Real Estate Etiquette?

I disagree with you here. What Bob is doing with you right now - looking at houses 1-2 a month, telling you what to do to sell your home - that IS  how a realtor earns their commission. Not just at the closing table. I mean he's spent more than a year with you, looking at houses with you, showing you stuff. That the definition of a realtor's job. When you go to the closing table you don't even need a realtor. You can do it yourself. But you hire a realtor to do all the looking for you. He earns his commission by finding you listings and meeting your criteria - type of house, sale price, neighborhood etc.

People pay realtor's for expertise and it looks like Bob's giving you a lot of expertise. As a real estate investor I draw up contracts for myself and take care of myself at closing but I use a realtor to find me stuff I don't have time to look for.

Since you haven't signed a contract with Bob (I'm surprised he spent this much time with you and hasn't asked you) you can't tell Mary you're represented but I bet you a dollar to a donut Bob thinks that you are and he thinks he's the representative. Why would he spend this much time with you? You may be friends but he still has to earn a living unless Bob is so successful that he can give away his services for free and if that's the case why would he charge anyone.

I would tell Mary that you're already working with a realtor. And that if she wants to show houses she needs to show it to Bob. If she wasn't going to do C then she would be doing this already. This is what gives realtor's a bad name and what Mary is doing is not good RE etiquette. Otherwise you might be doing Bob a disservice. Do you really think that if you worked on a project for more than a year and someone comes in and works on it for a month and the project gets sold that you would split the commission with that person? Is that really fair?

I would say to tell Mary that Bob is your agent. Even after that, if she still asks to show you property just flat out refuse. Unfortunatly the business of real estate has become marred with the assumption that no one in the business has any type of business ethics. "Mary" sounds like one of these people. While it is not illegal to steal someone client they have been working with it is certainly unethical. On the other hand you need to go with the person who is the most qualified and you feel comfortable with. If Bob knows his business well and is honest I would go with him. Sadly lawsuits are a fairly common occurence in Real Estate transactions. But interestingly enough I have seen that lawsuits are more commonly associated with unethical agents rather that ethical ones. The reason, I beleive, is that ethical agents will not due things that are illegal or try to skirt around the letter of the law.

Unless you sign a buyer's contract where you pay the realtor yourself (not a % of the selling price), the realtor works for the seller.

If Bob takes you through the house you buy, work with him. If Mary finds the dream house, work with her. Both of them should have access to the same listings, and if Mary fires first even though Bob has the history, she should be rewarded. Now, if you've made it clear all along that you'd be taking a year or more and are finally ready to buy, you should give Bob the first chance to show you the house. Mary shouldn't "Poach" you, but Bob still needs to earn his commission.

Thanks for the responses... very insightful...

I probably overstated the "hasn't earned his commission yet" thing. I guess I was thinking that he's got to (a) *find* the right house - not found yet, and (b) sell the old house - not begun yet before he's earned it. But by definition all the work involved in doing that happens well before closing. He's certainly been quite helpful over the past year. We have no good reason to leave him (and, for the record, no intentions, either.)

But Bob has also encouraged us to go looking on our own and report back what we see, and point him to houses we spot as well. In doing so, we run into a lot of other agents, all of whom we tell that Bob is our Buyer's Agent, and some of whom point out other houses we might be interested in.

It's pretty obvious that if Mary's intentions are "C" (stealing a client), then that's acting in bad faith, and can lead only to trouble. That's the option that bothers me, though I'd like to think Mary's character is such that her intentions are "A" or "B"...

As for "B" (splitting the commish), let me clarify that what I mean is since Bob is already the Buyer's Agent, that he only gets 1/2 the commish anyway, no matter whose house we buy (unless it's one of "his" in which case he can't be the buyer's agent), and that by selling us one of "her" houses, Mary would simply get the OTHER 1/2, instead of Fred or George, or Margaret, or whoever... Bob would not be out any money that he would have been otherwise entitled to... This seems fair to me, though Bob would clearly have to be "in the loop" on anything Mary does with us. Mary might also hope to get a favorable referral from us ("We worked with Bob and loved him. Mary is also a good one...") at some future point. Also seems fair, at least on the surface...

As for "A" (just a friend helping out with something she enjoys), again this seems harmless, though unlikely as motives go. Again, Bob would have to KNOW (and approve) what's going on...

Seems that assuming Mary is either "A" or "B", this falls under the same as us looking on our own, another agent making a suggestion, and us running it by Bob. No?

Right now I'm leaning toward letting Mary know clearly that Bob's our agent, but if she wants to show my wife some stuff on the web during/after her facial, that's okay, given that she understands we're working through Bob and Bob will need to know everything that goes on. If Mary continues to press beyond the "just being helpful" stage, or leans against full disclosure with Bob, then that would be the time to put the foot down...

Further comments??


PS: Come to think of it, I think we may *have* signed an agreement with him... which clearly changes the picture ever-so-slightly... I need to go back over my paperwork...

Yah, Bob knew the time frame (1-2 years) when we started talking with him. He's also done a very good job to date. He clearly gets the "nod" when fairness is a question.

Mary doesn't get the sale unless Bob does something egregiously wrong (which he *won't* do).

