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You can bet that I have asked our perspective realtor for selling our home if she participates in this outrageous BAC. Needless to say, we will not hire an agent who does this, as it may not be illegal....but certainly unethical.
As the buyer, I cannot tell you what was agreed upon between seller and agent but I can tell you that the seller is fortunate that we do indeed like the property and it is unfortunate that the agent muddies an otherwise clean transaction and can understand if previous potential buyers walked when she demanded the $695 or she would NOT....not...present their offer to the seller.
We've contacted the ADRE.
Actually, if the additional fee is a violation, it is a RESPA violation and a complaint would need to be filed with HUD RESPA: More Information
Whether it is a RESPA violation or not would be determined by what the fee was specifically for, and how it was disclosed.
As for the ADRE, the complaint to them would be that the agent refused to submit your offer to the seller (absent the sellers written instructions to not present certain offers) if you did not agree to the fee. (An agent is required to submit all offers unless the seller instructs the agent to not submit certain offers.)
There is a whole lot of misinformation about Real Estate Agents in this thread. Bill has addressed a lot of it already.
I want to back up:
There is no customary or "normal" fee or commission. With some exceptions (ie. brokers can not legally charge for loan modifications since they are not qualified), agents can charge whatever commissions or fees they want, as long as they are disclosed to and agreed to up front by the seller. Setting commissions as "customary" between brokerages actually violates federal antitrust law.
"never use the inspector and appraiser the real estate agent refers to you."
That can't be farther from good advice! The Real Estate Agent wants to protect you, and themselves, from harm or lawsuits arising from conditions of a home that cannot be seen by the untrained eye. Agents want the inspector to be very thorough. If inspectors find something doesn't seem right, they will recommend further analysis by experts in that field, ie. roof, mold, or pest. Hiring "a few contractors" instead of a home inspector will likely result in "a few different opinions" on pricing, and on what needs to be done. A home inspector does not perform the work, and will not recommend fixing items that don't need fixing. An agent will be relieved if an inspector finds item(s) that make the home unsuitable for purchase, not disappointed that the inspector pointed them out. For example, I currently have a home purchase in escrow, and the inspector noted moisture damage that was well-hidden by the seller, and the inspector recommended further inspections. We required the seller to obtain a mold-inspection and guess what? The house is riddled with hidden mold which will require thousands of dollars in remediation. The buyer can choose to go through with the purchase or elect to pass this one up. At least I, as an agent, will not be held accountable and sued for not pointing out a moldy house or not recommending an inspection! The buyer is told they can use whomever they want to inspect the home, but usually the buyer requests to use whomever the agent trusts to do a thorough job.
The ADRE does not hear complaints about ethics or amounts of commissions charged. If an agent refuses to present an offer, the ADRE will respond to a written complaint. But there are certain circumstances where a seller will instruct their agent to not present certain offers. Before complaining to the short-handed ADRE, it would be advisable to make sure the complaint is legitimate.
If you choose to go without buyer representation in a home purchase, you are setting yourself up for dual agency, or limited agency. You just might want to obtain professional legal advice if you choose to go this route.
"Seller's agents taking both sides are double-dipping"This false assertion comes up quite regularly on forums like C-D and Zillow. How do you know this? How do you know that the Seller and the Seller's agent haven't agreed to a lower commission if there is no buyer's agent? How do you know that the agent isn't working twice as hard because they now have double the parties to answer to?
If you have questions about legalities in a home sale or purchase, it is advisable to seek professional legal advice, not untrained advice from a forum of people, most of whom have no professional experience or education, but who at the same time have a slanted perspective towards the industry. I see lots of opinions in this thread, but haven't seen enough information to make an opinion on whether the listing agent is wrong, right, unethical, or doing nothing wrong. There is no way to do so without seeing the original contract between the seller and their agent, or the complainant's purchase offer contract, or by being privy to the actual conversations that prevailed.
There is a whole lot of misinformation about Real Estate Agents in this thread. Bill has addressed a lot of it already.
I want to back up:
There is no customary or "normal" fee or commission.
