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Must I contract with agent showing open house?

August 25th, 2008 8:29 PM by Ron Mastrodonato

Must I contract with agent showing open house?
Commission disputes can erupt over who represented whom

August 25, 2008

By Dian Hymer
Inman News

Buyers often find the house they ultimately buy on their own at an open house. Do they have to use the agent that was showing the open house?

Buyers should work with the agent of their choice. However, complications can arise when there is confusion about who is working with a buyer. It helps to understand the rules of the game.

Some buyers enter into a written buyer representation agreement with a real estate agent. These agreements basically say that the buyers will pay the agent a commission when they buy a house through the agent. If the agreement is exclusive, the agent may be owed a commission even if the buyers purchase using a different agent.

For instance, you could find a new listing on the Internet and want to see it right away. You call your agent, with whom you have signed an exclusive agreement to represent you. But she's not available.

Then you call the listing office and make an appointment to see the house with the agent who is handling the in-coming calls. You love it and make an offer right away through the agent that showed you the house. The offer is accepted.

When the seller listed, he agreed to pay his agent a commission, part of which was to be paid to a buyer's agent. So, the agent who sold you the house received a buyer agent commission that was paid for by the seller. However, you might owe a commission to your exclusive agent even though she had nothing to do with the sale.

HOUSE HUNTING TIP: No matter how anxious you are to see a new listing, you should always make it clear to other agents that you are already working with an agent.

Buyers who haven't yet selected an agent to work with often canvas Sunday open houses to get familiar with neighborhoods. They could spend a long time with an agent who is holding a house open. The agent might answer questions and provide disclosure documents. This does not necessarily obligate the buyers to buy the house through that agent.

These buyers could decide to find an agent to represent them when they get serious about buying. They could return to the house at a later date and decide to buy it through the agent they selected to represent them.

The buyers in this situation shouldn't be obligated to buy through the open-house agent unless they signed an exclusive buyer representation agreement with that agent, particularly if they had no future contact with that agent after the open house. If an open-house agent continues to call you after you've selected another agent, you should let the agent know that you have arranged for representation through a different agent.

The rules aren't black and white regarding when a buyer's agent is owed a commission. Normally, if the agent is a Realtor -- a member of the National Association of Realtors, which is a trade association with a code of ethics -- commission disputes are handled through the local association of Realtors. However, not all real estate agents are Realtors.

When Realtors are involved, the clients are often insulated from commission disputes. But, a client could be called as a witness. To avoid being involved in any of these sorts of disputes, be candid with agents you meet about your agent relationship.

THE CLOSING: If you think you might have misled an agent into thinking he or she might be writing an offer for you, have your agent call the other agent as soon as possible to clear up any confusion before a problem arises.

Dian Hymer is a nationally syndicated real estate columnist and author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

Posted in:General
Posted by Ron Mastrodonato on August 25th, 2008 8:29 PM


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