Referral Fee within the family (feedback, new agent, commissions, sale)
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Hi Everyone!
I am new to this forum and not a real estate agent. I have a question I'm hoping some of you can help me with.
My husband and his 3 siblings took ownership of their mothers house (in NJ) several years ago. She's been living in a nursing home for about 16 months and the house is going to be sold. My husband and I recently renovated/updated the house so it is in prestine move in condition.
My husband's one sister is a real estate agent. A year ago she was given the opportunity to market the house FSBO. She convinced the family that the house did not need any renovation work, it could go on the market as is and still get market value. Even though it had been described as an "Archie Bunker" looking house at the time because nothing had been updated in 40+ years. Her marketing tactics included, NO advertising other than a sign on the front lawn and 3 open houses in 6 months. Finally, my husband convinced his siblings (other than her) that the house needed to be renovated and depserately needed to be marketed properly. So against his real estate agent sister's wishes, we renovated the house and she was told she was not going to be given another chance to market the house. So bottom line, she has put no effort, no time, no interest, no money into the renovation and as you can see, no previous marketing effort.
Fast forward through all the BS............. the house is ready for market and we are interviewing agents. His agent sister shows up out of nowhere saying she wants to be involved in interviewing the agents. Ok, so she's finally taken an interest. With each agent she asked if they would give her a referral. There was never any discussion bewteen her and the agent about it, just a reply from them of yes or no. None of the rest of us knew what "referral" meant other than refer clients to each other when appropriate. We had no idea until we inquired more deeply that there was a "fee" involved and that "fee" was a percentage of the selling agents commission which goes to his sister (who is not the referral agent) and her broker (who has nothing to do with the sale of this house).
Knowing the story........... I am interested in any feedback that any of you may have with regard to his sister's and her brokers entitlement to this referral fee. As far as the actual sale of the house, is there any benefit (other than $$) to give this referral fee to his sister? Would it make more sense to let the real estate agent who is going to market the house have her full commission so she does the job that we expect her to do??
Gosh this sounds ugly... How many siblings are involved? Four kids? Eqaul split? If the sister is reasonable maybe she just wants a little compensation for the time she feels she invested with the open houses and the sign, if she is unreasonable she is going to put up a fight over every little detail, and given what has already happened that is where I'd lay my money down...
While good agents don't mind splitting commissions with cooperating agents, if the 'cooperation' seems ahead of time like it is going be a major PITA then don't expect the agent to be eager to talk to anyone in the family.
My advice is have all the siblings create a "rough draft" of the split of the proceeds and consider the expenses that have gone into the remodel and even the expenses the sister agent may have had. Make it clear that NOBODY GETS NOTHING if the place doesn't sell it is in EVERYBODY interest to be as detached and hands-off with the new agent as possible...
In my area, such referrals are done at 30-35% of the listing agent's fee. I am sure the sister "intends" to turn over the fee to your mother's living estate as a small token of participation, given she has not been able to be hands on.
And so, I think expressing your appreciation for her involvement makes clear, the family is in this together.
This story sounds so familar, almost like I know these people or it is a similar story. I wouldn't give a dime!!
They are getting a part and she didn't do a good job as you stated and now she wants to be greedy....no penny just the part they are intitled to. Just my opinion. If you pay or not, they won't be happy and money brings the worse out of people.
She sounds pretty greedy to me. Why does she deserve a referral fee?
Considering, she is one of the OWNERs of the home, and has invested herself in the marketing of the home, I'm not surprised. She doesn't sound greedy at all.
Quote:
Originally Posted by middle-age-mom
In my area, such referrals are done at 30-35% of the listing agent's fee. I am sure the sister "intends" to turn over the fee to your mother's living estate as a small token of participation, given she has not been able to be hands on.
And so, I think expressing your appreciation for her involvement makes clear, the family is in this together.
I believe there should be better communication between the siblings, as this is a rough time for everyone. It sounds like this difference of opinions might not be limited to this particular task, either. I am sorry to hear about the declining health of your mother-in-law. I am sure that she will be missed by all her family. Unfortunately, situations like this often become emotionally heated.
As it is your husband's siblings are involved, I would proceed with caution to not cause any more friction between the siblings, or things will be said and actions will be performed that will place fragile relationships in jeopardy.
I would comment that when you claimed that your sister-in-law was given the opportunity to market the FSBO. You have reported what you perceive as NO EFFORT. The time spent in holding an open house? The sign in the yard? Those are all marketing efforts and have associated costs behind it. Sure, you may disagree with your in-law's strategy, however, it's disingenuous to say that she no-effort, no-time, no-money, no-marketing.
It sounds like you're upset because of the money your husband has spent on the renovations of his mother's home and are looking for justification for your animosity toward your sister-in-law.
By asking for a referral fee (here it is about 25% or so), she is negotiated a better commission for her family.
