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The whole thing stinks.
But, it appears to me that the agent probably failed to meet legal requirements to document any agency relationship, unless they have one with DR Horton (which I sincerely doubt.) http://llronline.com/pol/rec/recpdf/...201.1.2017.pdf
Per the law: The agent is required at first significant contact to present a Disclosure of Agency In SC, which is a form that essentially states the buyer is a customer and as a customer the agent cannot provide guidance but can perform ministerial duties such as providing material information and fill out a contract. The agent cannot offer advice or other assistance.
The consumer can choose to become a client where the agent represents the buyers best interest by signing a buyer agency. Our company attorney doesn't think agents should do anything resembling representation, including just opening a door, without the agency agreement. I agree with our attorney.
Reality is that too many agents ignore the law because they are afraid they may lose a potential sale if they act as the state mandates. They are afraid to present agency agreements because they worry the buyer won't sign it. IMO, the agent in question made a mistake not getting a buyer agency and then this conversation never happens.
Sorry, got a bit off track. So I don't know if the agent presented the disclosure, but from the comments it sounds as if they asked they asked the consumer if they wanted representation once the buyer was ready to make an offer and the offer was declined. Not sure how it was presented so can't comment on the details, but the OP declined representation.
However, this is where it gets fun. Just because the OP declined representation doesn't prevent DR Horton from paying a commission as the agent did perform some ministerial duties (their representative attended the initial builder meeting). Someone commented the agent doesn't deserve a commission. I agree, but our opinion doesn't matter. If the seller, DR Horton, wants to give the agent a commission that's their money and their decision. Heck, DR Horton can give away every penny they sold the home for and that's their call because it's their money. Ultimately, it probably had minimal impact in the deal anyway but that's merely speculation on my part.
Most builders in my market don't discount the price of the home based on there not being an agent, and with it being a national builder I seriously doubt the OP would have received a correlating discount equal to the commission simply by not having an agent. With a custom builder they usually add commission to the price rather than give the buyer a lower price than advertised, so same thing. The OP was happy with the deal until they found out the agent got a commission, and the OP decided to sign which means they accepted it by closing. My guess is that would nullify any legal claims for damages against the agent so that only leaves reporting them for an LLR violation.
Based on the info provided on only see 2 possible violations.
1-Failure to present the agency disclosure. OP and the agent are the only ones that know if that happened and it would be OP's word vs. agents word so probably wouldn't go anywhere.
2-If the agent performed client level services without an agency agreement. Again, that would be up for debate but clearly nothing was done by the agent from the point of the buyer declining representation going forward.
I'll just throw in that our REC is a joke when it comes to disciplining agents, so even if the agent was guilty I'd be shocked if anything came from it. IMO there isn't anything for the OP to pursue.
Standard disclaimer: I'm not an attorney and this isn't a legal opinion. If a person feels they need legal guidance I recommend consulting an attorney. My advice is in line with Mike's. You were happy when you signed. You were happy all through the process. I think you have some sour grapes the agent got paid but didn't represent you. Life is too short. Let it go and enjoy your new home.
Questions or comments welcomed from anyone. What do you have for me?
Last edited by Brandon Hoffman; 09-05-2018 at 08:02 PM..
If the seller, DR Horton, wants to give the agent a commission that's their money and their decision. Heck, DR Horton can give away every penny they sold the home for and that's their call because it's their money. Ultimately, it probably had minimal impact in the deal anyway but that's merely speculation on my part.
Most builders in my market don't discount the price of the home based on there not being an agent, and with it being a national builder I seriously doubt the OP would have received a correlating discount equal to the commission simply by not having an agent. With a custom builder they usually add commission to the price rather than give the buyer a lower price than advertised, so same thing. The OP was happy with the deal until they found out the agent got a commission, and the OP decided to sign which means they accepted it by closing.
I'll just throw in that our REC is a joke when it comes to disciplining agents, so even if the agent was guilty I'd be shocked if anything came from it. IMO there isn't anything for the OP to pursue.
1) My observations mirror Brandon's regarding agent compensation to Realtors. Builders will not provide buyers a break for not having an agent in the transaction. Why on earth would they jeopardize their own comps? Not gonna happen. Period. You may see it with the mom and pop builder, but definitely not with a regional or national builder.
2) Not comping an agent would create some serious ill will in the real estate community. Builders pay Realtors for just bringing a buyer to a site. That's it. Sounds like your Realtor did that. News doesn't travel faster than in a pi$$ed off RE community. Trust me, I have seen lenders shut their doors.
3) Unfortunately most RE boards are a big yawn when policing their own. I've seen buyers report serious breaches of conduct go no where. I don't know if it's fear of a counter claim, but few proceed with any action.
For the past 3 years I have worked my way onto national builders approved lender lists as an alternate approved lender for non QM mortgages. That combined with a 20+ career working with large regional builders is how I formed these opinions.
It is up to the builder, to set the standard of an agent earning or not earning a commission on a home they build, not the buyers. They are taking this money out of their profits, not from the OP's pockets.
If the builder says she earned a commission, it means by the fact that she was paid and under their agreements with the local Real Estate Profession, she earned the commission.
It is none of the OP's or anyone else's business, if the builder feels the agent earned a commission and paid her office one. This is completely separate from the buyer buying the home direct from the builder. If an agent knows someone that is moving to another city, and they refer a potential buyer to someone in that city, they are paid a referral fee (commission) if they buy a home. This is one of the selling points for the big national franchised offices to join their group.
