Ethics and a real estate agent

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TheGreyingDuke
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Ethics and a real estate agent

Post by TheGreyingDuke »

We are looking to make a home purchase, I scour the MLS listings daily looking for properties. Two weeks ago I come across an interesting possibility and I drive by the house for a quick look (the pictures in the listing showed that it was unoccupied.) A few days later I call the listing agent, say I have some interest in this house and she says,"Oh that house has just been withdrawn from the market, but you might be able to make an offer." She sends along the listing details, including the seller disclosure, which was not on the public MLS.

I read the disclosure, which has the sellers name and quickly find where she is living and her phone. I think you know where this is going...

Am I bound to go through the agent event though when I contacted her she told me (correctly) that the house had been withdrawn? (This is in upstate NY, houses do not usually sell that rapidly during the winter.) Or, can I contact the seller directly and save some thousands of dollars, presumably some for the seller and the buyer?
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dm200
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Re: Ethics and a real estate agent

Post by dm200 »

TheGreyingDuke wrote:We are looking to make a home purchase, I scour the MLS listings daily looking for properties. Two weeks ago I come across an interesting possibility and I drive by the house for a quick look (the pictures in the listing showed that it was unoccupied.) A few days later I call the listing agent, say I have some interest in this house and she says,"Oh that house has just been withdrawn from the market, but you might be able to make an offer." She sends along the listing details, including the seller disclosure, which was not on the public MLS.
I read the disclosure, which has the sellers name and quickly find where she is living and her phone. I think you know where this is going...
Am I bound to go through the agent event though when I contacted her she told me (correctly) that the house had been withdrawn? (This is in upstate NY, houses do not usually sell that rapidly during the winter.) Or, can I contact the seller directly and save some thousands of dollars, presumably some for the seller and the buyer?
Not sure of the "fine print", but isn't paying or not paying a real estate commission on a sale a matter, primarily, between the seller and the real estate agent? Just a guess, but I suspect that such a sale is likely to be covered in the listing agreement the seller made with the agent.
earlyout
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Re: Ethics and a real estate agent

Post by earlyout »

Isn't this a question of your personal ethics. You called the Realtor expecting to involve her in the possible purchase of a residence and for the sales price to include the full commission of 6% or whatever it is in you locality. Based on information provided by her you could now bypass the Realtor's involvement. I don't think it is right to cut her out of the deal. Why don't you negotiate with her to be your buyer's agent for a 1-2% fee? Apparently the seller has no contract with a Realtor since the house in unlisted so you would still have a nice savings on fees.

DM200 (post above) raises a valid point since the seller may still have a contract with a Realtor to sell the house. Perhaps there was an illness or similar reason and the listing is just temporarily inactive.
Northern Flicker
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Re: Ethics and a real estate agent

Post by Northern Flicker »

The listing agent represents the seller. Withdrawn from the market doesn't mean the listing contract is expired-- the seller may still be bound to pay a commission to the listing agent however the property sells, and may want the representation of the listing agent for the transaction. You are not a party to that business relationship, so you are ethically free to contact either one. The agent has likely already informed the seller of the contact.

The question you should be asking is if you want a buyer's agent to represent your interests, which will include such things as an assessment of value and management of various risks you may not be aware of.

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Topic Author
TheGreyingDuke
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Re: Ethics and a real estate agent

Post by TheGreyingDuke »

earlyout wrote:Isn't this a question of your personal ethics. You called the Realtor expecting to involve her in the possible purchase of a residence and for the sales price to include the full commission of 6% or whatever it is in you locality. Based on information provided by her you could now bypass the Realtor's involvement. I don't think it is right to cut her out of the deal. Why don't you negotiate with her to be your buyer's agent for a 1-2% fee? Apparently the seller has no contract with a Realtor since the house in unlisted so you would still have a nice savings on fees.
Indeed, this is the heart of the matter for me; my initial reaction is that there is such an ethical consideration. On the other hand, I have also witnessed really shady actions by agents in deals I was not a direct party to. But then, it is unfair to hold this agent, with whom I have had no prior dealings, responsible for the actions of others in her profession.
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Jack FFR1846
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Re: Ethics and a real estate agent

Post by Jack FFR1846 »

What ethical problem is there? Say you buy the house. The seller likely will still be paying the listing agent 6% for answering your phone call. Most listing agreements survive pulling the house by 60 to 180 days. Sounds like you're well within this.
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staythecourse
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Re: Ethics and a real estate agent

Post by staythecourse »

Even if you did it the owner likely has an agreement with the selling agent still in place (that is why it is still on MLS which is real estate agent owned network). In which case, the selling agent will get 6% no matter what.