[b]
Sure there is. Generally speaking, RE fees are between 6-7%. That's "normal" / typical. Electricians "normally" don't charge $250 an hour (nor $30 an hour).
If it was normal /typical to pay $70 / hour for an electrician, you would feel ripped off if you were charged $200 an hour. That's human nature.
Quote:
Originally Posted by S. Chris Webb
"Seller's agents taking both sides are double-dipping"This false assertion comes up quite regularly on forums like C-D and Zillow. How do you know this? How do you know that the Seller and the Seller's agent haven't agreed to a lower commission if there is no buyer's agent? How do you know that the agent isn't working twice as hard because they now have double the parties to answer to?
We agree. It's not "double dipping". Some transactions have too little payment for the amount of work done and other times agents are are generously paid. Those "double dipping" situations average out with times when agents nearly work for free.
But we disagree about working "twice as hard". If makeitagreatday was driven around for three weeks, that is working twice as hard but answering questions and coordinating a sale isn't double the work. In her example, the agent got paid an extra point.
Quote:
Originally Posted by S. Chris Webb
If you have questions about legalities in a home sale or purchase, it is advisable to seek professional legal advice, not untrained advice from a forum of people, most of whom have no professional experience or education, but who at the same time have a slanted perspective towards the industry. I see lots of opinions in this thread, but haven't seen enough information to make an opinion on whether the listing agent is wrong, right, unethical, or doing nothing wrong. There is no way to do so without seeing the original contract between the seller and their agent, or the complainant's purchase offer contract, or by being privy to the actual conversations that prevailed.
It's fair to judge a situation based off of the statements that are presented. If makeitagreatday was of her rocker and made all of this up, we still can judge the (now) hypothetical situation.
The bottom line is I would be upset if I was charged a $695 fee. That's because I like to understand what is "normal" for an industry. Let me ask, do you charge one of those extra $695 fees?? I get the feeling that you are sympathetic to these fees.
Last edited by MN-Born-n-Raised; 01-03-2012 at 03:06 PM..
Sure there is. Generally speaking, RE fees are between 6-7%. That's "normal" / typical. Electricians "normally" don't charge $250 an hour (nor $30 an hour).
If it was normal /typical to pay $70 / hour for an electrician, you would feel ripped off if you were charged $200 an hour. That's human nature. ...
You may perceive that there is a "typical" fee, but legally, there can be no agreement implied or otherwise between brokerages as to a customary/normal fee. This would be construed as price fixing, which is an anti-trust violation. However, it is legal for a given brokerage to set a standard fee for their agents. My brokerage has no standard, all agents are free to set and negotiate their own fees. We also have no BAC fee.
"Sure there is. Generally speaking, RE fees are between 6-7%. That's "normal" / typical."
May I ask what real estate school or government agency is spreading that, or are you going from what you hear on the street?Some agents will work for 5%. Some for 3%. Some for a flat commission of $x.Some as little as 1%. But you often get what you pay for. By federal law, there is no "industry standard".There is also becoming more and more of a spread on listings as to what is offered as a standard co-broke in the MLS.
"If makeitagreatday was driven around for three weeks, that is working twice as hard"
"Driving people around" is not what good agents do to earn their living. Poring daily through new MLS listings, tracking comps in tax records, ensuring the buyer/seller is not getting ripped off, helping them determine a reasonable offer/selling price, negotiating the offer with the seller, writing up a fair and legal contract, running to the property multiple times to handle utility hook-ups, appraisals, inspections, repairs, following through the escrow, tracking down HOA info, figuring out how the funds are to be wired, following through with the loan requirements, etc. etc. is what agents do. When you have dual agency it's a whole different ballgame with double the people and vendors to deal with, and double the emails and phone calls. And 10 times the liability at stake. It never ceases to amaze me that so many people think all real estate agents do is drive to a few properties and open a few doors, and the deal just falls into place once a buyer likes a house. While that is what appears to happen on HGTV shows, it is not reality.
"It's fair to judge a situation based off of the statements that are presented."
