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Buying or Selling a Home/Agent compensation, contract issues


Dear Sir, Thank you very much for volunteering on this site!
Background:    We are selling a house in Louisiana as an FSBO.    (We are doing FSBO mostly due to major financial challenges we are about to face).   
We have paid an agent $400 to give our home an MLS number for 6 months.   As part of the listing, we have agreed to compensate a buyer’s agent some amount.    And sure enough, whenever we are contacted by an agent, one of the first things they wish to reconfirm, is if we are indeed willing to pay them a (usually specified amount of) commission.  
We just recently received an offer from an agent.    (She has the same last name as the buyer  and we  learned, she is the ex-wife of the buyer).    
In conversations with the agent there has not been any mention of compensation for her, nor is there anything in the contract.   We are a bit puzzled about this.   If it is not in the contract, would she have any legal basis for asking us for anything later?
The offer stipulated – among other things – the following:    the buyer wants to rent my house from June 1 till September 1 and then buying it.    Buyer doesn’t have a house to sell but we learned he is the Air National Guard and will deploy sometimes in September.   (We wonder if maybe the increased pay then is factored in and is the reason, or if he doesn’t want to break his apt lease).   
Should I be concerned about the terms of this contract?    
How could I make sure the buyer will be able to buy after two months of already living in my house?    
What should I put in the contract to protect my interest?
I am thinking about proposing a rental agreement for $40/day – starting on 1 June - until the closing.  
But while hoping for the best, would like to prepare for the worst and would like to also propose them an agreement that would state that if by 1 September the buyer cannot buy the home then the agreement will convert to a conventional rental of $1900/month w/ a $5000 security deposit?
Also, should I be concerned that the buyer's agent – as of yet - has not asked for any compensation from me?      Could this come up later if it is not in the contract?

Once again, thank you VERY MUCH for volunteering in this site and helping out other people!    


Pablo Durissimo

Hello Pablo - There are local customs and procedures which differ from state to state, and contract to contract so you will need to review your listing (MLS) contract with the listing broker. In most cases if the property is in the MLS there is an offer of compensation extended to all brokers who are also a member of the same MLS. The owner agrees to compensate the listing broker the entire compensation and then the listing broker compensates the buyers broker as a condition of closing. Your contract will identify if this is accurate in your area. In addition, residential purchase contracts usually don't include offers of compensation within the terms of the contract, it is usually by a separate agreement between the listing broker and the homeowners as mentioned previous. There unfortunately is no guarantee that the buyer will be able to close in September... This type of situation is typically referred to as a Lease Purchase or Lease Option. These rarely work out as desired. There is no teeth in the rental agreement (less than 12 months) and a rental agreement does not have terms that control the purchase. You should honestly have representation in this type of transaction to protect your interest. In a lease to purchase there is typically both a lease/rental agreement AND a residential purchase contract. The rental agreement covers the rental period and the purchase contract covers the terms of purchase. You will want to also look at the terms of financing in the purchase contract boiler plate. Many times the buyer has until just before closing to cancel the contract if the intended finance terms are not met either by due to the terms not being met or the buyers inability to qualify, and typically the buyer would receive their earnest money back as well. This could mean the sale doesnt happen and you dont get any earnest money.. but more importantly you still have a house to sell and did you miss the buying season? Usually people buy houses during school breaks so that everyone can get settled before the school year commences.. once this season passes, unless you are in a resort area, the market softens and the marketing time and process is much more difficult. You should definitely as you indicated consider the worst and what would it do to your situation if you didnt sell? Contractually, you can add additional language to the purchase contract which would make the earnest money non-refundable under any condition, and the amount could be such that the buyer would be more concerned about doing everything possible to close/qualify..  however you would need to remove any language that might allow the buyer to a return of the earnest money. I don't recommend using earnest money this way however there are few things you can do to ensure the other party is diligent in their quest. Remember it should be a conventional rental and a conventional purchase contract. Dont do anything in the rental agreement that is unlike a normal rental... this is where attorneys enjoy to get involved. Rather complete two separate agreements with the proper terms in each... rental terms in rental agreement and purchase terns in the purchase agreement. You could even make the rental agreement for a longer term with a clause that should the tenant purchase this property this lease shall expire/terminate upon closing... also remember that the Landlord Tenant Act may prevent you from encumbering/selling the property while there is a tentant... what if another buyer were to come along and desire to close right away? Perhaps the best thing you could do would be to rent it to this person and tell them once they are ready to buy, submit a purchase contract... in the meantime, just rent it to them. This is possibly the best way for you to achieve YOUR goal, however you still would be unable to close until the end of the rental agreement... so dont make it too long a time period. Please excuse the delay in my reply due to the Memorial Day Weekend. Please remember I am not an attorney and this is not to be considered legal advice, rather, this is real estate information that any experienced REALTOR should be able to provide. It is always appropriate and recommended to seek legal advice if you are concerned for your rights under the laws in your state. If you should have any additional questions please reply to this post.

