Profile picture for AFaler

Buyer's agent showing my FSBO. Proposed commission of 4.5% - what to do if I think that's too much?

I was contacted by a Realtor who would like to show my FSBO to a client of theirs. We are meeting soon to do a walk-through of the house. 

In our emails, I asked her if we needed to agree on commission up-front or if we do that later, she replied that she "routinely shows FSBO properties at a reduced commission rate of 4.5%." Doing some research, it seems that the typical buyers agent rate should be more like 2% - 3%. I really would be more comfortable with a commission rate in this range, but I am afraid to upset the Realtor and in turn have her discourage her client from buying the house. 

I should be meeting with her soon and would like some advice on how to approach the subject of bringing down her commission without upsetting her. Or do you think it's better to just leave it alone?
  • January 16 2014 - Sharon
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Answers (15)

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Profile picture for wetdawgs
4.5% seems high for a buyer's agent bringing a buyer, but some things to consider:

Have you identified the pathway to do the legal documents, disclosures etc that are required of the seller (at your cost) or are you expecting the buyer's agent to do these things?   If the latter, then you should plan on paying the agent for doing them.

The other thing to consider is the sales price of your home (lower sales price, same amount of work so perhaps a tad higher commission).  

Is the offer coming your way a full price offer or a low ball offer with them asking for closing costs and/or other concessions.

I'd have a number in mind before you talk with any buyer's agent.  Commissions are negotiable, and everyone wants as much as possible so plan to negotiate.
  • January 16 2014
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- I think it is better to just let the "selling" agent know up front what the "selling" commission is

Typical rookie mistake. 
  • January 17 2014
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There is some very good advice here on this post and some not so good. In California, when there is one agent involved in a transaction, he/she is responsible for both parties.  The paperwork within the transaction, including disclosures, is overwhelming for the average person. Don't take the risk of things going very wrong for you just over wanting to sell the home yourselves and saving a few bucks.  Buyer's agent appears and she is going to do your paperwork for 4.5% and take over all the details. In my opinion, it's fair.  Realtor takes an extra risk with this type of transaction and her buyer brings in the money to pay for it. You seller bring in the asset (the house) buyer brings in the money which pays for the commission.

I visited a couple the other day at a FSBO and the same thing came up, I let them know about implied agency in California and they wanted their escrow officer to do the purchase agreement and disclosures,  I called my escrow officer and she said, "no way, I am not an agent". Your  other choice in my mind would be an attorney and my experience is that they charge upfront for any paperwork done so if you like that option, then go for it. I am in Los Angeles, Attorneys here charge $300-$750 per hour with a $5,000 retainer fee which is usually  non-refundable if the deal falls through.  Sounds like the 4.5% is a bargain.
  • January 17 2014
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I think you should be very pleased to have your house shown to prospective buyer.  

As far as the commission amount  it seems like a fair amount because the agent would typically get 3 to 4% and sometimes more when selling a property from the MLS.  

The important part of the transaction should be NOT how much the realtor is paid BUT how much will go into your pocket at the end.  

If paying an agent a fair commission such as 4.5% bothers you then don't do it.

If you list your home with the agent first then you should get more in your pocket at closing than the expense of the commission.   REPSECT the REALTOR

  • January 17 2014
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Profile picture for MLS4owners
As others have said, the commission is negotiable unless you have an agreement that says otherwise. You may want to consult with a real estate attorney to protect your interests, as real estate brokers are neither qualified not permitted to provide legal advice.

Here's another thing to consider.  What are your competitors doing?  If they are offering somewhere between 2 and 3.5%, that's the range of compensation the agent and her firm could earn by helping her client buy one of the other homes in your neighborhood.  Don't be fooled into thinking 4.5% is a "discounted" amount unless you find that others are in your neighborhood are paying that much to the buy-side.

One thing to keep in mind is that buyers, not their agents, are in control of the identification of homes available for purchase, and that ultimately agents don't buy homes -- buyers do.  Also, this agent probably won't be acting in your interests.  She will be either representing her client or, by mutual agreement, acting as a facilitator to help both parties consummate the transaction.  

  • January 16 2014
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Profile picture for blank screen EXILED
Generally speaking FSBO net more when they skip the agents.  Realtors® don't know how to read statistics, and NAR lies to them about the data and the interpretation.

