- advertisement -
Columns: Real Estate Adviser
Steve McLinden   Expert: Steve McLinden
Real Estate Adviser
Home for sale by owner may be outside contract
Real Estate Adviser

Obligation to agent lies in fine print
 

Dear Steve,
My husband and I are looking for a home in the Midwest and signed a buyer's agent agreement that covers a specific area. In the meantime, we found a home listed for sale by owner that's not in that specified area. Are we in any way obligated to the buyer's agent?
-- Jacqueline Jill

- advertisement -

Dear Jacqueline,
The answer lies in the fine print of your buyer's agent agreement. If you signed a non-exclusive buyer's agreement, where you only pay the agent if she introduces you to the house, you're likely in the clear. If you signed an exclusive buyer's agreement, where the agent gets paid regardless of who finds the house, then your options for escape are less clear. I suspect because you are buying outside of the defined area, you probably have an out. But sometimes there are provisions in these agreements that cover homes bought outside of that immediate geographical area, which may still obligate you to at least pay a fee to cover marketing costs.

Obviously, you'll need to examine your agent agreement carefully. Some agreements have sections that, in effect, say that the buyer's agent will be owed commission for properties put on the Multiple Listing Service (MLS) only purchased by the buyer. (Note: This has become a little more of gray area since so many for sale by owner sellers are paying to get their homes listed on the MLS.) Some agreements have sections that say, "agent shall be compensated for buyer purchase of an FSBO home" with a box next to it that will either be checked or unchecked. If that box isn't checked, you have a double out.

Frankly, agents lose out to for sale by owner listings all the time and are quite accustomed to it -- though quite frustrated by it. A lot of them won't make a stink about it, even if the language in the agent agreement is ambiguous. The last few years have not been kind to agents, as sellers who are frustrated with lower selling prices seek to cut out agents on both ends of the deal.

There are two ethical schools of thought surrounding your type of scenario. One says you should not tell the agent at all since the deal doesn't involve her and you want to avoid stirring up any trouble. Another says to disclose it to her out of common courtesy and possibly offer her the job of facilitating the purchase for a set fee. There are, after all, many things that can go wrong in a real estate transaction and many protections that need to be built into your sales contract, not to mention knowledge of the dizzying sequence of obligations that both parties have in a home transaction. If you aren't using the agent, it would at least be prudent to bring in a real estate attorney or another closing agent to review your sales contract.

But short of seeing the actual language of your current agent agreement, it appears you're in the clear in terms of legal obligations to your buyer's agent. Good luck.

Bankrate.com's corrections policy -- Posted: Sept. 23, 2007
Read more Real Estate adviser columns
Ask a question

 RESOURCES
7 tips for home buying or selling
Buyer's agent is your secret weapon
Do you need a real estate agent?
 TOP REAL ESTATE STORIES
No stories available




Mortgages
Compare today's rates
NATIONAL OVERNIGHT AVERAGES
30 yr fixed mtg 3.99%
15 yr fixed mtg 3.06%
5/1 ARM 3.20%
Rates may include points
RELATED CALCULATORS
  Calculate your monthly payment  
  How much house can you afford?  
  Fixed or adjustable rate: Which is right for you?  
VIEW ALL  
FINANCIAL LITERACY
Rev up your portfolio
with these tips and tricks.
- advertisement -
- advertisement -