Agent demands commission on rejected offer and on anything buyer buys within the year

By
Real Estate Agent with Alain Pinel BRE 01367196

I had a prospective client I'll simply call "Client" whom I met in December 2007 and to whom I've shown properties. Until one day, he walked into an open house on a waterfront property that he liked.

OPEN HOUSE AGENT MADE OUTRAGEOUS CLAIM

The agent --- whom I'll refer to as Agent X --- holding the open house told him only HE can write the offer for my client, and that the chances of getting the offer approved would be greater if HE wrote the offer for him. It was a short sale, and this is the only house that Client saw with Agent X.

Client was almost embarrassed to tell me about it...and kept saying sorry that he went with the other guy. But he and his wife really wanted the house, and Agent X convinced him to write the offer.

As disappointed as I was, there was nothing I could do at that point. So I backed away.

Yes, I know....I should have had him sign a Buyer Broker Agreement.

But ....but.... :(

OFFER WAS NOT ACCEPTED

No, they didn't get their offer accepted. And along the way, they determined that they didn't want to have anything to do with Agent X whom they said was pushy and aggressive. Not to mention dishonest.

But Client continued to call me from time to time for advice and to say hello. I haven't shown them any properties any more. They need to sell some of their properties before they can buy another.

A YEAR LATER

Nearly a year later, the property  on which they wrote the offer was foreclosed, and is now represented by a different brokerage.

Agent X calls Client and tries to persuade him to submit another offer. Client tells Agent X no way! Client doesn't want to work with Agent X ever.

Whereupon Agent X tells Client that they have signed an agreement for one year, and that Client owes him commission 

  • If Client buys this house
  • and on EVERYTHING that he buys during this period of time.

How did I hear about this problem? The Client called me!

ADDITIONAL BACKGROUND

Agent X only showed the Client this one property that he was holding open for the listing agent of his brokerage. He wrote an offer for a short sale. The offer did not materialize.

Since then, May of 2008, they have had no other contact. Until the property came up as a foreclosure in Jan 2009.

Agent X says that if Client writes offer on the property that is foreclosed, using another agent, that Agent X wants to be paid on that sale, as well as future properties that the Client buys until the end of the agreement which the buyer doesn't remember signing (or maybe he just didn't understand)

CODE OF ETHICS

I researched NAR's Code of Ethics training online, to find case studies similar to this. And here are some thoughts from the course, that I want to highlight that perhaps may be helpful if Client buys another property and doesn't use Agent X.

The following info and quiz are quoted verbatim from the course.

Key Factors of Procuring Cause.

  • A common misconception is that the party who first showed a property to the purchaser is automatically entitled to the commission. This is not the case.
  • Similarly, writing the successful offer to purchase is not the sole deciding factor of procuring cause.
  • The fact that a REALTOR® had a buyer agency agreement with the purchaser does not automatically entitle that REALTOR® to the commission.

A general definition of procuring cause is found in Black's Law Dictionary, Sixth Edition:

"The proximate cause; the cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime object."

Quiz Question: When can a REALTOR® deal or negotiate with another REALTOR®'s client who is subject to an exclusive agreement?

Answer: If the client initiates the dealings

 

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Donald Bradbury 02/01/2009 02:43 PM
  2. Roland Woodworth 02/01/2009 11:28 PM
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Rainmaker
662,576
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Jessica -- just hoping for the best! Once a copy of that buyer broker agreement is provided, it should answer all the Client's questions, or at least provide him with information he can use to decide what his next course of action should be.

Feb 02, 2009 10:48 PM #84
Rainer
69,487
The Rains Team
Keller Williams Realty Atlanta Partners - Hoschton, GA
A higher standard in real estate

Pacita: What a story! Thank you for sharing...I haven't been through a situation like that before, so I've enjoyed reading everyone's comments and learning about what they would do.

