this kosher? - Posted by Ben (NJ)

Posted by Ben (NJ) on January 20, 2002 at 01:32:16:

I thought it was interesting too. I didn’t make a big deal of it because like I said, I have no intention to sell within the next year anyway and even then it would only apply to a sale to this tenant, so I am not going to blow out of proportion what could be a moot or very remote occurrence. I wonder if they ran some kind of study and found out that a large percentage of tenants end up ultimately purchasing their subject property and they were tired of getting screwed out of a sales commish for finding a buyer they “procured”.

Realtors…is this kosher? - Posted by Ben (NJ)

Posted by Ben (NJ) on January 19, 2002 at 20:52:22:

I hired an agent to find me a tenant for a condo I own.
She was about to put it in MLS but found a tenant before
it even went in which was great. Since the MLS thing never materialized she is asking me to just rip up that agreement and sign an exclusive. According to the exclusive, she gets her one month commish from the tenant which is no skin off my nose, but it also says if during the term of the lease the tenant agrees to buy the condo from me, she gets 6% commish. This apparently applies even if the tenant renews MULTIPLE times. This is where I balked. I told her if within one year, I decide to sell and the tenant buys, I’ll give her 6% because she in effect procured the buyer, but if he renews ten times and ultimately ends up buying the unit in ten years, I am not going to be indebted to her in perpetuity. She bristled a little and put up a fight but eventually caved in. This is a new clause to me. What do you guys think? Was I being unreasonable? What gives her the right to an eternal commission?

Re: Realtors…is this kosher? - Posted by Mark (SDCA)

Posted by Mark (SDCA) on January 23, 2002 at 11:08:49:

I think you were more than fair with her. I wouldnt even have given her ONE year. She didnt produce a buyer. She produced a TENANT. And she got paid for that.If she wants a commission then produce a BUYER.

Then again maybe I am biased against realtors since I get so many solicitations from them saying how they have a buyer for my property. Funny, whenever I fax themback saying to have their buyer write me an offer… I never hear back from them.


Re: Realtors…is this kosher? - Posted by GL

Posted by GL on January 21, 2002 at 14:11:35:

I guess she figures if baby holds up some candy why not take it?

Such a clause is not illegal or unethical but I can’t imagine why anyone would sign it. Apparently it seems like a remote possibility at the time so what the heck. But the agent is setting herself up for a free payday at your expense. If she can put that in every contract and get away with it why not? It cost her nothing and she might hit the jackpot.

I would sign a contract paying her to find a tenant, but I wouldn’t stand for a clause whereby I would pay if the tenant later bought the place, nor would I pay another commission if the tenant renewed her lease.

In fact I wouldn’t hire a RE agent to rent any property of mine, as I can do a better job myself and save a commission.

Re: Realtors…is this kosher? - Posted by Ken (NJ)

Posted by Ken (NJ) on January 20, 2002 at 18:22:00:

I had nearly the same thing happen to me. A realtor found a tenant for a SFR and inserted a clause that if the tenants buy I owe the realtor 3%. I did not balk because I needed the tenant and the 3% did not seem unreasonable. My thought was that holding costs plus another realtor’s commmisson would probably exceed 3% anyway. Also, if I sell to the tenant, guess who would eat that cost?

Re: Realtors…is this kosher? - Posted by Redline

Posted by Redline on January 19, 2002 at 23:20:33:

In listing agreements in NJ it would be common for the realtor to get paid regardless of who found the tenant/buyer, unless you state otherwise. You can get what I believe is called an “open listing” where if you find the tenant/buyer you don’t pay.

As far as her being due a commission if the tenant ends up being a buyer sometime in the future … this one is news to me. Can’t say I’ve seen it before and personally I would not go for this. You asked for a tenant, she didn’t even get you that … but OK fine, the listing says she gets paid. However if that tenant becomes a buyer later on just because you decide to sell I don’t think that entitles her to a commission.

None of our office listing agreements say anything like this … maybe they should! :wink:


Re: Realtors…is this kosher? - Posted by Travis (Dallas)

Posted by Travis (Dallas) on January 19, 2002 at 21:36:17:

What did the original agreement say the REALTOR would get? If you were just paying to find a tenant, then just stick with your original agreement. It sounds like it was easier than you both thought.
If the second agreement asks for more, why would you want to do that?
It’s your condo and your money. Do what you agreed to, but don’t get pressured into anything that you don’t want to do.
Good luck.

One point of clarification… - Posted by Ben (NJ)

Posted by Ben (NJ) on January 21, 2002 at 18:38:11:

here in NJ, the tenant pays the entire commission to the agent and again pays the commission to the agent upon renewal so it costs me, as landlord, nothing.