Dual Agency Situation: Advice Requested

[orgopeach_IHB]

First, I'd like to preface I am beginner in buying real estate.

I recently bought a home with an agent representing the the seller. We did sign the California Disclosure of dual agency. During our offer process, our agent did not advise that we could have the seller pay part of the closing cost nor did the agent mention that the we could specify a max interest rate for the loan or have the seller pay points. Typically I would think the agent has a fiduciary responsbility to us, and I would think to mention this even if we do not decide to ask for this.

Do buyer agent typically mention these things in Southern Cali? Do I have any recourse against the agent? If the contract was already signed by both parties, is it bound even if the agent is found to be of fault?

 

[SoCal78_IHB]

Hi, peach. You may want to read through some other threads such as this onewhere we have discussed situations similar to this and where the agent's responsibility lies.

 

[usctrojanman29_IHB]

First, I'd like to preface I am beginner in buying real estate.

I recently bought a home with an agent representing the the seller. We did sign the California Disclosure of dual agency. During our offer process, our agent did not advise that we could have the seller pay part of the closing cost nor did the agent mention that the we could specify a max interest rate for the loan or have the seller pay points. Typically I would think the agent has a fiduciary responsbility to us, and I would think to mention this even if we do not decide to ask for this.

Do buyer agent typically mention these things in Southern Cali? Do I have any recourse against the agent? If the contract was already signed by both parties, is it bound even if the agent is found to be of fault?

Unfortunately the listing agent has the main fiduciary responsibility to the seller first, then to you. I'm not surprised that they didn't advise you to request the seller pay a portion of the closing costs and/or your lender costs. I think it varies by agent to agent, but I know that I always ask my buyers if they want to request the seller to chip in for closing costs and/or lender costs. You have the right to exit that contract by speaking to the agent and/or his broker. Hope things work out.

 

[orgopeach_IHB]

I have the right to exit but I give up my deposit right? I understand the controversy of dual agent. Has there been any legal precedent over fiduciary responsibility of a dual agent to buyer? I know the answer is probably no but is there any grace period at all to a real estate contract if not expressly defined.

 

[awgee_IHB]

Okay, I give. Except for Ipo and myself, nobody else should enter a purchase contract without a buyer's agent.

Okay, maybe not Ipo either.

 

[stepping_up_IHB]

Have you already signed off on all the contingency removals? I think the standard for inspection is 17 days, which means any time within those 17 days you can decide that you don't like something about the house and cancel with a full refund of your deposit.

 

[orgopeach_IHB]

No the contingency approvals have not been removed. We have not moved into escrow. Can I back out for whatever reason in 17 days? Does the reason need to be substantial? Can I just say I don't like the house?

 

[IrvineRealtor_IHB]

No the contingency approvals have not been removed. We have not moved into escrow. Can I back out for whatever reason in 17 days? Yes . Does the reason need to be substantial? No . Can I just say I don't like the house? Yes .

You should be asking these questions of your agent, who will give you the same answer and a CAR form CC (Cancellation of Contract, Release of Deposit and Joint Escrow Instructions 04/09)

Good luck,

-IR2

 

[graphrix_IHB]

^^^ And after you do that you should contact IR2 to hire him, so this kind of thing doesn't happen again. You get what you pay for, and sometimes it is just best to pay for it.

 

[stepping_up_IHB]

No the contingency approvals have not been removed. We have not moved into escrow. Can I back out for whatever reason in 17 days? Yes . Does the reason need to be substantial? No . Can I just say I don't like the house? Yes .

You should be asking these questions of your agent, who will give you the same answer and a CAR form CC (Cancellation of Contract, Release of Deposit and Joint Escrow Instructions 04/09)

Good luck,

-IR2

Yeah IR except agent is just looking to double end and make a big fat one here.

Peach, back out ASAP. Get another agent ASAP in case the listing agent tries to stymie you. If you still want the house, then have your new agent present your offer. Note what IR, an extremely seasoned and professional realtor said about the contingencies. You want someone like him in your court.

