Realtors

[TheNiche]

Before I go off on Realtors as a subculture of American society, a disclaimer: not all realtors fit my description or the rant. If a Realtor is present, it'd just be best not to read the following.

My horror story of the day: I used MLS to find a home and personally contacted the seller's agent. They had another agent with the same firm meet me to give the tour, although I would have preferred to meet directly with the seller's agent. Right off the bat, I told the one that showed up that I was related to another realtor and would likely use her...if not her, then I had several realtor coworkers and one realtor that is a relative of a friend. Never the less, she got it into her head that because she'd shown the property, she became my agent...not that she told me that that was her working assumption until once I'd just about lined up financing and had brought in my relative in order for her to take the commission. So she threw a nasty fit and accused me of costing her a sale because she said that she'd given up her whole Saturday (in actuality, two hours of it that I never requested of her) and cancelled prior appointments in order to give me the tour. That was just plain assinine.

During the course of the tour, she had explained that another offer had been submitted that was already acceptable except for a contingent term, but that the seller's agent had advised the sellers to hold off for a couple of days for me to submit an offer. So I started the preapproval process and lined up several offers. Yesterday, I decided upon an offer that would be pretty generous, given that I was aware of the competing bid. My relative pressured me to bid higher...I was reluctant to and picked a still-generous middle ground and submitted the offer this afternoon.

In the process of arranging financing, one of my prospective lenders immediately noticed how unusually high my bid appeared and called the seller's broker. She told him (on her way to present the offer to the sellers) that the competing bid had been permanently shelved and that I was now the only competition...he insisted that the seller's agent contact my agent and be sure that we wanted to have that bid presented. So the seller's agent complied: she called and asked only "I just wanted to verify that this is the offer that you wanted me to present." My agent, knowing nothing of the change in the competitive environment, said "yes". As this conversation was taking place, the lender called me and relayed the same information, after which I called my agent and was told that the bid had already been submitted.

So now, the offer is contractually binding, and I'm stuck making an offer that is about $7,500 more than I would have made if I had been promptly and correctly communicated with about the status of the competition and if my relative agent hadn't pressured me to offer as much as I could. None of the agents care, of course, because that's just so much more commission for them to divide between themselves.

The more I think about it, the more suspicious Realtors are. By the way, Realtors are spelled with a capital 'R' because its actually a trademarked word rather than a professional description. They have an MLS system that is available in full only to themselves, but to the public in a very limited way...sort of as a tease. No matter how much a private individual was willing to pay, they are prevented from accessing MLS data except through a Realtor or by working for one.

Realtors also have a well-oiled political lobby with funding out the ass through their many associationships. In Texas, a buyer is entitled to a Realtor at the seller's expense. If the buyer decides to do all the work on their own, then the seller's broker just gets double commission. As such, the buyer has absolutely no reason not to work with a Realtor (if not for their own personal disgust at the racket). The seller, on the other hand, has every incentive to go without a Realtor...except that a lot of sales take place under duress, such as during a divorce, layoff, or just plain ol' ignorance, and that they can't list on MLS. Moreover, they're still likely to pick up the cost of the buyer's agent.

The whole industry appears to me to be nothing more than a strong-arm political machine. Where's John Stossel when you need him?

Here's what I should've done: approach the owners without contacting an agent, reach an agreement to let the seller's agent's listing expire, and then agree on a sale price that is well below what they were asking, but above what they would've gotten if they had to pay fees to the Realtor. Then I should've just conducted the sale entirely independently. My gut told me to do that, but my brain assessed the sellers as play-by-the-rules retirees from the silent generation when I met them.

[musicman]

Before I go off on Realtors as a subculture of American society, a disclaimer: not all realtors fit my description or the rant. If a Realtor is present, it'd just be best not to read the following.

My horror story of the day: I used MLS to find a home and personally contacted the seller's agent. They had another agent with the same firm meet me to give the tour, although I would have preferred to meet directly with the seller's agent. Right off the bat, I told the one that showed up that I was related to another realtor and would likely use her...if not her, then I had several realtor coworkers and one realtor that is a relative of a friend. Never the less, she got it into her head that because she'd shown the property, she became my agent...not that she told me that that was her working assumption until once I'd just about lined up financing and had brought in my relative in order for her to take the commission. So she threw a nasty fit and accused me of costing her a sale because she said that she'd given up her whole Saturday (in actuality, two hours of it that I never requested of her) and cancelled prior appointments in order to give me the tour. That was just plain assinine.

