Ettiquette for switching real estate brokers situation question.

[ElscottHavoc]

A little over 6 months ago, I contacted a local Realtor about helping us find an investment property. I had seen a couple properties online that he was brokering that interested me and our experience with him 4 years ago or so when purchasing my house was pretty good. Long story short, we made an offer, it was accepted pending a good Structural Engineering inspection. There ended up being more repair work than I or the sellers wanted to do and the offer was dropped.

We looked at a few more properties, but nothing I really cared to invest in. I ended up taking some time off of house hunting and also decided to find another Realtor. I just wasn't as pleased this time around as when we bought our house.

So I contacted another agency about 2 weeks ago after a 6 month break and have so far looked at 8 properties, 5 of which are decent investments. I was actually in the process of doing some cash flow statements when I get a call from Realtor #1 i used 6 months ago saying the house we initially made an offer on dropped another $6000 this past weekend - its dropped in price a couple other times.

Its current price is now lower than my initial offer and also at a price I can make the numbers work. But then, who would be appropriate to represent me considering if I use my new broker the original Realtor I used with the house will now have to split commissions even though he technically showed me the house originally, worked through paper work, and talked to seller, etc.

On one hand, I feel like in a way I fired the old Realtor to get a new one who so far has provided a great slew of houses to consider and done a lot of work for me past 2 weeks. In fact, he also informed us about that homes price change. On the other hand, the other Realtir was originally the one who took sole care of us in making an offer on it. So I'm just not sure what the etiquette is in this case as it makes no financial difference to me who represents me, my original agent or new one.

What would you do?

Cliffs: Made offer through Realtor 6 months ago who represented me and seller.
Now, 6 months later I've decided to have a new Realtor who I've enjoyed working with immensely for a couple weeks.
Original Realtor calls and says price is lower on the house than what we offered 6 months ago.
Get rid of new Realtor or force commission split?

Posted via Topify on Android

 

[jconnor3]

I'd say the new guy. Especially since he has done a lot of great work for you AND he is the one that informed you about the homes price changing. I don't think you owe the old guy anything.

 

[4u 2 nv]

You left the first one for a reason. Its all about customer service and earning your business. He didnt do that. No hard feelings. Just explain that to the new guy who will get 1/2 commision. At this point he could have gotten nothing at all.

 

[Torch10th]

Have you signed any documentation in regards to the old house and the old realtor? I know when I sold my condo recently there was right to representation verbiage that would have prohibited me from doing what you're asking about.

If you are honestly considering the original offer house, you may have a legal obligation via a signed contract to work with that realtor. If the new realtor has not done any footwork on the house you originally made an offer on, it would be somewhat unethical to bring the new realtor in and provide him/her with the sale.

If you wish to work with the new realtor, you need to be honest with your old realtor that you've retained a new realtor because you weren't satisfied from previous work. That way he can stop working on your behalf and spend time working with other clients. Realtors take this kind of thing extremely seriously. I don't know if it would go as far as blacklisting customers, but it wouldn't surprise me.

10 years ago when I purchased the condo I recently sold, I got caught up in a situation I knew nothing about. Having looked at a new construction with an on-sight realtor, I then contracted my own to finish things. To say that there were some feathers ruffled is an understatement. I nearly lost the realtor I retained that I really liked because she ended up having to split commission. The company building the community went as far as telling me in no uncertain terms that their realtor will receive partial commission, or they won't sell to me.

So, check any paperwork you've signed and you need to let both realtor's know about the situation.

 

[ElscottHavoc]

Well, I signed a purchase agreement (which fell through after inspections) through that Realtor, but I'd have to pull it back out and see if there is anything that mentions if I am legally obligated to use him for this new offer 6 months later.

I originally told him I was going to take a break from house hunting and give him if a call if or when I felt like looking again. We broke contact for about 5 1/2 months and heard nothing from him until I got the most recent notification of drop in price, even though this is not the first time its dropped in 6 months. My guess is he got word I was working with someone else and decided to throw me a line...