 

[usctrojanman29_IHB]

I have the right to exit but I give up my deposit right? I understand the controversy of dual agent. Has there been any legal precedent over fiduciary responsibility of a dual agent to buyer? I know the answer is probably no but is there any grace period at all to a real estate contract if not expressly defined.

As IR2 has stated, you can back out of the purchase contract at any time for almost any reason as long as you have not removed the contingencies via the CAR form IR2 mentioned without losing your deposit. You also have the right to exit the agent agreement contract at any time for any reason. I don't think that there has been any legal precedent over fiduciary responsibility over the dual agency of a listing agent. You have to remember that the NAR and CAR are very powerful lobbying parties.

 

[orgopeach_IHB]

At this point will there be any fees or costs incurred ("less fees and costs") per the cancellation contract? I wrote an email to my dual agent saying that I wish to cancel the contract and said I was not comfortable with the dual agency. We have not made it to escrow yet. We made the offer on Monday, signed by both parties and submitted deposit check. Other than that nothing has happened. I hope not to be screwed over by the agent if she turns out to be malicious. Also am I cancelling under 14B(3) of a purchase contract? I really want to get the full amount of my deposit back. I put in 3%. Has anyone experienced seller or agent not willing to release deposit?

 

[IrvineRenter_IHB]

At this point will there be any fees or costs incurred ("less fees and costs") per the cancellation contract? I wrote an email to my dual agent saying that I wish to cancel the contract and said I was not comfortable with the dual agency. We have not made it to escrow yet. We made the offer on Monday, signed by both parties and submitted deposit check. Other than that nothing has happened. I hope not to be screwed over by the agent if she turns out to be malicious. Also am I cancelling under 14B(3) of a purchase contract? I really want to get the full amount of my deposit back. I put in 3%. Has anyone experienced seller or agent not willing to release deposit?

It is unlikely that the agent will try to rip you off and try to keep any amount of your deposit.

I would like to point out that you may have inadvertently stumbled into a great opportunity to reduce your cost. Once you had the listing agent also become your buyer's agent in a dual agency situation, the agent now stands to make 6% instead of 3%. By threatening to cancel the contract, the agent now stands to make 0%. When the agent contacts you and asks you what would make you change your mind, tell him or her that you are acting as your own buyers agent, and you want a 3% reduction in the sales price in order to proceed. If the agent is rational, he or she will reduce their commission by 3% and close the deal. Since you are really planning to cancel the contract, your threat is real, and this agent will not want to see a deal fall apart because of a dual agency problem; 3% is better than 0%.

Expect plenty of resistance (including lies and threats) because the agent will still want 6% on the deal. If you stick to your guns and tell the agent it is 3% or 0%, he or she will capitulate.

 

[orgopeach_IHB]

Should I flat out ask if the agent is willing to give up part of his/her commission, or should I wait until he/she offers it? The agent said there was a backup offer in the pipeline which may or may not be true.

 

[IrvineRenter_IHB]

Should I flat out ask if the agent is willing to give up part of his/her commission, or should I wait until he/she offers it? The agent said there was a backup offer in the pipeline which may or may not be true.

In today's market there probably are back-up offers, but if the seller signed the agreement, then they must want to go through escrow with your offer. Reducing the commission does not change anything about your offer or cause the sellers to obtain anything less out of the deal.

If the agent rejects your offer and goes to a backup offer, I suggest you write a letter directly to the owners explaining that you would have and could have gone through with the deal, but the greed of the agent made the deal fall through. If the back up offer is for less money, the agent will have some serious explaining to do.

BTW, this is not a particularly good time to buy in Irvine. If this deal falls through, you will be better off financially if you wait another year.

 

[orgopeach_IHB]

Should I flat out ask if the agent is willing to give up part of his/her commission, or should I wait until he/she offers it? The agent said there was a backup offer in the pipeline which may or may not be true.

In today's market there probably are back-up offers, but if the seller signed the agreement, then they must want to go through escrow with your offer. Reducing the commission does not change anything about your offer or cause the sellers to obtain anything less out of the deal.

