Buying or Selling a Home/Negotiating a contract
Dear Ms. Lisa Webber,
Thank you very much for volunteering on this site!
And thank you for assisting military buyers/sellers! We are also military but at this time we are moving from LA to TX. Our question is generic enough so that you should have no problem answering it. Background: We are selling a house in Louisiana as a 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 your help!
Hi Pablo, You may want to see if you can find a professional in your area to help you with this. Ideally a Realtor who may be able to help you get through the details on an hourly basis or a real estate attorney who is familiar with contracts. I don't know how knowledgeable the person that entered the listing for $400 is, they may be primarily a paper pusher so you may want to find a different agent or attorney; one who is on the street, regularly working with contract and deals and can advise you.
You will need to contact the buyer's lender to discuss the loan and their qualifications. The agent should have supplied you with a pre-qualification letter from the lender stating that they are qualified for their loan. You need to know why they can't buy now. You can set up the paperwork as a pre-settlement occupancy which will continue as a rental agreement if the property doesn't settle and that should be something that a Realtor could handle for you. If the buyer wrote a check for $5000 for the earnest money deposit, specify that the deposit with turn into a security deposit if the house doesn't close and continues to be a rental. You could have the buyer's agent do this for you. My only concern is that you don't have representation and she is representing the buyer's interests not yours but as a Realtor, she does have a duty to be fair to all parties.
The compensation listed in the multiple list system is a promise-to-pay from the Broker who listed your property to the buyer's agent. You should have signed listing paperwork prior to listing the home in the multiple list system that states that you will pay the agent a certain amount of commission and the agent entered that into the system. As agents, we can see what a seller is offering to the buyer's agent.
Prior to settlement, you'll get a HUD-1 or settlement statement which will list all of the expenses including the commission. You should have a net sheet made up which will show what you will walk away with. Do you know what the transfer and recordation taxes are in your state? Typically either buyer or seller pays them or they are split 50/50 (which is customary in Maryland). That will be a potential charge to you in addition to the buyer's agent commission, any fees to the title company or title attorney and any potential pro-rations of property taxes.
I hope this helps - good luck to you!