Navigating Trust and Due Diligence as Your Net Worth Grows

[Anonymous]

As my income and investments have grown, I’ve noticed more people attempting to take advantage of me financially. Being younger seems to amplify this. I’m careful with money and looking for thoughtful advice on how others handle trust, boundaries, and due diligence as their net worth increases. I posted this in the real estate section after receiving a contract that raised serious concerns.

I received an agreement that seems abnormal. Curious to see what others think of this.

1. Irrevocable listing agreement/ same-day pressure to sign
The contract was initially irrevocable with no unilateral right to terminate, and we were asked to sign the same day it was sent, before attorney review.
2. Rental provisions creating ongoing revenue streams
The original contract included leasing terms that went beyond a one time fee and could create ongoing income for the brokerage (without property management services), plus potential future sale hooks years later.
3. Unrepresented buyer upcharge
If the buyer had no agent, the seller would owe an additional 1.5% commission. It's really unclear how that aligns with our interest as sellers when there is no buyer agent to pay.
4. Fee-shifting / legal fees
The contract included language requiring the seller to pay the brokerage’s legal fees if the brokerage prevailed in enforcing the agreement. It is essentially creating downside risk for the seller with no upside.
5. Commission tied to future loyalty
The listing commission was initially quoted higher at 4% for listing agent only. I told the agent no and the response was it will be reduced to 2.5% only if we agreed to both sell and buy with the same agent. I mean effectively bundling a current transaction with a future, unrelated one. We are staging ourselves.

I'm a bit insulted to receive a document like this. Can you imagine if I didn't read thoroughly?

In addition, it’s a brokerage drafted agreement. My first time receiving a non standard form. What are your thoughts on the rental section? It states that if the property is leased, the brokerage earns one month’s rent for placing the tenant plus an additional 8% of the rent on renewals/ongoing lease terms, even though no property management services are provided, and it also creates a future sale commission claim if that tenant later buys the property. It turns a simple lease into a recurring revenue stream and long-tail sales hook, which goes well beyond a typical one time leasing fee. INSANE!

[Anonymous]

Well, it's long been argued that Real Estate agents are predatory. That said, they really do bring something to the table. Setting the right price is crucial, especially in a market like ours.

We feel fortunate to have a trusted real estate agent who is a friend who we've used for several transactions. We know the value she brings, as she's saved us tens of thousands of dollars, and in other transactions helped family members have quick transactions while pocketing more money.

[Anonymous]

You may be getting more such things because now you have assets and buy or sell assets.
Curious what was the rental thing? Was this for an investment property?
Anyway as was noted in another thread, no thanks to that agent.

[Anonymous]

There are predators everywhere, OP, at all income and wealth levels. Read all the fine print, use your noggin. It's the best you can do.

[Anonymous]

[quote=Anonymous]As my income and investments have grown, I’ve noticed more people attempting to take advantage of me financially. Being younger seems to amplify this. I’m careful with money and looking for thoughtful advice on how others handle trust, boundaries, and due diligence as their net worth increases. I posted this in the real estate section after receiving a contract that raised serious concerns.

I received an agreement that seems abnormal. Curious to see what others think of this.

1. Irrevocable listing agreement/ same-day pressure to sign
The contract was initially irrevocable with no unilateral right to terminate, and we were asked to sign the same day it was sent, before attorney review.
[b] Never sign anything with the "same-day pressure to sign." No matter how great it looks. To be honest, I'd consider it an insult and would have probably walked away right then.[/b]
2. Rental provisions creating ongoing revenue streams
The original contract included leasing terms that went beyond a one time fee and could create ongoing income for the brokerage (without property management services), plus potential future sale hooks years later.
[b]If you go the rental route, one month rent is pretty standard. Not sure what the 8% are, I assume it's BS. If no management fees are provided, you are just paying for finding a renter every time you need a new one. [/b]
3. Unrepresented buyer upcharge
If the buyer had no agent, the seller would owe an additional 1.5% commission. It's really unclear how that aligns with our interest as sellers when there is no buyer agent to pay.
[b]It depends how you structure your agreement. If you are not including buyer's commission, you agent can ask for 1.5%. It is not egregious, but you can decide if you are ok with it. I would not agree to it and say that buyer's commission is negotiable. [/b]
4. Fee-shifting / legal fees
The contract included language requiring the seller to pay the brokerage’s legal fees if the brokerage prevailed in enforcing the agreement. It is essentially creating downside risk for the seller with no upside.
[b]I am not familiar with this cannot comment.[/b]
5. Commission tied to future loyalty
The listing commission was initially quoted higher at 4% for listing agent only. I told the agent no and the response was it will be reduced to 2.5% only if we agreed to both sell and buy with the same agent. I mean effectively bundling a current transaction with a future, unrelated one. We are staging ourselves.
[b] The 4% are clearly egregious. Tying a lower commission to representation on the purchase of your future property is pretty common. But I would negotiate something closer to 1.5% for that. I have not paid more than 2% in the last 15 years (without the buy-side representation). [/b]

I'm a bit insulted to receive a document like this. Can you imagine if I didn't read thoroughly?
[b]Always read everything thoroughly. [/b]

In addition, it’s a brokerage drafted agreement. My first time receiving a non standard form. What are your thoughts on the rental section? It states that if the property is leased, the brokerage earns one month’s rent for placing the tenant plus an additional 8% of the rent on renewals/ongoing lease terms, even though no property management services are provided, and it also creates a future sale commission claim if that tenant later buys the property. It turns a simple lease into a recurring revenue stream and long-tail sales hook, which goes well beyond a typical one time leasing fee. INSANE!
[/quote]

[Anonymous]

You should have a lawyer look at it. They can pressure you all they want to sign it without review, but it's easy to say no. Rather than be insulted, look at it as an opportunity to negotiate terms that are to your advantage.

[Anonymous]

Why tf would you be posting on the internet instead of having a lawyer look at it? you have only yourself to blame if you don’t protect your own interests.