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-Bloggged 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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Comments 102 New Comment

Rainer
156,291
Tom Boos
Sine & Monaghan Realtors, Real Living

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. 

March 04, 2009 01:52 PM
Rainer
43,751
Julie Nelson
The Nelson Project / Keller Williams Austin

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.

March 05, 2009 07:46 AM
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.

March 06, 2009 01:14 PM
Rainmaker
657,313
Pacita Dimacali
Alameda/Contra Costa Counties CA
Alain Pinel

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?

:)

March 13, 2009 01:22 AM
Rainmaker
894,756
Tony Marriott
Associate Broker, REALTOR
Haven Express @ Keller Williams Arizona Realty

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

September 05, 2010 10:28 AM
Rainmaker
657,313

Pacita Dimacali

Alameda/Contra Costa Counties CA
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