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What is a fair real estate fee in this situation?
Old 09-07-2014, 04:14 PM   #1
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What is a fair real estate fee in this situation?

So what would you do in this situation??

We were working towards an owner to owner agreement on trading our houses. In parallel with that we had discussed possibly listing our house, assuming that the trade was not going to go through. By the time we met with our real estate agent, it was clear that the trade was very likely.

Since the agent had come prepared with comps and done a little homework, we indicated that we could still use her services, and we would pay her something fair. She is a friend of a close family member, and we did not want to take advantage of her. However, we were very disappointed in her comps, since a couple of the “solds” were 12 years old. And she wanted to list higher than the house next door, which has not sold, and we felt was over-priced. My wife is a former real estate agent, and we have sold many homes by owner, so we know listings are not good comps.

The agent said she had a situation with a client and that they drug her all over to look at builders, reviewed blue prints, etc. She was paid $1500 for that, and she indicated that helping with a For Sale by Owner is 1%. Given we were doing all of the legwork on this transaction. I was thinking on the order of $500.

So without any assistance from the agent, the buyer/seller and us agreed on terms, logistics of the move, etc. At this point I asked our agent to send me two purchase agreements, one with our price, and one with their price. It took her 10 minutes to do this.

We met again with the buyer/seller, hashed out more details, and signed the documents, all without the agent. They made it clear that they would not pay our agent, and that an agent who was a friend of theirs would help them if they needed it.

I relayed all of this to our agent. She said she decided that the fee would be 1% of both properties, which would be $1600. I was quite surprised, and I told her that she won’t be doing anything with the sale of the property we are buying, and that we would be willing to give her 1% of our sale only. I told her we could handle both sales from here, including the mortgage, inspections, and title insurance.

A few days went by, and she called my wife, told her the same story, but with a little more anger. My wife did not back down, and told her in a professional way what she thought was fair. The agent then got personal, and insulted my wife about a situation that she knew little about, and was not true. So with my wife nearly crying and furious, we are now in an awkward situation.

I see a few options:

1. Pay her the $750 for what I think is more than fair for minimal work.
2. Pay her the $1600, and write it off as a lesson, and keep peace in the family. This would also avoid a lawsuit, which I would not be surprised about
3. Write a letter to her broker, inform them of the unprofessional service, and pay nothing.

What would you do?



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Old 09-07-2014, 04:38 PM   #2
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I don't know what is "fair" fee, but you have no good options here.....
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Old 09-07-2014, 04:39 PM   #3
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I'd pay her the 1% and feel like you got a real deal. There is a lot of work involved and RE commissions used to be 6%. Now, I realize you came to agreement with the other home owner but there is a ton of paper work involved and if I were your RE agent I'd be upset as well. I've never sold RE but I've bought and sold homes and commercial businesses. RE agents work hard and long hours following thouugh on all the signatures needed by a number of different entities. If you and the other homeowner each hired a lawyer you would spend a lot more money. Get over the personal insults, ask you wife and the RE agent to do the same and enjoy the move!
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Old 09-07-2014, 04:46 PM   #4
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Given the description of her actions and 'services performed' to-date, I would most definitely write a letter to her broker via certified mail and CC her, outlining the exact dates, topics, and conversations you have had with her, and her resulting actions.

I think the problem you ran into is asking her to issue purchase agreements for BOTH properties. If you wanted to do it all yourself between you and the other seller, why would you involve her at all with the other seller's house?


Legally, she and her agent become a liable party involved in both transactions when you ask her to write up a contract. Doesn't matter if all she did was hit "print" and it took her literally 5 seconds - if her company's name is on the contract, they are involved legally in the transaction.

However, I find it interesting that she NEVER had you sign anything until AFTER you and the other seller signed the contracts. AFAIK, any agent will at least make you sign a document stating that you are using them for a transaction (as a buyer and/or a seller). Why she waited until after everything was signed to suggest an amount and/or present you with the invoice/her contract is definitely not right (whether the price is correct is another matter).

