Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Hi there. Anyone have experience or suggestions on what to do with this?
We have been looking for a home in the area since September. We worked with Redfin who arranged some showings and separately, on our own we went to open houses and called listing agents for specific properties that we drove past and liked. We never signed an agency agreement, a buyers representation agreement, or any type of form with anyone when seeing a listing agent's property.
Now, there is a home we'd like to put an offer on. We found the home because the listing agent, who had shown us one of their other listings earlier this year, sent an unsolicited emaill saying they had a new listing we might like, and they thought of us.
We went to see it, and we do like it.
We called our Redfin agent to initiate the offer. Redfin won't do it unless listing agent releases us from "procuring cause". Redfin says because the listing agent showed us their listing and they were not aware of our representation, they have the right to decide whether to pay the broker who does ultimately represent us.
We immediately sent a note to the listing agent explaining we would like to make an offer and wanted to make sure they knew we were working with Redfin, and that agent would be contacting them shortly.
The listing agent then sent us the following note:
Typically, if we show you one or more of our listings and you don't mention having representation when asked, we have what's called procuring cause. In Virginia, dual representation is permitted if the seller agrees to it in the listing agreement. The owners of both properties have agreed to dual representation. We also typically negotiate a reduced commission in these situations which, in the long run, saves both parties some money. We have spent a significant amount of time with you at xxx.
We believe everyone has a choice who represents you in your purchase of a home. We are certainly disappointed and surprised that you have chosen to have someone else represent you. Especially as that agent has not even shown or even seen the property with you.
We certainly don't want to force the issue but hope that you both will reconsider and allow us to represent you in the purchase. We often do dual agency, especially in xxxx as we are the experts in the neighborhood. It has always been extremely successful for all parties and we have never anyone not be happy with the outcome.
More facts - -when I first contacted the listing agent on October 6 I wrote in an email that we "were not using buyer representation". I asked to see 2 of her listings because we were in the neighborhood that day for open houses. I am not putting an offer in on any of the listings that she had at that time, and she did not have this listing at that time.
So now, Redfin will not submit my offer until the listing agent sends a written note releasing us to do so. Apparently my only option is to agree to pay Redfin myself and the listing agent will keep the entire commission because the SELLER agreed to dual agency.
First I believe the listing agent works for the seller's interest. Second I believe the listing agent works for the seller by showing their listing and not for the buyer. Third, I believe the home is overpriced by about 8% as supported by comparables and an appraisal I had done on my own. For all these reasons, dual agency seems like a profoundly bad idea
Am I stuck? How shall we respond to the note? Thoughts? It seems so bizarre that the listing agent can hold a prospective buyer hostage because they were contacted directly in their capacity as the listing agent with no paperwork, no disclosures, nothing....really??
Wow, that's crazy. No one has a right to ask for any money unless they, you know, actually did something that benefitted you. Which Redfin did not. I'd ditch them fast.
But you're lucky you didn't sign anything. That means you can find a regular agent to be your buyer's agent. Or not use one at all.
Dual agency should be illegal. That's like trying to be the prosecutor and the defense attorney. One can't effectively represent a seller (who wants to get as much as possible for their house) and a buyer (who wants to pay as little as possible) without one of them getting screwed.
But you might be able to use this to your advantage: If the selling agent will take your offer without an agent, they don't have to split their seller's commission. Which makes your offer more desirable than others, even those offering the same amount of money for the house. In my view, this would be unethical on their part--but it's their job to worry about their ethics, not yours.
You must agree to dual agency, if you do not agree to dual agency the listing agent will represent the seller only. You can have an attorney represent you in the transaction, but you will be responsible for the attorney's fee. The attorney can negotiate the price and other terms of the contract for you. As far as dual agency goes I do not believe that a brokerage should allow it, I do not allow dual agency for any of my agents.
You stated that you have not signed an agency agreement with anyone. If you do not have an agency agreement with Redfin they (Redfin) are not entitled to a commission unless the seller consents to pay Redfin.
I suspect your real problem is that you were looking forward to a rebate of a portion of the commission which would be paid to Redfin as the buyers agent and you will not get it if no commission is paid to Redfin.
The listing agent then sent us the following note:
Typically, if we show you one or more of our listings and you don't mention having representation when asked, we have what's called procuring cause. In Virginia, dual representation is permitted if the seller agrees to it in the listing agreement. The owners of both properties have agreed to dual representation. We also typically negotiate a reduced commission in these situations which, in the long run, saves both parties some money. We have spent a significant amount of time with you at xxx.
We believe everyone has a choice who represents you in your purchase of a home. We are certainly disappointed and surprised that you have chosen to have someone else represent you. Especially as that agent has not even shown or even seen the property with you.
