Randall School of Real Estate

From the mail bag… I received this email this past week…

Dear Paul

Here’s my story. I’ve shown a buyer over 30 houses and I’ve written 5 unsuccessful offers. All were beat out by better offers. My buyer is qualified up to 150K FHA. Its so hard to find anything for them. After all this work my buyers stopped by a random open house this weekend without me. The open agent, who was also the listing, convinced MY buyers to write an offer with her…  I think I deserve at least a referral fee, but the listing agent refuses to pay. What can I do?

Sincerely… Jacob

That’s a great question… and I’ll give you 5 possible answers IN THIS VIDEO

I can’t tell you how many times in my RE career I have seen this. I have also been a victim of this as well. But… does Jacob any recourse… and the answer is yes…. And no…. and maybe…

Jacob…. UNDERSTAND the buyer can choose to use whomever they want to work, regardless of how many times you’ve shown them houses. On it’s face there are no procuring causes here. Also understand, it sounds like your buyers really want a home to buy and they certainly have had their share of disappointments. Sometimes this cause desperation… and if there faced with any glimmers of hope, buyers will many times forgo any loyalty to their agent just so they can get a house…. And that’s not a reflection on you as the agent, you’re obviously a great agent, but that’s just the reality of the today’s tight marketplace…

But I want to break this down into two parts…. First, are you entitled to any compensation AND second, are there any disciplinary options to take against the open agent

Option #1

Let’s look at the compensation aspect first….  Jacob, IF you have a signed Exclusive Buyers Agency Agreement Then yes, the fact that your buyers used another agent provides legal recourse against the s for compensation agreed to in the agreement.

To Clarify!  An Exclusive Buyers Agency Agreement is NOT the Agency disclosure that licensee’s have their client sign outlining the agent’s duties and obligations under license law. This is a separate contract, not unlike a listing contract, between the broker and the buyer and its purpose is to protect the agent and the broker from exactly what happened to Jacob…

If you have no such contract, then there is no claim for any type of compensation. From the buyers or the other agent.

Also keep in mind, since the Buyers Exclusive Agency Agreement is technically between the broker and the buyer, only the broker can bring any legal action or against the buyer if there’s an agreement in place.  So, Jacob will need to have that discussion with his broker about taking any legal action

Option #2

What about filing a complaint against the open agent with the Nebraska Real Estate Commission (NREC)?

From a license law perspective, Jacob MAY have an actionable complaint with the real estate commission against the open agent.  I say “may” have. I spoke to Greg Lemon director of the NREC and UNLIKE LISTING AGREEMENTS, he indicated there are no specific prohibitions in statute or precedent about poaching other agents clients who are under an Exclusive Buyers Agency Agreement.  But depending on the fact pattern, there certainly could be other violations.

For example, in Jacobs case, his buyers went to an open house. If the open agent made any kind of statements such as “’Buyers Exclusive Agency Agreements aren’t enforceable” or “No worries, courts don’t like these agreements” or “Don’t worry Buyer agreements are not worth the paper they are written on.”  Something like that, there would certainly be potential violations.

So, it really depends on the facts of the individual situation.

Option #3

In Jacobs case, if the open agent is a member of the National Association of REALTORS, Jacob may have recourse through the ethics process.  Let me explain using a few possible scenarios:

The Realtors Code of Ethics Standard of Practice 15-2 says:

[Realtors have] The obligation to refrain from making false or misleading statements about other real estate professionals, their businesses and their business practices includes the duty to not knowingly or recklessly publish, repeat, retransmit, or republish false or misleading statements made by others. This duty applies whether false or misleading statements are repeated in person, in writing, by technological means (e.g., the Internet), or by any other means. (Adopted 1/07, Amended 1/12)

In Jacobs example, IF the Open agent had known that the buyers were working with an agent, AND the open agent made a false statement about the buyer’s agent, such as, “you’d be better off allowing me to write up an offer, because the agent you’ve been working with is has been sued several times by his previous clients,” or makes some other disparaging, false or misleading comments. There would be grounds to file an ethics complaint under Standards of practice 15-2.

Option #4

Standard of Practice 16-9 says,

Realtors®, PRIOR to entering into a representation agreement, have an affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid exclusive agreement to provide the same type of real estate service. (Amended 1/04)

Standard of Practice 16-13 goes on to say,

Before providing substantive services (such as writing a purchase offer or presenting a CMA) to prospects, Realtors® shall ask prospects whether they are a party to any exclusive representation agreement. Realtors® shall not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements, except with the consent of the prospects’ exclusive representatives or at the direction of prospects. (Adopted 1/93, Amended 1/04)

This means, the open agents is obligated under this Standard of Practice to:

(1) ask the buyer about any potential Buyer Exclusive Agency Agreements they may have sign with another agent, and

(2) not conduct business with a prospect who is bound by the terms of a Buyers Exclusive agency agreement, unless it falls under one of the two exceptions.

Option #5

It’s happened to the best of us! I know it sucks but suck it up, move on to fight another day!

MY Recommendation

For all you agents working especially in tight market where there is low inventory and your buyers fall into that 1st time homebuyer price range and they have challenging financing such as FHA.  Have your buyers sign an Exclusive Buyers Agency Agreement before committing to them. Be open and honest with them as to why.

Its really the only way to protect your interest against the very situation we discussed in this video.

CONCLUSION

That’s all I have for todays video. If you have any questions or comments about todays topic… leave a comment below. If you have a situation, you’d like me to opine on, or you have a suggestion for a video topic, drop me an email: paul@RandallSchool.com

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School Director: Paul Vojchehoske
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Legal Disclaimer: Nothing in these videos should be construed as legal or financial advice. Users should consult with an attorney or other competent professional before implementing anything we’ve discussed in this video.

Paul Vojchehoske
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Paul Vojchehoske

Paul Vojchehoske stands as a distinguished figure in the real estate industry, boasting over 27 years of extensive experience. He currently holds the position of Director at the Randall School of Real Estate, where he plays a pivotal role in shaping future real estate professionals. His expertise spans across a variety of domains including real estate law, licensing, accreditation, and continuing education. Paul's commitment to the field extends beyond education and into the realm of content creation and media. He is a well-recognized real estate author, known for his insightful and informative writings that cater to both industry professionals and enthusiasts. Further enhancing his outreach, Paul has established a strong presence on YouTube, focusing on real estate topics, thereby educating and engaging a broader audience. Additionally, his voice resonates in the world of podcasts and radio, where he hosts shows that delve into various facets of real estate, offering valuable insights and guidance. His proficiency and thought leadership in the industry have made him a sought-after figure for interviews by real estate trade magazines and publications. Through his diverse roles and contributions, Paul Vojchehoske has become a vital source of knowledge and inspiration in the real estate community, continually aiding in the success and development of real estate professionals.