FSBO and buyers agents commissions

jcramsey

Well-Known Member
Joined
Jul 22, 2009
Location
Marion, NC
Getting ready to sell our house and we've already got a friend of a neighbor that is very interested in it. They came to look at the house and loved it. Buyer has a friend/client that is a realtor, so he put him in contact with me...I'm assuming he's going to act as a buyers agent for him. It's more than I want to even offer, but would 1% be a reasonable commission?
 
They will want more than that. Their value will be less than that.
 
jcramsey said:
Getting ready to sell our house and we've already got a friend of a neighbor that is very interested in it. They came to look at the house and loved it. Buyer has a friend/client that is a realtor, so he put him in contact with me...I'm assuming he's going to act as a buyers agent for him. It's more than I want to even offer, but would 1% be a reasonable commission?
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Have you discussed a price with the buyer/friend?

That is the money you want in your pocket. They can pay their agent who is doing a service for them. That agent has done nothing for you. You found the buyer without the agent. He also did nothing for the buyer. They found you without him.

Now...if the agent is unscrupulous they will negative sell your house and convince them not to buy.

What I would do (and have done in this exact scenario)...is say this (adjust dollars for your situation).
I quoted you a price of $100k because thats what I need to clear on the house. When I was talking to an agent about listing it he was going to list it at $110, because he wanted to be able to give $4k in concession and get a 6% commission split 3% for him and 3% for a buyer. I quoted you a lay man to lay man price. If you feel the need to engage an agent, then to protect myself I likewise need to hire a professional. So we can do that, but the sell price will be $106k final, no negotiations. You will pay $106k Each agent will get $3k and I will get my $100k. I am not interested in any deal that reduces my take home below $100k.


Now of course if you threw a high number and they didnt blink...then you may have some latitude. to drop and still be where you want.
What likely happened is this buyer signed a restrictive agency agreement, so they feel obligated to their buyers agent. Or they want to use their agent to beat you up. Neither is your problem or your best interest to engage.
BTW in SC....Buyers agency agreements are null if the buyer finds the home in good faith without the sue of the agent.

Not an attorney. Not a real estate agent. Just my understanding of the law based on past experience.
 
You could also tell the seller that you aren't paying for an agent, so if they want to use one they can pay their agents commission outside of the house price. I have done this before.
 
Ron said:
Have you discussed a price with the buyer/friend?

That is the money you want in your pocket. They can pay their agent who is doing a service for them. That agent has done nothing for you. You found the buyer without the agent. He also did nothing for the buyer. They found you without him.

Now...if the agent is unscrupulous they will negative sell your house and convince them not to buy.

What I would do (and have done in this exact scenario)...is say this (adjust dollars for your situation).
I quoted you a price of $100k because thats what I need to clear on the house. When I was talking to an agent about listing it he was going to list it at $110, because he wanted to be able to give $4k in concession and get a 6% commission split 3% for him and 3% for a buyer. I quoted you a lay man to lay man price. If you feel the need to engage an agent, then to protect myself I likewise need to hire a professional. So we can do that, but the sell price will be $106k final, no negotiations. You will pay $106k Each agent will get $3k and I will get my $100k. I am not interested in any deal that reduces my take home below $100k.


Now of course if you threw a high number and they didnt blink...then you may have some latitude. to drop and still be where you want.
What likely happened is this buyer signed a restrictive agency agreement, so they feel obligated to their buyers agent. Or they want to use their agent to beat you up. Neither is your problem or your best interest to engage.
BTW in SC....Buyers agency agreements are null if the buyer finds the home in good faith without the sue of the agent.

Not an attorney. Not a real estate agent. Just my understanding of the law based on past experience.
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My neighbor gave him a ballpark mid-$xxx’s estimate when he first told him I was selling. I haven’t personally given him number. He just came to look then other day and the agent called me shortly thereafter. I did give the agent my highball number when he asked if I would work with an agent, and he said that it might not appraise for that which might affect ability to get a loan. He’s probably right, but like you said, I know what I wanted to clear and if this guy wants a cut that’s what I’d have to get.

