real estate

Don't undercut your home's buyer by accepting another offer

Steve McLindenDear Real Estate Adviser,
I told a man who looked at my home that I would take a lower amount than asking price and I even told him by how much. My Realtor said what I did was against the law. Is it actually criminal to do this when already under contract? If so, what might happen? (She also said, "Shame on you.")
-- Gail H.

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Dear Gail,
What you did is a breach of protocol and a likely a breach of your original sales contract and possibly your agent listing contract, but it most certainly didn't violate any criminal statute. Your tempestuous Realtor should have been specific about that.

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This might cost some money

So while nobody's going to march you off to the hoosegow, the original buyers could take you to civil court for failure to perform. However, if you agree to refund them their earnest money and reimburse them for out-of-pocket expenses such as inspections and appraisals, a lawsuit isn't likely to happen. Potentially, you may face a different sort of suit from your agent if you try to beat her out of her commission because you were the one who "found" your buyer.

At the very least, the agent is peeved at the prospects of a lower commission from a lower sales price. And I'll venture that she's already informed you that you are contractually obligated to put all buyers in touch with her. That is typically a requirement of a standard "exclusive right to sell" listing agreement, where the agent gets the commish regardless of who produces the buyer.

More about contracts

If you signed the less-common "exclusive agency agreement," where owners aren't obligated to pay commission if they find the buyer, that's where the waters can get muddied. If the buyer you found stopped by your place after seeing the agent's sign in your yard or her listing on or other sites, the agent has a legitimate gripe if you try to get out of paying.

I'll assume you only entered into a verbal agreement thus far with your buyer, which is rarely legally binding in real estate. So no harm no foul, unless you really, really feel compelled to honor your word with him.

If the original buyers do go away, and you decide to wait out the balance of your agent's listing contract before selling to the man, you'd better think again. She already knows you have your own buyer on the hook. That means she could come after you for full commission within a set contractual "broker protection" period, generally ranging from 90 days to 6 months after a listing expires.

Other solutions

If the buyer you found isn't using an agent, an alternative solution may be to offer yours a 3.5% to 4% commission. That way, she actually gets more than the typical 3% (half of the standard 6%) since there's no buyer agent to split it with.

As for that condescending "shame on you." While what you did may have been ill-advised, I'll assume you didn't hire a Realtor to treat you as a child. (Did she threaten to send you to timeout, too?) That little shaming phrase may have been enough for yours truly to call the Realtor's agency and request a different agent. Either way, though, your present agent will still be due some money if either buyer completes the purchase.

But I'm obliged to tell you that the path of least resistance, as well as the cheapest solution to this mess, would be to honor your original contract. Good luck!

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