This story was submitted by a Phoenix Real Estate Agent and has a couple "lessons to be learned" for both agents and clients.
Early on in my real estate career, a business aquaintence asked me to list their property. However, prior to the listing, they wanted to find the perfect place to up-size as their family was growing. For some months we looked a properties, the whole family and relatives had to join along in the process. Finally, a property was agreed upon. I listed their home for sale so they could write a contract on the new property, contingent upon the sale of their current property I listed. My client was pre-approved based upon the savings they had, to purchase the new property. I made clear with my clients that this money could only be used to make their down payment on their new house. We closed on their old house then I received a call from their loan officer. "Your clients do not have the money to close on the other house"! (Young family, two children and one on the way)
Turns out, my clients spent their down payment on furniture for their new house. As the property I listed and sold for them had already closed, they were faced with being out in the street with no place to live. I ended up donating my commission for their down payment on their new house. After months working with them, the net result in my pocket was $320.00. During the walk-thru in their new home, I said to my clients, "Perhaps you could do something nice for me in the future".
It's been 10 years since. This family has had several additions to their family and needed a larger property. They listed with another agent although, I had stayed in touch with them over the years.
Because of situations like this, the "Buyers Broker Agreement" was created. An agreement is entered into between the Real Estate Agent and the Buyer. The Buyer pays an up front fee to the Real Estate Agent. ($1000.00) Upon close of escrow, this fee is refunded to the Buyer by the Real Estate Agent. It keeps Buyers honest and the Agent secure for time rendered in securing property for the Buyer. Many professionals charge up front fees for their service. Real Estate Agents have a fiduciary duty to secure property for the Buyer's. Buyer's in turn have a fiduciary duty to honor their Agent who provides them with professional real estate services.
Dan Hill, Realtor
Home Buyers: Don't spend your downpayment money. If it weren't for the generosity of this agent the buyers would have been living out of a hotel for weeks to come. I think you will be hard pressed trying to find an agent that will donate their paycheck the way this agent did. It would have been nice if the buyers returned the favor by listing their home with him when they were ready to sell.
Unfortunately for the Southern New Jersey agents, the use of the "Buyers Broker Agreement" hasn't been implemented as of yet.