Thursday, July 16, 2009

Do I owe my Agent a Commission?

A real-life question from our email in-box.

Question:

Hi, I actually am looking for a bit of advice from a realtor, and I'm hoping you can give me your opinion on this. My cousin who asked a realtor to show her some houses around the city recently found a house that she likes on her own. The house is being sold by the owner and isn't reporesented by an agent. The agent that my cousin used before helped her with finding financing for the homes that she was recommending and representing. If my cousin decides to go with the house that is "for sale by owner" but uses the financing that the agent helped with by referring her to a bank, does my cousin need to pay the agent a commission? I am arguing that she owes the agent nothing since the financing is between the bank and my cousin, and the agent has no business relationship with the bank. My sister argues that the agent helped with the deal overall, so is entitled to up to 3% of the value of the sale, which is about $9,000 in this case, even though the agent is not directly involved with the house in question. Can you please give me your opinion from an agent's perspective? Thanks!

Answer:

You're asking a question that's difficult, if not impossible, to answer based on the facts you've given.  I'm not sure what agreements they had (in writing and not in writing), or even what state they're in.  And even with that info, it's probably not my business, nor am I an attorney to determine who is due what..

Personally, we rarely have our buyer-clients sign a contract with us.  But we also ask our clients, in very clear terms, to understand that we are committed to them and we expect the same commitment from them.  Our service is more than just finding a house - it's knowledge of the market, the area, the history, the contract, the process, the lending environment.  It's advice, opinions, protection.  It's listening, understanding, facilitating the emotional questions that go along with making a major purchase.  Our clients get everything we have to offer, without paying a dime up front.  The only time we get paid at all is when our clients successfully close escrow on a home.  We ask our clients to understand this and to not put us in the position you've described.

So while I can't answer your questions specifically regarding your cousin, I hope this helps a little bit..

Your thinking things would be easier if everybody used the same set of rules Realtor,

Chris Butterworth