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| Rental Agent Commission On Sale To Tenant |
| Posted by: Rushfan |
| Date: July 07, 2006 03:25:33 PM |
| To All,
I currently use the services of a property management company to
manage my rental property in California. The agent also possesses a
real estate brokers license. I am currently contemplating selling the
property. I would like to give the tenant first bids on purchasing. I
have a couple of questions:
(1) The property manager advertised and located the tenant (several
years ago), and suppose she represents the tenant as a buyers broker.
What are the standard commission fees I should pay?
(2) Suppose the tenant does not sign up with the property manager and
I work with the tenant privately. Am I obligated (in general) to pay a
commission anyway to the property manager should I end up selling to
the tenant.
I would appreciate your replies.
Best Regards,
Rushfan |
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| Re: Rental Agent Commission On Sale To Tenant |
| Posted by: Ed |
| Date: July 09, 2006 11:05:33 PM |
| You have to look at the property agreement that you signed with the RE agent. Also consult the RE laws in your state, but it doesn't sound like you'd owe him a commission unless he represented either you or the buyers on a subsequent sale (unless it's in the property mgmt. agreement). |
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| Re: Rental Agent Commission On Sale To Tenant |
| Posted by: Ralph |
| Date: July 10, 2006 05:24:19 AM |
| California law requires a property management company to be licensed as a real estate broker. Accordingly, it is not unusual that a management contract include a listing agreement if the property owner doesn’t object to such a clause. The first thing you need to do is confirm that your property management contract does not give the company also a listing agreement. Even if it does, such clauses sometimes do not meet requirements for a legal listing – for example, most states require a specific ending date for a listing even if not requiring one for a management contract. Such listing clauses often include tenants obtained by the management company, sometimes even for several months after cancellation of the management contract. If your contract includes a valid listing agreement, you may be able to delete it, obtain a new contract without a listing, or negotiate a mutually acceptable commission taking into account that the broker had to do little extra work for the commission.
I myself would not be willing to pay much commission under such circumstances in a normal market. I would terminate the managemenet contract and wait the necessary time required to avoid doing so if the total commission were more than 2 or 3 percent unless the price were correspondingly higher than I thought I could get. However, if it's a slow market, having a ready buyer is sometimes worth a lot.
If the company has no written listing with you, any contract with the tenant as a buyer’s agent would not be your responsibility, but might impact the ability or interest of the tenant to be a buyer. However, that potential issue could probably be dealt with by adjustment in price and other terms.
Again, absent any written agreement between you and broker or between the tenant and broker, you and the tenant may do whatever you wish.
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