Last Minute Agent Antics
So we’re all set to close tomorrow and the real estate agent who was not retained by the seller apparently thinks he is still owed a commission.
Unbelievable.
I presented this agent with a release form to sign (just to be safe) in order to get the 0.5% referral fee that my agent was willing to give him and he won’t sign the release form!
Do I really need him to sign a release form? No, since he has no contract and therefore no claim to any commission, but since I indemnified the seller in order to get the deal done, I want to make 100% sure this is all settled before this agent sees any money at all. If he still has thoughts of raising a stink, he can do so without my money.
What I ended up deciding to do is to close this deal tomorrow, as planned, and have escrow hold this other agent’s 0.5% in escrow until he signs the release. If he doesn’t sign within a couple of weeks, I will just have escrow pay my agent the full commission instead.
I’m not too worried about this situation at this point, but it’s annoying to even have to deal with it. I do like having the power to keep this money in escrow, but honestly, I wish I had the power to withhold all commission related to this deal if I needed to.
This is important: most people don’t realize that the buyer’s agent contract they sign usually specifies that the buyer will be responsible for paying a 3% commission to the buyer’s agent if the seller doesn’t pay it (which they usually do). I do not like this arrangement at all and I will be writing it out of my next contract. I was still going to pay my agent 3%, but I don’t like giving up the right not to under circumstances like an intra-office commission dispute. Another thing people should change about their contracts is the termination clause. My stock contract didn’t allow me to sign on with another agent until three months after I terminated my existing contract. I ended up changing this to 14 days, but I would go even further in retrospect. Probably one week.
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I might be misunderstanding you, but, I thought the seller pays the real estate commissions. The buyer doesn’t pay any commission. Is this different in Washington?
Chris: Yeah, see this is the part that is confusing to most people (including me) — It is customary for the seller to pay the commission, but real estate contracts can be written up any way the buyer and seller decide. They could even be written such that a third party somehow pays the commission. Because of this flexibility/ambiguity, generally buying agents write something into their contract with their client (me) that says something to the effect of:
Since it almost always is paid by the seller, the clause rarely triggers. It’s in there so the buyer and seller can’t come to an arrangement and then decide to simply not pay the buyer’s agent. It’s also in there for cases where a seller puts his property on the market and declares in advance that he is not paying the full 3% commission to any buyer’s agent.
This was one thing I noticed as well when I read over the contract. I had some words with my real estate agent and we agreed that if by some chance the seller didn’t pay, that I didn’t have to either.
But you are right, most people do not realize this is in there.
Mike I’m just starting into your journal of your house that Ive stumbled upon, truly stumbled cause I live in Indianapolis. Nonetheless I am a recently licensed Real Estate Salesperson and the insight on your process has already been great, especially with regard to your opinion on the current salesperson/buyer relationship.