Good luck.
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Jeff P
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Re: Ethics and a real estate agent

Post by Jeff P »

The unethical thing was the real estate agent giving you the seller's disclosure after the seller had pulled the listing. I'd imagine the seller would also be weirded out if you call them directly.

Q. How did you get my information?
A. Your former real estate agent gave me the seller's disclosure and that had your name on it.
Q. She shouldn't have done that. Wait, how did you get my phone number.
A. I have my means...
Click (I guess cell phones don't really click though).
craveonewave
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Re: Ethics and a real estate agent

Post by craveonewave »

TheGreyingDuke wrote:
earlyout wrote:Isn't this a question of your personal ethics. You called the Realtor expecting to involve her in the possible purchase of a residence and for the sales price to include the full commission of 6% or whatever it is in you locality. Based on information provided by her you could now bypass the Realtor's involvement. I don't think it is right to cut her out of the deal. Why don't you negotiate with her to be your buyer's agent for a 1-2% fee? Apparently the seller has no contract with a Realtor since the house in unlisted so you would still have a nice savings on fees.
Indeed, this is the heart of the matter for me; my initial reaction is that there is such an ethical consideration. On the other hand, I have also witnessed really shady actions by agents in deals I was not a direct party to. But then, it is unfair to hold this agent, with whom I have had no prior dealings, responsible for the actions of others in her profession.
As a Realtor, it pains me to read this. Not that you're considering going direct, but that past shady actions by others in my profession have you thinking about cutting out the listing agent out now. I get it though; it's hit or miss (more miss) with Realtors unfortunately.

In Florida (which is where I am; I can't speak to New York), you'd technically be fine going to the owner direct if the listing was withdrawn before you made initial contact with the listing agent. Otherwise the listing agent would have a procuring cause action against the owner if the transaction as you proposed were to go through.

Practically, I'm assuming you don't know the type of relationship the owner and the listing agent have. They could be best of friends, family, in the same church, etc. What I'm getting at is you might poison the transaction by being seen as cutting out the listing agent. It's a calculated move that could pay off by persuading the owner of the saved commission, but could just as easily backfire and show you as someone who's willing to cut out a person to drive a better bottom line for yourself. (Personally I love clients like this. In practice, many people are emotionally driven even when they're the seller and desperately need to dispose of their property have to make sure their cherished home finds a family that loves it dearly.)

Ethically, I'd say you owe it to the listing agent to attempt to go through/work with her. You got valuable info out of her (you used the info to get the owner's info and from there a phone number if I understand correctly). And personally, I would have an agreement with her that she is not representing you in any capacity. (In Florida it's a No Brokerage Relationship disclosure that must be executed.)
craveonewave
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Re: Ethics and a real estate agent

Post by craveonewave »

Jack FFR1846 wrote:What ethical problem is there? Say you buy the house. The seller likely will still be paying the listing agent 6% for answering your phone call. Most listing agreements survive pulling the house by 60 to 180 days. Sounds like you're well within this.
Usually only for prospective buyers procured during the listing period and by disclosing in writing the first and last name of each such buyer to the seller at the termination of the listing agreement. If that occurs, then yes, such buyers are protected for 180 days following the termination of the listing agreement or until a subsequent listing agreement is entered into either with the same brokerage firm or a different one.

This is the case for Florida; your state may vary.
Jonathan
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Re: Ethics and a real estate agent

Post by Jonathan »

IMO, the ethics are too complex to parse without knowing the applicable laws. Also, it's the seller who likely has more of an ethics question here, not you.

Are you using a real estate agent on your end? If not, get a real estate lawyer. You can ask him/her all these questions, and you can use the lawyer to represent your position in the transaction.