But you're exactly right, even though I initiated contact on that house, he did all the brokerage work for me on it initially and it wasn't like our experience with him was God awful - it just wasn't as great as with the new Realtor in hindsight. When we bought our home, I felt like he was right there with us, but this time I got the impression he just didn't see priority in us and our $50-60,00 investment budget - apparently recently he's started catering to commercial and moderate residental). In my mind, I'm thinking surely he can't be that busy to be picky about values, but local rumor is that unless you're buying over $175,000 he's just not super excited.

And this is why its hard. The new Realtor has worked very hard to find numerous properties, gone above and beyond, it just so happens that other house is still available and just recently ends up with best ROI.

To force a split commission now discounts all the work the original Realtor did - being available for inspections, looking at the property a few times, checking into some city ordinances I needed to know about, etc. All of that pertains to that property and his work that he's entitled to payment for in the purchaseand not splitting ccommissioned.Yet, this new guy has represented me so well, and I feel like if I say I'm going to go through this other broker then I discount all the work he's done, including also informing me about this property he didn't realize I had made an offer on before. So to back out now discredits his work, but the reality is he really doesn't have to do anything except submit my new offer.

I don't really foresee my reputation being damaged (maybe by one of them) but I just figured I'd see what SVTP thought.

Posted via Topify on Android

 

[Torch10th]

I would talk with your new realtor and let him/her know about the situation. Given the fact that your new realtor hasn't done any work on the previous offered property, he may be inclined to take a split commission. In that business if you try pulling shenanigans with other realtors, you get a bad name in the industry real quick. They tend to work together fairly well because of it.

 

[CobRoush-00]

It's a pretty sticky situation.
1- Did you sign a Buyer Broker agreement with either one of them giving them the right to represent you in the transactions?
2- If you did, please check out the verbage (Usually any properties that broker #1 showed you during his or her service has to be purchased through him or her)
3- Please do inform your new broker of the situation because the first broker was the procuring cause of the sale even though the deal was canceled after the inspection. Although broker #2 informed you of the property but he or she never took you to see it and probably never set foot in there either.
4- If you want to keep your new broker, then walk away from that house altogether.
5- If you want that house, then buy it using the service of broker #1 and as a good guy you can buy broker #2 a little present and say thank you.
6- If you buy the property from broker #2 for whatever reason, expect a litigation suit from broker #1.

Good luck!

 

[ElscottHavoc]

Thanks for the replies guys.

At the current price point, it is too good of an investment to walk away from. So I'm going to go with CobRoush-00 suggestion #5, and buy the house through the original broker. I'm not necessarily sure all of the legalese included in some of the paper work I've signed with the original broker, but I don't want some fine print or hidden law to come back and bite me.

As far as the new Realtor is concerned, I'll just see about offering him something for his services rendered. At the very least, as a Landlord himself, he did a great job of providing me with a lot of insight about the current "rent economy" in town that is pretty valuable information. He was more than a Realtor, he was almost like a teacher...and that was really neat. That said, this will not be my last rental property so I'll be sure to go through him next time so he doesn't completely lose out.

 

[CobRoush-00]

Thanks for the replies guys.

At the current price point, it is too good of an investment to walk away from. So I'm going to go with CobRoush-00 suggestion #5, and buy the house through the original broker. I'm not necessarily sure all of the legalese included in some of the paper work I've signed with the original broker, but I don't want some fine print or hidden law to come back and bite me.

As far as the new Realtor is concerned, I'll just see about offering him something for his services rendered. At the very least, as a Landlord himself, he did a great job of providing me with a lot of insight about the current "rent economy" in town that is pretty valuable information. He was more than a Realtor, he was almost like a teacher...and that was really neat. That said, this will not be my last rental property so I'll be sure to go through him next time so he doesn't completely lose out.

That's a good decision. As far as broker #2, a few referrals his way would go a long way because he appears to be what a Realtor should be. Also look him up on Trulia or Zillow and recommend him on those sites. That helps a lot. Good luck with the property.

 

[SonicDTR]

I shit canned my first realtor, and the property I ended up buying was one that he had made the video for and demoed quite a bit. You snooze you lose. Just tell the new realtor whats up and they'll know the legal issues of it or not.