How Can a Seller Refuse to Pay a Buyers Agent?
The traditional method for selling a home is to post a For Sale sign outside the house and take amateur pictures online. The problem with For Sale By Owner (FSBO) homes is that they’re not listed in the MLS. 90% of buyers hire buyers’ agents to sell their homes. So, how can a seller refuse to pay their agent? Here are the legal ramifications of refusing to pay a buyer’s agent.
Legal action against a seller
There are several ways to take legal action against a seller who refuses to send you a buyer’s agent’s check. If the seller refuses to send you the money, you should contact a real estate attorney and consider your options. In some cases, the seller may be required to pay your agent’s commission even if you’ve broken the contract. However, this process can be time-consuming and costly, and there’s no guarantee that the outcome will be satisfying. The first thing to do is to record a lis pendens against the property. That will make the property unmarketable and stop any future transactions on it.
In most cases, a seller who fails to pay a buyer’s agent can pursue money damages for breach of contract. However, the seller must commence legal action within six years of the cause of action arising. Generally, this is measured from the failed closing date. If the buyer did not pay the buyer’s agent, he could attempt to collect the judgment from the seller. In some cases, this is not possible, but it’s an option.
If you’ve already signed a purchase agreement, the seller has 15 to thirty days to cancel the agreement if the transaction doesn’t work out. A seller who refuses to pay a buyer’s agent’s fee may withdraw from the contract and pay the buyer’s agent’s fee instead. Generally, the seller will keep the earnest money as liquidated damages. If the seller is unwilling to make a buyer’s agent’s fee, they may have to compensate you for the loss.
A buyer can also sue the seller for breach of contract. This action will often result in monetary damages for the buyer, and the buyer can file a lawsuit for damages. If the seller refuses to pay a buyer’s agent’s fees, he could also be ordered to sign a deed. The buyer can also demand that the seller repay the good faith deposit and any other expenses incurred during the transaction.
Reasons why a seller might refuse to pay a buyer’s agent
A seller’s refusal to pay a buyer’s agent can result in several problems. In many cases, this decision means that a seller cannot list their home on MLS and will therefore be unable to work with a buyer’s agent. The only option available to such sellers is to sell their home as a traditional For Sale By Owner, which means that the house will be sold off-market. Consequently, buyers’ agents tend to steer clients away from sellers who refuse to pay a buyers’ agent.
A seller may refuse to pay a buyer’s agent because they are uncomfortable with the commission split. In some cases, a seller may not want their buyer’s agent showing the property because the agents don’t think they’re qualified to sell it. Sometimes, a seller’s agent might refuse to work with buyers who are not eligible to buy the home. The buyer’s agent may refuse to work with the seller’s agent in such cases.
Another reason why a seller might refuse to pay – the seller’s agent has already sparred with the seller over price and inspection items. A seller’s agent has a fiduciary duty to their client. If they refuse to pay a buyer’s agent, the buyer can still win. When the seller refuses to pay a buyer’s agent, the buyer may lose out on the best property for them.
Another reason a seller might refuse to pay s buyer’s agent is a written agreement requiring the agent to receive 3% of the sale price. However, this agreement does not guarantee the commission the agent receives, and the buyer ends up paying more than expected. Not to mention that this could ruin the deal for both parties. It may seem counter-intuitive, but it is an inevitable occurrence.
Legal ramifications of refusing to pay a buyer’s agent
Sellers can refuse to pay their buyer’s agent, but the ramifications can be disastrous. If the seller refuses to pay, they cannot list their home on the Multiple Listing Service (MLS) or work with a buyer’s agent. Instead, they must list their home as a traditional For Sale By Owner, selling it off the market. Buyer’s agents will typically steer their clients away from sellers who refuse to pay their agents.
In some instances, the buyer’s agent can charge a commission to the seller, which could be as much as $18,000, depending on the home’s value. For example, suppose a seller accepts a $325,000 offer. In that case, the agent may refuse to show the buyer inspection reports or make repairs. A seller who refuses to pay his buyer’s agent can also lose out on the commission in the listing agreement. The buyer may have to extend the due diligence period, resulting in a prolonged closing.
Legal ramifications of refusing to accept an offer from a buyer’s agent
There are a variety of legal ramifications of refusing an offer by a buyer’s agent. While refusing an offer from a buyer’s agent is not illegal in all cases, it is unethical if the reason is discriminatory. It is unlawful to discriminate based on age, sex, race, sexual orientation, disability, or other protected characteristics in many states and federal jurisdictions. Refusing an offer is not illegal, but sellers should respond quickly to any reasonable buyer’s offer.
A seller may reject an offer if it is too low. The seller may feel that the house is worth more than the offer or that the market dictates a higher price. There is no need to accept the first offer in such a situation. Refusing an offer is also not illegal if the seller has legitimate concerns about the buyer’s ability to secure a mortgage. In such a case, the seller should wait until the buyer has received approval for the loan.
Refusing an offer by a buyer’s agent can have legal consequences. Under the Fair Housing Act, sellers cannot discriminate against a potential buyer based on their race, sex, religion, familial status, or national origin. Rejecting an offer based on these factors may be considered unlawful. Moreover, there are other legal ramifications of refusing an offer by a buyer’s agent.