Agent sent me some comps from our neighborhood from the past year that averaged out to $188 sq/ft. I questioned him on whether or not appraiser would go back a full year on comps instead of within the last few months. Within 6 months or less and the average is $192 sq/ft and those houses either don’t have a garage like me or haven’t had a single upgrade in 15 years. I don’t feel like I’m too out of line at ~$196 square/ft. I’m not sure how much an appraiser would care about those details though.

I don’t think agent will negative sell me, he’s already said they want it, and my neighbor confirmed as well.

I agree, he didn’t bring this house to his client and he’s certainly not looking out for my best interests, so I have no idea why in the world I should be expected to pay him anything.
 
FWIW, Appraisers will, within any reason, make the appraised value match what the house is selling for. (Nevermind that they aren't supposed to do that.) If they keep killing sales for a realtor by not appraising to match sales price, then the realtor will be hiring an appraiser that will.

When we sold our house, I thought it was in no way worth, even in a hot market, in that area, the listing price that the realtor suggested. We sold it well over asking price. And guess what? The appraisal came out within $500 of the agreed sales price.
 
kaiser715 said:
FWIW, Appraisers will, within any reason, make the appraised value match what the house is selling for. (Nevermind that they aren't supposed to do that.) If they keep killing sales for a realtor by not appraising to match sales price, then the realtor will be hiring an appraiser that will.

When we sold our house, I thought it was in no way worth, even in a hot market, in that area, the listing price that the realtor suggested. We sold it well over asking price. And guess what? The appraisal came out within $500 of the agreed sales price.
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I was under the impression that the appraiser was hired by the lender.
 
jcramsey said:
I was under the impression that the appraiser was hired by the lender.
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appraisers may be hired by a lender or the realtor, but realtor has a strong say in who they use to appraise, same goes for home inspectors. most dont know their head from their ass, and i was buying a house i would pay for an outside home inspector that isnt suggested by the realtor.
 
The lender virtually always chooses the appraiser, and as long as it is within reason and nearby comps the home will usually always appraise for pretty much exactly the contract price--because that's what the agreed value with a buyer turns out to be.

You don't have to agree to paying the buyers agent commission and I would tell them that you aren't unless the deal is just too good to pass. Depending on the buyer and how broke they are you might have to add 3% to the closing price and give them a concession though. They have a contract with their agent most likely and any home they buy while under contract even if the agent wasn't involved he still gets a cut.
 
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braxton357 said:
The lender virtually always chooses the appraiser, and as long as it is within reason and nearby comps the home will usually always appraise for pretty much exactly the contract price--because that's what the agreed value with a buyer turns out to be.

You don't have to agree to paying the buyers agent commission and I would tell them that you aren't unless they deal is just too good to pass. Depending on the buyer and how broke they are you might have to add 3% to the closing price and give them a concession though. They have a contact with their agent most likely and any home they buy while under contract even if the agent wasn't involved he still gets a cut.
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My initial price that the agent balked at was roughly 3% higher. He's supposed to call me this morning...I'll get his expectations and mine squared away when that happens.
 
ramjo said:
Nothing useful to add, just as long as I get my cut of that $196 sq/ft for that addition I hooked you up with....
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braxton357 said:
The lender virtually always chooses the appraiser, and as long as it is within reason and nearby comps the home will usually always appraise for pretty much exactly the contract price--because that's what the agreed value with a buyer turns out to be.

You don't have to agree to paying the buyers agent commission and I would tell them that you aren't unless they deal is just too good to pass. Depending on the buyer and how broke they are you might have to add 3% to the closing price and give them a concession though. They have a contact with their agent most likely and any home they buy while under contract even if the agent wasn't involved he still gets a cut.
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After the bubble collapse and lender reform of there is a lender involved 99% of the tone they are required by law to hire the appraiser.
But it’s a major chicken or egg deal. What sets the value is the market and the maker is what someone is willing to pay. So if you have a contract then there is an argument that’s the value.

that’s also what high end developer pump and dumps manipulate
 
Appraisers don’t actually appraise. They just give reassurance to the bank the property sales price reasonably aligns with the market and comps.

