I came across a seller that was advertising on Craig’s List that she has 3 half acre lots, one has a small house with pool, the other 2 have mobile homes.
She told me she wanted 240K for all 3.
I offered her half 135K, and she and her husband agreed saying they just wanted to get rid of the properties.
Then she tells me its listed with a Realtor. I told her if she can cancel the contract with the Realtor I would buy them, because I don’t deal with Realtors. She agreed.
I’ve had so many problems in the past.
Now I’m wondering if that’s ethical.
If you’re questioning the ethics of your actions (or asking on an internet board), you’ve probably already got your answer. There was something else you posted a couple months ago where some people questioned your ethics.
We all know what Realtors are supposed to do for sellers. In this case, you’ve talked directly to the seller, but said seller most likely signed some type of exclusivity agreement with the Realtor giving the Realtor exclusive rights to sell the property during some fixed period of time.
Sure the Realtor will be taking a commission based off 135k vice 240k, but the Realtor most likely would’ve been splitting the commission anyway since most of the transactions are involving a Realtor on the buyer and seller side.
I guess I don’t see a huge problem with the Realtor in this case. The seller is the one who ultimately decides what they’ll take and in this case they’ve already agreed to your 135k offer. It just means your seller nets 135k minus the 6% commission, other closing costs, and whatever mortgage there may be.
The Realtor is gonna fight you (or the seller) about trying to go around them. Rather than threats and possibly lawyers involved, why not just let the Realtor play in the sandbox too so they get their commission, the seller gets rid of the properties, and you get the properties at your price?
I don’t believe it is unethical to structure your private deal with the seller to “delist” the property with the Realtor. The deal with the Realtor is between the seller and the Realtor, it has nothing directly to do with your private deal with the seller. Nowadays, some real estate agency listing contracts allow sellers to terminate the contract at the seller’s discretion. If that is the case, you should have no problems. If contractually, the seller can’t “delist” the property, it is their problem to resolve. It may become your problem when the seller won’t honor your contract because they are contractually obligated to pay the Realtor a commmission.
I agree with your sentiments about Realtors, I also try to avoid them whenever possible.
Yes, it’s unethical. It’s unethical because you want the vendor to do something that will get them sued by the realtor.
The standard realtor contract in most areas won’t let the vendor cancel the contract; it’s up to the realtor whether to allow it to be cancelled if the vendor shows up to the realtor’s office and becomes a screaming maniac. But, usually there are 120 day holdover clauses, which allow the realtor to sue the vendor for their commission after the contract is cancelled if it gets sold as a fsbo. If the realtor can prove that you put a written offer at any point during their marketing period, that holdover can last years. The only real way to get out of holdovers is to hire a different realtor, but if their commission is less than the current realtor charges, once again, the original realtor can sue the vendor for the difference. If the vendor decides to not sell the property anymore during the marketing period, the realtor can sue the vendor for their commission. Surprise. Surprise. These are usually the standard realtor clauses when listing property that come straight from the real estate board made up of local realtors because it’s happened so many times.
My plan is to Wholesale, lease Option or buy them with owner financing which doesnt leave any funds for the Realtor. After not recieving any offers, The seller was forced to run her own ads on Craigs List to try to sell these properties. She told me that they just want to get rid of them.The Realtor placed the value at above market prices in a buyers market.
Its been my experience that Realtors are greedy, manipulative, controlling (Thats ther good points) and all they do is place the property on the MLS and nothing else.
One of my recent sellers was underwater, cudnt sell for what he owed, the realtor advised him against accepting my Lease Option. Of course eventually the house is foreclosed on. This Realtor shud be held liable and accountable. The homeowner now has to deal with a screwed up credit while the Realtor goes about his merry way. Should there be Malpractice for Realtors? Was he offering legal advice?
On these 3 lots the realtor shud walk away, its in his sellers best interest to move these properties.
There is no chance in hell they will sell for 240K
I don’t inherently hate or dislike Realtors. I really like our Realtors here in MS and they’ve helped us quite a bit in building our business. I do, however, believe Realtors aren’t required on deals and the whole occupation could be done away with if people would do a little work themselves to sell their own properties.
In this situation, you need to have this seller look at what they signed with the Realtor. If the Realtor has rights of exclusivity to sell the properties, it doesn’t matter one bit that you feel like the Realtor should walk away. A judge won’t care about your opinions if this goes to court and there is a signed agreement. You would be pissed too if you had this under contract to assign it and the seller found a better offer and tried to cut you out.
I just took some former tenants to court a couple weeks ago because they left a bunch of their crap in the house, gave me a four day verbal notice to vacate, and left the keys in the house with it unlocked rather than meeting with me to move out the right way. They also owed late fees for rent. Our written lease states tenants will give us a 30 day written notice and mail rent postmarked by the fifth of the month. They offered up a litany of excuses why they didn’t act according to the lease. Who do you think the judge believed? Everything I asserted about the situation was in writing and signed by both parties. They lost because the judge only cared about the written agreement.
If the seller isn’t under agreement to use the Realtor, then by all means they can use you and cut out the Realtor. If they are under written agreement, you’re going to set the seller up to be sued. Small claims court only costs $65 to file here and you can represent yourself. The Realtor may decide to sue the seller if this goes how you want and there’s a contract involved. If the seller gets sued over this, you might lose the deal anyway.