Real Estate Agents, Realtors, and Salesmen
(Page 3 of 8)
May/June 1974
by Les Scher
Even if you are positive that you have the law on your side and that you will have no problem proving your case, you still have to hire an attorney, pay court costs, and follow through with a lengthy and costly litigation. And if the defendant agrees to settle the matter out of court, you will still have legal fees to pay. In many areas, the courts are jammed with cases and a year or two may pass before you can even get into court. If you don't have evidence in writing, you will have a difficult time proving your case.
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Never depend on your ability to bring a successful case against someone should he defraud you. Your goal is to investigate the property so thoroughly before you buy that you will not have any reason to bring a court action later. As a safety factor, make sure your Contract of Sale specifies all the terms and conditions of the deal so that you will have a good case if those terms are not met.
THE REAL ESTATE AGENT WORKS FOR THE SELLER
A basic fact to remember when dealing with the real estate agent is that he is working for the seller.* Although he is a middleman, he is not an independent person who simply tries to find a buyer for a piece of property. Usually the seller has signed a form of Listing Contract, making the agent an "employee," and when the agent finds an acceptable buyer the seller will pay him a commission. Thus the agent is directly responsible, an owes complete loyalty, to the seller. Since the agent's commission is based on a percentage of the selling price, it is in his interest to get the highest price possible for the land. Commissions usually start at 6 percent of the selling price and often go as high as 10 percent.
A seller usually gives his property to an agent under one of the following common types of Listing Contracts. The most desirable contract for an agent is an "exclusive right to sell" the property, which means that he is the only person allowed to sell the land during the period the contract is in force. No other agent can show the land, and if the seller finds a buyer on his own, a commission must still be paid to the agent under contract.
Under an "exclusive agency" contract, no other agent can show the land, but the seller reserves the right to sell the land himself without being obligated to pay a commission to the agent.
The third type of contract is the "open listing," in which the seller will list his land with several different brokers. The first one to find a satisfactory buyer gets the commission. The seller can also sell the land himself and not pay anyone a commission. Most brokers dislike this type of listing and will only show open-listed land after showing their exclusive listings.
If you see land that is listed by several brokers under an open listing, you can choose the broker you like best or you can locate the seller and buy directly from him. The agent who is named on a "For Sale" sign on a piece of property does not necessarily have an "exclusive right to sell" the land. If the sign does not state that the agent has an "exclusive right to sell," you should contact the owner first because if you buy directly from him you can save the amount of the commission.
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