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A Realtor friend of mine in Costa Rica and just had an experience with a client and we would like to hear your opinions.
He showed a client a For Sale By Owner property and after the showing the client he told the Realtor that he was not interested in the unit as it was out of his price range. So the Realtor continued to show him other properties in the development.
The client then went around the Realtor, went directly to the owner and purchased the house.
If we have all the facts at hand – which may not be the case, I do not know – it would appear that the professional Realtor has been denied his participation in this transaction but we would love your feedback as whether you feel the buyer’s actions were ethical and tell me!
What would you have done had you been in his shoes? The Realtor and the client?
Scott Oliver – Founder
WeLoveCostaRica.comThe specific circumstances may make a difference, but sure leaves a bad taste!
Doubt there is anything the Realtor can practically do, – it’s not illegal, assuming there was no contract between the parties.
The other aspect is, even if there was legal merit – can you see a Costa Rica court handling this competently?? They are unable to handle serious land/home frauds.
Karma has ways 🙂
Edited on Aug 30, 2008 11:43
This is a prime example of why there should be a legal contract that defines the relationship between any agent (the real estate agent, in this case) and his or her principal (the potential buyer). Among other things, such a contract should specify that if the client (buyer) purchases a property shown by the agent within a specified time, the agent has a right to a stated commission.
Such an agreement should also specify other aspects of the relationship such as confidentiality, full disclosure, representation and protection of interest, etc.
Is this “Realtor” a resident of Costa Rica? I see many people calling themselves “Realtors” living here on tourist visas. If I google some of the names from this website I see many of them selling real estate who are tourists. Shame on them. They don’t pay taxes and they take jobs away from people who act lawfully. It’s disgraceful.
I have been in the situation myself as the buyer and even considered having a friend buy the property from the owner and later transferring the property to me. We didn’t do that though, but changed our minds and bought something else.
My opinion is that the seller should pay full commission out of their pocket to the agent if the agent sells the house for them. It sounds like the seller was not willing to do this because it was “for sale by owner”. Therefore, the agent should not have even shown the property to the buyer in the first place, unless the buyer understood that the agent was expecting a commission from the buyer. As a buyer, I would NOT expect to pay the agent a commission above and beyond the sellers asking price.
In my situation I describe above, the seller told me face to face that he was only asking such and such a price, but since an agent brought me to the property, he had to increase the price by 5% in order to pay them. It shouldn’t work that way. We said no thanks and looked elsewhere.
Jon
What I am hearing from Scott is that the Realtor showed the client the property and then he decided to call the home owner directly so he could cut the Realtor out the deal. If the realtor indeed showed the client the property and he cut him out then I would say that he just stole the services of the realtor. There probaly isn’t aything legally that the realtor could do but if the client ever wants to sell his home or needs help with this property he has just lost a friend in the business.
We recently sold a house (for sale by owner) and we met many different persons who were interested. Many “realtors” called us and began the conversation with “I have a client for you, what’s my commission?”. They wanted 5% but if you say “no, you can get 3-4%” they also agree. 5% over $ 400,000 is a lot of money for just a few phonecalls and a visit.
Once a buyer came with his “realtor”. He didn’t know anything about real-estate. Later we found out that it was his cousin. They tried to get 5% off the price…..
The foreign “tourist-realtors” without a visa and working-permit should be kept out of this business (any business). I don’t deal with these gold-diggers, fortune-seekers or whatever they think who or what they are.
Tourists should spend money in this country, not make money.
As a broker in NYC this on occasion happens to me with rentals, as the client discovers another unit in the building that is “no fee” or can rent direct from the owner. I always disclose every property I am showing to a client and if they agree to be shown the property I expect a commission if they rent. In sales(here) the listing broker always has a written agreement about what commission should be charged. I on occasion will show a FSBO property but first I speak with the owner to understand what he/she is paying in regards to a commission. I have to imagine a good broker in Costa Rica works quite hard finding available listings that are “kosher” and showing these homes through out the various neighborhoods. Could a foreign buyer navigate his way through all this and find a random FSBO house that meets his/her criteria and is fairly priced and is not encumbered by any big problems? Unlikely or at best very difficult. If you are are going to hire a broker to help you find a home understand that person needs to be paid, if you want to save 2-5% don’t hire a broker, very simple…and that said you may not save with out an expert opinion on price! A good honest broker can really make the process of looking and buying a home a very seamless operation. It’s just sometimes people get the wrong impression that they are being had when they come to the conclusion that by leaving out the broker they can save money. Shame on the seller and the buyer! And that goes for everything we buy anyway. as a broker on the rare occasion this happens to me I will have a conversation with the owner and buyer and try and work something out, I usually do this through an attorney. If you have really been had, a threat of holding this up in the bureaucracy of the Costa Rican law system may convince the seller/buyer to work something out with you rather than risk having a deal be held up.
