Buying or Selling a Home/Negotiating a contract, dealing with commission issues
Thank you very much for volunteering on this site! While you worked in Texas and California, our scenario is in Louisiana but the questions I have are generic enough so that you should have no problem answering them. 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). - BTW, we are moving to Texas! :)
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!
Your questions are exactly why we have Realtors. I'm not a Realtor, but I'll attempt to answer your questions without getting into the realm of what Realtors do since they are licensed in all 50 states, and practicing real estate without a license could get me into hot water!
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.
You say that as part of the listing, you have agreed to compensate a buyer's agent some amount. But then you say that there isn't anything in the contract about compensation. The MLS listing in most states, and I believe Louisiana is one of them, is considered part of the purchase contract. The person who listed your home should have had you sign a listing contract, which should state any compensation to be provided to buyers' agent. For $400, I'm pretty sure it does. If it doesn't, well, I don't even want to go there.
Most agents will ask a FSBO about compensation, mainly because FSBOs don't usually show up in the MLS. So those who are asking about it might have simply found you by the FSBO sign located in your yard or window. The agent who didn't ask might have found you in the MLS where the compensation was stated. That's what I suspect is going on here.
However, if compensation is not listed, I would make sure it is. If it's an oversight by the agent/buyer, perhaps from lack of experience, but it is in the MLS listing, then, yes, the agent/buyer could definitely come after you for compensation.
If I were in your position, I would not rent the house to anyone before close of escrow. At that point, you could do a Rental Agreement, but I think you're opening yourself to all sorts of problems in this case.
Tenants have lots of rights, and squatters #which your tenant would become if he didn't buy the house but continued to live there# sometimes have even more rights. You should be very wary of this contract.
$40 a day is only $1200 a month but you're thinking about a "conventional rental of $1900/month with a $5000 security deposit." I think you should offer a conventional rental for two months and then, if they want to buy, they can. But to offer a low rental with no security deposit for two months is just asking for trouble. I've seen too many like this turn into absolute disasters when the buyer destroys or breaks stuff and doesn't repair/replace and then moves out without buying.
Also be aware that many states limit the security deposit to the first and last month's total, so $5000 might not be legal. I'm not familiar enough with Louisiana anymore to know and I couldn't find out anything specific from my sources, so beware. There could be civil penalties for "gouging" tenants on security deposits.
Be up front with your concerns, especially the compensation for the other agent.
Hope that helps.