If the agent rejects your offer and goes to a backup offer, I suggest you write a letter directly to the owners explaining that you would have and could have gone through with the deal, but the greed of the agent made the deal fall through. If the back up offer is for less money, the agent will have some serious explaining to do.

BTW, this is not a particularly good time to buy in Irvine. If this deal falls through, you will be better off financially if you wait another year.

I am getting married, and my fiance wants to get a house this year. Unfortunately I cannot wait.

Question 1:

The reduction in sales price needs to be approved by the seller correct? So does the agent say I will take less commission to the seller so you can reduce the sale price. Is this how this works? Pardon my ignorance.

Question 2:

The conversation would go:

I want to cancel. I'm not comfortable with the dual agency arrangement but would be willing to continue if the purchase price is 2% less?

 

[IrvineRenter_IHB]

Should I flat out ask if the agent is willing to give up part of his/her commission, or should I wait until he/she offers it? The agent said there was a backup offer in the pipeline which may or may not be true.

In today's market there probably are back-up offers, but if the seller signed the agreement, then they must want to go through escrow with your offer. Reducing the commission does not change anything about your offer or cause the sellers to obtain anything less out of the deal.

If the agent rejects your offer and goes to a backup offer, I suggest you write a letter directly to the owners explaining that you would have and could have gone through with the deal, but the greed of the agent made the deal fall through. If the back up offer is for less money, the agent will have some serious explaining to do.

BTW, this is not a particularly good time to buy in Irvine. If this deal falls through, you will be better off financially if you wait another year.

I am getting married, and my fiance wants to get a house this year. Unfortunately I cannot wait.

The reduction in sales price needs to be approved by the seller correct? So does the agent say I will take less commission to the seller so you can reduce the sale price. Is this how this works? Pardon my ignorance.

Yes, the agent will need to redraft a purchase and sale agreement, but when he fills out the form of estimated proceeds to the seller, the bottom line will not change. The new terms will become part of the escrow instructions so the closing agent will know to cut the agent a smaller check.

 

[usctrojanman29_IHB]

At this point will there be any fees or costs incurred ("less fees and costs") per the cancellation contract? I wrote an email to my dual agent saying that I wish to cancel the contract and said I was not comfortable with the dual agency. We have not made it to escrow yet. We made the offer on Monday, signed by both parties and submitted deposit check. Other than that nothing has happened. I hope not to be screwed over by the agent if she turns out to be malicious. Also am I cancelling under 14B(3) of a purchase contract? I really want to get the full amount of my deposit back. I put in 3%. Has anyone experienced seller or agent not willing to release deposit?

It is unlikely that the agent will try to rip you off and try to keep any amount of your deposit.

I would like to point out that you may have inadvertently stumbled into a great opportunity to reduce your cost. Once you had the listing agent also become your buyer's agent in a dual agency situation, the agent now stands to make 6% instead of 3%. By threatening to cancel the contract, the agent now stands to make 0%. When the agent contacts you and asks you what would make you change your mind, tell him or her that you are acting as your own buyers agent, and you want a 3% reduction in the sales price in order to proceed. If the agent is rational, he or she will reduce their commission by 3% and close the deal. Since you are really planning to cancel the contract, your threat is real, and this agent will not want to see a deal fall apart because of a dual agency problem; 3% is better than 0%.

Expect plenty of resistance (including lies and threats) because the agent will still want 6% on the deal. If you stick to your guns and tell the agent it is 3% or 0%, he or she will capitulate.

This is some great advice. Use the leverage that you have on this realtor to get a 2-3% reduction in the sales price. Stand firm and don't waiver. You are not risking losing anything by backing out of the transaction (worst case scenario if the agent doesn't cut his/her commission).

 

[awgee_IHB]

At this point will there be any fees or costs incurred ("less fees and costs") per the cancellation contract? I wrote an email to my dual agent saying that I wish to cancel the contract and said I was not comfortable with the dual agency. We have not made it to escrow yet. We made the offer on Monday, signed by both parties and submitted deposit check. Other than that nothing has happened. I hope not to be screwed over by the agent if she turns out to be malicious. Also am I cancelling under 14B(3) of a purchase contract? I really want to get the full amount of my deposit back. I put in 3%. Has anyone experienced seller or agent not willing to release deposit?