During the course of the tour, she had explained that another offer had been submitted that was already acceptable except for a contingent term, but that the seller's agent had advised the sellers to hold off for a couple of days for me to submit an offer. So I started the preapproval process and lined up several offers. Yesterday, I decided upon an offer that would be pretty generous, given that I was aware of the competing bid. My relative pressured me to bid higher...I was reluctant to and picked a still-generous middle ground and submitted the offer this afternoon.

In the process of arranging financing, one of my prospective lenders immediately noticed how unusually high my bid appeared and called the seller's broker. She told him (on her way to present the offer to the sellers) that the competing bid had been permanently shelved and that I was now the only competition...he insisted that the seller's agent contact my agent and be sure that we wanted to have that bid presented. So the seller's agent complied: she called and asked only "I just wanted to verify that this is the offer that you wanted me to present." My agent, knowing nothing of the change in the competitive environment, said "yes". As this conversation was taking place, the lender called me and relayed the same information, after which I called my agent and was told that the bid had already been submitted.

So now, the offer is contractually binding, and I'm stuck making an offer that is about $7,500 more than I would have made if I had been promptly and correctly communicated with about the status of the competition and if my relative agent hadn't pressured me to offer as much as I could. None of the agents care, of course, because that's just so much more commission for them to divide between themselves.

The more I think about it, the more suspicious Realtors are. By the way, Realtors are spelled with a capital 'R' because its actually a trademarked word rather than a professional description. They have an MLS system that is available in full only to themselves, but to the public in a very limited way...sort of as a tease. No matter how much a private individual was willing to pay, they are prevented from accessing MLS data except through a Realtor or by working for one.

Realtors also have a well-oiled political lobby with funding out the ass through their many associationships. In Texas, a buyer is entitled to a Realtor at the seller's expense. If the buyer decides to do all the work on their own, then the seller's broker just gets double commission. As such, the buyer has absolutely no reason not to work with a Realtor (if not for their own personal disgust at the racket). The seller, on the other hand, has every incentive to go without a Realtor...except that a lot of sales take place under duress, such as during a divorce, layoff, or just plain ol' ignorance, and that they can't list on MLS. Moreover, they're still likely to pick up the cost of the buyer's agent.

The whole industry appears to me to be nothing more than a strong-arm political machine. Where's John Stossel when you need him?

Here's what I should've done: approach the owners without contacting an agent, reach an agreement to let the seller's agent's listing expire, and then agree on a sale price that is well below what they were asking, but above what they would've gotten if they had to pay fees to the Realtor. Then I should've just conducted the sale entirely independently. My gut told me to do that, but my brain assessed the sellers as play-by-the-rules retirees from the silent generation when I met them.

I'd alwasy wondered what they'd do when you get one agent to show you a home but you already had an agent. I know when i bought my house, the seller wanted to go through her realtor friend on Heights Blvd. The office was in a large house. We ended up going down there to do the paperwork. It was basically going to be a title change. Anyway, the lady who owned the company was the one i was talking with. she left and came back and said the best she could do was $2000. I was kind of surprised cause it was just a title change. I ended up saying no thanks cause i felt like i was getting the shaft.

well after it was all said and done, I ended up doing the title transfer myself and it cost me all of $15 to file the paperwork with the county.

I DEFINITELY feel for ya.

[TJones]

Niche, you are a big boy, no one MADE you make that offer. You DID waste that other realtors time and Saturday. You should have gotten your friggin' relative to show you the house, but I'm sure the 2% kickback you are gonna get from them will help compensate for the "overage" you made on the offer. If you don't want to make that bid, pull the offer, come back in a couple of weeks and make another offer, or come up with some stuff that you would like to have done to the house, after the inspection to soak up some of that $7500. There are all sorts of ways to absorb that amount on a house. Make the seller pay the closing costs, ask your relative, hopefully they will tell you. Since your relative just seems to be a pawn in this, tell them you want that 2% kickback. Tell them to write you a check at closing.

[TheNiche]

Niche, you are a big boy, no one MADE you make that offer. You DID waste that other realtors time and Saturday. You should have gotten your friggin' relative to show you the house, but I'm sure the 2% kickback you are gonna get from them will help compensate for the "overage" you made on the offer. If you don't want to make that bid, pull the offer, come back in a couple of weeks and make another offer, or come up with some stuff that you would like to have done to the house, after the inspection to soak up some of that $7500. There are all sorts of ways to absorb that amount on a house. Make the seller pay the closing costs, ask your relative, hopefully they will tell you. Since your relative just seems to be a pawn in this, tell them you want that 2% kickback. Tell them to write you a check at closing.

The offer was contractually binding.