Have a great day,

Anne Rains

Feb 03, 2009 07:58 AM #85
Rainmaker
662,576
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Anne

In our daily lives, there's always something that comes up that raises an issue, a question. It's not always easy to see what the right thing should be. Right in terms of ethics, right in terms of the law, right in terms of being honest. Being fair isn't always being right in legal terms.

Feb 03, 2009 11:27 AM #86
Ambassador
236,960
Scott Leaf
Keller Williams Elite Realty, Port Coquitlam, BC - Port Coquitlam, BC
Scott Leaf & Associates Real Estate Team

Pacita:  A common tenent of contract law is that all parties to a contract must be given a copy of the contract after it has been signed by all parties.

Both buyers, even if husband and wife, are each entitled to a copy.  If neither were given a copy in a resonable period of time this could be considered a cause to have the contract revoked if it does in fact exist in the first place.  Of course legal advice is in order here.

Certianly the Buyers Agency agreements we have in use in our area have a time limit on them and a geographical area desginated as well. 

I suspect that you are right and that there is no Buyers Agency agreement here and that this is more bafflegab from Mr X.

Feb 03, 2009 03:26 PM #87
Rainmaker
662,576
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Scott --- Guess they will have to wait and see if the Agent can produce a signed and unaltered copy. It will be to their best interest to produce their own copy if indeed they received one, just in case the agent makes a change on the document.

 

Feb 03, 2009 06:33 PM #88
Rainer
13,374
Rob and Camille Di Maio
San Antonio Real Estate - Keller Williams Legacy - San Antonio, TX

WOW!  I can't believe Agent X is still in the business.  We look at our business as a service.  Regardless of what is on paper, if someone really didn't want to use me, I wouldn't hold them to it.  I just don't think that serves anyone well.

Feb 04, 2009 09:33 AM #89
Rainmaker
47,435
Julie Nelson
Keller Williams Realty - Austin, TX

Agent X is a jerk and your clients recognized it.  Perhaps they should make agent jerk email them a copy of the signed buyer rep ... what are the chances that it is incomplete or incorrect and they could get out of it.  Or the chance that they could contact agent x's broker to let him/her know of the jerk status and that they want out of said agreeement and that intent is 90% of the law and their only intent was related to that old offer etc.  It always comes down to us gettting a Buyer Rep signed with our clients, doesn't it?

Feb 04, 2009 12:03 PM #90
Rainmaker
662,576
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Rob and Camille --- since I am building my business based on referrals, I only want to work with people who appreciate my service. Granted that these clients made a mistake by using the other agent to write their offer, they also recognized immediately that it was a mistake. I'd like to think that the reason why they contacted me is that when they are ready, they would like to use me. 

I don't think this agent will ever get any referrals from prospects he pisses off.

Julie --- the Client is hanging loose now. He may just wait until after the end of May before he makes a decision. He is also waiting for his other property in Redding to sell. And yes, you're right, it does come down to getting the Buyer Rep signed. But for what it's worth, I'd put a lot of faith in relationships, too. That's the one that has long-term benefits, right?

 

 

Feb 04, 2009 01:10 PM #91
Rainmaker
85,344
Sharon Harris
Coldwell Banker Select Pros. - Hanover, PA
Realtor

I think everything has already been said here. I just can not believe this agent. What a jerk. Sad that this goes on. I truly hope that his broker know that he is conducting business this way.

Feb 09, 2009 01:20 PM #92
Rainmaker
135,240
Terry Iwaniw
Avalar Atlantic Properties - Sicklerville, NJ
Realtor - S NJ

Sounds to me that Agent X should be drummed out of the business.  Unfortunately, many of us have to follow behind these agents with prospects who are not as understanding as your Client.  I'd like to think that Agent X's learned about the way they do business and straighten them out.  But...Agent X had to learn this technique from someone.

 

Feb 09, 2009 09:06 PM #93
Rainmaker
662,576
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Sharon --- I know this are desperate times. But I'd like to think that we will always think of providing good service, building trust, having empathy. And to think of serving the public.

