My real estate agent offered me verbally that she will pay for the home inspection fees for a property for which I signed an "agreement to sell" with the selling party. A mortgage application was prepared and submitted by my real estate agent to her mortgage agent. The mortgage was however rejected by the bank. In the meantime, my real estage agent got the property inspected by a home inspector and also paid him the home inspection fees on an invoice that was raised to her name. Subsequently, I decided to leave the real estate market till the time I have a better credit history to get a mortgage. Sometime later, my real estate agent started threatening me to pay the home inspection fees to her or else she will file a case in the court and also get a collection agency after me and report to the credit rating agency.

Am I obliged to pay the home inspection fees to the agent now that the deal did not materilize, when she herself had offered to pay this from her pocket?

Well what do you think the right thing to do would be?

She offered to do this with the expectation that you would buy something, and she would then be reimbursed for her expense when the deal closed and she got her commission.

Do you think real estate agents just have $300 - $600 cash to give away pro bono to people just for the heck of it??? Do you realize she has bills to pay, a family to feed?

Granted she was an idiot for offering to do this to you - never in a million YEARS would I offer to pay a home inspection for someone. If you don't have the cash handy to pay for a home inspection how in blazes are you going to come up with the closing costs to buy a house.

Why don't you just let your conscience be your guide. She acted in good faith (albeit stupidly, obviously) with an expectation that you would buy a home and she would be paid.

I'll take the opposing side from Perky.
She offered to pay, you signed an agreement of sale in good faith. You were not approved for a mortgage. End of deal.
Unless there's something left unsaid here (like you agree to pay if the deal fell apart) you have not obligation to the agent.
Sound like paying for the home inspection is a marketing ploy by the agent that she didn't think through.

I'm thinking that this guy is being nagged by conscience, otherwise he would have never come here and posted this.

What he is legally obligated to do may very well be different than what he is morally obligated to do.

Obviously, nobody likes it when their conscience tells them to do something they don't want to do....

Perhaps a compromise would be in order - repay half of the inspection costs.

Taking the high road is often a little painful.

This may have been a good idea IF the Agent had first asked that you obtain a Letter of Pre-Approval (Not Pre-Qualification) BEFORE any P&S or Inspection. I don't understand the part about her having prepared and submitted a Mortgage Application for you either. Wasn't there also an "Application Fee" for that, which was paid by whom? The Agent may have set a precedent by paying for everything on your behalf.

I wouldn't want to be the person interviewing or choosing the Inspector; but I "might" specify that it has to be an Inspector chosen from our list of 18 that we work with in the area. At least that way, I know my exposure is limited to less than $1000. But I don't want to be charged with "steering".

I don't suppose we could structure it so that we only have to pay for "successful" Inspections ? Inspectors don't like that.

Meanwhile, I don't think the OP should worry about it. Is anything in writing? Did you ever promise to repay? Is your name associated, in any way, with the property or the Inspection? This is too little money for her to carry out what are idle threats and just a way of mis-directing the hostility she should direct at herself for thinking up and implementing this Half-Baked concept.

If she continues pursuit, you could consult an Attorney and Sue her for Harrassment or Hounding or Stalking (or whatever you call it in Canadian?) We usually stop chasing people when we realize that seldom can you get blood out of a stone.

Meanwhile, I might do something with her idea AFTER I think about it a little more. Tell her thanks from me when you threaten to sue her.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a Lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult an Attorney in the relevant jurisdiction to ensure accuracy before acting on this information.

Vermont, I don't think this idea was even half baked....it was still batter in the bowl.

Maybe I will reconsider my position on this. The agent is a victim of her own stupidity...

On the other hand, if I were the buyer and this happened I would feel obligated to pay for the inspection. But that's just me.

I think the prospective Buyer placed her trust in the Professional who was thought to know what she was doing . . . . and didn't.


BTW, ever notice that the same people who will eat Raw Dough squirm at the thought of eating Raw Eggs? Odd, eh?

I'm not surprised that this episode emanates from Canada, where they're always saying "eh?".

But I've figured it out . . . . it's all due to their adopting that original Indian Name which is spelled:

"C" "Eh?" "N" "Eh?" "D" "Eh?"

So they can't help it; it's part of the National Identity right up there next to the Queen Mother and Prince Charley.

But, I really like Canadians . . . . they buy a lot of Vermont Property; especially when the Exchange Rate is Favorable, Eh?

