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Hi all. I could use some educating from experienced real estate professionals reagarding two transactions I am trying to work.
I looked at a home with the listing agent. I made no offer, kept shopping, and eventually hired a buyers agent. She showed me a few homes and I then asked her to take me back to this one. We made an offer and seller countered about 6,000 higher. I walked away.
After a couple weeks I went back to the home and discussed with the buyer how to make the transaction work. As I expected, the buyer agrees the house is overpriced and has seen no other interest from other buyers. The homeowners are overmortgaged and have recently divorced, and they will need to bring money to the closing table to get out of the mortgage--even at the price of their counter offer. The potential solution lies here: the ex-wife is downsizing and needs to get rid of furniture, while I like her furniture and need to buy many of the same items she plans to unload.
So we reached a tentative verbal agreement. After her ex-husband expresses interest, we will negotiate the sale of specified furniture items. If we can agree on the items and the price, I will hand them cash in exchange for an itemized bill of sale. This transaction will be separate from the real estate transaction, but happens to avail them of much needed cash to escape their underwater mortgage with less out of pocket. The real estate purchase price and terms will be similar to my original offer. No realtor or lender or title company will be involved in the furniture sale.
Both real estate agents think this is somehow illegitimate but I haven't been shown a code or regulation that it violates. (Seller suspects her agent is upset about losing 3% commission when that agent was first to show me the house.) I feel like we may have found an honest and creative way to make this work to meet the home and furniture goals of both buyer and seller.
Questions:
1. Is this arrangement in any way illegal or improper? If so, based on what code or regulation?
2. Am I or the seller at risk of owing full commission to seller's realtor and a separate buyers agent commission to my realtor? My offer to the seller specifies 3% to my realtor and I of course have no contract obligations to the selling realtor. So I'm safe, right? What about the sellers' risk? I don't want them to suffer any increased or unexpected realtor costs.
Okay so the home was listed with an agent. The listing agent showed you the house. Then you hired a buyer agent who showed you more homes. You went back to this one with the buyer agent while it was still listed with the listing agent?
Unless it has been six months since you looked at the house, the seller will owe the listing agent their commission. If in fact you put in the contract 3% to buyer agent, you could in fact be asking the seller to pay the listing agent their FULL commission and the buyer agent a commission. It depends how you worded things. Commissions don't belong in contracts between buyers and sellers.
You are welcome to purchase the seller's furniture separate from the contract. The sellers could have an estate sale and you could legally go over there and get what you want. This kind of stuff happens all the time...someone wants the plasma tv, or speaker system, or.... I personally prefer to keep furniture off real estate contracts and just convey the property, and let buyers and sellers work this stuff out outside the contract.
"Okay so the home was listed with an agent. The listing agent showed you the house. Then you hired a buyer agent who showed you more homes. You went back to this one with the buyer agent while it was still listed with the listing agent?"
--your description is exactly right.
I made an error concerning the purchase offer--it contains NO commission language. It's my buyers agent contract that specifies the 3%. It obligates ME to pay the commission in the event the selling broker does not pay my realtor. How do I eliminate the risk of the selling agent not paying my realtor and leaving me on the hook for the 3%?
If both our real estate agents refuse to do this deal, is that grounds for firing them and relieving sellers and me of our respective contractual obligations? Unlikely it will reach that point but seller and me are both irritated with our agents and I would like to know our options as we proceed. Both agents have responded to the idea with clear opposition. It feels like they are trying to prevent the deal.
It is so cool that we have access to so much information and expert opinion today via the web. Thank you for sharing your knowledge.
Last edited by buyerks; 11-15-2009 at 04:25 PM..
Reason: error correction
Whoa! There seem to be several issues flying around if I read the post correctly.
1. I hope that the Listing Agent is not upset that you brought your own representation. You didn't sign anything with the LA as a Buyer's Agent and I would think that some commission is better than no commission at all.
2. Tentative verbal agreement means nothing, nada, zippo. Only contracts in written form are legal (even if you scribble it on a cocktail napkin). Obviously this becomes an issue if someone tries to enforce a contract as it becomes a game of "he said, she said".
