True Realtor Stories - You Be the Judge: Should The Builder Pay Either of These Real Estate Agents?

By
Real Estate Broker/Owner with Fisher & Company, P.A., Marketing & Creative Strategists

A Builder has his own site agents covering his model homes daily.  They are employees of the Builder, and work exclusively for him.  The Builder has a full sales and marketing department, and they are doing their own advertising to attract potential home buyers out to their model homes and communities.

The Builder co-ops with Realtors at 3%, and it's well-known in the community that the Builder is willing to work with Realtors.  He sends them Inventory sheets weekly so that they will know which homes are available for "quick-move-in" should they have a customer who needs something sooner rather than later.

The Builder's policy is that the Realtor MUST accompany the prospect out on their first visit, however, his sales team is very good about calling a Realtor and letting them know that their prospect was out WITHOUT them, and that they need to come back out with them on the next visit. 

Case 1 on the Court Docket:

A buyer walks in to the model, and the on-site agent shows them around, and registers the prospect. The prospect never discloses that they were working with a real estate agent.  

The Builder's agent continues to follow up with the prospect, and eventually, the prospect makes the decision to purchase a home from the builder.  They make an appointment with the site-agent to write the contract. 

The Builder's agent gets a call from the Realtor demanding a commission since he has now just listed their home and states that he has been working with the prospect and had been showing them builder homes for some time.  

The Builder's agent is surprised to hear from a Realtor on this sale, since the Realtor's name had never come up in any conversations with the prospects.  The Builder's agent explains the policy to the Realtor and states that there is nothing the site-agent could do for the Realtor.  The Realtor threatens the site-agent that he is going to take those prospects and sell them on a home somewhere else if he doesn't get his commission.

The Builder's agent gets a call from the distressed buyers: the Realtor called them up and made them feel badly that they did not mention him, so even though they love the home and lot, they are going to go and look elsewhere with the Realtor again.

1. Does the Realtor deserve his commission?

2. Should the Builder pay the commission in order to save the sale?

3. What, if anything, should the Realtor have done differently?

Case 2 on the Court Docket:

A couple walks into the model, never mentions that they are working with a Realtor, and end up doing a lot reservation before going to contract. They have a home to sell and end up listing their home with a Realtor-friend.  Without telling the Buyers, the Realtor-friend calls up and demands a commission since they are friends of hers and she is going to list their home.

1.  Should the Realtor be paid a commission?

2. What, if anything, should the Realtor have done differently?

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Rainer
208,817
Cheryl Thomson REALTOR Army Ret
United Real Estate (703.216.5635) cheryltee47@gmail.com - Prince William, VA
Associate Broker in Northern Virginia

As far as I am aware the buyers agent is not entitled to that commission....

Feb 06, 2010 06:00 AM #1
Rainer
31,188
Deborah Fisher
Fisher & Company, P.A., Marketing & Creative Strategists - Fort Worth, TX

Cheryl: Thanks for starting the line of discussion! Are you speaking legally or ethically, or both? What, if anything, should have ben done differently? 

Feb 06, 2010 06:06 AM #2
Rainer
207,994
Marcie Sandalow
Marcie Sandalow, Compass 301.758.4894 - Bethesda, MD
Bethesda Chevy Chase DC real estate

I'm sure the laws differ from state to state.  However, in neither case does the realtor deserve a commission.  In case 1, the realtor should have instructed his/her buyers on what to to when looking at new builds.  The fact that the buyers met with the builders reps multiple times and their realtor was in the dark about it speaks volumes.  In case 2, the way you've presented it makes it sound like the demand came only once the agent was contacted to sell the house.  What exactly was it that he/she did to earn the commission?  It sure makes the agent look a touch greedy.  My opinion. 

Feb 06, 2010 06:13 AM #3
Rainer
10,905
Kelly Schipper
Keller Williams Fort Worth, TX - Fort Worth, TX

If the Agent had a Buyer's Rep, the BUYER would've been responsible for the commission, not the builder. If the agent wanted to get ugly about it, he/she could send a CDA along with the Buyer's Rep to the title company and hold up funding, I would suppose.

