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So, my wife and I met with a realtor who had a home listed, let's call it 5 Main St. We sign a dual disclosure agreement but do not sign a contract with him. We could not arrange a viewing of 5 Main St. right away because the owner would not allow it. The house next door, let's call it 3 Main St, is new construction and is for sale for approximately $20k more money than 5 Main St., as it is new and roughly a couple hundred square feet larger. 3 Main St. is listed with a different real estate agency. He offers to take us through 3 Main St. and another home for sale in the neighborhood just to see comparables. We like 3 Main St. but think it is most likely out of our price range.
We view 5 Main St. with the realtor on another day. While we like some things about it, it will need new countertops and flooring at a minimum to satisfy us.
Independently, I call the builder of both 3 and 5 to see if he would be able to help with the updates/changes to 5 if we were to purchase it as well as to discuss the option of him building a home for us. He says yes to both and gives a reasonable estimate for the updates. Then we get to talking about what we are looking for, and he invites us out to look at some plans he has for a home he will be building shortly. The plans are ok, but we don't like the lot where it will be built. He shows us a house that is currently in the process of being built for another customer, explaining things he does that not all builders do and why he believes he builds a good quality home, etc. Then he offers to take us through 3 Main St. to show the finished product. We decide to go since we liked it before anyway and admittedly do not admit that we had seen it before.
The builder spends quite a bit of time with us and we like the 3 Main St. house even more and like the builder a lot. We ask what his best price would be. He takes a day to look at his costs and numbers and gives a price that is a decent amount lower and explains he has a flexible contract with the listing agent where the listing agent will be paid something but not the full 3% if he finds a buyer rather than the realtor.
We have never signed a contract with the original realtor we contacted to show us 5 Main St., but he did show us 3 Main St. first. If we decide to make an offer or purchase 3 Main St., do we bypass the realtor? The builder is not aware of his existence and the price given most certainly does not include a 3% to cover his payment. Any thoughts or suggestions would be greatly appreciated. Of course I would like to save money but am curious what is "right" according to custom and etiquette in this situation.
You, the buyer, was found via the agent. If the listing agent finds out that the buyer of 3 Main St was someone he showed the property to, then the seller/builder will owe him 3%.
1. It does not sound like you have an exclusive buyer brokerage agreement with the agent.
2. Obviously, you did not feel anyf loyalty to the agent -- otherwise, you would have mentioned that you had alraeady seen 3 Main St. I suspect you didn't tell the builder, because you were afraid that the price would go up if the builder had to factor in any sales commission, right?
I suspect that the agent is SOL, as they were showing you property wthout a brokerage agreement in place. They could make a case to the builder that they are the ones that showed it to you, and that would be between them and the builder. What are you going to say to the builder if he asks you, point-blank, "Did ABC Agent show you this house?"
Did you sign any type of buyer agency contract with the agent that showed you 3 Main Street that said they represented you if you were to move forward with 3 Main Street? If not, then you would typically not have an obligation to them. Silverfall is touching on procuring cause, but I believe procuring cause is typically only supported by a contract that supports representation and that agent then also delivers an offer on the property. Check with an attorney, but if you've signed no representation contract with anyone, you most likely have no obligation to anyone yet.
Did you sign any type of buyer agency contract with the agent that showed you 3 Main Street that said they represented you if you were to move forward with 3 Main Street? If not, then you would typically not have an obligation to them. Silverfall is touching on procuring cause, but I believe procuring cause is typically only supported by a contract that supports representation and that agent then also delivers an offer on the property. Check with an attorney, but if you've signed no representation contract with anyone, you most likely have no obligation to anyone yet.
It sounds like the LISTING agent has an Exclusive Agency contract, not an Exclusive Right to Sell Agreement. If the LISTING agent for the builder finds out that the house was shown by a buyer agent, then the builder will still owe the commission because he/she procured the buyer via their advertising. The builder did not find the buyer. Most exclusive agency contracts address the means in which a buyer found out about the property to prevent such situations. They tend to change procuring cause to how they found out, not about an offer.
You are OK to go ahead and deal with the builder and leave that agent with nothing.