I don't know what would be 'fair' for this situation, as it's in a messy spot currently, Can both you and the other seller obtain your own sales contracts from another source? (I don't know if NOLO.com has anything on real estate).

I agree that she has done jack that really is 'worth' much value - but that's the risk you take when you involve any real estate agent, as the quality of the service can vary WIDELY.
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Old 09-07-2014, 05:04 PM   #5
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I think the problem you ran into is asking her to issue purchase agreements for BOTH properties. If you wanted to do it all yourself between you and the other seller, why would you involve her at all with the other seller's house?

I don't know what would be 'fair' for this situation, as it's in a messy spot currently, Can both you and the other seller obtain your own sales contracts from another source? (I don't know if NOLO.com has anything on real estate).
Yeah, I regret asking her to send the second agreement. I could have found it on the internet, and printed, like we have done before.

We can get new Purchase Agreements written.
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Old 09-07-2014, 05:22 PM   #6
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However, I find it interesting that she NEVER had you sign anything until AFTER you and the other seller signed the contracts. AFAIK, any agent will at least make you sign a document stating that you are using them for a transaction (as a buyer and/or a seller). Why she waited until after everything was signed to suggest an amount and/or present you with the invoice/her contract is definitely not right (whether the price is correct is another matter).
Yes, me too! Years ago we met with a real estate lawyer, and within a few minutes, he told us exactly his price.
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Old 09-07-2014, 05:48 PM   #7
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If she if offering her services through her RE brokerage she might not have a choice in what the commission might be. If she is running it off the books, which is a big no no then I think $500 is fine. Even if her conduct is somewhat unprofessional she did do some work and deserves some compensation. It is a tough spot to be in.
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Old 09-07-2014, 06:07 PM   #8
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I would explain to her that the value of her services bears ZERO relationship to the value of YOUR property which got its value from you and only you and your efforts. Stick to this notion. She contributed ABSOLUTELY NOTHING TO THE VALUE OF YOUR HOUSE. As such you are offering to reimburse her at a reasonable rate for her labor...how many hours did she put in? multiply by some reasonable professional rate and cut her the check for that number.


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Old 09-07-2014, 06:14 PM   #9
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I think your decision hinges on these words 'She is a friend of a close family member'. Without these words I believe your decision would be simple. You don't think she provided a service commensurate with a full or even partial commision. If the relationship is important to you, or your family member, pay off and chalk it up to lesson learned. Otherwise do what you would do as if she was a total stranger, someone you or your relatives will have no contact with, i.e. what you believe is right and just.
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Old 09-07-2014, 06:31 PM   #10
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As I remember from my real estate days in Florida, it's illegal to pay someone such as this "friend" if they are in the real estate business. This is compensation and must paid to the broker. The broker can give her all of it if he/she so desires. It may sound simple to most people, and I'm sure it's done quite often, but it is illegal in this state and in my mind.
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Old 09-07-2014, 07:14 PM   #11
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She was going to run everything through the broker, so she would get 60%. Seems like a good hourly rate, if 60% of $750, which would be $450. If she has more than 10 hours in at this point, she is doing something wrong. So $45 per hour seems like a nice gesture.
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Old 09-07-2014, 07:41 PM   #12
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Ignore her, pay her nothing. She'll likely go away. As I understand your post she has no contract with you so since she has behaved badly I would ignore her and take my chances.
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Old 09-07-2014, 08:15 PM   #13
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Ignore her, pay her nothing. She'll likely go away. As I understand your post she has no contract with you so since she has behaved badly I would ignore her and take my chances.
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Old 09-07-2014, 08:59 PM   #14
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I have a friend in real estate whose broker requires her to charge 1% for doing the paperwork on a sale. I assume this payment goes to the broker who gives her her part. If she does the paperwork for both parties, buyer and seller, it would be 1% each. That means she is performing all the services for the sale to go through, title insurance and all that.

