Ok, here is the story. We bought our house nearly 10 years ago. Since then the city/county in their infinite wisdom “improved” the street to a multi-lane median divided “highway” out front totaling 7 lanes. Just before the roadwork started many people sold there homes for far less than market value. And you know what that did to the value of our home.
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It turns out that we have been approached by a representative of a major commercial developer that wants our property for his next project. We went thru this about 4 years ago with another developer. The deal obviously didn’t go thru and when all was said and done we were left with a very bad taste in our mouth. This time around things are a bit different. Last time we were approached by a realtor who was contacted by the developer representative. This time we were contacted directly by the developer representative.

We were informed that the previous realtor would be contacted, due to his association with our neighbors, and I’m assuming that he will be contacting us soon. We currently have no contract with any realtor or representative. The dollar amount we are talking about is nearly twice fair market value for our house. The last time around the realtor’s cut would have gotten 7% of our offer. He was a very charismatic individual, long time friends with our neighbors and so we went with him.
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As I said, we weren’t to pleased last time around. For one, the smoke and mirrors of the developer’s representative was tough enough and then there was our realtor not being as on the ball as we thought. An example, he was surprised in finding out information at the last meeting we had with the developer representative that I felt he should have known from the start.
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Regardless, we aren’t all that excited in using him to protect our interests in the potential deal. Not only that, what exactly does a realtor do in deals like this? As best as I can figure about all he did was receive the offer the contractor made, brought it to our house, translated some legalese and showed us where to sign. This time his same 7% cut, or any other realtor for that matter, is in the $23,000 neighborhood. What my wife and I are thinking, based on the last go around, is it might be better to work with a real estate lawyer rather than lose that chunk of money. There is no guarantee that this deal will go thru but new development that has been completed over the last 5 years is the exact type of development that the city said they would not allow. So we are keeping our fingers crossed.
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I know this got long and I apologize but any input would be greatly appreciated.

I agree that you might be better off going thru a real esate attorney. I am not sure why the developer would work thru a realtor. I personally would feel more comfortable with my attorney prtecting my interests than a realtor that seems to be retained by the developer.

You don't have to go with the agent you had before. Also, in PA, the percentage you pay to a realtor is negotiable. So you could say, 'I'll let you represent me, but since you didn't find the sellers I'm only giving you 2%.' Probably the same in Indiana. I believe that you would also have to pay your laywer no matter what, while the real estate agent would only be paid if the deal went through. I'm thinking the agent would also have a better idea of the value of your property than the lawyer so that you don't get hosed on the price. If they want to give you $300k, but the agent can demonstrate that it would be worth $310k, he/she just paid for nearly all his/her commission.

BTW, what were your neighbors who sold their homes for less than market value thinking?? I would love it if the road outside my home was expanded to 7 lanes, then I'd do exactly what you are doing and get it zoned and sold commercial.

I am in California and this state does not really use real estate attorneys in most real estate transactions. I am a Real Estate Agent tho retired. Here is my advice. Get your own Real Estate agent who is representing only your interests. A normal total commission in Calif is 6%. That normally is 3% to each agent but real estate commissions are by law at least in Calif always negotiable. In your deal it sounds like 7% is awfully high. But it also sounds to me like your options are somewhat limited and i would get it sold and move on.

MrB, I'm sure you are correct that the realtors cut is negotiable and their fee comes once the deal is closed plus a lawyer would have to be payed up front for something that may not happen. I do know that the realtor has talked to the dev rep and a dollar amount has been discussed for the 3 lots he handled last time around. I also know what that dollar amount is. The last time thru my share was just under 31%, more stuff I learned at the last meeting. This time it will be 33%.

What were the neighbors thinking, well they bought their houses when the going rate was about $60-70K and had lived there for over 15 years. During that time their value more than doubled. Another major point is their location. I won't try to describe the "neighborhood" in order to give a good picture, but they on the main road and part of a housing tract. So commercial development was less likely to happen their way than mine.

Man, it's REALTOR® you punks.

Man, it's REALTOR® you punks.

PS: Since I'm in the biz, but not a REALTOR®, this gets hammered home to us quite a bit and thus I will hammer everyone else with it too.

If the deal is pretty straightforward, it will be cheaper with a real estate attorney. Odds are, they wouldn't have to spend too many hours on it and even at 200-300/hour, it will be cheaper than the realtor commission. Plus, your interests will be looked after better -- the lawyer will not care if the deal goes through but a realtor will even if the deal may not be exactly what you want.

Don't get me wrong. Realtors are useful and important -- they are needed to bring buyers and sellers together. However, if you already have the buyer/seller together, there really is no need for one. In fact, you will have a less trained eye looking at the contract which should be the main thing to focus on.

For what it's worth, I've been both.

VFP, thanks for the input and that is what we are thinking. We've been hit hard with a snow storm last night/today. Johnny of the spot realtor called last night and arranged a meeting this evening, my wife is there now. He got the letter of intent via fax and ours in going via snail mail and we don't have it yet. Strained my knee moving snow today or I would be at the meeting also. I suppose there will be more info when the boss gets home. Thanks again and please let me know anything else that comes to mind.

No problem. You're good doing your own negotiation or whatever. Then when the contract is complete and ready to be signed - that's when you take it to your lawyer. Discuss all the details with the buyer that's in the contract (conditions, payment, deposit, escrow terms etc.) and make sure everybody's on the same wavelength, then check with the real estate lawyer that the contract language actually says what the buyer claims and you have agreed upon. And then sign it, but not before then. Watch out for the guys that try to rush you, especially when you hear you want your lawyer to look at it. Anybody doing a fair deal is willing to give you a day or two to have a lawyer look at. Also, you may want to line up a real estate attorney in advance.

My advice is, if you can afford to do it even if the deal falls through, to absolutely use a lawyer.

Well it appears that the offer is 20% less than last time and the realtor is countering for the median of the two. No word as of yet and till nothing signed. One thing I've "learned" is that the corner property is always considered to be the most valuable. Call me a simpleton here but I just can't understand how that can be when the homes on either side of the corner lot must be included for the deal to go thru. My thick skull insists that all 3 property's are basically of equal value in this particular deal (even though we own the most property and have the highest appraised valued of the three).