Expert: Karyn Foley - 9/23/2007

Question
QUESTION: I am frustrated with my agent and have told him so.  We found a house we love but he insisted on us looking at another house that is pricier.  We told him we like the one we picked out and want to put a contract on it today.  It is a FSBO.  First he told me he could not represent us 1) because the FSBO would not pay a commision, 2) could not write a contract for us even though he was our realtor because he would be practicing law and his company would not allow him to write a contract where a commission was not involved.  And scolded me very strongly against going it alone.  I stated then I would get a real estate attorney to help.  I won't go into detail but it involved another lecture to the point I just let him vent.  It was an extremely unpleasant conversation.  One hour later he stated that he found out the FSBO would work with a buyer agent, I guess and pay a small commission and since he was a buyer agent for us he could represent us.  I was very clear that I wanted to make an offer today and I wanted him to make that happen.  He stated he had to go back to the office and put the paperwork together, I gave him the price and the conditions and had three simple questions of the owner but that should not hold up the agent from writing the contract.  I called and left numerous messages and waited over eight hours before my agent returned my call and he stated we now have a contract on our home, but he has not had a chance to review it.  So he stated he needed to deal with that because of the deadline and he felt that we needed to counter it so he wanted to deal with both offers together.  I told him I did not want to jeopordize losing the house we were interested in and wanted and expected him to submit an offer today, which obviously did not happen.  He stated he would call me tomorow and schedule a time when he could stop by and have us deal with the offer we wanted to make on a house, but still wants to stall on it until we handle the offer on our house.  I told him these are two different issues.  He should have handled our request this morning to place an offer on the house we want to purchase, especially since the offer on our house did not come in until sometime late afternoon.  I am frustrated and don't know what to do.  Who pays him for the purchase of the FSBO property?  Does he get a commission from us for representing us?  I don't know what to do because he is stalling for some reason on the house we want to purchase.

ANSWER: Dear Rose:
 I am sorry you have this problem, and I will try to help, a bit at a time.  Can you buy another home before you have sold your home?  If not, and if it would be subject to the successful close of the transaction on your home, I suggest handling the sale of your property first.  
 With reference to the FISBO, did your agent take you inside and show you the home?  Did he obtain a confirmation that the seller of that home would pay him a small commission? If so, then demand to make an offer on the home now.  If he will not oblige, then call your agent's manager,or the owner of the company where he is working, and discuss your situation with him/her.  Your agent should be working for you, and doing what you request with the FISBO.  If your agent did not show you the home, then you probably have no obligation to your agent.  If the agent still refuses to proceed on the FISBO and you haven't yet seen the home with him/her, then go yourself.  I agree with your agent about going it alone, but I absolutely agree with you that a real estate attorney can do as good a job representing you.
 Keep in mind, there is a time factor involvede with the offer on your home.  YOu do not want to jeopardize a potential sale, so attend to your office immediately with your agent.  Once your have issued an acceptance or counter proposal on your home, make certain your agent states that the offer on the FISBO is subject to the successful close of the transaction on your home if you cannot buy before you sell.  If you can go ahead and purchase a new home without selling, it is, of course, not necessary to include that clause.  You must realize, though, that it is a buyer's market in most areas.  If you hesitate too long on dealing with the offer on your home that is now on the table, your buyer may just decide to go and find another home.  Once you sell your home, you become a hot buyer and can negotiate from a position of strength.  
 So you see, the two can very well be related and dependant upon one another.  Two issues, yes, but they might just go hand in hand unless you have the ready cash to purchase without selling.  Lenders today are very cautious, so you should get a pre-approval letter from your lender that makes you a strong, solid buyer.
 If you go ahead and sell your house, and decide not to purchase the FISBO, and have lost confidence in your agent to represent you on the buying end, then choose another agent you fell more in tune with, and more energetic.  But, I truly feel your agent may have your best interests at heart, so relax, slow down.  There are always going to be a good value out there for you.  There may not always be a good buyer out there for your house.
 Take it easy.  Let me know how things work out, and want you ultimately do.  Good luck, and get back in touch so I can answer any other questions you have.  Karyn Foley

---------- FOLLOW-UP ----------

QUESTION: Thank you for your quick response to my concerns.  I can buy the house w/o selling my current home.  I have a pre-approval letter that states I'm qualified for the amount w/o selling my current home.  Yes, my agent took me inside to view the home and yes the seller is willing to pay my agent a small commission.  My next question is, should I have the lender remove the portion that states that I do not need to sell my current home in order to purchase the new one?  The pre-approval letter is for an amount I was thinking of offering but now I want to offer less, should I get a new pre-approval letter with the lower price so FSBO will be willing to negotiate.  If he sees I can qualify for more he might not be so willing to negotiate for a lower rate and I believe he is motivated?

Answer
Dear Rose:
Yes, you should now continue to negotiate with your agent for the purchase of the FISBO.  You should keep the wording in your pre-approval letter that you can purchase without selling; that makes you a real buyer.  Also, it gives your offer a great deal of strength.  You could reduce the amount for which you are qualified; however, that makes you a strong buyer as well.  You might, instead, have your agent support your lower offer by saying that carrying two homes in today's market makes all buyers nervous.  You, though, are willing to do that until your own home sells.  Thus, the lower price gives you a comfort level, because you never know how long it will take to sell or how long you will have the burden of carrying two homes.  Your agent should state that you are gutsy enough to do it, but obviously you wish to do it where it has less financial impact.  You could also simply state no, if the seller keeps countering with a higher price.  No is a pretty good word, if you say it nicely.  After all, you are a qualified buyer who does not need to sell before you buy.  You are indeed in the minority, and your agent should make that clear.  You could always walk away as well, or simply not respond if the seller gets greedy.  Silence is powerful. Plus, you could go back again in a couple of weeks in the event the FISBO doesn't sell.
 What also seems to happen is that when you sell your home, you, as a buyer, become more confident.  You go out looking at other homes, and you see how eager those sellers are to negotiate a deal with you.  You may even find something you like better that offers more for the same price.  Be cool, try not to let your nervousness show.  
 Now, if you are certain that you are absolutely crazy about the house, then just go for it.  Some people who sell decide to rent for a bit, especially when the slowest season of the year is approaching.  If you have children and pets this is a difficult decision to make, but you will come out ahead.
 The above are tough calls, but so is life.  I think you are in a great position, and try to negotiate with the buyer on your present home.  As I said, it is a buyer's market, so be smart and concede to your buyer on some points. You don't want to lose that buyer!
 I feel certain that you are smart and lucky, so again, I wish you success!
KARYN FOLEY