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Should a Buyer's Agent charge their client for expenses when buyer pulls out of market???

By
Real Estate Agent with Exit Realty Cherry Creek 038852

I had an interesting question proposed to me by a prospoect that I met months ago but the couple was already under a buyers' agreement with another agent.  This couple had been looking at properties since May, made 3 offers on homes which all crashed and burned at inspection.  They decided to wait for a while before they looked at homes further.

They requested that their contract with the agent terminate.  They were frustrated with the agent for numerous reasons.  The agent took a part time job and was not available to show property to the buyers' during their time frame, the buyers felt pressured to purchase one of the homes even though there were safety issues that were revealed during inspection, the agent was not sending listings that fit the buyers' criteria.   The buyers were doing most of the leg work in seeking homes to look at. 

The buyers offered to compensate the agent for her time since they were terminating the contract early.  This seemed fair and reasonable to me since we have all been in that situation where the buyer changes their mind and decides to stay put in the current living situation.  A lot of time and energy spent but no closing.

The agent provided the client with a fill for $3600.  Now this shocked me.  The agent had charges for gas at $2.40 per gallon = $700 fuel expense.   Seems like that is a lot of fuel for seeing 11 homes.   The client usually followed the agent in their own car or met at the property. 

The agent charged for sending meeting with the clients to sign buyer agreement, faxes, writing contracts to purchase, attending inspections, discussions with her managing broker regarding the offers, CMA's on the property they were making offers, retrieving faxes and (I love this one) time for attending a party at the buyers' home where she indulged in cake and ice cream with the family.

We agents do all of this and a lot more.  We don't get paid until we go to the closing table.  Yes it is frustrating when we loose a client or deal falls and we are left holding the empty bag.  I find it amazing the buyer is willing to compensate the agent for her effort.  BUT an invoice for $3600?????   She is billing for 56 hours at $50.00 plus fuel expense.

I would love to hear what other professionals feel about this.  I think this makes our industry look unprofessional and greedy.  We deserve to be compensated but I don't think we gouge our clients either, especially if we are a little miffed that it did not work out.

Have some fun with this.  Let me know what you think and any advice that I can pass onto these buyers.

Bill Ladewig
LoanOfficerSchool.com - Escondido, CA
Experience Is Your Advantage

Hi LaDawn, earning straight commisson for the past 39 years doesn't allow me much sympathy for the billing agent's action but, if there was a contact envolved then a contract is a contract.

Aug 04, 2009 11:01 AM
Lori Cain
Own Tulsa - Tulsa, OK
Midtown Tulsa Real Estate Top Producer

That's ridiculous.

I parted ways with some Buyers recently, and honestly hope I don't hear from them again. We went out at least six different evenings over a 2-month period (my car, my gas, my time, my planning, my mapping, my appointment-making & scheduling). We wrote a contract on one home and they changed their mind. We wrote a contract on a 2nd home a month later, and they decided not to counter a perfectly good counter-offer. I probably DO have 50 hours invested, but would never consider sending a bill. I missed something -- didn't read something correctly, but I'm going to chalk it up to one of the many hazzards of our business and move forward. However, if they call me to begin shopping again, I may ask for a retainer!

Aug 04, 2009 11:05 AM
TIM MONCRIEF
Tim Monciref - Austin, TX
Over 2,000 homes sold…..

Having been in the business so long, I have now realized that our world is so small.  Deals that were or were not made 10-20-30 years ago come back to your face at a point in time.  I make sure that every deal or non deal ends very peacefully.  If a buyer or a seller backs out on a contract.....I will bite my tongue.  In about half of such incidences acting that way has allowed me to refer the clients to another agent I know.  This just happened to one of my agent 2 weeks ago.  The agent will get 25% and is happy; the other agent is happy; and most importantly the client is happy.  If I were to do what that agent you were referring to did in my area of town, my name would toast.......

I truly believe you have to be a politician to be in this business.  So you are running for Mayor and someone burned you; what would you do?

Aug 04, 2009 11:26 AM
Dan Quinn
The Eric Steart Group of Long & Foster Real Estate - Silver Spring, MD
Dan Quinn

So how did the buyers feel about the bill?  Were they upset or are they going to pay the bill without a fight?

Aug 04, 2009 11:37 AM
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL
REALTOR

What does the buyer's agreement say, is there an expiration date? 

Aug 04, 2009 11:45 AM
Anonymous
horacio granados

I have to say I'm a bit surprise by your position since you are broker/Agent. However it is difficult to know how much of your client's story was a fact. I don't know what reasons the agent would have had to try to collect what she wanted to collect and I agree with you that some of it sounded pretty ridiculous.

I would say it is precisely the reason why I have a hard time believing your clients story is completely accurate. Clients tend to believe that signing this contracts have no bearing. I can't tell you how many clients believe you can simply cancel a contract after people have spent money time and effort.

I guess my biggest problem with this situation is that all of the actions the agent took on behalf of the clients you are talking about here are part of the job she is doing on their behalf. I think it's time we as agents start appreciating our own work. I don't agree with asking to get pay for attending that party but everything else sounds legit to me.

Most people seem to think Real Estate Agents sit around all day long with out doing a thing. A client ones said to me it must be nice to show a house and get pay as well as you do. He was absolutely clueless of the amount of work I would have to do to be able to help him accomplish his Real Estate transaction.

Most people go to work and expect to get pay at the end of the day, we work on a contract and there should be no difference.

In conclusion, I think the agent has every right in the world based on the signed contract to collect reasonable expenses.

Horacio Granados

Aug 04, 2009 11:50 AM
#6
Lois Davies
Century 21 Birchwood Realty, Inc. - Cape Coral, FL
Cape Coral & SW Florida

I recently had a disappointing experience with customers I have been working with for a year.  Even though I was frustrated with the situation I would never think to send them a bill.  Maybe a Buyers Agreement would solve these issues.  I'm with Lori and Tim.

Aug 04, 2009 11:50 AM
Christine McInerney
Great Life RE - Knoxville, TN
The McInerney Team, Knoxville TN Homes For Sale

Huh, I never billed a client.  There have been some clients who have really wasted a lot of my time and money.

Aug 04, 2009 12:24 PM
Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

This is why there are alternative business models out there.  If she wants to bill them $3600 for her time and services why shouldn't she?  The problem is since her fees were not outlined up front she will have a hard time collecting the money.  If she had an upfront hourly contract pluses expenses they wouldn't have been surprised.  What I question is why three contracts feel apart at inspection?  That seems excessive!

Aug 04, 2009 01:26 PM