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Seeking help on terms with real estate agent
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. |
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