By the way, since I'd done all of the work, when I initially called up my relative, I asked her straight up for the 2% kickback, but she said that it was illegal to do that as a buyer's rep. She did say that she would buy a nice homewarming gift, but didn't want to say how much it would cost or what it was.

Yeah, I guess I did waste the other Realtor's time...but I never asked her to meet me there. I just showed up, and there she was instead of the seller's agent, who she said was out of town. I remember that she even used the words "showing it as a favor to [seller's agent's name].

I'll definitely take advantage of whatever additional leeway I'll have in making demands, but I really don't like this situation. And I also wish that I'd just gone through everything without getting any representation. My original intent was to either do the 2% kickback thing, or failing that, just keep money in the family at the very least...but I'd have been better off going it alone.

[gnu]

The offer was contractually binding.

By the way, since I'd done all of the work, when I initially called up my relative, I asked her straight up for the 2% kickback, but she said that it was illegal to do that as a buyer's rep. She did say that she would buy a nice homewarming gift, but didn't want to say how much it would cost or what it was.

Yeah, I guess I did waste the other Realtor's time...but I never asked her to meet me there. I just showed up, and there she was instead of the seller's agent, who she said was out of town. I remember that she even used the words "showing it as a favor to [seller's agent's name].

I'll definitely take advantage of whatever additional leeway I'll have in making demands, but I really don't like this situation. And I also wish that I'd just gone through everything without getting any representation. My original intent was to either do the 2% kickback thing, or failing that, just keep money in the family at the very least...but I'd have been better off going it alone.

Looks to me like you could have immediately sent a termination of offer letter to the other agent before the owners signed off on it.

You can still terminate your offer now and just be out your option money...assuming you used an option period to do your inspections. Your agent should have told you that.

If you would have had your relative or another agent FULLY representing you beforehand, I don't think you would have ended up in this predicament. AND your agent should have shown you the property without bothering the seller's agent. That's how it works. The Buyer's agent is there to help YOU and you should utilize their service since it is FREE to YOU!

If the other agent wanted to be sleezy and act like there were other offers on the table, there is nothing you can do about it since you have no way of knowing whether or not there truly were other offers. all you can (and should) do is to make your offer what you are willing to pay to get in the house.

Really though, 7500 dollars over 30 years won't amount to much. if you love the house, just suck it up and say it was money well spent to get in your dream house. (Morgan's Point?)

Typically, You would not be able to go behind the real estate agents back and buy it directly from the owner. when an agent lists a house, the agent will still get a commission if the eventual buyer was made aware of the house as a result of the agent previously listing the house. A list of everyone who saw the house, during the time it was listed with the agent, is typically used.

plus i don't really see any incentive for a buyer to that since it's the seller that is paying the commission.

same deal with you wanting a 2% discount...its the seller that is paying the commission. they are the one that made their deal when they listed their house...so the only way for you to get a discount is to offer less of a sales price.

Edited May 3, 2006 by gnu

[TJones]

It is NOT against the law for your relative to write you a 2% check. She will still get the full commision check, she is gonna write you a personal check for the 2%, don't fall for that crap she is selling you. She gets a 3% commision and since she isn't doing a damn thing it seems, she should feel obligated. She is screwing you over.

[TheNiche]

It is NOT against the law for your relative to write you a 2% check. She will still get the full commision check, she is gonna write you a personal check for the 2%, don't fall for that crap she is selling you. She gets a 3% commision and since she isn't doing a damn thing it seems, she should feel obligated. She is screwing you over.

I would be forever grateful to you if you can substantiate that with a reliable source (not that you aren't reliable, but you know what I mean).

[TheNiche]

Looks to me like you could have immediately sent a termination of offer letter to the other agent before the owners signed off on it.

You can still terminate your offer now and just be out your option money...assuming you used an option period to do your inspections. Your agent should have told you that.

If you would have had your relative or another agent FULLY representing you beforehand, I don't think you would have ended up in this predicament. AND your agent should have shown you the property without bothering the seller's agent. That's how it works. The Buyer's agent is there to help YOU and you should utilize their service since it is FREE to YOU!

If the other agent wanted to be sleezy and act like there were other offers on the table, there is nothing you can do about it since you have no way of knowing whether or not there truly were other offers. all you can (and should) do is to make your offer what you are willing to pay to get in the house.

Really though, 7500 dollars over 30 years won't amount to much. if you love the house, just suck it up and say it was money well spent to get in your dream house. (Morgan's Point?)