In most cases where an agent is offering to pay for the inspection they will be offering to do so only upon a successful completion of a transaction. This would need to be disclosed up front if this was the case otherwise they are out of luck. If I were the agent I also would have held off the inspection until after the mortgage approval was in place unless of course you were on a very tight timeline. Just ask the agent what the Real Estate and Business Broker's Act states with regards to "Advertising Promises" as well as "Steering" (assuming that the agent picked the home inspector without you having a choice...if this is not the case and you were permitted to choose whoever you wanted, then ignore the comment on steering). Also ask what the Code of Ethics states with regards to "Unprofessional Conduct". I'm sure there are more places we could go with this but that should be plenty enough to make them rethink their actions.

As always, I am sure that there are 2 sides to the story though so try to look at it from their side as well and be sure that you weren't in fact told that it would only be paid for if the deal were to close (although by them paying it upfront I would doubt that this was discussed).

Vermont, there wouldn't be any fees originating from a mortgage application up here (in most cases).

I'll side with Perky on this one. Not a bright idea on the agents part, but whats done is done.

Either way the agent spent money on your behalf to get the deal done. Your side of the transaction fell through, and the agent is out money for going above and beyond what he/she should have done to benifit you. For that you decide it did not work out in my favor so screw everyone involved? Don't sound right to me.

Legally you may have a defense? Morally, thats for you decide. Financially, you might want to cut a deal.

Just my opinion.

There is such a simple way of doing this for the agent that it annoys me when they put themselves into this type of situation and then cry when it doesn't work out. If they wanted to offer some sort of rebate then they should have said that the buyer pays for everything on their own and upon a successful completion they will rebate $xxx to the buyer which could have been used for anything. This way there is no problem with steering and the agent has protection from this exact scenario. The agent is the professional and should know better (unless of course they were misled somehow by the buyer in which case my opinion might change).

I think my issue is more with the way that the agent handled it. Threatening to go after the person's credit rating when that is likely of concern to them at the moment having just been rejected for a mortgage. If the agent had have simply called and said hey, this is the deal, I paid for it in the thought that this deal was going to close and as a way to help you out.....it did not close and I am out $xxx as a result, would you mind splitting on the home inspection bill? I do not know where exactly this is but in my area home inspections run from about $300-400 so splitting on it would have been fair IMO. The agent would have learned their lesson but also hopefully maintained a good working relationship with the buyer so that once the buyer's credit rating improved they could work together again. If the buyer refused, well, too bad for the agent.

Just another question regarding the differences between our way of doing business and that of our Neighbors to the North. Is it common for:

I've never heard of such a thing! Is it common for a Canadian Agent to go so far as to actually prepare the Mortgage Application for their Clients? That's really facilitating the Transaction, Eh?

And really . . . . How likely is it that this person was an actual "Client" and not just a plain old Customer? These words are not interchangeable "here".

The vast majority of cases "here" the person would be a client as opposed to a customer. This is something that would be discussed over and over again in our paperwork regarding agency relationships and which one you are in. I have never actually prepared a mortgage application for a client but do know an agent who does (well, now he is also licensed to work as a mortgage agent, as will I at some point this week).



Eh.

Who signs such an Application? Who's responsible for the accuracy of the information contained therein?

The submission of an Application for Financing is a very grave activity and knowingly submitting false information is the equivalent of committing perjury in many jurisdictions.

I cannot imagine performing such an activity on behalf of another financial entity . . . . meaning the Purchaser.

The application would actually be done by the Buyer but with the assistance of the agent (I would hope). The reason for doing this with the agent that I mentioned is due to a language barrier with many of his clients and he is able to explain the application in their own language.

CREDITABILITY - there is always the other side of the coin:

a) did the agent have a fiduciary obligation ?
b) did the agent fulfill their fiduciary obligations to the client ?
c) was there a verbal agreement in place between the client and the agent ?
d) did the agreement relate to out-of-pocket expenses incurred by the agent on behalf of the client ?

WHAT IF: ????

What if, the agent claimed that there was a verbal agreement in place between the agent and the client, whereby the client authorized and instructed the agent was to procure an inspection of the subject property, the cost of which would be in the nature of out-of-pocket expenses incurred by the agent on behalf of the client and repayable by the client.

Further, the agent believing that they had a fiduciary duty to fulfill all lawful instruction received from a client, did obtain the the inspection as lawfully instructed, relying upon the client for reimbursement of their authorized out-of-pocket expenses.

Therefore, in this instance, in a court of law, a “trier of facts” might be persuaded to base their determination and decision on some of the following:

a) the facts surrounding the verbal agreement;
b) the meaning and intent of the parties;
c) the credability of the witnesses; and
d) the established legal precedents;and
e) why would an agent advance funds on behalf of a client, if they thought they would not be reimbursed ?

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant urisdiction to ensure accuracy before acting on this information .

That too....going off of one side of the story is always risky.

Well I am not in Canada. In my state of Georgia in the U.S.A. verbal is held to be a binding agreement but almost always unenforceable in a court of law.This is why EVERYTHING is in writing. You also have to be very specific in your contract details. If you are not the judge can strike that portion of the contract as non-enforceable for being too vague.

