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Old 01-26-2009, 03:18 PM
 
809 posts, read 3,401,144 times
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My aunt has a listing agreement with a Realtor to list her house. She signed an agreement to pay 6% in commission (3% to the listing agent and 3% to the buying agent). The agreement is a 6 month agreement that was just signed.

Now My aunt has a friend who has mentioned a strong interest in buying her house. If this friend buys the house, the friend was hoping to save some money by not using a Realtor.

I realize it is my Aunt who would save the money, but she would "pass on" the savings to her friend by accepting a lower price.

So, I know my Aunt would still pay 3% to her listing agent, but could she save the other 3% if her friend buys the house?

Anyone had a similar situation?
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Old 01-26-2009, 03:32 PM
 
Location: Salem, OR
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You just need to ask the agent. Sometimes that issue is addressed in contracts. So look through the contract and see if it is. If not, your aunt can ask the agent to reduce it to 3%.

The problem, as I see it, is that the buyer agent does most of the work from offer to close, whereas the listing agent does most of their work to get that offer in. If your aunt's friend is saavy then it's not a problem, but she just needs to make sure she knows what she is doing.
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Old 01-26-2009, 03:33 PM
 
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Your aunt agreed to pay the listing agent 6%. The listing agent will split that 3% with the buyer's agent, if there is one. It depends on the terms of the agreement, but I doubt they have to give in on that 3%. Most of the time, the listing agent will keep the full 6%. Most of the time, an unrepresented buyer turns out to be a royal pain and ends up making three times as much work for the listing agent. The majority of our work comes AFTER the contract is signed.

If someone is SOOOOO concerned about the 3%, they're going to be a pain elsewhere in negotiations too.

That's totally between your aunt and her Realtor. Ask her to talk to her Realtor about it directly.
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Old 01-26-2009, 03:48 PM
 
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I don't want my aunt's agent to represent the Buyer too. I feel strongly that that the listing agent needs to represent her and wouldn't want her to have split interests.
So if it's a problem, the friend will get her own agent to represent her.
Either way, the listing agent will not get the full 6%.

I was thinking that maybe with the market the way it is, the Realtor might welcome my aunt bringing her the buyer and maybe forgo 3% (or even 2% for example).

Maybe she could ask another realtor in her office to represent the friend for a reduced commission.

My aunt and I will talk to her Realtor about it. I was hoping to get some thoughts and input on the matter first to educate myself a little first.
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Old 01-26-2009, 04:09 PM
 
Location: Just south of Denver since 1989
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What if your aunt just lets her friend buy the house for a 3% discount of list price?

Why does the listing broker take it in the shorts - still doing all of the work necessary to close? And still has all of the liability.
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Old 01-26-2009, 04:27 PM
 
809 posts, read 3,401,144 times
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Quote:
Originally Posted by 2bindenver View Post
What if your aunt just lets her friend buy the house for a 3% discount of list price?

Why does the listing broker take it in the shorts - still doing all of the work necessary to close? And still has all of the liability.

The listing agent would get her 3%. We are talking about the Buyer's agent 3% and there's not a Buyer's agent so no one gets shorted.

And keep in mind the house has been on the market for 6 days. I'd be pretty happy if I was a listing agent and had a Buyer that quickly in this market.

The listing agent does deserve her 3%. But if no one represents the buyer, and the listing agent does only a little more work (not sure how much if any more work would be involved for her) - why would she get an extra 3%? She's not showing the house to this buyer. If she had to do any extra work for the buyer, we'd just have the friend get her own Realtor. Because we don't want to split the Realtor's interests.

We're just trying to help the friend out - or tell her why we can't help her out.

Personally, I would want a Realtor to represent me. But the friend would rather not and save some money.
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Old 01-26-2009, 04:30 PM
 
Location: Salem, OR
15,066 posts, read 37,251,759 times
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Quote:
Originally Posted by 2bindenver View Post
What if your aunt just lets her friend buy the house for a 3% discount of list price?

Why does the listing broker take it in the shorts - still doing all of the work necessary to close? And still has all of the liability.
Normally I would agree with this but the OP said that the listing agreement was just signed so the agent could cut her losses by not having to advertise the property and be able to recoup some of the "lost" commission that way.

I mean if they aren't going to do dual agency anyway (which kudos the OP, I'm not a fan) she would only get 3% in the transaction anyway. The only time there is increased liability is when agents don't know how to set the boundaries straight from the get go. Then yes, they can create an implied agency relationship and be in serious trouble.
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Old 01-26-2009, 04:42 PM
 
Location: Just south of Denver since 1989
11,607 posts, read 32,118,364 times
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Alright, there is "work" to be done on both sides of the transaction to get to closing. Compensation does not mean representation, at least not in Colorado.

Who is going to help the friend with the loan, inspection, appraisal, writing the offer? Who is going to remind the friend of upcoming dates and deadlines? Who is going to argue with the loan officer/underwriter/inspector/appraiser to get something taken care of?

Are you thinking that if the friend saves 3% she's going to do all that and more, or just save the money? What if by putting it on the market your aunt could get a better offer? What if the friend can't or won't close?
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Old 01-26-2009, 05:26 PM
 
Location: An active adult community
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I think many Real Estate agents would be happy to take 3% and write the contract, do their job and get the transaction closed. I know I would.
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Old 01-26-2009, 06:00 PM
 
Location: Salem, OR
15,066 posts, read 37,251,759 times
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Quote:
Originally Posted by 2bindenver View Post
Alright, there is "work" to be done on both sides of the transaction to get to closing. Compensation does not mean representation, at least not in Colorado.

Who is going to help the friend with the loan, inspection, appraisal, writing the offer? Who is going to remind the friend of upcoming dates and deadlines? Who is going to argue with the loan officer/underwriter/inspector/appraiser to get something taken care of?

Are you thinking that if the friend saves 3% she's going to do all that and more, or just save the money? What if by putting it on the market your aunt could get a better offer? What if the friend can't or won't close?
This is what I mean that she has to be savvy. If she can't do these things on her own, it puts the listing agent in a position of implied agency, which would be unauthorized dual agency which means, lose your license.

I have had unrepresented buyers on the other side. I don't fill in the contract. I email it to them. They have to read it and fill it out themselves. I correct anything I need to on a counter offer. I like my boundaries nice and clean.

It's a pain for my sellers but I do prepare them. I double check everything when a buyer's agent is involved anyway, so that part isn't any different for me.
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