If I understood correctly, you found first property (5 Main St.) youself and contacted listing agent for that property who asked you to sign an agreement only for that property (5 Main St.). Since that property wasn't avail. for showing, he decided to show you houses next door with similar floorplan with all intentions you will be looking at original house (5 Main St.). For some reason you didn't like that house as well as that agent as well as the price that agent named, so you went to the builder.
You was the one who negotiated the price and other terms.
Now you can inform the builder you were planning to look and possibly buy a house (5 Main St.), and listing agent showed you similar floor plan (3 Main St.) because listed home (the one you were considering - 5 Main St.) wasn't aval. for showing. Make sure you mention you never said any contract with that agent other than representation agreement for property next door (5 main St) and found that property without a help of listing agent.
Do whatever is best for you including moneywise. Good luck! You just saved yourself few thousands!
It sounds like the LISTING agent has an Exclusive Agency contract, not an Exclusive Right to Sell Agreement.
You are incorrect. They signed dual disclosure agreement - that applies only to property 5 Main St. This listing agent NEVER was buyers agent outside of this property, so he in not getting anything out of the deal topic starter negotiated.
You are OK to go ahead and deal with the builder and leave that agent with nothing.
If I understood correctly, you found first property (5 Main St.) youself and contacted listing agent for that property who asked you to sign an agreement only for that property (5 Main St.). Since that property wasn't avail. for showing, he decided to show you houses next door with similar floorplan with all intentions you will be looking at original house (5 Main St.). For some reason you didn't like that house as well as that agent as well as the price that agent named, so you went to the builder.
You was the one who negotiated the price and other terms.
Now you can inform the builder you were planning to look and possibly buy a house (5 Main St.), and listing agent showed you similar floor plan (3 Main St.) because listed home (the one you were considering - 5 Main St.) wasn't aval. for showing. Make sure you mention you never said any contract with that agent other than representation agreement for property next door (5 main St) and found that property without a help of listing agent.
Do whatever is best for you including moneywise. Good luck! You just saved yourself few thousands!
Thank you all for the opinions and discussion. I am not trying to be a jerk but trying to get us out of this predicament in the best manner possible, both financial and ethically. That being said, let me help a bit with clarification (hopefully):
As to the above, correct. I found first property, 5 Main St., online and contacted the listing agent for that property who asked us to sign an acknowledgement of dual disclosure that clearly states it is "not a contract" at the top for that property (5 Main St.) since he is the listing agent. He had an agency contract but did not require us to sign it and we still haven't. Also correct that since 5 Main St. wasn't available for showing, he decided to show us two houses on the street with similar floor plans but that were new and a higher price, a price we told him we thought was out of our price range. We wanted to know what the extra cost bought. After we looked at 3 Main St. with him, while we liked it, we thought the price was a little out of reach and still wanted to see 5 Main St.
When we finally saw 5 Main St., it was a bit of a let down and needed some updating. As I explained before, I got the builder's name off the sign and called him for this purpose. I explained above what happened after that, but we ended up spending about 3 hours with the builder and he sold us on the 3 Main St. and his construction. I talked with the bank and we can afford 3 Main St. after all.
I am thinking about doing the following:
Going to the realtor (listing agent for 5 Main St. and showed us 3 Main St.), and explain the situation and that I would like to terminate any relationship between us and pay them something for a release from any obligation on 3 Main St. and see how much money that would take. If they refuse to do so unless their full 3% or what have you is paid, I could go to the builder and explain the situation and make an offer for the full listed price of the home. Either way, I don't come out that great financially, but I think I will be able to sleep better at night. The other option is to keep looking for another home. Ha.
Thanks again to everyone for the thoughts and replies. They are appreciated.
In my book, clients come first. But, maybe there is a meet in the middle option. Be represented by an agent and get the house you want at a price you are willing to pay.
Going to the realtor (listing agent for 5 Main St. and showed us 3 Main St.), and explain the situation and that I would like to terminate any relationship between us and pay them something for a release from any obligation on 3 Main St. and see how much money that would take.
You don't have to do that. You have no agreement with the agent therefore you owe them nothing, nor does the builder, or agent for the builder. The agent may try and claim "procuring cause" - but you don't want to use them so they are essentially out of luck. They made the choice and suggestion on their own to show you comparable homes, but you are under no obligation to use them as your agent. This is why they should have a written agreement - so THEY know what their role is and can spend their time accordingly.
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