Buying a House ... Without My Agent?
February 13, 2013 11:08 AM Subscribe
I engaged a realtor - the brother of a friend - as I embarked on a home search. I have not signed a binding agreement with this realtor. So far, he has set me up with an online search site and arranged for me to visit 4 properties. I loved one of these properties and was prepared to make an offer, but before I could do that, the property went under contract to another interested buyer. Meanwhile ... the seller contacted me saying that she really liked me and felt good about selling to me. She wants me to ditch my agent and deal directly with her (she's acting as her own agent) and her closing attorney.
1) Is it legal for me to ditch my agent in order to make this deal happen?
2) How can I be certain that the deal is legit and that I'm not being duped?
3) I LOVE the property, so it's totally worth it to deal directly with the seller if that's what it takes to make the purchase.
If it is "under contract to another buyer", why is she contacting you?
As to the legality, if you didn't sign an agreement, it's legal...the question is, is it right? You make sure the deal is legit by having a qualified title company take care of the paperwork.
posted by HuronBob at 11:13 AM on February 13, 2013
As to the legality, if you didn't sign an agreement, it's legal...the question is, is it right? You make sure the deal is legit by having a qualified title company take care of the paperwork.
posted by HuronBob at 11:13 AM on February 13, 2013
Can't say if it's legal or not - but be prepared for your friend to face some flack from their brother, and potentially have that affect your relationship with your friend.
Your question reads as though she wants you to only deal with her and her attorney - has she said she doesn't want you to retain your own lawyer? If so - that is a huge red flag. I can understand not wanting to deal with a realtor, she doesn't want to have to pay the commission... but you need your own legal representation.
Another thought, to both keep the friendship in a good shape as well as to help protect your interests, offer to pay the commission out of your own pocket. Provided everything is on the up-and-up, that shouldn't pose a problem to her.
posted by PGWG at 11:15 AM on February 13, 2013 [8 favorites]
Your question reads as though she wants you to only deal with her and her attorney - has she said she doesn't want you to retain your own lawyer? If so - that is a huge red flag. I can understand not wanting to deal with a realtor, she doesn't want to have to pay the commission... but you need your own legal representation.
Another thought, to both keep the friendship in a good shape as well as to help protect your interests, offer to pay the commission out of your own pocket. Provided everything is on the up-and-up, that shouldn't pose a problem to her.
posted by PGWG at 11:15 AM on February 13, 2013 [8 favorites]
1 - Legal? I'm not sure. Ethical, nice, or the right thing to do? Nope.
2 - This is one of the things that realtors are paid to help you with.
3 - Worth it? You should understand that the only upside to this deal is to the seller -- she makes more money by not paying a commission. The cost of that is additional risk on your part -- you enter the deal without a professional on your side to look out for your interests. In other words, you're giving up something of value so that the seller can make more money.
You might also probe a bit into why the property was under contract and now it suddenly is not. Could be some hidden issues there.
posted by spilon at 11:15 AM on February 13, 2013 [10 favorites]
2 - This is one of the things that realtors are paid to help you with.
3 - Worth it? You should understand that the only upside to this deal is to the seller -- she makes more money by not paying a commission. The cost of that is additional risk on your part -- you enter the deal without a professional on your side to look out for your interests. In other words, you're giving up something of value so that the seller can make more money.
You might also probe a bit into why the property was under contract and now it suddenly is not. Could be some hidden issues there.
posted by spilon at 11:15 AM on February 13, 2013 [10 favorites]
In New York State, emails count as contracts with agents. If you look closely at your contractual obligations to the brother of a friend, it may be that you have no obligations. Still, that would be seen as kind of a dick move. What was the term of any contract proposed by the broker? Good form would be to inform the seller of that date, and wait it out together. You could give a deposit because the broker only comes in at closing.
posted by StickyCarpet at 11:16 AM on February 13, 2013 [1 favorite]
posted by StickyCarpet at 11:16 AM on February 13, 2013 [1 favorite]
I know you said you love the property, but please don't let that blind you to potential problems. Everything you have described so far about the seller's behaviour has given me the heebie-jeebies. I don't think you can trust her.
posted by hurdy gurdy girl at 11:30 AM on February 13, 2013 [5 favorites]
posted by hurdy gurdy girl at 11:30 AM on February 13, 2013 [5 favorites]
Oh hell no!