Edited on Aug 31, 2008 18:44
I personally would not like to take advantage of anybody, even RE agents. My take is: they are not worth the 5% or even 3% of what they earn, BUT I will not try to use them and try to get away from paying commission. That in my opinion is definitely not “kosher”. So, if you are trying to avoid using an agent, then do your own research and find that house you want and negotiate yourself. If you can’t do that, then use an agent and expect that he/she earns a commission.
The problem with that Lotus, is that there are no regulations governing the commissions for the sale of real estate. Anyone can act as a “realtor” and sell real estate, even tourists who have no experience in the field elsewhere. There is no “multi-listing” service either. If there were regulations in place, I’m sure it would be much better for everyone. Fewer people would feel cheated on all sides.
I worked with five different agents showing us homes before we ended up buying ours. None of them mentioned anything about me “hiring” them. I believe it is a given that the seller pays the commission out of the sale price. That’s my experience.
There were no hard feelings with the agents that showed us properties we didn’t buy, apart from the one that wanted us to pay 5% on the seller’s price. I totally disagreed with that and still do.
We found a house in which the seller had contracted an agent to sell the house. That agent showed us the property. Perhaps the seller listed the property for more than what he wanted to cover the cost of paying the agent the commission. That’s perfectly fine with me. I, as the buyer, saw only one price and negotiated that. I talked him down some, agreed on a price and from that price, the seller paid the agent. We were very happy and if we were buying or selling a house in the future, we would look to this agent again first.
Jon
Why would this fellow be showing a FSBO property to start with? Seems he opened himself up to this situation…. and as such lost out on the commission. My opinion…. no soup for him!
As a broker you take a risk showing a FSBO listing even with the owners permission. But as the agent sometimes you know of a property that may be just perfect but it’s an open? I think the client is best served by introducing him to it, rather than pass it by, what are the chances in an unorganized market place like CR that the buyer will stumble across it? The vast majority of my clients are very busy making money at there own profession and spending time at there personal life-family etc. and they hire me to find them the best suitable property and not waist there time. For those who want to scour want ads, FSBO sites etc.. go for it I don’t have time nor the desire to work with this type of client, I sincerely wish them the best. And I have also found that most sophisticated sellers want to be represented by a competent broker to handle the advertising campaign, the large amount of tire kickers,phone calls, e mails and the sometimes months of showing. When I work 3-5 months to sell a property 5% seems fair to me, I have spent up to 8 months on some properties.
I agree sumaSAL. These same “tourist-realtors” were the ones in the USA who were constantly putting down the Mexican immigrants for taking jobs away from Americans. Jobs that lazy Americans didn’t want. It sickens me to see them here making lots of money, paying no taxes, and taking jobs away from the people who are here legally. They should all be deported and not allowed back into this country.
I do agree with what dehaaij said, in part:
‘The agent should not have even shown the property to the buyer in the first place, unless the buyer understood that the agent was expecting a commission from the buyer. As a buyer, I would NOT expect to pay the agent a commission above and beyond the sellers asking price.’
If there is/was a sign or the ‘client’ knew in advance that the property was FSBO with the price stated, why would he even consider paying a commission?
As some agents say ‘I have been working on that property for months…’ and all they have really done was take & post photo on their website.
As many who have tried to or have sold their home here in Costa Rica it can take years! And it probably was only shown a couple of times. And if the were using, FSBO, they too probably were contacted by agents ‘who have a client…’ that never appears.i agree scott…..no soup
agent needed to have a written contract before showing it to buyer and buyer did the best he could to protect himself with the best deal…….ie he owed no obligation to agent
you asked about ethics . . . no ethics are owed buy buyer as you know caveat emptor
if buyer signed contract before being shown……….he owes you
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