We certainly don't want to force the issue but hope that you both will reconsider and allow us to represent you in the purchase. We often do dual agency, especially in xxxx as we are the experts in the neighborhood. It has always been extremely successful for all parties and we have never anyone not be happy with the outcome.
Sounds to me like they don't want to, but they will "release" you from having to be represented by them. If I am misreading this and they won't let you out without you paying redfin yourself, I would tell them the only way you are making an offer is if they allow redfin half the commission. If they say no, I would knock on the door of the house and tell the owners that you want to make an offer, but their agent isn't letting you use the representation you want. If the house has been on the market for much time at all, I'm sure the owners will convince the realtor to sign the release.
Here's the deal: Since they never signed a contract with a buyer's agent, the OP and spouse CAN buy any property they want, using any agent they want (or none at all--if the seller and his/her agent will allow this). (We once, as buyers, used an agent for a while who showed us dud after dud. Just completely didn't get what we were looking for. Fortunately, we'd never signed a contract. So it was easy to just stop using him. And when we finally found a place that we spotted on our own, we didn't owe him a thing, nor did the seller or his agent.)
So IF the seller of the place you want to buy will agree to dual representation--a terrible idea for them but GREAT for you--then you stand to gain, because the seller's agent knows that with your offer, they keep the whole commission percentage that the seller is paying them. Whereas with buyers who have agents, they're gonna be splitting that down the middle.
The latter also happened to us once. We found a condo we liked. We had no agent. The listing agent (a complete buffoon--he surprised us by bringing his farting Rottweiler to the signing) was more than happy to convince his hapless client to consent to dual agency. So we managed to talk the price down a good bit, because the agent didn't want to lose this sale that was allowing him to keep his full 5 or 6 percent.
Last edited by Carlingtonian; 12-16-2011 at 03:55 PM..
Carlingtonian, not exactly. Sure you can buy any home you want, and you can buy it with any agent you want. But in the OP's situation, with procuring cause, the Seller is not obligated to pay the Buyer's agent, and since that buyer agent most likely is not going to work for free, the Buyer would have to pay the Buyer agent. This of course depends on what contract the Buyer has signed with the Buyer Agent. Redfin is completely within it's limits here. If the Buyer wants Redfin to represent them, they should be able to be paid for their services. Sure they didn't show them the home, but I'm assuming they are going to be performing some services for the buyer during the transaction.
The Listing agent works for the seller, period....think about it, their commission is based on the sales price. The higher the sales price, the more commission. Even if that commission just doubled from 3% to 6%. Now of course, ethically, even if another buyer comes without procuring cause and their own agent, and the offer is better for the seller, they can't steer their client to the offer that nets the realtor more.
And while yes, they buyers did not sign anything with any agent, it's still a tricky situation. If you went to an open house, and when you sign in, don't say you have a realtor, then if you make an offer on that house, the seller's agent would be entitled to procuring cause.....even if you didn't specifically sign anything with that realtor.
It works pretty much the same with new home builders. If you go to a new home builder's sales office, and then later decide to bring in a realtor, they are not obligated to pay your realtor anything. I think most will, because they know they rely on realtors to be on their side, but they do not have to.
Gammann, I don't think I disagree with you, actually--but only because this listing agent specified this "procuring cause" thing--which strikes me as very odd. (The wife and I have gone to more open houses than we can count and have bought four properties between us and never heard this brought up, ever.)
Normally, this "procuring cause" thing would never be specified since who's representing whom (and getting paid) is all in the offer contract. If a buyer puts in a signed offer on the standard contract form, there's a space to indicate if the buyer does or doesn't have an agent. If the buyer says no agent, then the listing agent doesn't need to split his/her commission. If the buyer lists a buyer's agent on the offer contract, then the listing agent does have to split the commission if the seller ratifies the contract.
That this listing agent, when contacted by an interested buyer, basically said "Whoa--you never mentioned an agent, so guess what: I'll be a dual agent, so I'm keeping my whole commission if you put in an offer"--that strikes me as completely unethical and probably illegal. I can't imagine why they'd do this; most buyers have agents. So this listing agent either doesn't want to deal with Redfin for some reason, or they got dollar signs in their eyes at the prospect of dual agency and not having to split their commission with a buyer's agent.
I'm sure her line of reasoning is that because she told you about her listing, she's entitled to the buyer-agent commission. But that doesn't hold water. Suppose some random realtor you ran into told you about a house you ended up buying. Are they legally entitled to a commission for steering you to what turned out to be your new home? No--not unless you had a written, signed representation agreement with them.
