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Sorry-this might be a little vague as I don't understand the details and it was awhile ago but I am just trying to see if I was told the truth or not.
Multiple years ago when we were going to sell our house, a family member who is in real estate in our state but not our town, wanted to call the agent we were going to use prior to us signing a contract. This family member told us that she wanted to talk to the local agent and get a feel and make sure that we were using a good agent. We didn't think anything of it, just a family member looking out for us.
We signed the contract with the local agent and at the end of that meeting, the local agent tells us that she has faxed over to our family member the referal contract for the (I forget the amount-maybe 25)% of the commission. This was news to us since we had found the agent on our own through friends and didn't understand. From our understanding it meant that this family member was going to get a % of the commission from the sale of the house because she had contacted the local agent.
We confronted the family member. Her answer was that she was going to have it be a surprise at closing and that we would see it on the HUD settlement. The family member was offended and said it was to be a surprise and that she was going to give us the money.
It just has never sat well with me and I was just wondering to those of you in the know-is this something that occurs in the business?
We never did sell our house. I am not in real estate so I have no idea if this would have happened or if it would have been disclosed in the sale of our house.
How it came off to us, if we had sold the house, the family member was going to make money from the sale of our house and if our agent hadn't mentioned the contract, it might not ever been known to us.
Am I completely wrong with the above assumption or would we have seen this all at closing and we would have had a wonderful surprise?
It's entirely possible that what your relative said was true. I've rebated partial and entire commissions to clients and it showed up as a credit to the particular party on the closing statement.
My question is in regards to real estate-do agents get a % of commission when they call another agent on behalf of the people looking to sell their house-prior to contracts being signed (finders fee)
Second-is that disclosed to the sellers of the house?
I have no idea what a HUD settlement is-but would we the sellers of the house been "surprised" at closing with this wonderful thing that this family member was doing for us?
Or perhaps would we never have known that this family member had a cut of the sale of our house had the listing agent told us.
What I am trying to figure out is....would this have been disclosed on paperwork that we would be seeing or would all of this exchange of money might have happened without us ever knowing if our listing agent hadn't mentioned it.
I believe that this family member would have kept the money. She is saying that we would have found out when we sold our house and it would be a wonderful surprise.
All moneys are disclosed on the HUD. You would have seen this brokerage make whatever amount of money. BUt again, we can't answer your question as to it being a surprise to you, because we don't know if the money would actually have gone to you. But if the family member received any money from the transaction, yes it would be on the closing statement.
And to answer your other question, yes, this is very common for agents to receive referral fees when people they know use another agent.
My question is in regards to real estate-do agents get a % of commission when they call another agent on behalf of the people looking to sell their house-prior to contracts being signed (finders fee)
That's a completely different question than what you originally posed. Yes, sometimes referral fees are paid.
Quote:
Originally Posted by sunnie741
What I am trying to figure out is....would this have been disclosed on paperwork that we would be seeing or would all of this exchange of money might have happened without us ever knowing if our listing agent hadn't mentioned it.
As the Seller paying the commission, the disbursement of that commission would normally be disclosed on your closing statement (at least it would be in my area).
Also, if part of the commission were to be rebated to you, that would also be disclosed on the closing statement.
I think that Mike is right: your mistrust goes beyond normal real estate practices. Again, it's entirely possible that your relative had your best interests at heart. Or...you can think otherwise. (But, either way, it would have been disclosed.)
The commission disbursement to the listing agent and the buyers agent would have been disclosed. But the referral fee is typically paid through the brokerage, and I do not think it would show up on the HUD
The commission disbursement to the listing agent and the buyers agent would have been disclosed. But the referral fee is typically paid through the brokerage, and I do not think it would show up on the HUD
In my area, the title company writes the check directly, so it would still show on the hud as they have to disclose all people receiving funds from the closing. If the Brokerage wants to full amount and then they disburse it out later, it would not be on the HUD, but then that brokerage will be paying taxes on money they didn't get to keep. Better to go through the title company so you only pay taxes on money received.
What she did, calling the agent asking for a referral fee when she did not give a referral, is very underhanded. Had I been the agent she called after the fact, I would have crucified her. (and would not have been willing to pay it)
Anyone who would stoop so low as to even think about doing that, was not going to credit it back to you. She interfered with your listing contract. Is it possible she removed money motivation from your agent and cost you the (successful) sale of your home?
Chances are you would have seen it on the HUD, but it is up to how that side’s Broker handles their referral fee payments. Usually the Broker wants it on the HUD.
It would show on the HUD as a payment to the office (ABC Realty) that your family member works for, and chances are slim that you would have known what it was.
I've never seen a referral itemized on a HUD-1 and I've seen hundreds of HUDs. In the referral instances I've been involved in, the entire commission was paid to the broker on the buyer's or seller's side as shown on the HUD and then the referral check was cut from that brokerage to the referral brokerage undisclosed to either of the principles. Sometimes a referral is sucked out of the agent's check after closing by their own brokerage for a lead. Very common for franchise offices. Shameful.
To my cynical mind, it's more probable that your relative had no intention of giving you the money and she unfairly extorted the referral from your agent. What if in tight negotiations a commission concession from your agent would have made the difference but she couldn't because she was already giving up a chunk to your greedy or unthinking relative? Referrals are unfair in almost all cases and especially in after-the-fact cases like yours. To anyone who reads this, don't let your undeserving friend or relative refer you to a hard-working agent in order to skim part of that agent's pay.
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(But, either way, it would have been disclosed.)
