September 29, 2017
Realtor.com quoted me in Selling Your House Privately If You Have a Listing Agent: OK or a Big N-O? It opens,
So your home is for sale, and you’ve signed a contract with a real estate agent, but you were actually able to nab a buyer through your own efforts. Maybe it was through word of mouth or your aggressive push on Facebook (you should really apologize to your friends for posting so many pictures of your house!), but someone is writing you an offer and really wants to buy your house. Having found a buyer on your own, are you still legally obligated to pay real estate fees or commission? Here’s how to know if you’re on the hook.
Read your listing agreement
In most states, a seller and an agent draw up something called a listing agreement. The listing agreement details the rights and responsibilities of the seller and the broker, and usually outlines the circumstances when a broker is due a commission.
“If it is an open listing or an exclusive agency listing, the seller can sell the property and not have to pay the broker a commission,” says David Reiss, professor of law at Brooklyn Law School .
Things get tricky if the listing agreement confers an exclusive right to sell. This means the real estate agent has the sole right to sell the property. All offers must go through him or her, and for any sale, you’re obligated to pay the agent the commission spelled out in the contract, according to Marc D. Markel, a board-certified Texas attorney in residential and commercial real estate law. Agents rely on these exclusive listing agreements to avoid putting in what can be months of free work without seeing a payoff. For this reason, the agreement outlines the many ways an agent earns a commission, including what happens if the seller breaches the exclusive agreement.
If the sellers do find a buyer on their own, despite having a contract with an agent, they may be able to negotiate a reduced commission with the agent. But the sellers should be up-front about their potential to find their own buyer when drawing up the exclusive-right-to-sell listing agreement, says Markel. Maybe they know of a friend of a friend who is looking for a house, or they plan on marketing their home on social media.
If the sellers feel as if they are doing all the work, they might also be able to modify the existing agreement and add a termination if the broker doesn’t meet certain obligations, like selling the home within a certain time frame, says Sandy Straley, a real estate agent in Layton, UT. Other obligations for the listing could include organizing open houses, creating and distributing printed materials, and even the posting of videos shot by drones, says Markel.
- Based upon the 2007-2009 financial crisis and the Dodd-Frank Act, the U.S. Government Accountability Office studied the use of the financial industry’s use of swaps. Swaps occur through financial contracts (derivatives) where two parties trade payments rooted in an asset price or other value. The use of swaps is governed by Section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Dodd-Frank Act allows individuals and institutions to register as swap dealers; however, each are required to abide by specific rules which determine their eligibility to receive federal financial assistance.
- Equifax’s data breach woes are far from over. Massachusetts led the charge against the credit giant by filing a complaint against Equifax. The city of San Francisco has followed suit. While Massachusetts led the charge as a state, San Francisco is the first city to take action against the company. San Francisco marks the eighth group to take action against the company. Further Equifax’s internal controls are taking action as well, three of the company’s top executives were fired and the CEO suddenly retired.
- Similar to Equifax, Meridian Title Corp., has found themselves in trouble with the Consumer Financial Protection Bureau (CFPB). The CFPB fined the real estate settlement services provider $1.25 million for their violations of the Real Estate Settlement Procedures Act. Meridian failed to correctly disclose their relationship with Arsenal Insurance, a title insurance company party owned by Meridian’s own executives. By participating in such activity, the company illegally benefited from their relationship with the title insurance provider.
- Financial Regulatory Reform and the Excess of the Dodd-Frank Act, Dodwell
- Opposite of Correct: Inverted Insider Perceptions of Race and Bankruptcy, Cohen, Lawless, and Shin
- The Effect of House Prices on Household Borrowing: A New Approach, Cloyne, Huber, Ilzetki, and Kleven
- Multiple Tranches, Information Asymmetry and the Impediments to Mortgage Renegotiation, Korgaonkar
- Sunk-Cost Fallacy and Seller Behavior in the Housing Market, Ratnadiwakara and Yerramilli
September 26, 2017
I was one of the many signatories of this letter to Senators Crapo (R-ID) and Brown (D-OH) opposing H.R. Res. 111/S.J. Res. 47, “which would block the Consumer Financial Protection Bureau’s new forced arbitration rule.” the 423 signatories all agree “(1) it is important to protect financial consumers’ opportunity to participate in class proceedings; and (2) it is desirable for the CFPB to collect additional information regarding financial consumer arbitration.” The letter, reads, in part,
Class action lawsuits are an important means of protecting consumers harmed by violations of federal or state law. Class actions enable a court to see that a company’s violations are widespread and to order appropriate relief. The CFPB’s study shows that, over five years, 160 million class members were awarded $2.2 billion in relief – after deducting attorneys’ fees. Class actions are especially important for small dollar claims, because the time, expense and investigation needed for an individual claim typically make no sense either for the consumer or for an attorney. Additionally, class actions provide behavioral relief both for the plaintiffs and the public at large, incentivizing businesses to change their behavior or to refrain from similar practices.
Individual arbitrations are not a realistic substitute for class actions. Compared to the annual average of 32 million consumers receiving $440 million per year in class actions, the CFPB’s study found an average of only 16 consumers per year received relief from affirmative claims and another 23 received relief through counterclaims; in total, those consumers received an average of $180,770 per year. While the average per-person arbitration recovery may be higher than the average class action payment, the types of cases are completely different. The few arbitrations that people pursue tend to be individual disputes involving much larger dollar amounts than the smaller claims in class actions. Most consumers do not pursue individual claims in either court or arbitration for several reasons: they may not know their rights were violated; they may not know how to pursue a claim; the time and expense would outstrip any reward; or they cannot find an attorney willing to take an individual case. Thus, if a class action is not permitted, most consumers will have no chance at having their dispute vindicated at all. Class actions, on the other hand, are an efficient method of resolving claims impacting a large number of people.
The U.S. legal system depends on private enforcement of rights. Whereas some countries invest substantial resources in large government agencies to enforce their laws, the United States relies substantially on private enforcement. The CFPB’s study shows that, in those cases where there was overlap between private and public enforcement, private action preceded government enforcement 71% of the time. Moreover, consumer class actions provide monetary recoveries and reform of financial services and products to many consumers whose injuries are not the focus of public enforcers. American consumers can’t solely depend on government agencies to protect their rights.
Reporting on individual arbitrations will increase transparency, broaden understanding of arbitration, and improve the arbitration process. As scholars, we heartily endorse the information reporting requirements of the rule for individual arbitrations. This reporting will address many questions that have gone largely unanswered, due to the lack of transparency that currently exists in this area of law. For example, the public will now know the rate at which claimants prevail, whether it is important to be represented by an attorney, and whether repeat arbitrators tend to rule more favorably for one side than the other. The reporting will permit academic study, which will prompt a necessary debate on how to strengthen and improve the process.
In conclusion, we strongly support the CFPB rule as an important step in protecting consumers. We believe it is vital that Congress not deprive injured consumers of the right to group together to have their day in court or block important research into the arbitration process.