Whether you are a businessperson looking for office space for your company, or a residential buyer looking for a new home for your family to settle down in, you have probably been working with a realtor. Realtors can be expensive, but their services are often worth the cost, since they make the process much easier for you.
But what happens if you find a property that is for sale by owner? Could you avoid mentioning it to your realtor and take care of the deal yourself in order to save some money on realtor fees? Or would that incur legal problems?
Types of realtor contracts
When you first retained your realtor, chances are you signed some form of contract with them. There are several different types of realtor contracts (also called buyer-broker agreements), each with their own functions and rules.
The most important feature of your realtor contract when it comes to properties that are for sale by owner is the exclusivity element. Read through your contract carefully. Does it say that your realtor has the exclusive right to represent you in any property purchase? Does it bind you to allow your realtor to represent you even if you find the property yourself?
If your contract is an exclusive right-to-represent contract, your realtor will receive their fee regardless of who found the property. These types of contracts have an expiration date, which can range anywhere from a month to six months or more. Unless you are willing to wait until your contract expires, you will have to involve your realtor in the transaction.
What if I do the deal myself anyway?
If you choose to ignore the exclusivity provision in your realtor agreement, you are violating a binding contract between you and your realtor. It could be that nothing bad will happen – however, if your realtor were to choose to bring a breach of contract lawsuit to recover the fee you owe them, they would be able to point to the contract in support of their claim.
If you want to ensure that you will not have any legal troubles with your realtor, then, it’s best to either involve them in the transaction anyway, or wait until your exclusive realtor agreement expires before beginning the process of purchasing the property.