It can be a challenge to educate Buyer's about Builders but it's our fault as agents if we didn't educate them properly about what trading loyalties in a Buyer's Rep really means to them financially if they stray.

Most builders I've worked with have a Registration Form which will asks how the customer heard about them?  I think their sales associates need to go one step further though and ask in their out-loud voices "Are you currently working with an Agent?" because not all the time did their agent tell them about that builder. Buyer's are being honest on the form, if they mark "drove by" as their source. I've never seen a form YET that asks "Are you are currently under representation with a real estate professional?"

 I think the legal answer depends on if there is a Buyer's Representation agreement.  Morally, I would not jeopardize my reputation over a few thousand dollars vs a relationship with a client, AND a Builder I may have to work with down the road.

Case #2: Realtor is NOT entitled to a commission, the Realtor should've NEVER called the builder!

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Feb 06, 2010 02:10 PM #4
Rainmaker
287,587
Barb Van Stensel
Chicago, IL

Neither deserves a commission.  I have sellers who are buyers right now and they go out on weekends to the open houses.  I have the list and I call the agents and let them know that "Sally and Fred" will be coming to their open house to look as I am holding an open myself.  Professional Courtesy.

Case #1:  I think it may be a case where the real estate agent didn't explain in detail the procedure and the buyer's may have assumed.  Those assumptions are what causes problems.   It is a hard lesson for a real estate agent to learn but you can't be calling up when after the contract is written, or prior to and saying "I deserve".  I do not feel the real estate agent doesn't deserve because they weren't monitoring close enough.  I would bite the bullet and take the loss and hopefully, this agent learned a lesson.  To put buyers in a stressful situation and out of loyalty to the agent, they are going to buy another house that they may not like to make the real estate agent happy?  How many referrals do you think this agent is going to receive after acting that way?

 

I had a listing where the buyer found the property under my website and advertising.  Didn't have an Realtor.  I asked him if he had an Realtor and he said "no".  I told him that I find most files successful if a different Realtor was represented on his side.  (my decision).  He came to the house unattended 3 times and I spent a total of 8 hours discussing, handling questions, etc.  He brought in a Realtor after the fact but she came to preview the home prior to writing the contract.  I had no problems with it because this buyer said that he could find one and would rather do that then for me to recommend him one.  (It was a tough file, people!)  She got the commission.

 

Case #2:  No discussion.  Realtor should be put back into the school of learning.  Doesn't matter if it is a Builder or not, nobody deserves to be talked to in such an unprofessional manner.  NO COMMISSION.  I doubt not much future business too!

 

Feb 07, 2010 06:15 AM #5
Rainer
31,188
Deborah Fisher
Fisher & Company, P.A., Marketing & Creative Strategists - Fort Worth, TX

Marcie, thanks for your comments.  I will do another post explaining how all of this came about and the reaction.

Feb 08, 2010 05:35 AM #6
Ambassador
591,131
Julie Chapman
DR Horton - Ormond Beach, FL
New Homes Sales Ormond, New Smyrna, Daytona Be

featured post new homes sale group - homes brunswick gaFeatured Post in New Homes Sales Group

Congratulations on another featured post in the New Home Sales Group.  Thanks for your contribution.  I am waiting on your next post to comment - I need details.......

Feb 08, 2010 01:51 PM #7
Rainer
24,591
Jim Paulson
Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID
Broker / Owner - Progressive Realty Corporation

This will vary from state to state and how your MLS and Realtor Association deals with Procuring Cause issues.  Just being the first one to show the property is generally not the deciding factor.  Real estate commissions are "earned" they are not an entitlement!

Feb 13, 2010 01:58 PM #8
Rainmaker
1,082,280
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Deborah, what everyone else said. It's hard to imagine a Realtor who would have the nerve to even make a phone call or jeopardize their reputation by acting the way #1 did. They must have been desparate for a commission and with those actions will likely be or are already out of the business. Neither one deserves a dime. They could have educated their buyers, not to mention communicated with them to find out what they were doing on the weekends...

Oct 29, 2010 02:11 AM #9
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Deborah Fisher

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