In a Real Estate Sale, Can a Home Buyer's Agent Bypass the Listing Agent and Go Directly to the Seller?
UPDATED: June 19, 2018
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Frequently, in order to avoid paying agent fees, parties may seek to avoid including the agent in the actual real estate sale. In this instance, the parties may be “bypassing” an agent...but not their obligations to pay that agent.
A contract, which includes the agreement (written or oral) by which a real estate agent represents a seller, generally binds the parties to the contract. Their agreement—the way they have agreed to perform—generally has no bearing or force on any other parties. Keep in mind, however, that the law sometimes recognizes what are called Third Party Beneficiary's rights. This is a complicated area of law meant to protect the legitimate expectations of people who know of a contractual relationship, have not signed it, but are still part of that agreement's intended beneficiaries.
From a contractual point of view, a buyer’s agent could bypass the seller’s agent and approach the seller directly. Since there are no laws requiring a third party, like a prospective buyer, to go through the seller’s agent rather than directly to the seller, this is a viable and perfectly legal tactic.
The buyer could bypass his own agent as well, and go directly to the seller. Conversely, the seller could bypass both agents and negotiate directly with the buyer, or the seller’s agent could likewise bypass the buyer’s agent. However, courts have consistently required parties to pay their respective agent(s) regardless of this potential end-around.
Both parties are still bound by their own agreements with their own agents. If a seller owes a commission to his or her agent on the sale of the home, the seller will have to pay that money even if the buyer, seller, or both opt to cut the agent completely out of the loop. (If the agent was not fulfilling his or her obligations under the terms of the agency, then the agent may have committed a material breach of contract which might, depending on circumstances, justify not paying the agent—but that would require a showing of breach of contract, fraud, or the like.)
Therefore, bypassing an agent will not save on commissions. In fact, there are even cases where a buyer had no formal agreement with an agent, though there was a “handshake” agreement between them. The buyer went on to contact a seller directly, and concluded the sale...only to have the original agent demand a commission on that sale. Once begun, all parties need to maintain a scrupulous understanding...and “bypassing” agents has serious potential to lead to costly conflicts. Thus, sellers and buyers need to be aware of industry custom as well as contracts law.
Beyond the Law
There are also practical business reasons, beyond legal obligations, not to bypass the agent:
- Taking advantage of an agent's expertise
- Keeping things more professional rather than personal
- Letting the agent spend his or her time, rather than the buyer or seller spending their own time
There’s also a final legal advantage to having an agent in the loop: it’s another person who might be legally responsible, or liable, in the event something goes wrong. To put it bluntly, if you negotiate directly and mess up, you have no one to blame or sue; but if you have an agent and the agent errs, you may have recourse against that agent (who presumably has some form of business insurance). But this potential liability may also boomerang against you in that now—as discussed above—there’s another person who can sue you.
It is important to note that either party to a real estate transaction can bypass one or both agents. That means that if the agent seems to be obstructing matters rather than helping the deal along, it’s permissible to just pick up a phone and call the other party directly.