It is unlikely that the agent will try to rip you off and try to keep any amount of your deposit.

I would like to point out that you may have inadvertently stumbled into a great opportunity to reduce your cost. Once you had the listing agent also become your buyer's agent in a dual agency situation, the agent now stands to make 6% instead of 3%. By threatening to cancel the contract, the agent now stands to make 0%. When the agent contacts you and asks you what would make you change your mind, tell him or her that you are acting as your own buyers agent, and you want a 3% reduction in the sales price in order to proceed. If the agent is rational, he or she will reduce their commission by 3% and close the deal. Since you are really planning to cancel the contract, your threat is real, and this agent will not want to see a deal fall apart because of a dual agency problem; 3% is better than 0%.

Expect plenty of resistance (including lies and threats) because the agent will still want 6% on the deal. If you stick to your guns and tell the agent it is 3% or 0%, he or she will capitulate.

This is some great advice. Use the leverage that you have on this realtor to get a 2-3% reduction in the sales price. Stand firm and don't waiver. You are not risking losing anything by backing out of the transaction (worst case scenario if the agent doesn't cut his/her commission).

Oh, now it is great advice. But, when I say to act as your own agent and negotiate 3% out of the sales price, everybody says that buyers are too unsophisticated and can not represent themselves. Especially you, Troj.

If you do it my way, you do not even have to threaten or coerce. And it is much more straight forward and upfront.

 

[usctrojanman29_IHB]

At this point will there be any fees or costs incurred ("less fees and costs") per the cancellation contract? I wrote an email to my dual agent saying that I wish to cancel the contract and said I was not comfortable with the dual agency. We have not made it to escrow yet. We made the offer on Monday, signed by both parties and submitted deposit check. Other than that nothing has happened. I hope not to be screwed over by the agent if she turns out to be malicious. Also am I cancelling under 14B(3) of a purchase contract? I really want to get the full amount of my deposit back. I put in 3%. Has anyone experienced seller or agent not willing to release deposit?

It is unlikely that the agent will try to rip you off and try to keep any amount of your deposit.

I would like to point out that you may have inadvertently stumbled into a great opportunity to reduce your cost. Once you had the listing agent also become your buyer's agent in a dual agency situation, the agent now stands to make 6% instead of 3%. By threatening to cancel the contract, the agent now stands to make 0%. When the agent contacts you and asks you what would make you change your mind, tell him or her that you are acting as your own buyers agent, and you want a 3% reduction in the sales price in order to proceed. If the agent is rational, he or she will reduce their commission by 3% and close the deal. Since you are really planning to cancel the contract, your threat is real, and this agent will not want to see a deal fall apart because of a dual agency problem; 3% is better than 0%.

Expect plenty of resistance (including lies and threats) because the agent will still want 6% on the deal. If you stick to your guns and tell the agent it is 3% or 0%, he or she will capitulate.

This is some great advice. Use the leverage that you have on this realtor to get a 2-3% reduction in the sales price. Stand firm and don't waiver. You are not risking losing anything by backing out of the transaction (worst case scenario if the agent doesn't cut his/her commission).

Oh, now it is great advice. But, when I say to act as your own agent and negotiate 3% out of the sales price, everybody says that buyers are too unsophisticated and can not represent themselves. Especially you, Troj.

If you do it my way, you do not even have to threaten or coerce. And it is much more straight forward and upfront.

Well, since he's already gone down the line and has the listing agent over a somewhat barrel with a signed offer so now he has leverage. I think it would be great if he would use that leverage to his advantage. If a buyer is comfortable in representing him/herself then buy all means a buyer's agent is not necessary and the arguement to reduce the sales price by the buyside commission should be made. I don't think I've ever stated that buyers need to use a buyer's agent. If the majority of buyers were as knowledgable and diligent as you and represented themselves, we would have never gotten into this mess in the first place. Besides, I've always been of the mindset that the buyside is easier to handle than the sellside and agents should kick back of portion of their commissions as thanks for the business. I offer my services for whoever wants to use them.