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How much do you charge to clean up someone else’s mess?

Today, I was asked by a friend to help out his buddy, who decided to by a house from a FSBO without representation. He said his friend didn't know about using a real estate agent and that the seller could help pay for the agents services, if the seller agreed.

The seller is willing to pay for me if the buyer is willing to raise the price of the house by that much. The buyer is willing to do it if I agree to a lower commission that I would normally charge when helping a buyer .75% to be exact. Well, here is the problem... I would be taking on cleaning up the mess the buyer and seller have already created with earnest money, down payments paid directly to the seller, liens put on the property in the last 30
days, and wanting to do a contract for sale now.

Neither knows what they are doing and it is clear to me that I may be getting myself in to a situation that could be a lose-lose-lose situation for the seller, the buyer and myself, since no one really wants to pay and only want to use me because they don't know what they are doing. I could do this, and make it a win-win-win, but I'm wondering how fragile the egos are, after already having to admit they don't know what they are doing. Are they willing to bow their head one more time and take some advice from someone who has done more than my fair share of these contracts?

This sale is pending on a contract, that if had it gone through me, would have been done in less than 15 days, has now dragged on for 7 months. The seller is tired of paying a second mortgage, but still doesn't know what he is doing, and doesn't even want to pay a lawyer to represent him.

So, my question to you, my fellow Activerainers, how much do you charge someone to clean up their mess?

Todd Clark - broker
Kastings & Associates
Phone: (503)524-9494
Fax: (503)622-8739

Posted by Todd Clark (Broker) (503)524-9494 (Beaverton, Oregon Real Estate Expert) on 05/03/2008 06:38 PM

Comments (49)

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49 Comments on How much do you charge to clean up someone else’s mess?

MAY

2008

$95-$125 per hour (depending on how deep the mess it and how unreasonable the people are). I don't do FSBO messes on a commission basis. Hourly rate keeps people focused on ON TASK.

Hmmm. I think I'd send them to respective real estate attorneys and steer clear. Or is this something a title company can sort out?

I don't know that I'd want to get involved! Send them to an attorney. .75 certainly isn't worth your risk - do you think??

Boy, that seller sure did save money didn't he/she? Look at what 2 mortgages cost. I would love for all the Realtor haters to see a mess like this.... like the Redfxx people, etc.....

OK, I'm off my soapbox now - back to you Todd!

I certainly would not be discounting my commission if there was that much to clean up! And most definitley not for less than 1% for goodess sakes!

Would the parties agree to return all EM, tear up any paper work and start again from scratch? You could always offer up a T&R to them.

I'd lay it all on the table - what you can do for each of them, how much you would charge each of them - and then let them decide what they want to do.

I don't think I would want to take on the situation, no matter the $ to me. They got themselves in this situation by trying to avoid paying an agent, let them get themselves out of it. Maybe next time they will both see the wise decision to use you as their agent from the beginning.

Friends or not, They should understand that there is a value for your services. Since they are your friends, it should make it more valuable because you would look out for their best interest. If the sale doesn't get cleaned up how much will it cost them in the long run? I would let them know what your fees are and then give them a break if you want. I would do company minimum.

Todd,

To answer your question, at minimum Full price if not more! 7 months!!! Well , you get what you pay for!!!

Good luck, let us know how it works out!

Christopher

Good question. I'm not sure I'd want to tackle it, though. Let us know what you decide! :)

Todd- not worth the risk, have them both sign a ton of disclaimers and indemnity clauses with you, charge by the hour, $250 to $375 per hour, just like an attorney. If the seller does not even want to pay for an attorney they may not want to pay your hourly fee. We have FSBO's put up retainers and then I bill them on my hourly rate of $372 per hour. Then they come to us and then offer around 7% if we will become a transaction brokers.

You must weigh the risk to the amount of money you will net. Good luck!

definitely on an hourly basis, like a lawyer would. disclose the heck out of everything and remind them that you strongly urge them to each hire an attorney to review the whol exchange.

and keep in mind, the buyer may have brought you to the table, but really you'll be representing both parties in the court's eyes.

Todd,

Not sure. My gut feeling is to turn it down. If you decide, go at least 7%, sign a bunch of non agency disclaimers and get them to both agree in writing to using an attorney. If they won't do that, then you have too much risk and let it go.

List and Sell (works better if they get it in that order ... List and Sell ...) Gary @ RentonHomeFinder

I'd charge them by the hour and keep track of time in 15 minute segments. 2 minutes to do an email = start of a billing increment. Get a retainer

Todd, I pay TLW $5 to poop scoop after the dog. Oh wait a minute........OK I see what you are asking. It depends. If it's just writing a contract and getting the deal to closing I normally charge about $1,500 BUT only if I know the folks. If I don;lt know them then I would normally just charge just a tad less than my normal commission since I didn't have to find the buyer or seller.

