Hypothetical Hoboken Condo Buyer Scenario
I thought it might be fun (and educational) to discuss a possible response from you, the Hoboken condo-buying public, to a pretty common situation that might arise when you’re home hunting in Hoboken. While I sometimes get ideas for blog posts from real life situations, this is a hypothetical that I made up for the sake of this post and bears no relation to any particular “deal” in reality.
Let’s say you’re looking to buy a condo in Hoboken. You’ve found a real estate agent whom you really like and whose expertise you think highly. Your agent has been taking you to see a bunch of properties. In fact, you’ve now spent a few months looking at Hoboken condos on a pretty regular basis. Your agent has been responsive, diligent, informative, and generally helpful to your search process. Overall, you have seen some really nice properties and you’ve been very happy with your agent’s work on your behalf.
Most people refer to a realtor as their ‘agent’. Now, in some parts of the country, a buyer will sign an agreement with an ‘agent’ that creates a true agency relationship. That agreement also obligates the buyer to compensate the agent for his or her services no matter where the buyer finds the property they ultimately buy. In addition, the agreement makes the buyer’s agent an actual legal agent of the buyer. In Hoboken, that is rarely the case.
Most buyers work with someone called an “agent” but that person is just there to help find you a new home and facilitate the deal from finding the property through closing. We call that realtor a “transaction broker” to differentiate them from a true agency role. If you ever sign a New Jersey standard form sales contract, you will see that term. There is no overt or express contractual relationship or legal agency between the buyer and the agent. So let’s say that is the case in our hypothetical scenario. Your agent and you have not signed a buyer’s agency agreement so your ‘agent’ is really a transaction broker.
One day, you are walking down the street, or browsing the web, when you see the condo of your dreams. It’s is for sale by the owner (we call them fsbo’s). Since you’ve got no contractual duty to include or compensate your agent in a transaction regarding this new fsbo property, what do you do? How do you handle it? The possibilities range from:
– offering to sign a buyer’s agency agreement right away so that you will compensate your agent and they will represent you from start to finish in your fsbo deal.
– informing your agent about the fsbo property you’ve found so your agent can find out if the seller is willing to pay a commission to your agent for bringing a buyer (you) to see the property and to handle the transaction on your behalf.
– you drop your agent like a hot potato and avoid his or her calls, emails and questions and persue the fsbo on your own. When they track you down to ask where you’ve been, you lie and say you no longer have any interest in buying.
Of course, there are many shades of grey in between these three options but you get my gist. I’m curious to hear what you all think is the right / best / moral / ethical/ honest / expedient way to handle this type of situation.
Does it matter what stage you are at of the buying process? What if you’ve found a place together with your agent, have made an offer which was negotiated by your agent, have done a home inspection with your agent, and are still in attorney review on the first property when you come across the fsbo you now wish to buy instead? You certainly have the right to cancel the contract on the first property and buy the second. But does that change your answer?
Remember, situations like this do on occasion arise in Hoboken, I’m posing the question merely because I’m curious to see what you all have to say on the subject and what your experiences in similar situations may have been.