“When it I was buying my last house I had a nightmare of story. It costs us thousands of dollars over and above the price of the house, and left my wife crying on the couch as the real estate agent walked out on us.”
This story comes from someone who wishes to remain anonymous. It shows what can happen when you sign a contract. Many of us never read the terms of service and quickly told to “Sign here, and here and here.” never reading in full. Let’s all learn from this unfortunate event and what happens to them.
How did it start?
When we decided to buy our first home, we knew we needed to find a real estate agent. We assumed that given the hot market having a real estate agent would cut down on our time finding a place. All said, it would be good to have a real estate agent in our corner.
I’ll admit, the amount of due diligence we did wasn’t enough. I should have asked the real estate agent a lot of questions and done some more digging. But we picked our agent because he had a lot of signs in the area we were looking.
We called him up and he was friendly and pleasant and offered to meet right away. All things we would like to see in a real estate agent.
It was pretty straightforward, we met with him at our house. Told him what area of town we were looking in and the search criteria. Then he gave us the contract to sign. .
We asked if we could take a day to look it over. I run a business and like to think things through.
The real estate agents answer to this was, “You can. But I can’t get things set up for you until you sign. This is the prime buying season (for us it’s April through June), I wouldn’t want you to miss out.”
It seemed like a normal thing to me. So he got us to sign the contract right then and there.
Honestly, at the time, I didn’t seem to think much of it. It all seemed easy. He would be our real estate agent for the next 90 days and if we bought a house, he would get 2.5% commission on the final price of the house. He told us this was a normal buyers commission and that he would split it with the selling real estate agent.
Usually, when you buy a house, the money will come from the seller. The seller give the commission to the sellers agent and the commission will get split. Costing you nothing more than the price you agree on for the house.
He shook our hands and left.
My wife even said, somethings not right. We should have trusted her gut.
That’s How Everything Started
A week went by and we hadn’t seen a house yet. In fact, we hadn’t heard from him at all. I called him and said, “When will we see the results of our searches? We want to get looking around.“
He said he would “get around to it”, his tone wasn’t as helpful as it had been when we met.
We kept waiting for things to start, and nothing did.
We assumed that he wasn’t wanting to properly represent us, so we decided to keep looking.
I’m pretty impatient. It was the time of the year where we want to buy so that we can move in the summer while the kids aren’t in school. You know, make it easier on the whole family.
Taking Matters Into Our Own Hands
Looking around we found a home that was by one of those For Sale by Owner. Since our real estate agent wasn’t really helping us, I called them, set up the appointment to look at the house.
The house was everything we wanted. More space, extra rooms, another bathroom (with growing kids we needed another one).
We sat down with the owner and went back and forth that day and settled on a price and possession date.
We were so happy to have our new place.
Finally after a month or so, I got a call from the real estate agent. He said he had a listing that he thought would be great for us, and he was the seller agent.
I would find out later, that this real estate agents way of operating was common once under contract. He would only show homes that he was the listing agent on. That way he could double up the commission and cut down on his efforts.
We told him that we had found a place, a private sale, and we would go about it on our own.
That’s when things fell apart.
He started to yell at me on the phone “You can’t do that! You’re under contract. You owe me my commission!“
“Commission for what? We were the ones who found it. We set up the viewing. We were the ones who negotiated the deal and terms. What exactly did you do?” I said.
For the record, my blood was boiling, I was furious.
He said that we had signed a contract and that we owed him a commission. If we didn’t pay him, he would be taking us to court over the whole thing.
We agreed to meet the next day and try to resolve everything.
Turns out A Contract is Binding
I’m going to spare you the details here. This wasn’t the first time the real estate agent had done this. He said that the contract stated we owed him 2.5% of the house price. It was still in the 90 day window of the contract and the law was on his side. My wife and I were upset and furious. Here he was trying to get a commission for doing nothing.
But it didn’t matter, we had signed a contract and from everything I understood, legally we had to pay the commission. Since there was no listing agent, we had to pay it to him ourselves. It sucked.
Ultimately, at that meeting we agreed to pay him otherwise we would both loose more in court fees and I felt like we were duped.
My wife sat on the couch crying, that money was bookmarked for other things we were going to do in the new place once we moved in. I stood there doing my best not go crazy on this guy who clearly never had our best interest like he should have. I wrote him a check and he snatched it out of my hand and walked out the door.
“You’re a crook.” I said as he left my house.
“Yeah, but I got your cheque.” He smirked and he snapped it looking at me as he got in his car and drove away.
Bottom line: Take the contract home, read it over, make notes ask questions. You are entering into a business contract with a person and you need
Millennial Homeowner Take Away
When you are working with any kind of business person you are going to find good ones, great ones, and some really bad ones.
In this case our couple found a bad one. Looking back on it they wished they had done their due diligence. If you want to see what we use to find a good real estate agent you can hopefully save yourself from anything like this.
Remember that doing your research up front can possibly prevent you from this type of situation. Make sure you understand what you are signing. Ask questions, read the contract, and if you are getting pressured walk away. A good real estate agent won’t pressure you into signing and understands that people need to time to process things.