Want the data?  NAR doesn't have it; but HUD does as it is required on the HUD-1 forms.  Read the 2008 HUD study on closing costs.

The only reason people with more expensive homes don't sell FSBO is because they make an awful lot more per hour than Realtors do, and they don't want to spend their time on it.
  • January 16 2014
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You should level the playing field and list your house with a broker you trust in your market. Let an experienced broker handle all the incoming requests and questions .Generally speaking you will net more money when you allow a professional to handle the marketing and sale transaction of your property. The time and stress you have already wasted on deciding upon a 'fair' commission is the result of not allowing a realtor to help you. But then again, you might get lucky it sounds like you want to gamble.
  • January 16 2014
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Profile picture for Mark Deering
As the others have stated, commissions are negotiable.  Most one sided commissions are between 2-3% of sales price.  I would definitely communicate before she shows your home that you do not agree with her commission charge, but are willing to negotiate depending on the offer.  Best of luck to you!
  • January 16 2014
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Profile picture for blank screen EXILED
I think it is better to just let the "selling" agent know up front what the "selling" commission is... 2% ...., just as a seller with listing agent does in the MLS.  Tell the agent before the agent even comes over that if it isn't acceptable, their client will not be allowed a showing, that their client will need to find another agent if they would like to see the house or make an offer.

You might want to read the blog:
Thinking about doing a FSBO?

Do I even believe that the agent has a client interested in the property?  Of course not!  The agents are "told" to do that kind of fishing, and the ones that do usually don't have clients.  FSBO and MMM's typically get dozens of those agents "fishing" for clients.

Zillow's Academy even "suggests" these agents do that kind of  "fishing" even though it is against Zillow's "terms of use".
  • January 16 2014
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I think negotiations are difficult, which is why you're posting, Amy.

May I suggest that you tell her, "It depends on your offer." 

All the best,
  • January 16 2014
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Profile picture for JessicaAggson
Hi Amy, This buyers agent would actually be representing both parties as a dual agent in this transaction even though it's not listed with the Realtor. The Realtor is now legally responsible and the Realtor is the one doing all the paperwork for both parties the liability is much greater for the Realtor in a dual agency situation. This is why they are requesting a bigger commission. But again it is negotiable and should discuss this with the Realtor. Good luck to you.
  • January 16 2014
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Profile picture for sunnyview
Commissions are fully negotiable. I think the 4.5% for a FSBO is high. You can let the agent and their clients see the house without signing anything or agreeing to that rate. If the clients are interested, then you can negotiate the commission with the agent or amend the contract so that the buyers are asked to split their agent's commission 50/50.

Don't sign anything with the buyer's agent that you feel uncomfortable with. Sometimes FSBO sellers think that they are signing a right to show and end up signing a right to list.
  • January 16 2014
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Thanks for posting your question on Zillow.com!

If you are only paying 1 agent (no listing agent), you should be paying 2.5%-3.5% depending on the price of the house.  They higher the price, the lower the commission.

If they buyer wants the house, the agent will not prevent the sale because of commission (or one would hope not).

Good luck!    
  • January 16 2014
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I would meet with the agent and discuss if he or she is willing to take less. Outside of marketing your property the realtor will like wind up doing much of the work a listing agent would do had you contracted one. Perhaps he or she would be willing to take less if the responsibilities are clearly defined and you do what a listing agent would normally do in totality. Many times buyer agents wind up doing "selling" side work in these transactions because they know how to and are able to do it quickly and more efficiently than a seller him or herself.

I wish you the best!
  • January 16 2014
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Profile picture for NormSwiger
It is a good thing that you have a buyer. Selling a FSBO can be hard. The percentage is negotiable. So make a counter offer. Just remember, when a Realtor sells a FSBO, though not representing you like a regular listing agent, the Realtor will do much of the work that is needed on your side to make it to closing. You may want to agree in writing on who does what. Also, the Realtor's Broker may have a required minimum. Finally, this is the only way that a Realtor gets paid. A Realtor doesn't get to keep the full amount. The broker gives thr Realtor a cut. Then the realtor must pay all of his expenses and taxes from what is left.
  • January 16 2014
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