My seller’s property was listed on the MLS for $150,000. A buyer made a full-price offer, but my client decided not to sell. Now the buyer’s broker says my client has to accept the full-price offer. Is she correct?
No. A seller is not bound to accept any offer, even at full price. However, your seller could be in breach of your listing agreement by refusing to accept the full-price offer.
The seller does not have to accept the offer, HOWEVER I believe they should be made to pay the sales commission /the listing agreement because the Realtors have done what they were “hired” to do. If the seller does not have the cash, then I believe a lien should be placed on the property. For far too long the real estate industry, at least in my area, has coddled sellers and been afraid of getting a bad reputation so have just “let these situations go”. It is time that people understand that this is a business, not a hobby, and… Read more »
We Should partner together!! You are so Right!!! Tell your Seller his boss wants him to work for a couple of weeks free! Lets see how he likes that!!!
Three arguments are spurious and illogical. Every professional provides “free” work, whether it’s quotes (engineering, architecture, construction, repair, etc), consultation (physicians, lawyers, accountants, etc), samples (sales, marketing, food service, etc), or a host of others. I understand being frustrated, but a Realtor’s value is in being a knowledgeable advocate for the seller. So help the seller, don’t sue then! I’ve sold multiple homes and because of the current market, usually end up with multiple offers, some at asking. That may mean my realtor did a poor job creating comps and set the price too low or simply underestimated market demand.… Read more »
Your listing agreement would protect you via the verbiage but regardless… Second Restatement of Contracts 45 (the legal “go to” for lawyers involved in contract disputes if you will) (1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree begins the invited performance or tenders part of it. (2) The Offoror’s duty of performance under any option contract is created is conditional or tender of the invited performance in accordance with the terms of the offer. … “THIS SECTION FREQUENTLY APPLIES TO… Read more »
A seller should sell house if they receive full price offer from pre approved buyer. If this happened to me as listing agent I would demand the commission I have earned. Only a rookie agent wouldn’t.
Unless the Seller’s Agent encouraged the Seller to price low in the hope of creating a bidding war. A lot of agents are recommending this approach
I like your response. As a realtor I want to look out for my sellers best interest. Maybe if the seller decides not to sell then he can at least reimburse the agent for any costs the agent may have incurred.
We put a full price offer with 200k down. Only offer they received. Seller countered requesting more because it was a contingent offer based off the sell of our current home – which is under contract and closes in 2 weeks.
Also their last offer fell through we think because they didn’t want to do the fixes requested on the inspection.
Also we ran comps and house is slightly overpriced for the area.
Huge red flag for us and I’m glad we can back out
While I agree that everyone is entitled to be paid for their work, most listing agreements say that the commission is not payable until closing or the seller’s breach.
A lien would get you paid when or if it ever sells in the future.
“Seller’s breach” could very well be not accepting a full price offer, agree?
David, the TREC Listing agreement says the compensation is earned when the broker, individually or in cooperationwith another broker procures a buyer ready, willing and able to buy the property at the Listing Price or any other price acceptable to the Seller. That’s Paragraph 5B. So on presentation of a list price offer, it looks like it is EARNED then.
The key words “acceptable to Seller” I guess it would depend on your Brokers interpretation if he wants to sue you. If that is an issue, clarify it up front.”
I believe you answered your own question. In this case, the seller did breach the agreement by refusing to sell when a ready, willing and able buyer was provided at full asking price. I am at fault for letting folks go many times when much time has been spent and every situation is different, but if we do not take ourselves seriously, who will??
Michael, You are correct. The commission earned, but it must also be payable in order for the Broker to collect it. In comes the question if the seller actually breached the listing contract by not accepting a full price offer. This is going to be two sided every time you look at it. There simply is no getting around it. If the seller was not willing to accept a full price offer, the likelihood that they will pay you a commission is pretty remote. Unfortunately the property code doesn’t allow the longevity that you might think on placing a lien… Read more »
I totally agree! Well said.
I strongly agree with you Janet. Happy to know there are many Realtors not afraid of bad reputation and simply mean business. I have let go many clients coz they would ask for commission back as high as 2.5%.