I'm just fishing for whether even letting Mary go over *her* favorite web picks with the wife is some sort of breach - assuming Bob knows about it at least after the fact (i.e. "Hey Bob, Ms. BG was over at Mary's house doing a facial and she thought we might like houses X, Y, and Z. What do you think?").

The only way Mary makes any money in my mind is if we decide to buy a house that *she* is listing. Then Bob gets his 1/2 as Buyer's agent, and Mary gets her 1/2 as selling agent.

PS: Yes I realize there's still an inherent conflict of interest that Bob's commish is still linked to the selling price... but this is a chump change transaction for him, and his actual advice to us reflects that he's not doing this for the money. We're comfortable with that conflict. Just about any other agent (behavior and advice-wise, not to mention credentials, history, and references), and we would be insisting on a flat rate.

A few points:

1. Unless and until you sign a written contract, you are probably not legally committed to Bob. I'm not familiar with "Horse Country" law, but real estate contracts are generally required to be in writing.

2. That said, Bob has invested a significant amount of time and effort to get and keep your business. while he is not legally entitled to anything at this point, I would say that he is morally/ethically entitled to "fair," good faith treatment from you and your wife. If you are unhappy with Bob, feel free to find another agent. If you are happy with Bob, I think he's entitled to some level of commitment from you and your wife.

3. My suggestion (based on the above) is to tell Mary that you appreciate her offer, but that you're working with Bob--something along the lines of "thanks so much, Mary. That's really sweet, but we've been working with Bob for quite some time."

4. I would not let Mary show you houses. Even if you tell her that you're working with Bob, what happens if she shows you a house and you end up buying it? Who gets the commission? I know you will have made it clear to Mary that you're working with Bob, but the real estate brokerage convention may dictate that they split the commission or that Mary gets the commission. Such a result would be unfair to Bob.

5. If Mary wants to help you find a house (for whatever reason), tell her to contact Bob with the houses she thinks you might like. This way it is clear that Bob is your agent/contact and if you buy, Bob gets the commission.

Bill

Thanks. I absolutely agree with points 1 & 2. Point three also, except my nit on point 4, which tends to muddy the waters.

ON point 4:

As I understand it, since Bob is acting as a Buyer's agent, there will by definition be a Seller's agent (whoever it is) that is NOT BOB that will get half of the total commission for the sale (per the agreement we signed - I think we signed it, I know we discussed it - with Bob).

So Bob's only getting 1/2 the total commission anyway, no matter what house we buy. The only way Mary gets any commision at all is if she happens to end up being the selling agent - that is, if we choose a house that she's listing. Then she get's the seller's half of the commission, and Bob gets the buyer's half. Bob gets the same amount of money regardless. The only variable (money-wise) is whether Mary gets the other half, or some other agent gets the other half.

I think (5) is probably the best way to go - have Mary tell Bob about the houses... but I think the same net thing is accomplished if Mary shows us whatever it is she wants to, and then we tell Bob about the ones we like (and don't like).

Bob is going to be "our agent" regardless, and he's going to get paid what he agreed to regardless... the question is whether accepting some suggestions from Mary is unfair to Bob, given that he's getting paid the same whether we talk to her or not.

I think we may have to query Mary as to her intent, and to the extent of "help" she's offering and what she expects in return. Then that will help us determine whether to say, "thanks but no thanks", "thanks, but you'd better talk to Bob", or "thanks. Let's tell Bob about this, too!"

Y'know what. I'm going to ask Bob whether he minds, and how he thinks we should respond...

Good diea. My last suggestion, then, is to be very clear with both Bob and Mary where you stand and what your relationship with each is. That should go a long way towards preventing unfulfilled expectations.

Bill

In all the cases shown so far, Bob is still a "selling agent."

In general, the listing agent is the person who writes up a listing contract with a prospective home seller to put a house on the market. The selling agent is the person who brings a buyer to the listed house. These agents split the sales commission 50/50 (usually). These agents work for the SELLER and have a fiduciary responsibility to the seller. Their job is to maximize the transaction price for the seller.

You can sign a contract specifically for a buyer's agent. This says that the agent gets paid by you to find you a house and represents your interests in the transaction. This agent would not share the sales commission but represents the BUYER as a fiduciary agent. Their job is to minimize transaction price for the buyer.

You are correct in the general case, but not in the specific case.

The agreement we are working under with Bob (signed or not - and if it isn't it will be before it matters) is for him to act as a Buyer's Agent. It clearly states that he is to act as our (the buyer's) representative, and represent our fiduciary interest. We were clear about that.

I am a bit fuzzy about the compensation. I'll have to double check whether it is flat fee or 3% (1/2) If he does get half (as opposed to a fixed fee), the apparent conflict of interest is not a big deal here. He's not interested in making money off us - his actions and advice belie that, not to mention his character (we've known him for decades).

The agreement also stipluates the exception where if we purchase a house that is listed by him, he will act as the Seller's agent (he must - a preexisting contract exists), and we must either use a different Buyer's Agent, or go the "traditional route."

Update: We asked Bob. His response was that it would not be fair to Mary to use her time with no compensation. He suggested we refer her to him if she has any ideas, and he would do the legwork.

We're going with that.

If Bob is doing a good job already, why would Mary find a house that Bob hasn't already seen, assuming he is doing a good job at keeping up to date with the market. After one year, Bob probably has a very good idea of what you are looking for. I doubt Mary will be able to show you something Bob won't have already evaluated.