We need to talk about enforcing these damn things
I have listed over 800 properties and on occasion a seller gets cold feet and asks to cancel the contract...I could have demanded my commission for services provided...but always allowed the cancellation as a "cost of doing business". Yes buyers will ask for a reduction or elimination of commission and other than taking them to small court ($12,500 in CA), an agent will make that business decision: enforce the contract and piss off a client, or just consider it collateral damage in the new commission world we live in.
Correct. For all intents and purposes, they are completely unenforceable. The lack of preparedness on the ground may unfold quite similarly to the first photo you used on the first article you published on this.
Rob, what if the Buyer's agent, while presenting the BRA for signature, asks the Buyer "How do you want me to handle a listing where you would have to pay me out of pocket?" If his Buyer says, "I don't have the funds, so don't show me a property if I'm going to have to pay you out of pocket." If this understanding is properly memorialized, is the Buyer's agent in the clear for skipping $0 and low BAC listings?
And then, that same agent explains to a future Seller, that sometimes Buyer agents could be directed by their Buyers to NOT show properties where the Buyer would have to pay out of pocket. So if the Seller chooses $0 or a low BAC, it might result in fewer showings. (Yes, the BAC is entirely the Seller's choice.)
Any harm in this logic?
Rob you wrote
“ My strong sense is that if the seller’s credit to the buyer is conditional, that is, “As part of this contract, I agree to give you $10,000 to be used only to pay your agent and if you fail to use the $10,000 to pay your agent, then you must return it to me” or something like that… I think the courts will have problems with that.”
My question is, aren’t seller credits for buyers loan closing costs, loan origination fees, prepaids etc currently specified and conditional? They are conditional as the funds are for a specific use.
You can’t get a Fannie or Freddie loan right now and get cash back for unspecified and unrelated expenses because you put a ton of cash down toward downpayment.
Cash back loan transactions wouldn’t work at all.
An attorney once told me that there's a danger in suing a buyer because the buyer can counter-sue saying you breached your fiduciary, didn't live up to the standard of care, etc. With a listing agreement there is usually a standard of care established in different areas...but what standard of care do we have with a buyer broker agreement? Just asking... PS. I have always used a buyer broker agreement.