Stick with your agent. This is skeezy and uncool. She wants to save the 3% on his commission.
You need your agent to guide you through potential issues and problems, and it's her money, not yours.
There are plenty of houses out there that you can fall in love with. Engage your realtor, tell him what she proposed and see if he can swing a deal with her.
If her deal fell through, and she wants you to pull this dick move, I'd give her a wide berth.
posted by Ruthless Bunny at 11:30 AM on February 13, 2013 [6 favorites]
Stick with your agent. This is skeezy and uncool. She wants to save the 3% on his commission.
You need your agent to guide you through potential issues and problems, and it's her money, not yours.
There are plenty of houses out there that you can fall in love with. Engage your realtor, tell him what she proposed and see if he can swing a deal with her.
If her deal fell through, and she wants you to pull this dick move, I'd give her a wide berth.
posted by Ruthless Bunny at 11:30 AM on February 13, 2013 [6 favorites]
I would talk to your agent and be very upfront about everything. Whether it is an ethical move depends on the seller's situation and also how much time the agent has already invested. Someone who's spent a good amount of time talking to you and accompanying you to look at houses deserves more than someone who took 5 minutes to set up an account and send a few emails.
It's not clear what the situation is with the seller.
Usually when a seller is not using an agent, the seller will specify in advance what commission will be paid to a buyer's agent. However, the seller and a smart buyer (or a buyer with a smart agent) will understand that when a seller is considering offers from people with and without a agent, only the net cost matters. For example, with a 2 percent commission, a $99,000 offer from someone without an agent beats $100,000 from some with an agent.
Perhaps the seller got an offer from someone with the agent and promised a commission and is trying to get out of it?
If you do go through with it without an agent, hire your own lawyer to at least look over the paperwork.
posted by Mr.Know-it-some at 11:30 AM on February 13, 2013 [2 favorites]
It's not clear what the situation is with the seller.
Usually when a seller is not using an agent, the seller will specify in advance what commission will be paid to a buyer's agent. However, the seller and a smart buyer (or a buyer with a smart agent) will understand that when a seller is considering offers from people with and without a agent, only the net cost matters. For example, with a 2 percent commission, a $99,000 offer from someone without an agent beats $100,000 from some with an agent.
Perhaps the seller got an offer from someone with the agent and promised a commission and is trying to get out of it?
If you do go through with it without an agent, hire your own lawyer to at least look over the paperwork.
posted by Mr.Know-it-some at 11:30 AM on February 13, 2013 [2 favorites]
I might counter with offering to pay for your agent's commission. I think it's a phenomenally bad idea to buy a house without a representative especially given that the seller expressly wants you to be unrepresented, but SHE will have an attorney. FYI that attorney does not represent you or your interests AT ALL. There is a very high chance the seller is trying to pull something.
Also if it's already under contract this may be a ploy by the seller to play you off of the other buyer. Such as the buyer is asking for repairs or something or it failed inspection and now she's trying to pressure the other buyer into taking it as is or trying to get you to buy it and waive the inspection. There is a lot of other mischief that could be afoot. I would take the seller's "feeling good" about selling to you with a BIG grain of salt. I'm guessing she isn't doing this out of the goodness of her heart.
posted by whoaali at 11:31 AM on February 13, 2013 [3 favorites]
Also if it's already under contract this may be a ploy by the seller to play you off of the other buyer. Such as the buyer is asking for repairs or something or it failed inspection and now she's trying to pressure the other buyer into taking it as is or trying to get you to buy it and waive the inspection. There is a lot of other mischief that could be afoot. I would take the seller's "feeling good" about selling to you with a BIG grain of salt. I'm guessing she isn't doing this out of the goodness of her heart.
