I am a licensed attorney and am in the maket to purchase a home. My wife and I saw one that we liked that is on the market. We do not have a real estate agent representing us. The seller of this new townhome does have a broker listed. I told the broker today that we would like to make an offer on the house and I also informed him that I would be serving as our own broker in this transaction and would be entitled to a split in the commission which I would want to take as a credit at closing. This guy responds in an email saying that it is against the law for them to split the commission with an unlicensed person. This led me to go to Westlaw and check out the Texas Transaction Guide where it clearly states that attorneys are exempt from the licensing requirements and that attorneys-at-law can receive a commission. Anyway, I send this to him assuming that he would accept this at face value. Anyway he responds later with some bs saying his superior won't allow this. What do you guys recommend that I do. It is clear that I can get a split of the commission and that he has a duty to present all bona fide offers to the seller/builder and it is not his call to make. I would rather not go nuclear yet and punk this guy. What do you guys suggest? Should I go ahead and print out a TREC form and submit it. What are some winning strategies here.
Its possible that they are unsure of what to do because they split a title insurance kickback with RE agents, and aren'ts sure if you are on the down low. Please please please ask for a kickback from the title insurance people and record it. Everyone knows they do it, but its impossible to prove.
Check out this article from the Texas Real Estate Commission. The Link If you are the principal in the transaction, it is also legal from them to split fees with you. I would email him this document as well and tell him that you don't have an agent and want your 3% or else no sale. I know another lawyer who had problems with this same issue and ended up contacting the sellers and informing them of their agent's tactics in sabotaging a sale because he didn't want to split the commission. They read him the riot act and my friend got his commission when he bought the house.
Hey - a lawyer asking for advice Seriously, the above advice has been good. I would ask the broker, "Why are you hesitating on following the law in Texas? I don't understand your bosses' legal stance that he just doesn't want to do it". If no valid response (like ok, we'll give you the 3%) - then go to the seller and find out how much he knows about the transaction.
that article is quite confusing and I've read it several times before. A lawyer (I am one) is exempt from the Act, but all that means is a lawyer can perform brokerage services without a license and without complying with all the requirements of the Act. However, in the course of representing someone else, a lawyer cannot require fee spliting with an agent/broker because the agent/broker isn't authorized to share with unlicensed persons performing brokerage services. This part of the Act is a prohibition on the broker/agent who is subject to the Act and the prohibition is against paying someone other than a "license holder" refering to a broker/agent. The lawyer's "exemption" does not erase the prohibition on the broker/agent. This is part of the teeth of the law that provides only licensed individuals can perform brokerage services (except for lawyers who are by definition exempt from the license requirement). In that situation, you have the seller agree to pay "attorney's fees" and the broker agrees to reduce his commission. However, it is entirely different than the listing agreement which provides that the listing broker/agent shall share with a licensed broker/agent representing the buyer. When an attorney is a principal, the commission can be shared, but an attorney is no different than any one else in that positition, hence the reference to plumbers, etc. However, it should be disclosed to the lender, because most lenders are very picky about cash back deals and this would certainly qualify as such. If the payment is credited to closing, it would show up as closing costs paid by the seller and the commission paid by the seller would also be reduced. Once again, the listing agreement doesn't require sharing in this situation. So, the seller's agent is very much in his contractual right with the seller to say "no deal". It may be bad business, but that's his contractual perogative. In other words, you can demand a fee splitting, but the mere fact that you are a lawyer really has nothing to do with it. You can demand it because you are a principal to the transaction. Of course, the seller's agent isn't required to share, so the only tactic that might work is the one mentioned above, tell the seller the agent is refusing to close the deal because of his refusal to split the fee with a principal. Bottomline, you are not entitled to fee sharing simply because of your law license.
Thanks for the help. I found that article as well after posting this thread. The Transaction Guide had some incorrect information. i will use that as ammo and submit an earnest money contract and if they don't forward it on to the seller I will make sure the seller knows that fact. That is just greed on the listing agent's part.
When in similar situations, I always find it useful to go directly to the "managing broker" at the agent's office, and chat with them. They are almost always more knowledgable than the agent.
As already mentioned, the listing broker CAN share the commission with you since you are a Principal to the transaction, but he is under no OBLIGATION to do to so. Your best bet is to submit your offer, including the commission split, in the form of an earnest money contract. Inform the listing broker of his obilgation to present the offer to the seller. If the offer isn't presented to the seller, the you can file a compaint with TREC and the broker could lose his real estate license. Bernard
As a licensed agent you would not get half my commission the offer would be submitted to the seller if he chooses to pay you three percent great. Attorneys can sometimes be very difficult to deal with and are not always the ideal customer. My seller is made aware of this anytime the buyer is an attorney. I have had sellers take lower offers to prevent having to deal with attorneys. That being said I have a lot of respect for attorneys and recommend my clients hire them for all transactions I just do not want to be the one they are negotiating with.
I would guess it's to be included specifically in the offer for the owner to accept or decline. By law the agent has to bring the offer to the seller.
I would be interested to hear from WBH why dealing with lawyers is generally speaking, a pain in the ***? Perhaps it is because they are generally better negotiators than the general public and have more experience dealing with complex contracts?
I went through this buying my house. I referred them to the rules both from the realtor and the legal side. Eventually, they credited me at closing with the 3%, which was better, anyway, since it was not income to me. (Incidentally, I've been easy to deal with in numerous real estate transactions.)
Will you have to pay income tax on the commission split? It may be better to reduce the sale price by 3% if the seller's agent will accept a lower commission.
generally, lawyers are more difficult to deal with because a) they think they know everything, and b) they assume they are smarter than anyone else they are dealing with. please to all the attorneys on this thread, don't take offense, but I have found this to be true in my professional life. but some of my best friends are attorneys the 3% is coming from the seller of the home, not the listing agent. seems to me the seller may be the one that doesn't want to pay you 3% of the purchase price, but maybe they will. Can't hurt to ask.
^^^ I was going to say what bularry said. As a lawyer, I assume an industry guy knows more than me about an area of the law that impacts him everyday unless I deal with that area of the law everyday. I think that is not the norm for most lawyers.
in texas, a lawyer can act as a realtor or real estate broker and thus is entitled to the standard commissions of one, which is usually 3% or half of the listing realtor's 6%. this is not the same as the listing agent giving commission to a principle in the transaction. and yes it would be taxable income, unless you as your realtor elect to give yourself a credit on the HUD. but some lenders don't like that, or at least count it towards the maximum concessions the buyer is allowed to receive. so if you were to negotiate the seller paying some closing costs you would have to factor that in. it figures that the one realtor on this thread is the least informed. seems to me that 2/3rds of realtors don't know half as much as they should about their job. (same goes for loan officers)
Okay I will take my lumps if there are any to be given. First as an agent of REMAX i would submit all offers to my client. The seller chooses to whom he will sell to. Second if I am not a member of the local MLS then I would not be entitled to a fee for selling a home in that MLS area. Just because someone is an attorney does not mean they are entitled to a commission. Check the listing agreements on TREC and if the home that you are interested in purchasing excludes non-memebers of the mls from recieving a fee then that would make it pretty simple. And i do not have anything against attorneys as my brother is a UT law grad and currently in his second term as a Judge in Collin County and his wife is district Court Judge.