This agent is an idiot. I don't care who it is I never front money. This is like sellers saying give a discount on listing commission and we will buy through you. Then they go through a rebater on the purchasing end to double-dip.

Many buyers and sellers are clueless as to the costs of running a real estate business. They just look at it as you win some and you lose some.I am always extremely clear in the beginning how things are going to go. If they don't like it we part ways.

It just sounds like a green rookie agent that learned lesson 1 in the real estate school of hard knocks.This agent had an opportunity to get referral business from this buyer. Often times when brokers/agents do selfless acts buyers and sellers will feel they need to reciprocate to pay back the good will or they feel guilty.

Now instead this agent has alienated themselves and the buyer will say guess what so and so agent said and is doing to me. Do you believe any of those people will want to EVER be their client? NO!

You would have thought their broker would have helped them through this before making a decision like this. I know first hand dealing with agents however that they call you AFTER they have done something stupid and rarely before. If I drill it into their head anymore they will turn to mush.

I am always amazed at what goes on. I guess this is how E and O got it's start back in the stone age.

On its surface, I don't see that there was any "Agreement to Reimburse" . . . . only the supposition that there would be a Transaction from which a Commission would be earned and cover the costs of the Inspection.

It's like playing Black Jack always on the Supposition that the next card drawn will be an Ace.

There is no "sure thing" in Real Estate, so if you want to gamble, you have to recognize that sometimes you lose !

ISSUES UPON ISSUES

Many of the issues noted herein also raises the question of whether a brokerage firm’s needs and/or benefits from an established "Policy & Procedures Manual" which may be of some assistants to both new and old agents within their firm.

A policy & procedures manual describing the brokerage firms current policies and procedures to be followed and the appropriate forms to be utilized in relation thereto, with a caution that if not listed herein, speak with the broker manager before proceeding further, may have prevented some of the issues noted.

A brokerage firm should require all of their agents to read the firms “Office Manual” and sign an acknowledgement to that effect and should draw to their agents attention that non-compliance is not an option, unless specifically authorized in writing by their broker manager.

Further, a indemnity clause within the firms "Independent Contractor’s Agreement", indemnifying the brokerage firm should reinforce the idea that non-compliance with firm policies & procedures could have serious consequences.

As a side note:
In some jurisdiction, many litigants without the benefit of written agreements, file and have their claims successfully adjudicated in what is known as the “Small Claims Court” , which is generally referred to as a “Court of Equity”, meaning the court’s decisions are based on what is fair and impartial.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .

I would like to add to what I said before. The agent offered me to pay for home inspection only because she wanted me to become her client. I was doubtful on getting a mortgage but she told me she worked with a mortgage agent with whom she had discussed my case, and it will surely be approved. After signing 'agreement to sell' for a selected property, I was given 5 days to get mortgage approval as well as home inspection done. I wanted to wait for mortgage approval before getting home inspection done (because to me mortgage approval was a bit doubtful) but the agent insisted not to waste time and get it done as mortgage approval was a sure thing and in any case she was paying for home inspection, so there was no risk for me.

Also, we had a verbal agreement on payment of home inspection fees.....so I'm doubtful how much value does a verbal agreement carry. The only evidence I have is a copy of the home inspection invoice in the name of real estate agent. BTW, the home inspection agent was bought by the real estate agent and I had no say in his selection.

Here's reality:

She's not going to small claims court for this small of a fee.. isnt going to happen..the realtor would be wasting her time and she knows it. she ordered the inspection in her name..she bought it..

I disagree with others comments holding you responsible for the confusion. The Realtor is the professional here, advising you and directing you and claiming to be the licensed individual with knowledge of the process
You are the non licensed client seeking her advice. She has the duty to disclose, document etc and this her error.

Call the office, ask to speak to the Broker of Record and explain that she is threatening you. Tell him you plan to file a complaint with the local Real Estate Board regarding this behavior if she contacts you again.

I'd be willing to bet you dont hear from her, if you do hear from her; file the complaint. Include the details of the entire transaction. Specify that she directed your to her lender, etc.

Then let it go.

The next time you are interested in buying a home, interview several Realtors, talk to be people who have had favorable outcomes with Realtors and use them.

my 2 cents.

Ontarian

I would expect you to do the right thing and use her in the future, it is apparent they was a failure to communicate and she should have reduced it to writing so there would no misunderstandings. Truth is you don't want to pay it because it's a lot of money, and I think you know there was a misunderstanding and now you have this situation.

As her Broker I would have chewed her out for how she handled this and then told her you just received an education, now work with your client to help work out his buying problems and then help him find what he's looking for.