Hi Nikki, I like Janet’s comments too. It is a shame that people do not think we are worth our commission. I guess many people do not realize how much time and effort and $$ goes into listing and selling properties.
How many of us have gone shopping for a car? We use the salesman’s time for a couple of hours, (while ready buyers come in), and then go somewhere else and buy. Sometimes we waste the time of the salesmen at several locations, before we make a decision. Should we pay them a commission for wasting their time? Just saying
Is selling a car really a profession? How much time and money invested to earn that license? Do car salespeople pay over $2000 per year in licensing and CE requirements? Is a car one of the most expensive assets in a person’s life, appreciates in value, and is a major underpinning of a family’s wealth? Do you have to have even a high school diploma, be able to read dense 16 page legal contracts and remain accountable for your advice to your customer to be a car salesperson? Plus, car salespeople are paid draws against commissions and let go within… Read more »
@ Venesa Monague: Car salesman get paid hourly as well as commission. No, not the same at all. Pay a Realtor for services rendered.
Wow Gail, I know right? it’s just crazy considering Engineers and Architects spend 5-6 years to earn an advanced degree and then years doing internship before the licensing process begins …even more years. Average start time from college to license for an Architect is roughly 14 years on average. Then when you have your own firm there are are those pesky Health, Safety and Welfare laws and codes that the Engineer and Architects must comply with; as well as being knowledgeable in Building Codes, Fire Codes, Accessibility Laws..etc..etc. not to mention all the insurance such as Errors and Omissions and… Read more »
Love this! I couldn’t agree more.
I like “non-refundable marketing fee” Is it OK with TREC??
AND TIME TO LET FOLKS KNOW THAT THIS IS INDEED A “PROFESSION “AND NOT A HOBBY!!!!
I totally agree! What other business professional works for Free! We SHOULD be charging an upfront marketing fee; to be paid at signing the listing agreement and it is non refundable. Whether the property sells or not. I was told by an Attorney you can not sue for services in the state of Texas. You can sue for breach of contract. That is why Attorneys require a written agreement before they agree to represent a Client.
The article didn’t say if the seller actually signed a contract. If he did and then changed his mind he is in breach of contract and I believe a commission is owed. If he was not under contract then he has the right to change his mind. I’m not the type to sue a client, that would spread faster than the speed of light and I wouldn’t want to tarnish my reputation like that. The seller would become the victim and I would become the “money grubbing” realtor. As far as collecting money up front, there are so many different… Read more »
I agree Sheri…
@Sheri A. Stinson: No the contract was not signed because a seller does not need to accept that offer, however the seller did sign a Listing Agreement & an Exclusive Right to Sell Contract with the Realtor. Given that the seller is most definately legally bound to that contract. Realtors are not “money grubbing” they are licensed professionals that work very hard to maintain education, licensure, and stay current towards maket trends for their clients. It is a business. And business is business. If the seller is in breach of their contract with their Realtor, then they will need to… Read more »
I agree with you on this matter, Totally! seller not accepting the full price offer, yes, the Realtor has done their job, so seller, it’s time to pay up, we have families to provide for too!! Great answer!
You are absolutely correct on all points!! Our industry needs to stick together and have all REALTORS set these same standards, otherwise it doesn’t work. And yes, we do collect non-refundable marketing fees up front.
Barbara Sanders, Texas Realtor Licensed since 1976 A legitimate reason may have caused the seller not to accept the full price offer. We’re big girls and boys so IF NOTHING WAS SUSPECTED before & during the listing being signed. If the seller has lost the job that precipitated the sale, or illness is involved, I want no part in charging the seller. If it is THAT important, cover yourself on the listing form, i.e. advertising. I personally have done so, sensing a possible problem (like a disinterest is sprucing up the home &/or not being willing to bring simple things… Read more »
Hi Janet, here is a scenario: Suppose your seller gets a full-price offer, but there is $4000 in closing costs? Or what if it is a full-price cash offer but the closing date is 10 days from the offer date and both side refuse to budge? Are the sellers still in breach if they refuse to accept? Just curious on your thoughts…
Good point David.