I disagree. The OP was recommended to talk to the agent's broker. They stated they couldn't because the agent was the associate broker, which makes no sense as being an associate broker means nothing. Why can't the OP call the Designated Broker to have the fees spelled out to them? I didn't see anywhere in this thread how the specifics of the contract were written up. How can we tell the offer was even legal? How do we know if the seller had given the agent instructions not to present certain offers?
"The bottom line is I would be upset if I was charged a $695 fee. That's because I like to understand what is "normal" for an industry. Let me ask, do you charge one of those extra $695 fees??"
I did not see anywhere that specified what the fee was exactly for, or how it was written in the contract. I do indeed charge an extra fee on rare occasion, usually when a seller is not offering enough commission to cover certain expenses, but I write it into a contract with the buyer or seller before I become their express agent on a certain property.
The last few years has been hard on the real estate sales industry. With prices slashed and banks ruling the majority of sales, a lot has changed. What was seemingly "customary" for years on end has come to an end. The industry has had to react to a lot of external forces.
I am playing Devil's advocate - I am not saying the listing agent isn't doing something out of the ordinary or outright illegal. I'm saying that they are innocent of wrongdoing until proven guilty. Some people on this thread appear to be being judge, jury, and executioner without enough info to go on. There has been enough said to damage an agent's reputation in this thread without them being here to defend themselves. I am thinking of calling them to let them know this is going on.
If an agent refuses to present an offer made by a particular potential buyer, they are breaking the Law Of Agency, which requires them to present the offer.
I know of one situation in my own family. An agent did not present an offer to my daughter in California until after the buyers bought a home somewhere else 3 days after the listing expired. When my daughter found out, and asked why was told that the agent did not think she would have taken it. This was while prices were dropping. The next offer was for $70,000 less, and she took the offer as the home values in that are were dropping so fast she still got a top price for the time. She would have taken the first offer that was not made to her and was given to her after the offer had expired and they bought another home.
She took it to arbitration, and the Broker was ordered in the settlement to pay the $70,000 loss. The agent was one of 4 parts of the partnership that owned the office, and she ended up losing her partnership, and the firm really hurt over this. They were fighting with their E&O insurance carrier the last I heard trying to get this reimbursed, but the insurance company saying one of the partners failing to present a contract, was not an Error or Omission.
If you make an offer, and the agent refuses to present it, they have broken the law and the sellers contact with the agent may no longer covers you. You can go directly to the buyer as of that point, who would be glad to sell without paying the commission, which the agent not taking them the contract makes possible for a direct sale with no commission. Have done this two times on the advice of our attorney and both were accepted.
If an agent refuses to present an offer made by a particular potential buyer, they are breaking the Law Of Agency, which requires them to present the offer. .
That is correct, unless; the seller has provided "written" instructions to the listing agent to not present certain types of offers.
You may perceive that there is a "typical" fee, but legally, there can be no agreement implied or otherwise between brokerages as to a customary/normal fee. This would be construed as price fixing, which is an anti-trust violation. However, it is legal for a given brokerage to set a standard fee for their agents. My brokerage has no standard, all agents are free to set and negotiate their own fees. We also have no BAC fee.
The word "legally" is purely technical. It's well understood that the total fee for service is generally 6-7%. It is also understood that it's normal to tip 15% on your meals. Forget the anti-trust violations. I speaking of common knowledge. If you told someone verbally that you get the typical 7% commission rate everyone will know what you are talking about. There is no need to be worried that you are going to be dragged in court if you suggest that is the norm because it is the norm.
..
If you make an offer, and the agent refuses to present it, they have broken the law and the sellers contact with the agent may no longer covers you. You can go directly to the buyer as of that point, who would be glad to sell without paying the commission, which the agent not taking them the contract makes possible for a direct sale with no commission. Have done this two times on the advice of our attorney and both were accepted.
One should be very careful in going direct to the owner and making a deal, bypassing the agent(s). The buyer needs to be absolutely certain that the seller has not given specific "written" instructions to not present certain offers before taking any type of action like that; and probably get advice from a real estate attorney.
A safer approach is to contact the Designated Broker with a complaint and find out all the details.
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I get the feeling that you are sympathetic to these fees.
