Matt wrote:
[snip]
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.
[snip]
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.
[snip]
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.
[snip]

The problem is that "substantially less" is indefinite. I would guess
you have an "agreement to agree in the future", which legally isn't a
contract at all. I think the agent is tryhing to take advantage of
you, but the agent did provide some services for which you should
morally pay.

Let's get down to basics. If you had bought one of the other
properties the agent showed you, he would have gotten half of the
commission, probably 3%. He would have also helped you with all the
paperwork, making the written offer to buy, letters of instruction to
the escrow company, etc. But you didn't buy any of the properties he
showed you, and you didn't make use of those "closing" services.
Technically you bought a FSBO (for sale by owner), and there was
no commission to split.

Now that's just the luck of the draw. When an agent shows a buyer
araound, there is no guarantee that the buyer will buy one of the
properties the agent shows. In fact, the buyer may decide not to buy
anything at all. In that case, the agent gets nothing for his time
and trouble. But that's a risk that all real estate agents take every
time they show a property. It's just part of the real estate
business, and unless you have an agreement to the property you would
owe him nothing.

But you do have an agreement to pay him "something", "substantially
less" than his half of the commission. If he wanted half of his usual
commission, he should have said so at the outset when you made your
"gentleman's agreement". As it is, he can either take whatever you
offer, or try to get a court to award him a higher payment.

And he did provide you with a valuable service (other than showing you
properties you didn't buy). He did a full appraisal on the property
you ended up buying. A real appraisal is more work than just the
typical real estate agent's "list of comparable sales", and there is
some potential liability if he gets it wrong.

As I understand it, the usual going rate for an appraisal these days
is around $400-$500. At least, that's what lenders are asking
for(*). So I think your $1000 offer is generous.

If it were me I would probably offer him $1000 and see if he takes
it(+). If he threatens to go to court over it, you'll have to decide
how much the risk (of losing in court) is worth to you vs. the $1937
difference between what he's asking and what you think his services
are worth. Then you can decide whether to sweeten your offer or not.

If he's completely adamant, you could go see a real-estate lawyer for
further advice, but that will probably cost you $200-$300 so it's
better if you can settle without getting lawyers involved.

(*) This is often inflated. Many lenders will do a "computer
appraisal" costing around $50 and then charge the borrower for a full
in-person appraisal. But that's not relevant to this case where OP
did, in fact, receive a full appraisal.

(+) And point out that the usual fee for an appraisal is $500 or less,
and the other services he provided are part of the normal risks of
doing business as a real-estate agent.
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