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National Association of REALTORS Board of Director (2011, 2012) Arizona Real Estate Salesperson License (1991-1995), Arizona Real Estate Brokers License (1995-Present), Arizona Association of REALTORS Board of Directors (2008-2013), Arizona Association of REALTORS Professional Standards Committee (2008-2012), AAR Certified NAR Code of Ethics and Professional Standards Instructor, Southeast Valley Regional Association of REALTORS President (2012) Southeast Valley Regional Association of REALTORS Board of Directors (2008-2013), Southeast Valley Regional Association of REALTORS Grievance Committee Chairperson (1998-2007), Southeast Valley Regional Association of REALTORS Bylaws Committee (2008-2010), Southeast Valley Regional Association of REALTORS Education Committee (2007-09), Arizona Association of REALTORS Forms Committee - Residential Purchase Contract (2005), Arizona Association of REALTORS Forms Committee - Residential Rental Agreement (2008), Arizona Association of REALTORS Forms Committee - Buyer Broker Agreement (2009), Arizona Association of REALTORS Presidents Advisory Group, Road to Professionalism (2009), Arizona Association of REALTORS GRI Curriculum Review Committee (2009), Arizona Department of Real Estate, Commissioner's Education Advisory Group Sub-Panel B (2010) Arizona Department of Real Estate, Commissioner's Statute and License Review Committee (2007)

National Association of REALTORS, Arizona Association of REALTORS, Arizona Real Estate Educators Association (AZREEA), Arizona Regional Multiple Listing System (ARMLS), American Notary Association, Southeast Valley Regional Association of REALTORS (SEVRAR), Southeast Valley Regional Association of REALTORS Women's Council of REALTORS (2010-Present), Phoenix Association of REALTORS (1994-2000, 2005-2009), Scottsdale Association of REALTORS (1994-2000, 2005-2009), Maricopa/Glendale Association of REALTORS (1994-2000, 2005-2009),

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- Certified NAR Code of Ethics and Professional Standards Instructor, Graduate REALTOR Institute (1993), Certified Negotiation Expert (CNE), Over 100 Hours of annual real estate continuing education, Annual Ethics and Professional Standards Development Workshops as required by the National Association of REALTORS, Approx. 36 hours of NAR Code of Ethics training annually, Numerous IDW, Seminars and Train the Trainer programs, Business Management Degree - 1981

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2009 REALTOR of the Year Award, Southeast Valley Regional Association of REALTORS (10,000+ Members), Double Platinum Production Award ($45,000,000 Sales Volume)- Keller Williams Realty Int'l (2001), Top 15 Sales Production Keller Williams Realty International (2001), Top 5 Sales Producation Keller Williams Realty Southwest Region (2001), Top Recruiter Award - Keller Williams Realty Int'l, SW Region (2002), Who's Who in U.S. Executive (1983), Who's Who in U.S. Real Estate Professionals (2007)

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