In realty, are there laws concerning how commission is handled in sales?
We tried to buy a house at an auction and won the auction, but the owners didn't accept the price and have been in negotiations since. Apparently, the realtors that listed the house at auction, got upset about us choosing a realtor to represent us that we've been working with for years. After we submitted another offer, they countered with an offer that could only be accepted if we cut our realtor out. This feels like bribery or blackmail or something. Is this legal? I don't know much about the rules of real estate sales.
Sorry, this is in Ohio
- realtor.sailorLv 73 months agoFavorite Answer
That's a violation of the Realtor Code of Ethics. If the listing Realtor insists on that report him to the local Association of Realtors. That said I sell bank owned homes and I've never heard of the seller countering with that. Auction sites encourage Realtor participation. That's absurd.
- Beverly SLv 73 months ago
You didn't win the auction if the owners didn't accept the price. Since sellers pay the realtors in most cases this means they would have to pay your agent 3% (or whatever your agent is charging) out of what they net. Until you have an agreed upon contract you are still in negotiations & they can disagree with any offer you make. Not bribery or blackmail or illegal in any way.Source(s): Mortgage lender 33 years.
- Anonymous3 months ago
Your realtor commands a fee which means the seller gets less if you use one. They are under no obligation to accept an offer that nets them not enough.
Had you not used the realtor, your offer might have been accepted because of the fee.
- busterwasmycatLv 73 months ago
Laws vary from state to state and most real estate transaction rules (laws and regulations) are aspects of basic contract law. I do not know the conditions of the auction (the underlying contract whether implied or written), so it makes me wonder if the seller even has a right to refuse on your bid. Even if they do, you probably have a contract with your realtor so you cannot simply exclude the realtor without paying a penalty (conceivably paying the realtor for the commission he would have earned had you complied with the contract).
This entire situation stinks of questionable legal tactics on the part of the seller. You really ought to discuss the law with your realtor (who ought to at least know the basics, simply to be qualified for the realtor license). A lawyer might be useful as well. It really depends on where you live, what is legally permitted.
One of the many possible reasons that the parties might want to exclude your agent is so that the agent of seller will receive the entire commission, rather than seeing part of it go to your agent. Your use of an agent is taking money out of the pockets of the agent for the other party.
How badly do you want this house? These people are being pretty sketchy in my view. What kind of auction allows the seller to refuse? If they had a minimum then the bidding ought to have started at their minimum. Unless the auction declared that the bidding was for the right to negotiate purchase, I would have presumed that it was for defining the price of the sale. I have all kinds of questions.
I know the laws and rights here where I live because I am in the process of selling my house at this very moment. Had a problem with the first offer (they tried to force a price drop after making an offer that I accepted) and had to look up the applicable laws for here.
- How do you think about the answers? You can sign in to vote the answer.
- Anonymous3 months ago
Yes of course there are laws about commissions in real estate. But you didn't bother to tell us what country you're in let alone which state (if in the USA).
Generally speaking, in the USA a seller is not required to accept any particular offer if they don't like the terms.
It's not that they object to your agent personally. It's that they object to paying your agent. If you really want this house, consider writing an offer that states YOU will pay your agent. You could pay your agent outside of closing, or if you need to finance the commission, you could add it to the purchase price of the home.
If you insist on the seller paying your agent, you'll probably need to find a different house.
ETA: "If the commission is the same..." Same as what? The traditional 6%? Seller doesn't want to pay that, and is therefore looking for a buyer without an agent.