How about a full price offer and close in two years??
My listing agreements allow the Seller to cancel upon payment of a cancellation fee.
Happened only once so far.
Well far too long unknowing sellers have coddled unscrupulous realtors setting up listing agreements that avoided MLS submittal long enough to allow wheeling and dealing in a hot market with investors, thus avoiding multiple ans split commissions. Not to mention the “under the table finder fees” being paid out to agents by real estate investors. Kind of like corrupt insider trading. This is just “OPINION,” mind you.
There is only a statutory commercial broker’s lien – I don’t think there is a valid way to place a lien on property based on a residential transaction commission (except through a judgment lien on non-exempt property). I agree that a seller’s refusal to sell for list price is a breach of the listing agreement, absent special provisions.
I seem to remember back in the foggy years of long ago, a real estate broker cannot create a situation to prevent the sale of at least, a homestead, could be broader than that, at least not with a mechanics lien nor an intent to file lien notice given to a title company. I have known of title companies being notified and withholding closing without fees being paid. An attorney can possibly explain this. I think you have to go through the courts and win a summary judgement, where you will have the defense attorney try to make you look… Read more »
Very well-said! I look at the relationships and how I’m helping people and the money just happens. I was a high school teacher for 22 years, so the perks of this job absolutely astonish me every day in comparison and I can’t believe I get to do this for a living and make a very nice living! It actually reminds me of teaching because I get to “teach” people about real estate and build friendships through helping others.
Amen…I tried and failed to say all that using 5% of the words. Yes, it’s frustrating at times! I’ll flip that around for you. I have decided to terminate a few listing before due to an unreasonable seller. I can remember two recently who didn’t accept offers I presenter only to fire me and a few weeks later accept a lower offer from the new amazing listing agent (lol). If you have not had this happen yet it will in the future, prepare yourself now.
Why should a seller have to pay a commission if the they do not accept a full price offer; the buyer stills need to be approved for a mortgage; the property stills needs to appraise to a value that meets the terms of the loan program. Very slippery slope claiming a “fee” grab because they “did what they were hired to do”.
You are correct Vaughn. Who knows what the other terms and conditions were present in the offer. Maybe a 6 month closing? I can’t believe so many of you think the Seller’s refusal is not in their absolute right to decline an offer!
Price is not the only condition of a sale. Terms also may not be acceptable to the Seller.
Unless it’s a full price offer with no contingencies such as financing, option etc… the seller has the right to not accept BUT, I always thought if it was full price with no contingencies they had to sell. This article is not clear on that. I guess a seller could just change their mind about selling period and terminate the listing early in which case I feel the listing agent should be reimbursed all expenses. I write in an early cancellation fee in my listing agreements.
I also write in an early termination fee…
How much would an early cancellation fee be?
I agree. The seller may not agree to financing conditions, closing cost issues. Lease options, the closing date, etc….
Sometimes agent/sellers list below market value in hopes of getting multiple offers, above list price. Also, some agents do not truly know how to do a proper CMA to determine a good listing price. If the seller doesn’t sign the offer, there is no contract…but they may not get another full price offer again!
I guess the question would be – what constitutes: 5B (3) seller breaches this listing.
At what point could the agent walk away?
There are multiple reasons why a full price is not the best for the seller. A Good Listing agent should look for their sellers best interest and not chase the commission and threaten their clients to accept an offer that may be lacking. I could never put a lien on a client for something like this.
I’d be interested to know in which paragraph it states that if on the top line sales price it is equal to the list price a seller must accept the offer. There are so many other costs that may lie on other lines. Title policy cost? Survey cost? Residential Service Contract cost? Contributions to closing costs? Just to name a few. A net sheet at the listing appointment should clearly spell out expected costs that may come along with an offer. Even at that, it’s still the owners call on acceptance or not. It sucks…but come on…would you alienate a… Read more »
So maybe it is an FHA or VA deal, and the Seller doesn’t want to accept it because many times their conditions or appraisals are difficult. As mentioned above, a Seller may hold out for a “clean” contract with short closing and no conditions that will cost them more in the long run. I advised a client to accept a less than full-price offer rather than an FHA contract with minimum down that was above list price because of the likelihood the property would not appraise at the higher number and the buyer would not have additional money to bring… Read more »
Darlene, it would depend on the terms that were part of the listing agreement. That details what financing the seller would accept. If he accepted VA/FHA in the listing and a client comes with a full price offer or more, the agent has earned the commission. Take the offer and do a backup for any subsequent cash offer. Either that or in the LISTING agreement restrict it to cash offer. Nervous about the financing offer? Require a larger option fee!
