so yes you will have that if you're putting 20% down. I believe you were thinking of PMI.

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    @Kyle, Thanks for pointing this out. The cost $730 i mentioned before includes the P&I, which is about $330 per month.

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    I have been really struggling to get a good real estate agent, because most of them focus only on primary residence,and not too keen to handle deals that are under $150k. Can somebody recommend any good agent in Minnesota ?

  • Mike HurneyPro Member
    Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 542 votes
    13y

    Wendy, Move on, next!

    I think you need a Buyers agent, best way is to interview several yourself.

    By the way what was the HOA?
    Good Luck Investing, Mike

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    @Mike Thanks! HOA is $306.

  • Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    13y

    With rent of $950 and self management, I'd estimate your NOI at about $600 a month. Subtract $330 for P&I and that leaves cash flow of $270 a month or $3240 a year. On your $15,700 investment, that's a cash on cash return of 20%. That's a good deal.

    However, with HOA fees of $306, my estimate is overly optimistic. $330 for P&I says you're at $400 for HOA, taxes and insurance where I'm only estimating $350 a month for all expenses, capital and vacancy. You will clearly still have additional expenses, capital and vacancy beyond HOA, taxes and insurance. $306 for HOA seems very high.

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    @Jon thanks for the analysis. Yes the HOA eats quite a bit of the profit. If I assume 8% vacancy and $50 montly cost for fixing poential problems with the property, my spreadsheet shows about $110 month cash flow, which is about 7.6% of return. If I include the principle payment part of the mortgage, which adds about $80 more into profit. I feel it is a ok deal, but not fantastic. Nowadays, it is not easy to get a good deal, at least by myself. But this agent issue really throws me off.

  • Wholesaler · Salt Lake City, UT · Member since 2009 · 1k+ posts · 401 votes
    13y

    Just want to endorse the get a buyers agent. Which really could be any agent not working for the same broker as the listing company. It doesn't have to be a brokerage that just works with buyers only, but you want someone required by law to be on your side of the agency issue. To bad you didn't have recordings of this idiot, he would be explaining to the State Licensing Dept right about now.

  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    13y

    Wendy BK What you could have done was write up the offer and told the agent you were representing yourself, and would like to set up a time with his sellers to meet with them, and that you'd like to go with him to present it to his sellers.

    It seems to me the only question was who would pay the commission. If the sellers have the property listed they have already agreed to pay the commission, the only question is if they would accept your offering price and be happy with the net proceeds they would get after paying commission.

    However; the back and forth is why it's better for people that have no experience benefiting from using an agent.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y
    Originally posted by Wendy BK:
    Where can I get a PA if I want to represent myself ( I am not a real estate agent)? Is hiring an attorney the only way?

    You can have the listing agent write up the offer for you and present it, but that doesn't mean the agent will represent you. You go unrepresented (represent yourself, technically), and the listing agent can deal with all the paperwork and help you through the process.

    But, you won't have anyone representing you, so you should only do this if your 100% comfortable representing yourself.

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    Some update about the story. Although I decided to walk away from the deal, I felt I should have at least let the sellers know about what happened. I contacted the condo manager and left my contact information with him, so that the sellers can contact me if they are interested. Then, this morning, the agent called me and said that, he knew I tried to contact the sellers and the sellers had no interest to talk to me, but feel free to find an agent to send an offer. I emailed him that I don't want to make an offer anymore because of his unethical behavior and wish the sellers best of luck. It is a puzzle for me that why the sellers don't bother to even email me. Why trust your agent so blindly?

    I give best luck to people who are using or will be using him as an agent in the future.

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    @Karen and @Scott, thanks for the advice. All I wanted the agent to do is to prepare a PA, and he and the selles can get the commission. I think the reason he tried to force me to sign the exclusive contract (he represents me) is to get the whole commission, which means he didn't communicate to the sellers that they can share the commission.

    So in general, a seller's agent would be happy to provide a PA to a buyer, even he is not representing the buyer? This is what I thought before, but this nasty agent opened my eyes. A good lesson for me!!!!

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    13y

    Hi Wendy,

    Because the sellers might have a long relationship with this agent. They could be family or related for all you know. Could be a million different reasons. They have an agent because they want them to be the buffer between them and the buyer.

    Many agents do not like dealing directly with buyers because they haven't been able to qualify them yet.

    My commercial buyers are qualified right away before I work with them and I make sure they are realistic. Example they have 500k cash but tell me they want a 11 cap apartment building fully stabilized when the market is trading at a 9 to 9.5% cap. It's just simply not realistic and I can get them some more off the asking price but not ridiculous numbers especially if it's fully performing for a long time.

    Since you are an investor is there a local real estate investor association you can go to?? There you will generally see brokers and agents who work with investors and are investors themselves. You might have more luck that way then with brokers and agents trying to sell regular houses.

    The brokers and agents that regularly transact in an area the other brokers and agents know them and their reputation. It goes a long way in helping land a buyer a deal when the listing broker knows that buyer broker or agent gets it done if they go under contract with them.

    Where I see many brokers and agents fail is not educating the buyers about the process and then the buyers back out of a deal. You have to analyze and get the price and terms right going to limit deals falling out and wasting everyone's time.

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    @Joel thanks Joel. Yes, finding a good agent in the investor domain is what I really need to do. I don't get much help from a "normal" agent because all he does is to show a property and write a PA when I tells him I am interested with a specific property. I do all the analysis and find properties myself. But I feel if a agent is really good, he is probabally too busy to devote any time to small investors like me.

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    13y
    Originally posted by Wendy BK:
    ... All I wanted the agent to do is to prepare a PA, and he and the selles can get the commission. I think the reason he tried to force me to sign the exclusive contract (he represents me) is to get the whole commission, which means he didn't communicate to the sellers that they can share the commission.

    ...

    So, the problem with your thinking here is that you don't know the details of the listing agreement that the seller signed with this listing agent. Almost certainly it says something like a certain commission is to be paid by the seller ...

    Here is an older sample listing agreement from MN:
    http://dirt.umkc.edu/files/list.html

  • SFR Investor · Minneapolis, MN · Member since 2013 · 36 posts · 3 votes
    13y

    Hi, Steve, the link is very useful. Thanks!
    I am glad I posted the whole thing in bigger pockets. You guys's responses let me realize how danger it is to act independently when I am still lack of enough knowledge to represent myself.

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