real estate

I sold the house myself -- do I owe agent a commission?

Steve McLindenDear Real Estate Adviser,
I met with a real estate agent 2 days ago and then assumed we had a valid contract, as I had initialed and signed it. Today she called to tell us the contract became official only this afternoon. Yesterday, believe it or not, I got an offer on my house (in Florida) from a friend whom I showed the house to a few weeks ago. Some timing! Am I still obligated to pay commission to the agent?
-- Mary Beth

Woman using smartphone in front of real estate agent window display | Andrew Bret Wallis/Photographer’s Choice RF/Getty Images

Andrew Bret Wallis/Photographer’s Choice RF/Getty Images

Dear Mary Beth,
Ostensibly, you shouldn't be obligated since the agent didn't represent you, bring you the buyer or earn the commission in any way before your contract took effect. However (and doesn't there always seem to be a "however" in real estate?), unless you immediately informed your agent of your deal, she might try to make a commission claim.

Try shopping today for the best mortgage deal on

Why? Well, if she's since put an agency "for-sale" sign in your yard, for instance, she might suspect the buyer you found saw her sign, dropped in for coffee and cut a commission-free deal behind her back. That's not an implausible scenario, mind you, as many a listing agent will attest.

Since she is -- or was -- planning to spend time and resources on your listing, the Multiple Listing Services, that aforementioned signage and other marketing, the sooner she knows about your deal, the better. Sooner, as in today, if not yesterday.

If the agent indeed ends up insisting on a cut, you may have another potential exit.

Listing agreements vary

It may be a moot point, however. If you happen to have an open listing agreement, where you pay commission only to the agent/broker who finds the buyer, the agent is typically not entitled to any commission if you sell the house yourself. But in the far more common exclusive listing agreement, the agent pockets the commission regardless of who finds the buyer. That's why I'm concerned your agent may try to make a claim, especially if you've kept her in the dark on this. How could you prove when you showed your buyer the house and when the offer was proffered?

Other ways out

If the agent indeed ends up insisting on a cut, you may have another potential exit. In most states, including Florida, a listing contract has to be signed by all parties and copies received by all before it's legal. Did the latter part happen yet?

As an alternative, you and the buyer could offer to pay the agent a flat fee to handle the paperwork of what will become a For Sale by Owner (FSBO) transaction. Many FSBO sellers end up hiring attorneys to do this at $150 to $350 per hour. While an attorney isn't a bad idea, a veteran agent can generally assist with most of the clerical work, including contracts, disclosure statements and the like, for less money, especially in a friendly deal. If you were a buyer, I probably wouldn't be suggesting this. But typically, there's less that can go wrong on the sell side of an FSBO.

There's a good chance your agent will back off if she's pretty certain you found your buyer before your listing was formalized. But not a 100% chance. So tread cautiously.

Good luck.

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