I realize this does not exactly reflect your situation if you are trading houses.
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Old 09-08-2014, 07:37 AM   #15
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I feel a little lonely suggesting the RE agent be paid what she has requested. If the broker and the RE company appear on any of the contracts I'm sure the broker would receive the 1% and pay the agent. Now, if the broker is on the contract every signature, every part of the deal, all the paperwork that goes to the State, city, changing ownership records, mtge contracts etc....the RE agent and broker have to check them for accuracy since they are liable if anything is wrong. If I were the agent I would ask that everything be torn up and send a certified letter to buyer and seller removing any responsibility for anything in the sale. The real problem here is that fees should have been discussed and disclosed and understood up front. But.....since 1% is so much less than 6%.....I think the RE agent didn't feel that a friend of a friend would dispute what I believe is a very reasonable fee. Now, again, I never had a RE liscense, no RE agents in the family.....I just have bought and sold a lot of property and NEVER knew any agent to work for less than 1% if his/her or the brokers company name appeared on the contract. Am I wrong? I'd love to hear from RE agents if I'm incorrect.
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Old 09-08-2014, 08:00 AM   #16
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I feel a little lonely suggesting the RE agent be paid what she has requested. If the broker and the RE company appear on any of the contracts I'm sure the broker would receive the 1% and pay the agent. Now, if the broker is on the contract every signature, every part of the deal, all the paperwork that goes to the State, city, changing ownership records, mtge contracts etc....the RE agent and broker have to check them for accuracy since they are liable if anything is wrong. If I were the agent I would ask that everything be torn up and send a certified letter to buyer and seller removing any responsibility for anything in the sale. The real problem here is that fees should have been discussed and disclosed and understood up front. But.....since 1% is so much less than 6%.....I think the RE agent didn't feel that a friend of a friend would dispute what I believe is a very reasonable fee. Now, again, I never had a RE liscense, no RE agents in the family.....I just have bought and sold a lot of property and NEVER knew any agent to work for less than 1% if his/her or the brokers company name appeared on the contract. Am I wrong? I'd love to hear from RE agents if I'm incorrect.
I am not a real estate agent, but i tend to agree with you. Even if she did a bad job, or had little work to do, she needs to be paid. Just don't use her again. I would probably shoot for a compromise in this situation both to keep peace, and to be fair. When I was in a similiar situation with a junk fee that was not disclosed the realtor rebated me the fee in dispute from her commison. Perhaps pay the 1%, and ask her to refund the overcharge.
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Old 09-08-2014, 08:18 AM   #17
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......Now, if the broker is on the contract every signature, every part of the deal, all the paperwork that goes to the State, city, changing ownership records, mtge contracts etc....the RE agent and broker have to check them for accuracy since they are liable if anything is wrong. .....
Yeah, right. What dream world are you living in? The reality is that they won't take responsibility for anything. I was previously a licensed agent. Where the agent screwed up is not having a contract with the buyers/sellers and providing services (albeit minimal service). The fact that she got nasty about it would cause me to ignore her and let her take me to court if she can afford to, where she'll lose.
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Old 09-08-2014, 09:28 AM   #18
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I too think the key is that the agent is a close friend of a family member. Give them the $1,600 and consider it a deal compared to the 6% you would have paid for a regular full service listing.
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Old 09-08-2014, 09:36 AM   #19
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Shows once again the importance of having an agreement upfront. I'd never engage someone professionally, especially a friend or family member, with "pay something fair." What are the odds of two people on opposite sides of a transaction coming to the same $ figure? Low IME.
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Old 09-08-2014, 09:58 AM   #20
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Shows once again the importance of having an agreement upfront. I'd never engage someone professionally, especially a friend or family member, with "pay something fair." What are the odds of two people on opposite sides of a transaction coming to the same $ figure? Low IME.
Exactly. +1
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