Our friend is a real estate agent. He just sold the house that we are living in. We have been looking for a new home for a long time, but can't find anything pre-existing that we want to buy despite his best efforts. We have decided to build new. We know the builder well and I am an attorney so I feel completely comfortable proceeding with new construction without the help of our friend. We could add 1-3% to the sales price so that we can give our friend a commission, but that would be stretching our budget more than I feel comfortable. My spouse and I have been fighting about whether to bite the bullet and include him or not. I feel obligated and I don't want to cause hard feelings; my spouse says I'm being silly. Help?
I understand your dilemma and would be in the same quandary if in your seat. I’m certain that you can handle the transaction by yourself. Just a little side note- Perhaps you may be aware that in some states, an attorney may apply to sell real estate without taking real estate educational courses. Practicing attorneys (members of the State Bar) exceed the educational requirements for salesperson licensees, and meet the educational requirements for broker licensees. In addition, some state laws provide broker licensees expanded abilities for practicing attorneys. I just thought that this is an interesting fact. Being loyal to a friend is a very important and frequently overlooked virtue. With that said, here's my answer as follows: Stretching your budget to pay an unnecessary fee just isn't practical. Neither is bickering with your spouse. I would explain to your friend that funds are tight, but that you looked at every possible way to pay them a fee. Perhaps you could take them out for lunch and have a heart- to- heart discussion. Promise that you will spread their name around in a positive manner to friends, family, neighbors, and colleagues. A real estate sales person will appreciate your referrals and provide them with instant credibility. People who are not your real friend will not accept any excuse as being satisfactory; true friends really don't need an excuse.
I agree with spouse. Attorney, huh?
You are not obligated to use a real estate agent. Real estate agents work on commission, which means that they only get paid if they are successful in finding a buyer for a property or in finding a property for a buyer. If things don't work out for whatever reason, even if they make a good match, but the bank refuses to give the person a mortgage, then they don't get paid. They know about this risk, and it is part of what they get paid so much when they do get a deal that works.
Your spouse is 100% correct. If it's a straight forward transaction, then do that. No point stretching the budget to give a commission to your agent. Your agent already made a commission from selling your home. It's a business transaction. Stop viewing this from the friendship perspective and think business. If this were some random agent, would you be thinking this? Of course not! Your friend will understand. I have helped many friends with their home purchase questions when they use other agents! Why? Because they're my friends not because I like making money; but because I like them as people! It'd be a different story if you're saying your friend found you this lot, did all this work and you're trying to screw him. It doesn't matter if you're an attorney. Make sure you have the assistance of a real estate attorney in doing this transaction or offer your friend a small commission for doing the contract (since you already found the lot and the builder).
