In your search for a new home, you decided to hire a real estate agent. Later, you found the perfect house, only to discover that it is listed as For Sale By Owner (FSBO) and the seller does not want to involve real estate agents.
You might feel the temptation to handle the transaction yourself to avoid the agent’s fees. Can you get in legal trouble if you go ahead with the sale without notifying or using your agent?
Types of real estate agent contracts
Part of the reason why you hire a real estate agent in the first place is to find and present houses to you. You may feel that, since you found this FSBO home yourself, you do not have any legal duty to involve your realtor in the transaction. However, that depends entirely upon the type of agency agreement you signed.
Some agency agreements are non-exclusive, meaning you are only contracting to pay the agent fees if you buy a house that they present to you. This type of contract does not prevent you from using other agents, or from buying a house yourself without agent representation.
Other agency agreements are exclusive. If you signed one of these agreements with your real estate agent, you have a legal duty to: inform them of the house that you want to buy, involve them in the process, and ensure that they receive their fee (which the seller typically pays, but which you will be responsible for if the seller does not pay).
Exclusive agency agreements are not permanent. They have a set time limit – typically three months to a year – after which they expire. If you do not want to involve your agent in the purchase of the FSBO home you found, you must wait until your exclusive agency agreement expires.
What if I do it anyway?
If you decide to purchase the home without your real estate agent, you run the risk of breach of contract. Many agency agreements contain clauses that give agents the power to collect their fee if clients try to cut them out of a purchase. The agent can sue to enforce the clauses.