Typically, You would not be able to go behind the real estate agents back and buy it directly from the owner. when an agent lists a house, the agent will still get a commission if the eventual buyer was made aware of the house as a result of the agent previously listing the house. A list of everyone who saw the house, during the time it was listed with the agent, is typically used.

plus i don't really see any incentive for a buyer to that since it's the seller that is paying the commission.

same deal with you wanting a 2% discount...its the seller that is paying the commission. they are the one that made their deal when they listed their house...so the only way for you to get a discount is to offer less of a sales price.

Well, in the future at least, I'll know to not even contact an agent and go straight to the seller instead, bypassing this whole mess and all commissions. I think that that'd work out better for everyone.

$7,500 in the hole is always unacceptable...and this is far from a "dream house". Its a good unique product on a good unique location. I like it, but I'm not going to retire there...although I can easily see myself selling it to my parents as their retirement home.

Please tell me if my remedy sounds reasonable: I do have a 10-day inspection period during which I can conduct due diligence. I know already that when I bring in my inspector (a certified engineer) and appraiser, they're going to point out some structural defects with the roof (it is a pitched roof attached to an original flat one, the hipboard is way too thin, and there are no cross-beams). I'm sure that the age of the home and the fact that it has been renovated will create other issues. I'll also get a bid from an insurance company that I know will ask way too much. At that point, I'll think that I can comfortably withdrawl and resubmit a lower bid to account for the flaws without putting off the sellers. Does this sound like a workable approach?

[gnu]

Well, in the future at least, I'll know to not even contact an agent and go straight to the seller instead, bypassing this whole mess and all commissions. I think that that'd work out better for everyone.

i don't see how that will work if the seller has an agent. you will still have to deal with their agent since they are bound by an agreement. If the seller does not have an agent - then go get 'em.

$7,500 in the hole is always unacceptable...and this is far from a "dream house". Its a good unique product on a good unique location. I like it, but I'm not going to retire there...although I can easily see myself selling it to my parents as their retirement home.

agreed...but it would be more easily digested if it were your "dream home"

Please tell me if my remedy sounds reasonable: I do have a 10-day inspection period during which I can conduct due diligence. I know already that when I bring in my inspector (a certified engineer) and appraiser, they're going to point out some structural defects with the roof (it is a pitched roof attached to an original flat one, the hipboard is way too thin, and there are no cross-beams). I'm sure that the age of the home and the fact that it has been renovated will create other issues. I'll also get a bid from an insurance company that I know will ask way too much. At that point, I'll think that I can comfortably withdrawl and resubmit a lower bid to account for the flaws without putting off the sellers. Does this sound like a workable approach?

sounds like a plan and it generally happens like that.

also know that your option gives your an option to terminate - no questions asked.

so don't pay for an inspection if you are seriously considering bailing on the whole thing anyway.

However, you could find out that it is very well built and structurally sound and deserving of $7500 more than asking price

[TJones]

I would be forever grateful to you if you can substantiate that with a reliable source (not that you aren't reliable, but you know what I mean).

The only source I can quote is myself, and dealing with realtors when I was building homes. My own 2 personal homes that I have closed on as well. Your relative is just being greedy. She is at no risk, if she writes you a personal check Niche. The only people she reports earnings to is the IRS. The commission check will be in full to her and she in turn writes you a 2% check form her personal account. It is easy to figure out, 3% of the selling price of the house, minus 2% is what she needs to write you a check for, you may want to let her take out the taxes from your end, just to be nice. She doesn't have a check written to you from the sale proceeds. She just doesn't want to lose a big fat commision. I am not trying to start trouble between you and her, but she knows better. It's like if I sell a car, and you sent the buyer to me, I would in turn send you a "birddog fee", that's money for sending me the business. This is what she should be doing for you. I am getting upset writing this, because I know what she is doing, and I just hate that !

Edited May 3, 2006 by TJones

[rps324]

I only have your comments to base my assumptions on, but from what you have written, to be blunt, it sounds like you got played in the negotiations game. You have the listing agent that is there to make sure she squeezes every dime out of you that she can for the benefit of their seller. The other agent from the same firm, who never would have been brought into it had you had the person representing you show you the property, but that's water under the bridge at this point. I also get the impression that your relative that is supposedly representing you really doesn't want to get too involved, which is her perogative. Did I miss something or are you on your own basically when it comes to negotiating? How satisfied are you with the results of that?

Forgive me if I am jumping to the wrong conclusion, but it appears on the surface that your attempt to save money by not having a GOOD agent negotiating in your corner has actually cost you money. (heavy emphasis on GOOD agent)

Nevermind how you got to where you are now though, you are there. You have an option period, you can pull out or threaten to pull out if you don't get the price you want. Don't be afraid to use it. You have to be prepared to walk away from any transaction if you need to.