As I said before, dual agency could benefit the buyers by making their offer more favorable for the listing agent (but not necessarily the seller) than offers at the same price that have a buyer's agent. On the other hand, it could burn you instead; if yours is the only offer (or the only good one), and the agent thinks you really want the property and knows the seller is set on the price, the agent will probably advise you to pay the asking price (or to raise your offer)--even if the asking price is ridiculous. Again, it's a conflict of interest. (For that reason, dual agency is illegal in some places.)
At any rate, I'm 99% sure the listing agent can't force you to use them as your own (dual) agent just because you didn't mention having a buyer's agent when you saw the house. (What if they forgot to ask? What if one party just forgot or was distracted when the buyer's agent was mentioned?) They have to tell the seller about any offers they receive, and the seller gets to pick the offer to ratify.
I'm fairly sure it all comes down to whatever is on the ratified offer: If it contains mention of a buyer's agent with the specific percentage, and both parties sign it, then it's binding. Likewise if no buyer's agent is listed. (But if you do that and it turns out some agent you had a representation agreement with told you about the home you bought, then they could sue you [but not the seller or listing agent] for their half of the commission.)
Last edited by Carlingtonian; 12-16-2011 at 08:02 PM..
Reason: I am not a lawyer, but I play one on the internet.
Both Gammann and Carlingtonian have a good understanding of the issues in this situation. Procuring cause is a sticky issue. It is usually defined as a continuing and ongoing relationship with the buyer that results in a contract for the sale of a property. To claim "procuring cause" just because you showed a property may not be sufficient if there is a dispute. Also the listing agent cannot just decide they will be a dual agent without the consent of the prospective buyer. I would suggest that the OP call the listing agent's office, ask to speak to the managing broker, tell the managing broker that they want an agent assigned to represent their interests (this is called designated agency) and that they will not consent to dual agency. It is not sufficient that the seller consents to dual agency, the buyer must also consent to dual agency.
If you do not want an agent from the same brokerage, tell the managing broker that you are using an agent from another brokerage, are ready to make an offer on the property and want to make sure that the broker will not have an issue with paying commission to your agent and that you want this assurance in writing. It is up to the broker who gets the commission, not the agent. All commissions are paid to the broker and the broker then pays the agent according to their commission agreement.
If you have a signed agreement with a buyer agent to represent you in the purchase of a home they agreement will probably state that if you buy a home the buyer agent is owed a commission (nothing about procuring cause here, that is a separate issue). If the seller's broker does not offer one (because of a procuring cause issue) the commission is owed to the agent from the buyer.
Thanks everyone for the education. After reading all your postings (here and on the RE forum), I sent a reply note to the listing agent. Lesson learned on my end is to say " We will select an independent agent if we decide to put an offer on this home". I also benefitted from your reminders that this is simply a business transaction, about money. In this case at least, the offer turned out to be as important as extra commission to the agent.
Here's the email I sent and reply we received... now of course we need to see how the offer negotiation is handled!
Happy Holidays everone and thanks again
OP
Sent: Fri, Dec 16, 2011 9:26 pm
Subject: Re: your offer
Hi xxxx
We certainly regret the awkwardness of this situation. I'm glad we are working through this now. In this environment I'm sure every dollar of commission is important. Here's our view of where we are- -
Over the course of months, we have used Redfin to identify properties that interest us, and have also contacted listing agents directly to show us a property when it was more efficient for us. We also attended open houses, which is how we first encountered xxxx. Like you, we made some assumptions - -we assumed that listing agents were paid by the seller to show their homes. Separately, we were never presented with an agency disclosure or any other representation information, nor did we request it - we assumed you did not care how we did an offer, only THAT we did an offer on one of your listings.
There is no doubt that you guys corner the market for listings in xxxx - -but we do plan to use Redfin to manage our side of the transaction. We appreciate your offer of dual agency, but the concept is fraught with conflict of interest and just makes us uncomfortable. I'm sure you can appreciate that we are preapproved and have a reasonable offer ready to submit - - but our agent won't proceed until you indicate your approval. Could you send a note back?
I hope the detailed estimate I sent from XXXX on repair work for your seller at xxxx will be helpful. XXXX promises his estimate by Monday. Whether or
not we move to an offer on XXX, I will gladly forward his estimate to you.
and then the reply we got back:
Sent: Friday, December 16, 2011 11:30 PM
Subject: Re: your offer
Thank you for your reply. I understand and respect your thoughts on dual agency. I left xxx a message earlier today and ask if an email would be sufficient stating our intentions not to claim procuring cause. I haven't heard back from him yet. If that works for him then we can present the offer this weekend. Let me know if you hear back from xxx.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Update from OP