3. I could possible see the furniture as being an issue of what could look like a "kick back" and in Georgia - that is a no - no. We do have a Personal Bill of Sale form that we use in our contracts. Any personal property that is being conveyed with the property can be disclosed on that form.
Why do you think that both the Listing Agent and Buyer's Agent would be against the possibility of selling the property and thus earning a commission? If you are still referring to the personal property - I would contact an attorney to make sure that everything is a legal transaction so you can leave the two Agents out of the picture.
That's why I always use the Personal Property Bill of Sale Exhibit. It also completes a legal transaction - you give me "A" and in return I give you "B". Also - that way everything is disclosed.
How do I eliminate the risk of the selling agent not paying my realtor and leaving me on the hook for the 3%?
The listing agent and buyer agent have a contract via the MLS for payment. If the listing brokerage refuses to pay the commission, then your agent would need to file a complaint with the MLS and go that route.
Is the listing agent saying they aren't going to pay? Why are you worried about it?
Quote:
Originally Posted by buyerks
If both our real estate agents refuse to do this deal, is that grounds for firing them and relieving sellers and me of our respective contractual obligations?
What do you mean refuse to do the deal? If they think you are trying to do something illegal, then of course they shouldn't assist you in that matter. If you purchasing the furniture violates some KS laws, then they are acting in your best interest. I can't see how refusal to engage in an illegal act would constitute a reason for you and the sellers to breach your contracts.
I am sure there is a way to legally purchase the furniture, you just need to make sure that how you do it is above board. You can always consult with a real estate attorney on how to do that.
I have a hard time believing that people in Oregon are the only ones that purchase personal items during a real estate transaction.
That's why I always use the Personal Property Bill of Sale Exhibit. It also completes a legal transaction - you give me "A" and in return I give you "B". Also - that way everything is disclosed.
Yep. I agree. The OP said they would do a bill of sale. That's why I'm confused by the "illegal" aspect of things.
Silver, I agree with you. We have vacation property here that is many times sold with personal items, they are listed on a sep. bill of sale... sometimes for just a dollar. Seen plenty of my clients go to sellers yardsales and purchase, or outright ask to purchase. Also seen many sellers put price tags on their stuff so that when potential buyers go through they know what is for sale.
Can't see where there is a problem. Sounds like you are above board.
as for agents, just ask!! We have a commission agreement form that that the selling agent completes and submits with the Purchase Agreement stating what the MLS said, the listing agent is paying the selling agent X%. both sides sign it. It is submitted to the closing company with the other docs and information. Do you all have something like that? if not, ask your agent to create one and have both sign off.
George, thanks for your response. This is really helpful.
1. My thoughts exactly.
2. Yes, our agreement is intentionally not binding. We just expressed mutual interest in further discussing the furniture sale option.
3. I see how, on the surface, this could look suspicious. That's why I want a simple bill of sale for the furniture, demonstrating a fair market price and a true exchange of value. Seems this would show the transaction stands on its own merit and isn't a "kick back." After my face to face with the seller, I'm willing to trust that she's a decent person seeking an honest solution to her problem. So, rather than pay for a attorney-written contract, I'll accept the risk that the sellers may run off with the furniture after I pay for it. I suppose a check rather than cash would give me a little more protection and documentation. I own a business here in the small KS town where the home sits, so they probably know I wouldn't write a bad check and ruin my reputation.
It sounds like you're saying the furniture sale COULD be noted in the real estate transaction documents but this is NOT REQUIRED?
To your last question, I'm not sure why the agents would oppose this. Maybe they are jumping to incorrect conclusions, thinking it is somehow a kickback. Maybe it's irritating that buyer and seller have the gumption to speak directly to one another. Or maybe it reminds them of some "don't do this" scenario that got presented in their continuing ed courses. Who knows.
I just know that in my gut this feels honest and good for seller and me. ...and I'm willing to push and shove from every angle to get this house without overpaying too much. (I think my original offer overpays by a couple thousand, but I'm looking for the right home for my family, not a real estate bargain.) I'm tired of shopping, I'm choosy, and this house's layout and decor fits me.
Want more amusement and complication? The seller's sister just put her home, right next door, on the market FSBO. It's a more valuable house with a higher price. I could afford it and be OK living there, but the first house feels like the right one. We live in a small world with big coincidences.
Thanks again.
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