I’ve bought properties for 50% of their actual value; appraisal was the sales price. And I’ve bought property 125% of value. Again, appraisal was the sales price.
 
kaiser715 said:
If they keep killing sales for a realtor by not appraising to match sales price, then the realtor will be hiring an appraiser that will.
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Loganwayne said:
appraisers may be hired by a lender or the realtor, but realtor has a strong say in who they use to appraise, same goes for home inspectors. most dont know their head from their ass, and i was buying a house i would pay for an outside home inspector that isnt suggested by the realtor.
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Licensed NC realtor here...Hoping to clarify a bit of incorrect info in this thread. The appraiser's job is solely to protect the bank's interest. The bank wants to make sure the house is actually worth at least what they're loaning for it. Appraisers are selected by the lender, and we have no say who they use. The only exception to this is if a seller decided to have an appraisal done before listing to ensure that the property appraises for the listing price, in which case the realtor would select and order the appraisal. However, if a loan was involved, the lender would still order a new appraisal of their own. However, I completely agree with the above statement on home inspectors; unless you have a great relationship with your realtor, select and use your own inspector.

Regarding the buyer's agent commission in a FSBO...NC's Buyer Agency Agreement specifies that:
"If Buyer purchases property where the compensation offered by the listing firm and/or seller is less than the Fee, or
where no compensation is offered by either the listing firm or the seller, Buyer and Firm agree that Buyer will pay the
difference between the Fee and the compensation offered unless prohibited by law. Firm will timely inform Buyer if the
compensation offered is less than expected."
I assume SC probably has a similar clause. In which case you have two options: 1. Offer the buyer's agent no compensation, and let the buyer pay the agent directly if he wants representation. 2. Bump up your asking price enough to offset the commission.
The agent would be working solely for the best interest on the buyer in this case, so is providing no benefit to you. I certainly wouldn't take money out of my own pocket to pay for that.
 
cj777 said:
Licensed NC realtor here...Hoping to clarify a bit of incorrect info in this thread. The appraiser's job is solely to protect the bank's interest. The bank wants to make sure the house is actually worth at least what they're loaning for it. Appraisers are selected by the lender, and we have no say who they use. The only exception to this is if a seller decided to have an appraisal done before listing to ensure that the property appraises for the listing price, in which case the realtor would select and order the appraisal. However, if a loan was involved, the lender would still order a new appraisal of their own. However, I completely agree with the above statement on home inspectors; unless you have a great relationship with your realtor, select and use your own inspector.

Regarding the buyer's agent commission in a FSBO...NC's Buyer Agency Agreement specifies that:
"If Buyer purchases property where the compensation offered by the listing firm and/or seller is less than the Fee, or
where no compensation is offered by either the listing firm or the seller, Buyer and Firm agree that Buyer will pay the
difference between the Fee and the compensation offered unless prohibited by law. Firm will timely inform Buyer if the
compensation offered is less than expected."
I assume SC probably has a similar clause. In which case you have two options: 1. Offer the buyer's agent no compensation, and let the buyer pay the agent directly if he wants representation. 2. Bump up your asking price enough to offset the commission.
The agent would be working solely for the best interest on the buyer in this case, so is providing no benefit to you. I certainly wouldn't take money out of my own pocket to pay for that.
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Appreciate the view from an agent's perspective. I don't know if they have a formal signed agreement yet, but I assume I should have this discussion with the agent and not the buyer since he at least appears to be acting on the buyers behalf?
 
jcramsey said:
Appreciate the view from an agent's perspective. I don't know if they have a formal signed agreement yet, but I assume I should have this discussion with the agent and not the buyer since he at least appears to be acting on the buyers behalf?
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Agency should be disclosed, so it's certainly reasonable to ask the agent if they have a signed agency agreement with the buyer. However, in any conversations with the agent please keep in mind that he is not working for you and is not looking out for your best interest. Do not give him any information that could work against you in the negotiating process or tell him anything that you would not tell the buyer directly. If he is representing the buyer, his fiduciary duty is only to the buyer, and any information you give (i.e. minimum offer you would accept, motivation for selling, issues with the house, etc) will likely be disclosed to the buyer immediately.
 
If you ask the agent the question and he is unscruplous he may run and get the buyer under contract....
 
Agent is now trying to convince me that the per sq ft price of the comps in my neighborhood aren't as applicable to my situation because I have to factor in that they paid 6% commission on the sale. Apparently he's being a good guy only asking for 2% :rolleyes:
 
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