Terry --- our good name is one of our most prized possessions. Getting into a much maligned profession, we should try even harder to build a good image. Right?

Karma!

Feb 10, 2009 01:49 AM #94
Rainer
44,805
Michael S. Mackey
CENTURY 21 All Islands - Mililani, HI
REALTOR ABR, CRS, GRI, RSPS

This crazy agent should join the circus...is his name Bozo? This is another one for the "Believe it or Not" file.

Feb 15, 2009 12:10 PM #95
Rainmaker
662,576
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Michael --- I recently spoke with a broker who had partnered very briefly with this agent and set up their own brokerage. That lasted just a few months and she broke it off. She said they have very different styles --- she would rather not be sued whereas he seems to push the envelope.

Feb 15, 2009 12:14 PM #96
Rainmaker
311,335
James Downing - Metro DC Houses Team REALTORS®, CRS, GRI, ABR,MRP, MilRes
Real Living | At Home - Washington, DC
When Looking to Buy or Sell - Make the Right Move

The guy is a slimeball.  I would have the buyer call the broker and demand a copy of the agreement.  He should say he never received a copy of the agreement and demand it voided or else.  No Broker wants trouble.

Feb 20, 2009 05:23 PM #97
Rainmaker
662,576
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

James,

The client vented....and learned his lesson. That's one positive outcome of this.

Feb 21, 2009 12:04 AM #98
Rainer
156,549
Tom Boos
Sine & Monaghan Realtors, Real Living - Grosse Pointe Farms, MI

I too would suggest that your "client" contact agent "x"'s Broker to lodge a formal complaint.  Essentially, the client was "hood-winked" into signing a buyer's agency agreement of that duration when it was obvious that the intention was for representation on that property only. 

Mar 04, 2009 01:52 PM #99
Rainmaker
47,435
Julie Nelson
Keller Williams Realty - Austin, TX

Agent X is a jerk and no one in their right mind would want to do business with him.  It is a good sign that your buyer called you for advice.  Certainly somewhere in the rules the buyer can terminate the "agreement" he had with Agent X and I would hope reported the jerkiness to Agent X's broker (unless he is his own broker).  Yuk ... stuff like this hurts us all and serves no one.

Mar 05, 2009 07:46 AM #100
Anonymous
Anonymous
Anonymous

Pacita,

As many have noted not all agents are ethical or responsible.  I have not read each commit but the ones I have read have no mention of implied agency.  From your post that is the impression I get as to the agency relationship you had with your clients.  I use clients instead of customers because of implied agency.

From NAR:

http://www.realtor.org/fedistrk.nsf/files/testcompre.pdf/$FILE/testcompre.pdf 

"An agency relationship may be based on a formal written agreement (express agency) between the broker and client or it may result from the parties' behavior (implied agency). Implied agency means that if you act like the representative of a party, you may in fact be creating an agency relationship, and will be held to satisfy the legal standards applicable to an agent. Additionally, compensation is not required to create an agency relationship, and an agent does not necessarily represent the person who pays his or her commission."

I would have turned the tables on Agent(x) by demanding the selling commission for this short sale property.

Mar 06, 2009 01:14 PM #101
Rainmaker
662,576
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Tom --- the client is taking the high road and is moving on ---- towards me!

Julie --- the client and his brother own several income properties in town, and have a wonderful network of associates and family. Good people to nurture and cultivate as referrals, too.

Ross --- thanks for the reminder about the implied agency. Since he calls me frequently for advice and updates, that probably is a good example of implied agency, right?

:)

Mar 13, 2009 01:22 AM #102
Rainmaker
916,630
Tony Marriott
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Associate Broker, REALTOR

We reward "good behavior" of Buyer Agents who have Buyers who purchase our short sale listings.  "Bad behavior" is .... "discouraged".

Sep 05, 2010 10:28 AM #103
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Rainmaker
662,576

Pacita Dimacali

Alameda/Contra Costa Counties CA
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