If a property does not sell inside the real estate agent's contractual time frame, can I approach the owner once the contract is up and suggest a private sale? I was introduced to the property through the real estate agent's advertising and have made a formal offer however it seems like it will be unsuccessful. Through the offer process, the real estate agent has revealed the owners name and email address. The owner only purchased the property a few years ago and is trying to atleast break even and cover their costs. To cover their costs however, I believe the property is just over market value. If the owner wasn't up for the 3% or whatever it is sales comission, I believe they may accept my offer. What are the potential legal/ethical issues for all parties in a situation like this? The property is located in Perth if it makes a difference.
Is this legal/ethical?
- Thread starter deecee28
- Start date
It is possible but the Seller would need to read their terms and conditions that they signed up to when they put it on the market. Sometimes in Perth the 'introduction' can last quite awhile and they would still be up for the commission to the REA.
The only copy I can find is an oldish one and I don't know if it's changed since then - see Section 4
http://media.hubonline.com.au/agent...28145647_Listing Agreement exclusive plus.pdf
As to ethicality. Yes it is ethical.
The only copy I can find is an oldish one and I don't know if it's changed since then - see Section 4
http://media.hubonline.com.au/agent...28145647_Listing Agreement exclusive plus.pdf
As to ethicality. Yes it is ethical.
Sorry I also meant you to read 13 as well which outlines selling to an introduced person
... and agents do chase this type of thing up. I've seen it often enough to know it is a risk. And from a moral viewpoint, it is not something I would do.
I wonder how deecee28 would feel if he/she had it happen to him/her?
How would I feel if I was in the vendors position? Well first of all, I wouldn't expect a capital gain in this particular market after overpaying(I know what the property sold for) a mere 3 years ago without making any improvements to the property. Either the owner is quite nieve which makes me question whether they are are actually serious about selling at all, or the agent has grossly over valued the property. I know real estate agents in Perth are desperate for listings at the moment but if it is the latter then the ethics of the agent should probably be questioned as well.
Well after reading that, it seems you would have to be a fool to agree to that clause. Say you sign that clause, the property doesnt sell, you decide to hold for another 3 years, list with another agent yet someone who viewed it 3 years ago ends up buying, are you liable to pay the original agent the comission? And what classifies as being "introduced" to the property anyway, does it mean merely viewing it on RE.com.au or do I have to physically view the property in person and hand write out my contact details in a registar... after all, people purchase property all the time on nothing more than photos and emails over the internet.
Hang on, you have just said that if the owner doesnt have to pay the agent's commission of around 3% they might accept your offer, how is that grossly over valuing the property?
I personally wouldnt screw the agent out of his commission because a) it doesnt sit well with me and b) the perth real estate market is a pretty small one. If you intend to be pretty active in it i can almost guarantee you will run into him again in the future or someone who works with him etc
Because I know what figure the property sold for 3 years ago. I can roughly guess the legal/settlement fees incurred by the owner and thus come to a figure that would allow them to break even which is what I believe they are after. If the owner takes my market value offer then adds the agents 3% sales comission to the property, I believe they are grossly out of pocket. This is absolutely the owners problem and highlights to me the importance of due diligence when buying! However if we could somehow bypass the agents comission I feel my offer would be successful and I would end up with a pretty good deal.
I agree, the agent has been very honest and respectable so far. No phantom offers etc., I am the only horse in the race so to speak with a week left on his sales contract. I truly feel the admirable result is for the owner to take a loss, after all it's only been 3 years since they bought in a fairly stagnant market, their situation suggests they need to sell(moved insterstate for a new job and having to rent) and the agent ends up with his commission.
Or maybe you could just pay the commission to the agent who (I assume) took you through the house. If the amount of agent's commission is the difference between "overpaying" and a "screaming bargain" you seem to be the one with blinkers on.
And "introducing" you to the property is more than you looking at in on the internet. It is attending an open house or being taken to the house by an agent. Seriously, how would you feel if that was you and your buyer did the sneaky thing behind your back. I'm sure you would be fine with losing the commission, wouldn't you?
It always amazes me how some people bang on about how unethical some agents are perceived to be, yet sneaking behind their back and robbing them of what they are contractually entitled to is seen as being just fine. Pfffft!!!
Its a Standard REIWA Contract, written for REIWA Real Estate Agents to support their members... no one else
Bolding by me
The General Conditions document is owned jointly by REIWA and the Law Society of Western Australia.
I've read of it happening recently
I know it does happen.
It happened once when my parents bought a house (later to be our PPOR). The vendor had done something dodgy (not with the transaction involving my parents) but I do remember a well dressed man calling to the house (by that time we had bought it from my parents) trying to find the vendor who sold it to my parents. It was something to do with them having dodged an agency fee. We had another "man in a suit" looking for those vendors too. I suspect anybody who is prepared to cheat an agent out of their fees is also happy to cheat others. I reckon someone would have caught up to them before too long. Good!!!
I do know that agents routinely looked through the RP Data, cross checking the names on the "open house" lists to see if anything has done the sneaky "buy it afterwards and cheat the agent" thing.
It happened once when my parents bought a house (later to be our PPOR). The vendor had done something dodgy (not with the transaction involving my parents) but I do remember a well dressed man calling to the house (by that time we had bought it from my parents) trying to find the vendor who sold it to my parents. It was something to do with them having dodged an agency fee. We had another "man in a suit" looking for those vendors too. I suspect anybody who is prepared to cheat an agent out of their fees is also happy to cheat others. I reckon someone would have caught up to them before too long. Good!!!
I do know that agents routinely looked through the RP Data, cross checking the names on the "open house" lists to see if anything has done the sneaky "buy it afterwards and cheat the agent" thing.
Wow… Isn’t it funny that this forum is full of people who complain about agents acting unethically, yet when the shoe is on the other foot its fine?
Imagine if the agent was to go behind the buyers back and approach the owner in regards to purchase the property themselves. We wouldn’t hear the end of it.
Under the extremely unlikely scenario of this happening… no (it’s a grey area)
Physically entering the property.
The contracts will still have to be signed in your name. Either way that little plot will be discovered. Agents do take notice of this kind of thing.
So are you saying the owners are prepared to accept your offer if it were 3% more? Or are you guessing? Or, are you 20k-30k below what they want?
No legal issues for you. But the owners may get a nice little surprise invoice in their mail box.
Things must be different in this country.Maybe I am missing something...
I see nothing wrong with a buyer waiting until the REA contract has expired and then making an offer. The buyer does not have a contract with the REA.
Maybe the vendor will still be liable for paying commission, but that is no concern of the buyer.
Another possiblity, is to rent the property from the vendor, and have an option to purchase it in a year or two, and an agreed price.
I see nothing wrong with a buyer waiting until the REA contract has expired and then making an offer. The buyer does not have a contract with the REA.
Maybe the vendor will still be liable for paying commission, but that is no concern of the buyer.
Another possiblity, is to rent the property from the vendor, and have an option to purchase it in a year or two, and an agreed price.
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