There is no statute that authorizes a broker to place a lien on a seller’s property. A broker would have to sue to try to collect any commission he/she thinks is earned and payable. If a lien was filed without a court order, the Commission could consider this a violation of the broker’s fiduciary duty for putting the broker’s interest ahead of the client’s. Just a suggestion, but by the time you go through the lawsuit, spending time in your attorney’s office, being deposed , going to court, etc., you could probably list and sell way more property with buyers… Read more »
It is always about the RE agent. Maybe, just maybe, the seller/client realized that the agent’s CMA was poor, and that the agent’s advice to list the house/property at ‘X’ was a substantial undervaluing of the property.
What is the penalty for the agent’s negligence and incompetence?
Mr. Eberwine, that’s an interesting slant, especially on this forum. What was the seller/client doing to substantiate the agent’s “undervaluing” before the offer was submitted? Maybe, just maybe, the seller/client should have addressed that issue at the time of pricing, not at the time of the offer.
Typically, an agent’s penalty for negligence and incompetence is starvation. But I understand your point.
What about the “full price offer” with seller concessions such as excessive seller paid closing costs. Does that count as a full price offer?
These forums always serve to remind me that although we’re all presumed professional agents, so many of us operate daily under such different circumstances. Not necessarily better or worse, just different. These circumstances shape our perspectives so differently. But here’s one thing we need to all keep in mind; unfortunately, not all agents and clients are honest or honorable. Regarding clients and this thread, my suggestion to agents is to be more attentive to seller comments before agreeing to the listing. Hear what they’re saying. Consider what they’re not saying. Read between the lines. Ask more questions. My point is… Read more »
Interestingly, and coincidently, that’s not me, but I agree 100% tocayo.
Although I believe that we should be compensated for our work, I think we should consider what we could lose by suing a seller. Isn’t Real Estate about forming relationships? Don’t we rely on referrals? Is this seller someone who has bought and sold properties through you before? We want both buyers and sellers to sing our praises, not our greed.
I’m tired of working for free. Is there any other industry where you can work for a day, a week, a month and get nothing? It’s time to stand up for ourselves and our profession.
Don’t get me wrong, but after 38 years in Real Estate, I have been lucky that I haven’t had a seller back out. It’s the buyers that have screwed me out of commissions. We haven’t always had a buyer’s representation agreement, therefore I have been a glorified taxi driver more than once. I just know in the small town I live in, word would spread like a wildfire, and not in a good way.
great thoughts, all. I enjoyed the “enlightenment” all your comments provided. Thanks to each of you!
Is this communicated clearly to a seller at time of signing ? The agreement is very long so it’s important to make this clear how commission Is earned to the seller? Medical doctors would say my first consultation is free and then there is fee afterwards. Do you get my point ?
I bought a house I sign offer to purchase with the seller and agency they refuse to give me the property
A seller is not bound to accept any offer, even at full price.