Buyer's and seller's agents typically split the 6% fee. If you don't have an agent, the seller's agent gets double the fee. You can use that bonus to negotiate down the sale price (selling agent gives seller the extra 3%), or to incentivize the seller's agent to sell to you, for double the commission (selling agent keeps the extra 3%).
Topic Author
TheGreyingDuke
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Re: Ethics and a real estate agent

Post by TheGreyingDuke »

This is all good, many thanks. I am going to proceed to speak with the listing agent, try to negotiate a lower commission, and go from there.

I am not interested in having a buyer's agent, too many conflicting cross currents there.
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pshonore
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Re: Ethics and a real estate agent

Post by pshonore »

It certainly depends on locale but in most cases, if a buyer was "introduced to the property" during the listing period, a commission is due to the agent if that person buys the property with XX days of listing expiration. XX might be 90, 180 or even 365 depending on locale. And what's the big deal with disclosure?? I can walk into any town hall or county records office and determine who owns a property. Its a public record.
Jonathan
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Re: Ethics and a real estate agent

Post by Jonathan »

pshonore wrote:And what's the big deal with disclosure?? I can walk into any town hall or county records office and determine who owns a property. Its a public record.
x2.

Keep in mind (and I am speculating here) that it's quite possible that the seller is not obligated to the agent, and the agent knows this, and is using a tactic (sending along listing details and disclosures) intended to imbue you with a faux ethical obligation to complete the sale through that agent.
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TheGreyingDuke
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Re: Ethics and a real estate agent

Post by TheGreyingDuke »

Jonathan wrote:
pshonore wrote:And what's the big deal with disclosure?? I can walk into any town hall or county records office and determine who owns a property. Its a public record.
x2.

Keep in mind (and I am speculating here) that it's quite possible that the seller is not obligated to the agent, and the agent knows this, and is using a tactic (sending along listing details and disclosures) intended to imbue you with a faux ethical obligation to complete the sale through that agent.
Indeed, I did find the contact information at the town clerk's office (and could have discovered the owner's name as well).

I am just back from a run, clears the head, and some other thoughts came up. If I were in the seller's position I would be happy to find an ethical way to avoid the commission. For all I know, the seller has decided to sell it on her own and is not going to re-list it.

My plan, which I am now considering again, was to have my wife scribe a letter, in her best school-marm fashion. Very respectful, we saw that the house was for sale, now it is not, are you interested in dealing with us directly or would you rather we call your (former) agent. I cannot imagine anyone would get upset by such an inquiry.
Last edited by TheGreyingDuke on Thu Oct 08, 2015 10:58 am, edited 1 time in total.
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celia
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Re: Ethics and a real estate agent

Post by celia »

TheGreyingDuke wrote:My plan, which I am now considering again, was to have my wife scribe a letter, in her best school-marm fashion. Very respectful, we saw that the house was for sale, now it is not, are you interested in dealing with us directly or would you rather we call your (former) agent. I cannot imagine anyone would get enervated by such an inquiry.
How about . . . deal with us directly or rather call our [own] agent.

I think it is a conflict of interest for one agent to represent opposing parties. Sellers (and buyers) often confide their minimum (or maximum) price to the seller. How can an agent remain impartial knowing this?
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drawpoker
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Re: Ethics and a real estate agent

Post by drawpoker »

Think you are putting Cart before Horse here. Aren't you wondering why this property was "withdrawn" before the expiration of the listing?

Typically, when a house is taken off the market, the seller may be difficult, or impossible, to deal with. She may have received more than one reasonable offer for her house but is stubbornly holding out for full asking price. Some sellers are like this, they are the sellers from H - LL as known by local realtors. Totally impossible to be realistic. So, unless you plan on meekly forking over full asking price, this is something to look into before you waste any more of your time.

She (the seller) may be growing alarmed as the "DOM" counter keeps edging up. This is often a turn-off to prospective buyers, as a high DOM number may suggest that the house is grossly overpriced. Or has something wrong (or something pending nearby ) with it. If this particular property is unoccupied, it should show very nicely, so you have to wonder what else is going on.
So, she takes if off-market, waits 30 or 60 days, then re-lists it to start the DOM counter back at zero.