I understand your frustration, I know better than most that there are a lot of yahoo agents out there. The hardest aspect of my job is managing the other agent. Believe me, I know there are a lot of agents that suck, I can across them more frequently than I care to admit. I also deal with many that are really sharp. That said, there are individuals out there that can negotiate wonderfully on their own, and I say this with all due luv and respect, based on what you have said apparently you are not one of them. If this deal doesn't gel, get a GOOD agent to do your negotiating for you on the next one, you will probably come out money ahead even without a "kick-back."

Now that is my advice, feel free to ignore it.

[nmainguy]

As in anything in life, don't try to pretend you're something more than you're not. I am in my 5th home but even with my first, I knew better than to try to be a realtor. So I found a pro and stuck with her. So far I've been very succesful and I have instructed her not to die before I do.

DON'T work with a relative-all that will get you is life-long hard feelings when you or they screw up.

ALWAYS hire an expert-whether it's the guy who fumigates your house or sells your home.

[jscarbor]

It is legal to rebate commission to principles in a real estate deal. I do it all the time.

2percent2buyer.com

[clearush]

jscarbor is correct, Your Relative is refering to the fact that you can't recieve funds at closing acording to state law, but your agent can give you what ever money afterwards.

It sounds like your relative is just along for the ride. You would have been better served by using an agent that would have worked for thier money and tried harder to get the best deal they could for you.

Also even if the seller's actual agent had shown up to show you the property they would have desired the full 6% since you were using thier time. This is the purpose of having a buyers agent, and why the buyers agent recieves 3% compensation for showing the property or properties to you, then doing research into the subdivisions sales history to find out what a resonable offer is an what you can expect in price trends so you don't go into a house upside down on your mortgage, and then to do all your paper work and back and forth stuff between selling agent, loan officer and title company.

It sound like your bad experiance with agents came from trying to split the work load instead of finding an agent that would work for you and in your best interest.

[Parrothead]

I wouldn't blame this all on the agents!

[TheNiche]

My offer, only $2,000 below a $178,900 ask, was rejected. After having put in my next offer, I received notice a few days later that an option had been taken out on the property. It came completely out of the blue with no warning whatsoever. Wouldn't it have been smarter to tell me in order to get me to bid higher?

So now I'm dead in the water on this.

[jscarbor]

jscarbor is correct, Your Relative is refering to the fact that you can't recieve funds at closing acording to state law, but your agent can give you what ever money afterwards.

It sounds like your relative is just along for the ride. You would have been better served by using an agent that would have worked for thier money and tried harder to get the best deal they could for you.

Also even if the seller's actual agent had shown up to show you the property they would have desired the full 6% since you were using thier time. This is the purpose of having a buyers agent, and why the buyers agent recieves 3% compensation for showing the property or properties to you, then doing research into the subdivisions sales history to find out what a resonable offer is an what you can expect in price trends so you don't go into a house upside down on your mortgage, and then to do all your paper work and back and forth stuff between selling agent, loan officer and title company.

It sound like your bad experiance with agents came from trying to split the work load instead of finding an agent that would work for you and in your best interest.

Actually you can distribute funds at closing if you want as long as theperson is a principle in the deal.

[clearush]

Tell that to the title company at my last closing. If your not bringing cash to the table to close with you cannot recieve money back out of your loan, unless you are specificaly going with a 105% LTV loan and even then the money is usualy escrowed.

Now if your bringing more cash to closing than you will be getting back (as in its not coming out of the home loan) then it shouldn't be a problem, but even then Title Co can be a pain in the a--- about it so it's just easier to get it after closing if you can.

As far as I remember the not recieving funds a closing from home loans was to prevent mortgage fraud by over selling properties in fake arms length transactions. But its been a while since I studied my mortgage law.

[jscarbor]

Tell that to the title company at my last closing. If your not bringing cash to the table to close with you cannot recieve money back out of your loan, unless you are specificaly going with a 105% LTV loan and even then the money is usualy escrowed.

Now if your bringing more cash to closing than you will be getting back (as in its not coming out of the home loan) then it shouldn't be a problem, but even then Title Co can be a pain in the a--- about it so it's just easier to get it after closing if you can.

As far as I remember the not recieving funds a closing from home loans was to prevent mortgage fraud by over selling properties in fake arms length transactions. But its been a while since I studied my mortgage law.

You are correct, the lender typically won't let you rebate on HUD statement but I can give a personal check if I wish.