Not if it is advertised for sale. There are two contracts that come into play here. The listing agreement, in which the seller agrees to sell at a stated price, and the Realtor agrees to market and use best efforts to find a buyer for the listed price. The second contract is created by the advertising. If the property is advertised at a certain price, a contract is implied between the seller, Realtor, and the buying public. If a buyer makes a full price offer without contigencies, and a seller refuses to sell at the advertised price, then “false advertising”… Read more »
Good morning, The following happened in AR not Tx! My wife and I offered full price on a home after viewing home via video walk through with our realtor. The home being very nice would not last long. Our offer was the first tendered only hours after listing came out. Later in the day while local potential buyers were viewing the home the homeowner came home. After meeting them she decided they would be the ones who would purchase her beloved home. Our offer was never considered. She based her decision solely on meeting them. This seems quite discriminating to… Read more »
Not in Texas(just recently moved from Texas) But found a home that was perfect in many ways. The home had been on the market for over a year. due to unforeseen issues, I had to clear a few things up and 6 months later the the home is still for sale. They had lowered the price several times over the year and knew we were interested. When things where cleared we offered full price of the listing. (minus closing cost) but the realtor had dropped them because the home is being sold by two brothers who bicker, and one decided… Read more »
Another perspective on this is when an uniformed seller signs with a listing agent and the agent convinces the seller to price the house low to get a quick sale. In this case, it seems reasonable that the seller decides to not take a full price offer after the seller wises up and realizes the house is under-priced. It goes both ways.
Thst is a true statement! Our realtor is doing that as we speak…We told her the CMA’s don’t warrent a lower price
..Then two home in our neighborhood sold for much higher thsn our listing with the same sq ft…
A contract is a contract. Sellers should be taken to small claims court or if commission amount too large than an attorney. Too long we have allowed Realtors to be held to a contract, but not the buyer or seller.
There are too many variables in the contract, Even when you receive a full price offer, sually there are other items that must be negotiated. If you try to collect a commission, when lawyers get involved, chances are that the seller won’t have to pay. However your reputation may be tarnished in the long run. It is best to let it go. Represent the best interests of your clients. You may not get this commission, but if you handle it well, referrals will come your way. That happened to me with a client, I let it go and know have… Read more »
I made a full price offer on a home. The sellers agent declined my offer saying the seller didn’t want to sell at this time. The property is still listed for sale at the same price. Do I have any recourse?
People may work for less then their time is worth but the cost is figured into the price. If you go to a dealership the “wasting” time is already figured in with commission. Same with Agents “wasting of time” is already factored into sales commission. Sometimes you get a lot sometimes a little but if you think you are not making enough per hour for the work you do change how you work. You do not have to be a real estate agent if you do not like the pay you can go work in a factory or fast food… Read more »
Is a agent supposed to say no to my price to list my home for. She refused when bidding wars were going on. She dropped price 10 grand at closing no idea. She kept saying you will get the right money it’d in the numbers game
The Real Estate industry has created this monster. In this market the listing price as become a suggestion not a price to buy.When you encourage multiple “over list” price offers then please don’t feel sorry for the Realtor. If a few brokers started sueing for a commission when they obtained a full price offer things might change
Can the agent remove the sign and lockbox( which are part of agreement ) if he gets upset that we refused an offer .
From the current feedback, it seems that I am forced to sell my home myself using an attorney versus a real estate agent. I am very conscious of the growing practices of corporate and wealthy investors to buy and flip homes in established neighborhoods. This disrupts the long term character of a close, nuclear neighborhood. I will never sell to an investor regardless of their offer. You state that a real estate agent is entitled to their fee if a full price cash offer is made. That leave me with no option other than selling the house myself. Do other… Read more »
Maybe she should pay for his commission
I think so
Seller not accepting the full price offer, yes, the Realtor has done their job, so seller, it’s time to pay up, we have families to provide for too. A seller should sell house if they receive full price offer from pre approved buyer.
So Y’all really think that a seller should be forced to pay you if the buyer offers full price but there are all kinds of other stuff in the contract that aren’t acceptable? What a racket that would be. Buyer agents could setup fake buyers and offer full price and demand ridiculous concessions with everything else favoring buyer and then when seller declined you get paid commission? Nice scam. It’s nice to see a situation where seller gets protected.
Question – I made an offer $100 over the asking price. The seller had no other offers for 2 weeks on MLS. I toured the home a week after my offer and still wanted to buy (the seller thought I may not like the house). I was told they’re waiting for two rich potential buyers (with no offer yet) to pay for a foundation inspection 2 days after my visit. I think they refused to sell due other discrimination circumstances. Is it legal to not accept my offer after a week while hoping for a bidding war or hoping for… Read more »