TODD - I'm with others in saying that this one should be sorted out by the attorneys. It's not worth the risk trying to unring the bell that these two parties have already rung. Just my 2 cents.

Todd-My advice is not to handle other peoples problems for free.Also, I don't know if I would be willing to take on the risk.

UUgggg, I don't see myself cleaning up someone else mess, they can pay someone else to do that.

Sean Allen

Full commission in conjunction with attorney's advice, heck maybe 2% above full commission to clean up their mess...smile Plus a 'testimony' from buyer and seller - as to why no one should ever 'FSBO'....published....lol

If you have to ask what to charge, Stay away from the job.

You also state that there are liens. Apparently the seller does not pay his bills. Stay away from the job.

If you can't get paid from the HUD, cashiers check or cash prior to doing the work, Stay away from the job.

Also specify in writing exactly what you will do for an X number of dollars and have seller sign. If he won't sign, Stay away from the job.

Why would you work cheap or for free. Usually if you think it is a bad job or bad situation it is. Run.

In the first few lines when I read that " I didn't know I could use a realtor?" That left me with the feeling, you get what you deserve.

I would stay away from this one and recommend both parties hire a lawyer. In the end, you'll probably end up being the bad guy.

Todd, Do you think anyone else would work for free. I am sure you would love to help a friend but is the liability worth it. I'd stay clear and advise them to seek legal counsel.

I like Melina's suggestion, an hourly rate. Then as the meter runs -- admittedly an insensitive analogy -- hopefully the principals will heed your advice. But no lawyer or professional closing agent? In New Jersey that sends us a very bright flare.

Why are you even considering doing this ? Why not go find a real buyer/seller ?

Todd,

I'm on Bill's side...move on...or charge 1% and 'get er done'!!! Thanks, Fran

I hope this doesn't date me. But when I was younger the going rate for auto repair was $35/ hour. I used to help mange a garage where the sign on the wall had two rates.

$35/ hour for repairs

$55/ hour to fix what you tried on your own.

I am sure it is 2 or 3 times that today.

I sure wouldn't do it for the same or less I normally would charge. The liability is too big. That will cost you. I think the most sensible suggestion was to seek an attorney.

&%$^ NO, I wouldn't touch it with a ten foot pole. Why ? Refer them to an attorney to sort it out. Like you said it is undoing their messes. You don't know what you will find. There is a problem here. One doesn't know about a Realtor and one doesn't want to pay an attorney and then wants to raise the price of the house. You have got to be kidding me !

Just tell your friend that you appreciate the opportunity but 7 months of who knows what is just too much to ask. IMO

I would definately charge full commission. At this point, they need to be told that if they want this transaction to work, you have to clean up their mess. Let them know it will actually be more work than a normal situation. You are a professional, and deserve to be paid for it. If they had tried to build a house by themselves, and half way through half the house fell down, a builder would know that he would need to start from the beginning, and charge for it!

I'd charge nothing because I would not agree to get involved. There are times when you just have to walk away and let those that created the mess, clean it up. Your "cleaning it up" could end up with one party not being happy, and the next thing you know is that you are being sued, just for helping. Walk away!

Melina - That makes sense, but I'm starting to think if I do take this on from all the feedback, I should consider charging $500 a hour to cover my court costs.

Lorrie - I think you are right about an attorney, title company isn't going to touch this until it has been sorted out.

April - I think this is a story I may put in my FSBO books and hopefully some will figure out that it just isn't worth it.

Nancy - I certainly wasn't planning to discount, I was talking about going up! Maybe 9 or 10 percent, because I do know if I did take this on, it would be harder than most.

Pam - I am leaning toward not doing this after reading all these responses that is for sure!

Shaun - Lucky for me this is a friend of a friend so don't know either party, but I'm starting to see the serious risks involved and looking like gonna say SEE YA!

Christopher - Wasn't going to go less that full commission, but now may not do it for any commission!

Debi - Thank you for your feedback and this is really helping in my decision.

Nestor or Katerina - I'm certainly getting some great feedback here that I hadn't thought of not having been in the position before. Certainly giving me a lot to think about!

I started thinking that I would charge about $200/hr... to keep them focused on getting everything done, but I don't know that I would do it, and I don't know if it would be worth the risk...

Sounds like a job for an attorney and save yourself from being blamed if it stays tangled.

I think that is one I would refer to a real estate attorney. It is a mess as you said.

Another point is that is a contract you didn't help write, perhaps not written on standard language contract- I say that because in my state, we are only allowed to help on contracts written by WA ok'd attorneys with standardized contract language.

It sounds like you would be acting as both arbiter and contract interpreter. I sure don't have the training for that, and my broker would flip if I tried it LOL

I have had too many attorney taught classes that told us, IF you act as an attorney, you are going to held to the same standards of one if you get sued!