posted by whoaali at 11:31 AM on February 13, 2013 [3 favorites]
It sounds to me like the seller is trying to game the system to try to coerce potential buyers into ditching their own realtors. This could be a tactic to make negotiations more favorable for the seller, or to save the seller the 3% commission that would otherwise be going to the buyer's agent, or both. In any of the above cases, though, it's incredibly shady, possibly illegal, and an excellent way for you to lose a friend and get screwed over on a real estate deal at the same time.
posted by Mayor West at 11:36 AM on February 13, 2013
posted by Mayor West at 11:36 AM on February 13, 2013
Stick with your agent, pay the commission out of pocket.
Make sure to have a competent home inspector and real estate lawyer.
posted by sebastienbailard at 11:53 AM on February 13, 2013 [2 favorites]
Make sure to have a competent home inspector and real estate lawyer.
posted by sebastienbailard at 11:53 AM on February 13, 2013 [2 favorites]
Even if it wouldn't breach an agreement with the agent, if you buy the house, the agent may argue that he gets his share of the commission because he showed you the house--this is called procuring cause. This is probably a road you don't want to go down. It's also a lousy thing to do to a person even if you can get away with it.
You could always be upfront with your agent and tell him what's going on. He may agree to let you out of the agreement. Whether he does or not, you should absolutely get a lawyer. And if the seller balks at you having a lawyer, there is definitely something untoward going on.
posted by payoto at 12:02 PM on February 13, 2013 [6 favorites]
You could always be upfront with your agent and tell him what's going on. He may agree to let you out of the agreement. Whether he does or not, you should absolutely get a lawyer. And if the seller balks at you having a lawyer, there is definitely something untoward going on.
posted by payoto at 12:02 PM on February 13, 2013 [6 favorites]
If you do get a lawyer, you have automatically gained a broker, as lawyers are permitted to act as brokers.
posted by StickyCarpet at 12:09 PM on February 13, 2013
posted by StickyCarpet at 12:09 PM on February 13, 2013
Huh, a lot of misinformation in this thread.
In general terms, because you do not have a signed buyer's agent agreement, your real estate agent is not officially working for you. You are under zero legal obligation to this agent, for better or worse. Emails do not make an agency relationship.
On the other hand, the agent was working in good faith to help you find a home. It was the agent's mistake to not get a signed agreement from you. In reality, asking a buyer to sign an agreement can scare them off without a real understanding of that document.
The agent has no leg to stand on for procuring cause. I'm assuming the house is not currently listed with an agent, but not outside the realm of possibility with the owner's actions so far.
This is the challenge of one side only having an agent. If you sign an agreement with the agent, it should say they will make a best effort to obtain their commission payment from the seller, but if not you are responsible for that fee (3% is the norm per side).
Here are your choices:
1. Ditch your agent, they are out of luck with regard to the work they have done. Not commenting on the moral issue. You then proceed without any representation into a large transaction. Or you hire a lawyer and spend your money there.
2. Tell the seller you have been working with the agent, and there is a three percent commission due.
From that point, you can take the stance of paying between 0-3% of the commission rate. It may or may not kill the deal.
posted by shinynewnick at 1:48 PM on February 13, 2013
In general terms, because you do not have a signed buyer's agent agreement, your real estate agent is not officially working for you. You are under zero legal obligation to this agent, for better or worse. Emails do not make an agency relationship.
On the other hand, the agent was working in good faith to help you find a home. It was the agent's mistake to not get a signed agreement from you. In reality, asking a buyer to sign an agreement can scare them off without a real understanding of that document.
The agent has no leg to stand on for procuring cause. I'm assuming the house is not currently listed with an agent, but not outside the realm of possibility with the owner's actions so far.