With regard to the marketing the sister in law did before the renovation. She was reimbursed for the sign on the lawn and my husband was present all day with her at all of the open houses and even had an additional one by himself. Every couple of weeks, one of the siblings would ask her about marketing the house on the internet or in the newspapers, etc. She kept saying oh yea, I have to do that or I haven't had time. There was never any doubt that the marketing costs would be split 4 ways as soon as the costs were incurred and she knew that. But she made no effort whatsoever to advertise the house.
Wen my husband approached the idea of renovating the house for the last time, she was the only one who said no way I am not putting a dime into this house. "My own house needs work, I'm not spending it on this one". Even though she could afford to financially partake in the renovation, it was agreed that she did not have to put any time or money into it, but everyone else who did was to be reimbursed at the time of the closing.
As for the renovation, my husband and I took 3 months off of work (he is self employed and I was able to do this at my job) so we could get this house done and on the market by May. We willingly did this work with no compensation, just an oral guarantee that whoever put money into this project was reimbursement at the closing. We worked out a preliminary budget and everyone agreed to it, but his sister said it depends on how much is spent in the end. This is the kind of nonsense that we all had to deal with. That was basically the last anyone saw of her until the day we interviewed the agents.
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I am not upset about the money that we spent on the renovation. I think it was all well spent. In fact, we would have done more, like replace windows, etc., if his siblings would have allowed us to, but they were all tight fisted with the money. The agents have all said the house will show beautifully....... so hopefully the house will not sit on the market too long.
It's not a question of feeling animosity towards my sister in law. It's about her misleading us about her interest in marketing the house before the renovation and then her misleading us about the referral fee and how she feels entitled to have it so she can split it with her broker. It just doesn't make any sense to me!
Personally, I would have preferred to not get involved other than in the acutal renovation portion because I am just an "in-law". However, a vacant house in my husband's name becomes a liability for me whether I like it or not.
Any other comments would be welcome!
elljay
Last edited by elljay08; 06-03-2008 at 11:55 PM..
Reason: spelling
Sounds about what I expected. The type is near universal. Greedy bump-on-a-log, sorts like Janice from the Soprano's with out the pistol...
I really wouldn't worry too much about the agent split a referal with her, in the end there are worse things to consider. Hopefully the money will keep her from further meddling.
Let her get the commission but get all the other siblings to agree that she is NOT TO SAY A WORD to any potential buyer or the selling agent. You know how Janice kinda got Uncle Junior worked up and how tht almost was the end of Tony...
I personally have no say in whether or not she gets the commission or not. I just want the damn house sold and get these people out of my hair!!
My husband feels strongly that she is just not entitled to that referral fee and her broker (whoever that is!!) has no entitlement either. He also feels that the money should not be taken from the agent who will be marketing the house. It just doesn't make any sense to agree to such a thing! It's not about the actual dollars and cents, it's about the principal of the matter.
Another example of her lack of interest.......... during the open houses prior to the reno, every person that came in put their name and # on a sign in sheet. The day we interviewed the agents, SHE said those people should be called before the house gets listed with an agent to see if there would be any interest now that the house was renovated. SHE was going to do that. That was 5 weeks ago and she has not called a single one. This morning, my husband gets an email from her with just the list of those people saying "you call them". Again, she is not lifting a finger to do a thing, but she wants a piece of our agents commission??
Unfortunately, my husband will stand alone on this because his siblings tend to stick their heads in the sand when things get complicated. I wish there was a way to justify her entitlement to a commission, but I just don't see it............. anybody else have any insight??
elljay
Quote:
Originally Posted by chet everett
Sounds about what I expected. The type is near universal. Greedy bump-on-a-log, sorts like Janice from the Soprano's with out the pistol...
I really wouldn't worry too much about the agent split a referal with her, in the end there are worse things to consider. Hopefully the money will keep her from further meddling.
Let her get the commission but get all the other siblings to agree that she is NOT TO SAY A WORD to any potential buyer or the selling agent. You know how Janice kinda got Uncle Junior worked up and how tht almost was the end of Tony...
I'm actually going through the exact same scenario. Three other siblings involved. The difference is that I'm the only one pushing it to get done (its been 4 years and we finally have put the house on the market because no one would budge). I asked for a referral fee 25% so we can get a break on the commission and we are splitting this between us. I would never keep it just for me.. although I am the only one that has made the arrangements talking to realtors, fixed up the house, and have tried to keep the peace between us as I'm the only one anyone talks to,.. but I am not the executor of the estate.
Hang in there. Try to be neutral as possible and keep the big picture in sight. I hope to be finally done with this myself... it's been going on .. like I said for over 4 years.
P.S. I love the statement you said about putting their heads in the Sand. I so feel the same way. I always felt that the siblings scenario was: if I don't believe it exists.. then it will go away.
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splitting the referral fee