I have been paid a 3% commission, just for structuring a complicated transaction and writing the contract which was something that 2 Brokers in the business for over 15 years each, did not know how to structure when the two properties involved were owned by the brokers. Some will say just have an attorney do it, but there was not one attorney in the business in that area, that would have any idea of what was happening, until it had been structured and written. One of the properties was a large Sod Farm, so it was a substantial sale, and I was well paid to go over to one of their offices, and spend an hour structuring the sale, and writing the contract.
I have had brokers who ran top single family homes brokers offices, list with me their property which was part of the estate of a deceased family member one time a commercial property and another a large apartment house, both out of town where we all lived. It was out of their expertise, and they did not have the connections to move it quick so an estate could be closed. Both moved in a matter of days. They listed with me, as their listing broker.
There are a lot of ways a good agent/broker can earn all or part of a commission, that the public is not aware of. The OP just saw one of them, and does not want to agent to get a commission, even though the builder and agent are in full agreement she should receive one.
I once put together a 9 large property exchange with 9 different owners, and involving 8 other brokers, located in multiple states, and 2 of them were single family homes in Costa Rica (Central America) I had listed, and pulled down half of the 6% to 10% commissions on all 9 properties as my share of the commissions.
Decisions between brokers on how they compensate other brokers for cooperating with them, are their business, not the public's business as long as it is not against the buyer's or seller's interest or causes them harm.
There are so many ways that Real Estate industry, intertwines and mixes to make it work. Of course builders have a commission built into their projects, and pay a commission if it falls within the guidelines for earning one. The OP's agent met the requirements and got paid. The builder is the one that makes their rules, and makes the decision who gets paid, not the buyers.
Take away this joint working together, and the sellers and buyers would both lose, as a lot less business would be done. A lot of sales would never be made, which would hurt the sellers.
Based on the info provided on only see 2 possible violations. 1-Failure to present the agency disclosure. OP and the agent are the only ones that know if that happened and it would be OP's word vs. agents word so probably wouldn't go anywhere.
2-If the agent performed client level services without an agency agreement. Again, that would be up for debate but clearly nothing was done by the agent from the point of the buyer declining representation going forward.
Doesn't the agency disclosure form need to be signed in order to establish an agency relationship in SC?
Doesn't the agency disclosure form need to be signed in order to establish an agency relationship in SC?
There is a signature line but some buyers refuse to sign it anyway despite there being printed in BIG BOLD LETTERS THAT IS ONLY A DISCLOSURE AND NOT A CONTRACT AND DOES NOT CREATE AN AGENCY AGREEMENT.
It's fine with me when they do because they just did me a favor be preventing me from wasting any time with them. I don't want to commit my time to someone that won't make a commitment to take care of me when they buy a home. The only real reason not to sign an agency would be for the buyer that will screw over an agent should the opportunity presents itself.
When a builder pays a commission to an agent on a new home purchase, they do not have to have an agent disclosure form or anything else signed by the buyer.
Some say make a complaint to the local Board Of Realtors, etc. There is nothing for the buyer to make a complaint on. The builder is the one, who decides who earns a commission on a home he/she builds, not the buyer.
It is non of the buyers business, who the builder decides earned a commission on the sale of one of their home. It took no money out of the buyers pockets. It caused them no harm. The builder is the one that sets the rules with the real estate community, how an agent can earn a commission on the homes he builds, and is not the buyer, that makes this decision.
The buyer and those that support the OPs complaint, are the ones that are in the wrong. If the builder feels the agent earned a commission under rules he/she has established with the local real estate community, the agent earned one, and did no damage to the buyer (OP), nor did it cost them any money out of the buyers pocket.
The OP is the one in the wrong in this situation, not the builder and not the agent.
When a builder pays a commission to an agent on a new home purchase, they do not have to have an agent disclosure form or anything else signed by the buyer.
Some say make a complaint to the local Board Of Realtors, etc. There is nothing for the buyer to make a complaint on. The builder is the one, who decides who earns a commission on a home he/she builds, not the buyer.
It is non of the buyers business, who the builder decides earned a commission on the sale of one of their home. It took no money out of the buyers pockets. It caused them no harm. The builder is the one that sets the rules with the real estate community, how an agent can earn a commission on the homes he builds, and is not the buyer, that makes this decision.
The buyer and those that support the OPs complaint, are the ones that are in the wrong. If the builder feels the agent earned a commission under rules he/she has established with the local real estate community, the agent earned one, and did no damage to the buyer (OP), nor did it cost them any money out of the buyers pocket.
The OP is the one in the wrong in this situation, not the builder and not the agent.
If the agent made a representation that they were due a commission as the buyer's agent, the buyer was not served and has a mighty fine complaint for failure to fulfill fiduciary duty.
If that's the case, perhaps the OP should go after the agent for the commission money.
If the agent made a representation that they were due a commission as the buyer's agent, the buyer was not served and has a mighty fine complaint for failure to fulfill fiduciary duty.
If that's the case, perhaps the OP should go after the agent for the commission money.
Not really because the agent asked to help, and the OP declined. No fiduciary duties are to be fulfilled if they're declined. And you can also look at it as the fiduciary duty to do what the client asks of you, which is to not help, so she bowed out.
Not really because the agent asked to help, and the OP declined. No fiduciary duties are to be fulfilled if they're declined. And you can also look at it as the fiduciary duty to do what the client asks of you, which is to not help, so she bowed out.
The agent was never engaged in any role. The agent's representations of agency to the builder would be interesting. If operating as an undisclosed sub-agent, would that be material in the discussion?
Did the agent undermine the OP's case in any way on a sweetheart deal with the builder?
It would seem, taking the OP's input at face value, the agent may well be a greedy snake and just another smear on perceptions of agent professionalism and integrity.
I have to wonder how closing would have gone had the OP said, "Bull!! We're not signing that crap!"
I would have liked to seen THAT tale.
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