MAY

2008

Todd,

It looks like a lot of painstaking work to sort it all out, so one option is to stay away from it. But if you decide to get involved, charge on an hourly basis whatever an attorney would charge up there. That would be fair.

Your price is your price. Don't sell yourself hort.

I would remind them BOTH that their CHEEPNESS has caused a 7 month mess. They need to realize that you get what you pay for and that some things are not meant to be done by rookies i.e. heart surgery, etc, etc....

Don't do it for next to nothing. Charge at least your regular rate.

Friends don't let friends drag them into messes like this. This sounds like a headache in the making. Your liability, your time and your frustration level have got to be worth more than this! I know that it's hard to turn a friend down, BUT if your friend is asking the very, very difficult, something that could cost you quite a bit and is probably a lose-lose situation then the answer can only be "no".

I won't get involved in that type of situation...they are already in contract...they'll be better off hiring an attorney in my opinion. At least they'll get paid and hopefully get your their mess cleared up.

You don't really have a role in this transaction, because at this point, it is an attorney's job not a Realtor's to fix the problems you mentioned. What you can do is start showing your friend other houses, because it sounds like this one will most likely not close with that sellers attitude.

I am in agreement with the other post-ers - run, don't walk, away from this one and tell your friend that the buyer is best off contacting a real estate attorney at this point.

Ron - Thanks for the advice, I certainly have a lot to consider on this one.

Gary - It is looking like asking everyone was good thinking on my part and it is looking more like I will be turning this one down or maybe refer it to my worst enemy. (LOL)

Rich - I've been thinking about getting a retainer anyway lately for anything I do, since I have been running in to more and more time wasters.

Bryant - First of all, I'm not letting my kids see your comment because I pay them less than that (LOL) But, I see how it could work if I just write the contracts and do none of the negotiations, but I am thinking that is what they really want out of me and I'm leaning toward running away after reading everything here.

Adam - I think I'm going to take every one who has commented here and take their two cents and cash it in for some candy. Less chance of getting sued and I do like candy, so thanks for your two cents.

Greg - That seems to be most peoples opinion on this one and I'm starting to realize there was a lot I didn't think of when I asked the question.

Sean - I am going to be giving them a few attorneys' numbers, just to see what they say.

Liz - I like the testimonial idea, that was funny! When I originally posted this I was actually considering 3% above my normal commission, but now I'm leaning toward there isn't enough money in the world to take this on!

Richard - I'm thinking your points are very valid and I'm considering your advice of staying away from the job.

Russ - I'm putting my running shoes on...Hold on!

Valerie - I'm not sure that is their fault as it is our fault for at some point not educating him that he could use a Realtor to help him in the transaction with a FSBO.

I think that I would hit them with a full commission. Especially with a big mess to clean up. And it sounds like it needs to come out of the seller's pocket.

Sounds like a big mess! 7 months is a long time for this to drag out. Too bad they didn't ask for your help earlier in the sale.

Hi Todd,

These are difficult situations to get into. You never really know what you are getting into until you dive in and start wading through the mess, so you must be careful. The risk with a commission based fee in this case is that it could turn out to be way too little if the job turns out to be an absolute disaster.

I'm not a Realtor. I'm a 1031 Exchange Expert. I'm asked often to help straighten out messes created by other Qualified Intermediaries and I charge an hourly rate. I will politely decline if they insist on a flat rate quote or I will give them a flat rate quote if they will agree to limit the time to a specified number of maximum hours. I learned my lesson years ago. I only charge an hourly rate if it is expert witness work involved with litigation.

Todd,

My broker always reminds us about the cost of our deductible for our E&O insurance when we deal with a situation like yours. Every transaction should at lease cover it, since you're incurring the risk.

Todd, if I were in your shoes, I would say, "Like a long fly ball on a hot summer day - I'm outa here!"

Richard - Didn't even think of that, I wouldn't want to have my friend's friend be mad at him because they are made at me.

Jay - I certainly wasn't planning to work for free, but after reading all the comments, I am going to give them a good real estate lawyer's number.

Andrew - I think it really has backfired on both parties in this case, but this does make you realize why more cases that end up in court involve a FSBO.

Bill - After reading through all the comments, I can tell you I am no longer considering it!

I would have to agree - I would most likely steer clear of this and refer it to a real estate attorney. If you are determined to go ahead - I've often heard of a 1% transaction brokerage fee. But who are you representing? That had better be clear. A fee of .75% is already very reasonable. Any less- and you are taking a pretty big risk for a low return.

MAY

2008

$250/hr -And that is just being nice. See this is a good reason why buyers and sellers need real estate professionals to represent them. If only they would've done what they should've done in the first place which is seek the services of a real estate professional,they would be in this situation in the first place. Make them do what they should've done in the first place -Make them pay-IN A BIG WAY. Great post.

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