If you decide to follow through with your letter I would suggest you act dumb - Say you understood the house was taken off the market, and you don't understand why that is......???? See what kind of answer she gives, that might tell you just how to proceed.
small_index
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Re: Ethics and a real estate agent

Post by small_index »

I like the idea of writing to the seller to see the situation. It's less pressure than a phone call, and gives them time to consider. A phone call might catch them at a bad moment, or might get their stock answer that the home is off the market. A letter might get them thinking that maybe they can make a sale. Note that since you haven't seen the house, this may not be very interesting to the seller - they've probably already had lots of people view the house and not purchase it.

The listing agent's job includes showing open houses, showing individual buyers the house, negotiating... most of which the listing agent has not done with you. Did the listing agent do anything but answer the phone and say the house is off the market?
fishingmn
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Re: Ethics and a real estate agent

Post by fishingmn »

In Minnesota a listing "withdrawn" doesn't necessarily mean the listing contract was cancelled. The listing contract will still be in force if you are within the dates of the contract and it hasn't been formally cancelled with signatures by the seller, agent and listing broker. Even after it has been cancelled there may be a small grace period which would require the seller to pay the listing fee for clients who saw the property during the listing period but purchased after the contract expired. That part shouldn't apply here.

Otherwise, many agents will remove a listing from MLS for showings using a status called TNAS (temporarily not available to show) but still keep the contract in force.
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TheGreyingDuke
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Re: Ethics and a real estate agent

Post by TheGreyingDuke »

Some additional information in response to the great replies.

The house went on the market last spring, a listing price offer was made, contract signed, and then the buyer backed out, wonder why?

One possible explanation for the listing being withdrawn has to do with winter and the notion that in this community, houses do not sell well in winter or if they do sell they go for a lower price, as there are fewer people searching.

The tactic whereby an agent re-sets the listing date by withdrawing it is not as effective as it once was, several websites allow you to see the entire history of sales, purchases, listing, etc. In the case of this house it was listed 3/1/15, listing was removed 3/31/15 (this presumably was when the house went under contract), re-listing on 6/15/15 (contract abrogated), price change noted on 8/15/15, listing removed 9/25/15.

I am grateful for the responses.
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scone
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Re: Ethics and a real estate agent

Post by scone »

If the listing agent wants to make a fuss, she may have "procuring cause," which means she is owed a commission-- and effectively that comes out of both buyers and sellers pockets, since the price is set including expenses. Personally I'd just get my own realtor, tell her about the prior phone call, and get her to make the phone calls indicating you would like to see the house and possibly make an offer. Trying to buck the system isn't worth it, in my experience.
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drawpoker
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Re: Ethics and a real estate agent

Post by drawpoker »

TheGreyingDuke wrote:....... house went on the market last spring, a listing price offer was made, contract signed, and then the buyer backed out, wonder why?

I am assuming that you mean the seller received an offer last spring for the full asking price. That doesn't bode well for you, she may now have an expectation that she can do it again.

As for the buyer "backing out', not clear what that means. If the buyer truly backed out just due to change of mind they likely lost 100% of their earnest money deposit.

If, however, the buyer backed out due to legitimate contingency in the contract that could not be met - mortgage loan denied - inspection failed - that sort of thing - than that does not really tell you very much.

If indeed this is the type of Stubborn Seller who is holding out for full asking price - taking it off market during the slow winter season as you say may suggest just that - a sharp agent sould counter that argument with a simple - "Look what happened last time".
Topic Author
TheGreyingDuke
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Re: Ethics and a real estate agent

Post by TheGreyingDuke »

drawpoker wrote:
TheGreyingDuke wrote:....... house went on the market last spring, a listing price offer was made, contract signed, and then the buyer backed out, wonder why?

I am assuming that you mean the seller received an offer last spring for the full asking price. That doesn't bode well for you, she may now have an expectation that she can do it again.

As for the buyer "backing out', not clear what that means. If the buyer truly backed out just due to change of mind they likely lost 100% of their earnest money deposit.

If, however, the buyer backed out due to legitimate contingency in the contract that could not be met - mortgage loan denied - inspection failed - that sort of thing - than that does not really tell you very much.

If indeed this is the type of Stubborn Seller who is holding out for full asking price - taking it off market during the slow winter season as you say may suggest just that - a sharp agent sould counter that argument with a simple - "Look what happened last time".
The price has been reduced marginally ($3500) and there is a $5000 payment to be made by the seller to cover closing costs, a new to me sort of price reduction
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