Expert: Karyn Foley - 9/20/2007

Question
[I apologize - I just sent this question, but had typed the incorrect e-mail address.]

Hi Karyn,
I've looked through your past answers and didn't see this precise question, so I hope I'm not being redundant. I've been working with an agent to buy a property. We looked at several properties, although ultimately I located and contacted the property in which I'm now interested. To be clear, I am NOT seeking to disengage my agent because I happened to find the property; rather, I've just found the agent to be unhelpful - she knows less than I do about the neighborhood and the property, she has not been timely in her inquiries about the property, and she has even potentially interfered with my purchase of the property by disclosing to the seller my intentions.

There is no contract in place between my agent and me. We've looked at several properties, which I realize is not binding in and of itself, but (possibly) significantly, the agent has represented herself as my agent to the developer (the property is a new development). On the other hand, I am close to making an offer, so I don't know how much more harm the agent can do at this point. At the same time, I hate the idea of this incompetent agent getting a significant commission from this sale. Any advice?

Thank you for your time.

Answer
Dear Diana:
Thank you for showing concern to do the right thing and wanting to go in the ethical and legal direction.  Unless you have signed some kind of broker-buyer agreement, you may have no obligation; also, these agreements are not necessarily binding.  With reference to a particular development,most developer's offices state specifically that in order for an agent to be paid either a commission or a referral fee for showing a buyer a home in that particular development, there must be a document signed by both agent and buyer stating that this agent introduced and showed this development to the buyer.  Also, it is usually mandatory that this paper be signed at the office at the development at the specific first time the buyer is physically brought their.  So, from what you are saying, this has not been done.  To be certain, and to find out the rules of that particular developer, you should make a call and find out all about their procedures and if they have been followed by the agent.  If your agent did not take you there, then I feel you most likely have no obligation.
 Because you are not satisifed with the due diligence of your agent, I am wondering why you are still using that agent.  I respect loyalty, but your first obligation is to yourself as the buyer.  Your agent should be knowledgeable about the neighborhoods in which you are looking, they should be extremely helpful, and not interfering with anything you are doing or purchasing.  If she is interferring with you and your purchase, she is looking for problems.  It is not ethical to stand in the way of a buyer making a purchase; she should know better!
 Now, perhaps she has done what she needs to do in order to earn that commission or referral fee from the developer.  If so, then let it go.  And, once the paperwork has been signed, then direct your questions to the members of the developer's staff; they may be more timely and helpful to you.  I do not honestly feel that her disclosing to the seller that you are interested has been harmful to you.
Keep in mind that the developer usually builds commissions to be paid to agents into the overall financial picture of the development.  It should not detract from any final sales price or detract from your negotiations.  It is a buyers market in most parts of the country.  The developer may not wish to go down in price much, if at all, and that has nothing to do with commissions.  The sales price tells the lender that the developer has a quality project, and the developer will continue to receive funds to continue the development with positive sales figures.  Also, they want to be fair to each buyer, and they know that buyers check with one another and will complain if some one gets a much better deal than they did.  Instead, as incentives, developers can offer upgrades to the property and interior.  They would calm the buyers and still send a positive message to the lender.
 Good luck with the purchase.  Please let me know what you do and what happens ultimately.  Good luck!
KARYN FOLEY