Buying or Selling a Home/contract


   My wife and I are looking to buy a retirement home.  We have picked a couple of areas, one out of state.  We have had 3 agents show us homes in different areas.  One of the agents keeps handing us a contract and tells us we have to sign.  The contract says she is our exclusive agent and something about a 3 1/2 commission that we would help pay if the sellers agent doesn't give that much.  I said "You are not going to show us houses out of state or far away."  She said "Don't worry I would let you out of the contract if you bought far away."   
  We feel uncomfortable because if we buy in one of the other areas from another agent what does that mean? We would have signed that she is our only agent. Can we just tell her that we don't want to sign the contract or that we will sign when she finds us the right house?
   Also when we find the right house we are to put down money.  How much should we put down and what happens if the deal falls through, do we get our money back?

Hey, Dan.

All agents should use a contract regarding exclusivity. However, many people balk at signing a contract before any work is done. The contract means that if she does the work, she gets paid. Without a contract, she could do the work and you could, at the last minute, use a different agent to buy, giving that agent who did not work 100% of the commission and the agent who did 100% of the work getting 0% commission.

However, the 3˝% commission is too high. Buyer's agents typically get 50% of the listing broker's commission. That's why it's important for all buyers to use an agent because the Seller is paying the Buyer's agent. So let's say that the Seller has signed a contract providing a commission of 6% to the listing broker's office. The Seller's agent will get 3% of that and the Buyer's agent will get 3%. Then the two broker's take their share out of the 3%.

It's been a decade or longer since Seller's agents have provided 3˝%. That would mean a listing broker fee of 7%, and that's just not in the ball park in today's world. I think the average broker fee is around 5.6% right now.

If you sign an exclusive contract with an agent, that agent doesn't necessarily have to let you out of the contract if you bought outside of the agent's territory or area of expertise. What usually happens is that the agent refers you to an agent in the area you want to buy and then gets a referral fee.

As you already discovered, only one of the three agents wants you to sign a contract, so it is possible to find agents who will do the work and hope for the best without having a contract in place. Again, though, personally I'm a proponent of contracts because your hiring that person. Look at yourself as the employer and your agent as the employee. Employers like to have employee contracts in place because they tell both sides what is expected of them.

As to the down payment, a typical down payment is 10% of the purchase offer price. That can depend on the type of loan you are getting, though, so you might have to come up with another 10% before your loan closes.

If the deal falls through for a legitimate reason, typically spelled out in the purchase contract, which is why you need a good agent working in your best interests, you'll get your money back. Sometimes, though, people have different views on what a "legitimate reason" is, which sometimes means you'll have to wait until a court determines if your reason is legitimate.

Again, get yourself the best agent you can. Don't hesitate to interview them. After all, you're the employer looking for an employee.

Hope that helps.


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Russel Ray


Through home inspections, I provide an education about real estate. I'm one of those rare home inspectors who has been involved in real estate in many different capacities: as a Realtor (in Texas), as a property investor/flipper, as a teacher, and as a marketing expert (for Realtors and home inspectors). I believe that my experience as a Realtor and property investor provides me with a different viewpoint about home inspections in that I work for my Clients, but when there are other people involved in helping my Clients, then I firmly believe in helping them, too. That includes Realtors (both the seller's and the buyer's), repair professionals (e.g., plumbers, electricians, etc.). If I can get all the players (seller, seller's Realtor, buyer, buyer's Realtor, and repair professionals) playing in the same sandbox together to accomplish goals as a TEAM (Together Everyone Accomplishes More), then I believe I have succeeded in my job as a home inspector. My profession is, in my opinion, much more than simply documenting the condition of a property and then take the money and run. I am also a rare breed in that I don't believe that one inspection fits the needs of all Clients, and I have led the industry in understanding that fact. For example, the goals of a property investor are far different than the goals of someone buying a property to live in. The goals of a seller (a pre-listing inspection) are far different than the goals of a buyer (a pre-purchase inspection). To that end, I offer 14 different types of inspections, e.g., STANDARD, LIST, RENTER, BASIC, MAINTENANCE, SPOT, and more. I believe in giving the benefit of the doubt to all professionals in whatever industry they represent until they prove me wrong.


Over 42 years in all aspects of real estate--building homes, renovating homes, inspecting homes, Realtor.

National Association of Certified Home Inspector, Better Business Bureau of San Diego

Graduate of Texas A&M University; College Station, Texas

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