So, my realtor had not been really helpful in my search of finding deals. I explained to her what my buying criterias are (2% rule) and she just would not get it. She keeps on insisting that I buy at a higher price, not have much repairs and pay part of the mortgage and it would still be a good deal with cashflow in a duplex, triplex, ect… So, I have decided that I’m going to get me new realtor once my contract with her ends(10/16/09).
So, now I have found a local landlord that have a few properties free and clear and willing to do owner financing and/or contract for deed.
My first question is - would I have to pay the realtor any commision if I do owner financing with the landlord? The contract stats that if I find a property that’s FSBO, then I would have to pay her a 2% commision because she would do all the paper work and such.
My other question is - If I do owner financing on a property, would this disqualification me for a FHA loan?
Cancel with that realtor if possible and never agree to that again. You can use FHA to finance out the seller financing just do it after the 90 day seasoning has passed. Herbster
You’re learning a lesson in buyer agreements; including the one that says exclusive means exclusive. For the privilege of having your agent do any work for you (which could mean none), whether you find the property on your own or not, you owe her a commission if you obligate yourself to anything found within the period of the agreement. So the answer is yes, you’ll owe her the 2%. This is what you agreed to.
It is not at all in your interest to sign this type of agreement since it essentially limits your choices but not those of your agent. I never sign exclusive agreements as this and make these rules clear to all agents I work with:
1) If they find something for me, they get to represent me
2) If another agent finds something for me, that person gets to represent me
3) If I find something myself, I’ll decide who represents me
They’ll understand, and you’ll have no trouble as long as you follow these rules. My suggestion is to lay low and wait a month for your agreement to expire before shopping around.
Herbster & Equity - Thank you both for your helpful inputs. I did learn something during this whole deal. So, I could talk to agents and have them send me listings and look for properties for me and then if they find something worth pursuing, I , then can choose who would represent me? I didn’t know that before. I always thought that you’d have to sign an agreement for the agents to work with you.
I will lay low for another month and in the mean time, I will keep in contact with the landlord regarding his properties. Thanks again, guys!
Thanks everyone. It was helpful. I didn’t know much about exclusive agreement with realtor. Also I was unclear about specific clause. A nice effort it is.
Most agents need to have something signed to represent you. It does not need to be an exclusive buyer’s agency agreement. Agents don’t want to end up feeding you leads then have you stiff them on a commission if you deal directly with the seller. As a general rule, if an agent gives you the lead, then the agent is the “procuring cause” and would be entitled to a commission if you bought the property.
If you are going to get leads from several agents, then out of courtesy give the agent that gave you the lead your business if you are making an offer.
I will lay low for another month and in the mean time, I will keep in contact with the landlord regarding his properties. Thanks again, guys!
Your agreement may have some language that stiplates you will owe a commisssion if you purchase a property you were shown up to 60 days after your agreement expires. Read the contract to make sure.
Your agreement may have some language that stiplates you will owe a commisssion if you purchase a property you were shown up to 60 days after your agreement expires. Read the contract to make sure.
Yes, the contract stats that if I buy a property that was shown, the agent will get a commission. But I am deal directly with a few landlords now that never have their properties listed. Thanks again!
Since you have a contract based on buying the property, I would look into a lease agreement with a purchase option after the 60 day period expires. If your renting/leasing, there is no purchase. Possible loophole. I would seek a lawyer about this contract, you may have some outs.
If you signed an exclusive buyer’s agency agreement, then you will still have to pay a commission on any property you purchase (even if you found it yourself) while the agreement is in force. Check your contract language for your liabilities.
FHA loans are given to owner occupants. If you don’t already have an FHA loan and if you are occupying the property as your primary residence, you can usually refinance with an FHA loan.