This is the challenge of one side only having an agent. If you sign an agreement with the agent, it should say they will make a best effort to obtain their commission payment from the seller, but if not you are responsible for that fee (3% is the norm per side).
Here are your choices:
1. Ditch your agent, they are out of luck with regard to the work they have done. Not commenting on the moral issue. You then proceed without any representation into a large transaction. Or you hire a lawyer and spend your money there.
2. Tell the seller you have been working with the agent, and there is a three percent commission due.
From that point, you can take the stance of paying between 0-3% of the commission rate. It may or may not kill the deal.
posted by shinynewnick at 1:48 PM on February 13, 2013
I fired two agents looking for my house, and although I kept the third, I kind of felt like I could have done at least as well myself. Your mileage may vary, of course, but I was kind of soured on the whole 'buyers agent' idea by the end. All three agents felt to me like they were working for the seller more than for me. All tried to talk me out of asking for "too much" money off for large inspection problems, talked about the house in ridiculously optimistic salesman-speak terms while glossing over drawbacks... I felt like I was talking to a used car salesman the whole time with my own agent. I only kept the third one because buying a house seemed so complicated and I was afraid of being taken advantage of for being inexperienced. Turns out, it's not really THAT hard, and besides, my agent probably would have let that happen anyway and pocketed the money.
So only two things are keeping me from saying dump the agent. One, that seller sounds real shady. And two, it IS kind of shitty of you for you to have the agent do the legwork of finding the house for you (which is the part of what mine did that I did appreciate, having resources I don't have for that) and then dumping them for the part where they get paid.
posted by ctmf at 6:53 PM on February 13, 2013
So only two things are keeping me from saying dump the agent. One, that seller sounds real shady. And two, it IS kind of shitty of you for you to have the agent do the legwork of finding the house for you (which is the part of what mine did that I did appreciate, having resources I don't have for that) and then dumping them for the part where they get paid.
posted by ctmf at 6:53 PM on February 13, 2013
It may vary by state, but if an agent has scheduled yo unto a showing, or otherwise contacted the seller on your behalf, the seller may have an obligation to (your) agent. This seller is behaving in a way that would make me uneasy. Get the house inspected by the meanest, baddest house inspector in town. If you make an offer, you better have a bulletproof contract.
Find an agent you want to work with.
posted by theora55 at 10:40 PM on February 13, 2013
Find an agent you want to work with.
posted by theora55 at 10:40 PM on February 13, 2013
Doesn't sound like the seller is someone trustworthy. And in the homebuying process there are tons of things that can go wrong and cost you a lot of money. A good Realtor is an expert in that kinds of stuff.
By going shady and ditching your Realtor you would help the shady seller save some cash, but saves you nothing. Way too risky and unethical!
posted by cp7 at 7:09 AM on February 14, 2013 [2 favorites]
By going shady and ditching your Realtor you would help the shady seller save some cash, but saves you nothing. Way too risky and unethical!
posted by cp7 at 7:09 AM on February 14, 2013 [2 favorites]
Your realtor is there to protect YOUR interests. If that seller will do that to him or her (and it is unethical as hades) then I am assuming she will have absolutely no compunction against screwing YOU over.
And yes, no matter what you do-if you buy that house, you need to get a barracuda for a home inspector.
posted by St. Alia of the Bunnies at 7:39 PM on February 15, 2013
And yes, no matter what you do-if you buy that house, you need to get a barracuda for a home inspector.
posted by St. Alia of the Bunnies at 7:39 PM on February 15, 2013
(And one other thing, good way to lose a friend, too, on rereading your question. Remember that agents work their tails off and if they don't make deals they don't eat. Don't have them work for you for free. )
posted by St. Alia of the Bunnies at 7:41 PM on February 15, 2013
posted by St. Alia of the Bunnies at 7:41 PM on February 15, 2013
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posted by procrastination at 11:13 AM on February 13, 2013