Hello,

I am trying to settle a relationship with a real-estate agent I have
employed. I am buying a property that he (my agent) did not originally
show me. I am trying to decide what to pay him. Any advice or
perspective is appreciated, particularly if you or someone you know
has had experience dealing with a similar situation and you knew the
outcome of that scenario.

More details:

Let's see, where to start...

My real-estate agent wants 1.25% of commission (half of his typical
2.5%) on a $235,000 property in Chicago, IL, USA that I plan to buy
that he did not find for me (I found it on my own). This works out to
be $2937. This is significantly more then I expected to pay per our
"gentlemen's agreement" I detail below. I had an amount of $1000 or
less in my head. I'm sure that this agent would be very unhappy with
me if I paid him $1000 or less. Unfortunately, the agent and I never
discussed any numbers or percentages or set any other quantitative
expectations when we made our "gentlemen's agreement." I'm realizing
now that this was a key mistake on my part.

All my friends and real-estate experienced people I've talked to thus
far strongly feel that I should be paying this agent little if
anything. A few of my friends said that they have found properties
outside of what their agent had shown them and not paid their agent a
dime.

I am a 2nd-time buyer; I have previously purchased and sold a property
in downtown Chicago; this property sold for $250k back in spring of
2002. (I sold it back then because I moved to Colorado...and now I'm
back in Chicago and want to own a place again.)

Even more details:

I have been in the market, since early January, to buy a property for
myself to live in somewhere in Chicago. A friend of mine happened to
be selling his condo at the same time. He offered to sell me his place
prior to listing it with his agent, at a price less then what he would
list it if I didn't buy it. The place met all my requirements, and the
price seemed somewhat reasonable, but I wasn't sure.

I decided to employ an agent to see what else was available on the
market. The agent and I orally made a "gentlemen's" agreement wherein
I would pay him (the agent) standard commission (2.5% of the sale) if
I bought a property that he introduced to me, and something
substantially less then that if I bought the original property owned
by my friend. I took my agent to visit the property being sold by my
friend to have him evaluate its worth and to show him what I liked. (I
also wrote a substantial document outlining my real-estate goals and
preferences and requirements.) Since this agent also has an
appraiser's license, I gave him the offer, if he agreed that my deal
on my friend's property was good enough, to do a formal appraisal
right there on the spot and start the process of my friend and I
cutting a deal...and I would pay this agent the same amount I would
for an appraiser's fee (even if that wouldn't be the last formal
appraisal done).

My agent advised me to look at other properties. After a significant
search that involved approximately 10-12 property visits spread over 2
different showing days, my agent and I decided that the original
property being sold by my friend was the best property available for
me and my requirements. We also agreed that the $235k asking price my
friend had was competitive and reasonable.

I have decided to not seek any help from my agent for any further work
with my purchase of my property (the original property I found myself
through my friend). I am arranging all the lawyer, inspector, etc work
to close the sale myself.

I am not comfortable paying the $2900 my agent seeks. Furthermore, it
may be difficult or impossible for me to drive this expense into my
mortgage loan, because my seller is not that interested in doing it.
This makes for a considerable out-of-pocket expense for me. All in
all, I'm fairly unhappy.

On the flip side, I am quite sensitive to honoring my agreement with
this agent. He seems good, and I was considering having a long-term
relationship with this gentlemen. I have to admit that I'm not yet
certain that I am as interested in a long-term bond with agent after
these discussions have been as uncomfortable for me as they have been
thus far.

Any advice or perspective would be greatly appreciated.
Thanks very much for any help,
-Matt
--
Remove the obvious text (including the dash) to email me.