Profile picture for 446parkwynne

FSBO - Buyer's agent commission

I currently have my house fsbo for 215. I did a lot of research and priced it slightly under market value to attract more buyers. I had an agent call me and stated, "I noticed your house for sale, and will be showing a client of mine a house up the road for 220. Would you be willing to pay my 3% commission if my client was interested?" I responded that we would contribute 1.5%, and they told me nevermind. I thought a real estate agent was supposed to find the best house for their client! How does this agent know my house is not right, completely based on me contributing 1.5%? Not to mention, my house is 5k less than the house they are showing; I can't see it being too difficult to explain to their buyer, certainly if my house meets their needs better! That just seems so ridiculous to me.
  • May 25 2012 - US
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Answers (29)

If the client had requested to see the home, the agent should've shown the home - even with a commission that is probably below the norm in your market.

But there are some buyers representation agreements which stipulate the buyer pay a commission of xx percentage. And if the sellers commission offer is less than that percentage, the buyer is obligated to make up the difference. If the buyer had such an agreement, they would be obligated to pay the agent $3,000 plus which pretty much defeats the purpose of saving $5,000. Plus the agent commission would have to come out of pocket (and might not be able to be financed).
  • May 25 2012
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Profile picture for Ofe Polack
The buyer agent should have shown the property anyhow, but I think that if you  want to be more competitive you should offer whatever the average  buyer agency commission is in your town, after all you will be saving the other hal, which is the listing side.
  • May 25 2012
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Profile picture for 446parkwynne
Can agents refine listings that show up on their clients' mls listings based on how much the seller is willing to contribute to their agent's commission? For example, can agents ensure that only houses that will pay 3% will show up in their feed, or is that not a possible criterion that can filter results?
  • May 26 2012
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Every MLS association is different (there is no nationally recognized set of rules). But in our MLS system the ability to auto delete listings that pay less commission is not possible (that is not a sort feature in our MLS system).

  • May 26 2012
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Profile picture for the_country_hick
"Can agents refine listings that show up on their clients' mls listings based on how much the seller is willing to contribute to their agent's commission? For example, can agents ensure that only houses that will pay 3% will show up in their feed, or is that not a possible criterion that can filter results?"

When a realtor sends a list of properties for sale to one of their clients they can leave certain properties off that list. The reason could be price, lot size, neighborhood, and yes, the commission being lower than they want.

This does not stop a buyer from searching on their own and finding a house their realtor never sent to them and then having their realtor show it to them.
  • May 26 2012
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Profile picture for 446parkwynne
I just have a hard time accepting this. The role of an agent is to find the best house for their client, correct? This does not mean the financial aspect of buying a home is not important, however, it just seems to me that agents that would do this are doing a disservice to their clients. What is wrong with them telling their clients that the seller is contributing 1.5%, so if they ended up wanting it they would have to make up the 1.5% difference. It just gives real estate agents a bad rap in my opinion.
  • May 26 2012
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For most agents, 1.5% is not worth there time and effort and work. There is so much inventory in the market that some agents wont bother with fsbos to begin with. If you really need to sell your home, I would have agreed the 3%, after all, he/she is brining the buyer to you, taking care of inspections, appraisals, contract, dealing with the lender, title company and of course making sure the deal goes through! Next time you have an agent with a buyer knocking at your door, try not to pass it specially in todays market! Thanks
  • May 26 2012
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Profile picture for 446parkwynne
This seems to be turning into a fsbo bashing. I'm not trying to beat a dead horse here, but each response I am getting negates the fact that the buyer would still be saving money and the agent would still get 3% (just not all of this from me)! I'm not trying to say that a buyer's agent is not worth 3% at all. But why would an agent have such a difficult time telling their client that if the house may ended up working for them that they would have to make up the additional 1.5%. It just seems flat-out wrong to me.

Additionally...I'm not trying to argue or say that all Realtors are equal, but my experience with the agent that helped us buy the house in the first place didn't do any of those things that you mentioned above. I found an inspector; i found a lender who did the appraisal and title; and my lawyer made sure the contract went through. My agent literally entered the criteria that we wanted into the mls, our feed automatically updated with listings, and we contact the agent for showings. I would have loved for my agent to take care of those things listed above. This is probably why I am selling my home fsbo.

Furthermore, if I were a buyer (which I currently am) and I found out that my agent removed potential listings from my mls feed because of the commission, I would feel deceived. Additionally, if my agent found a house that they felt had the potential to be right for me that was not on the MLS. I would feel that much more confident in the skills of my agent.
  • May 26 2012
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Profile picture for hpvanc
User,

You have summed up a lot of the debate that has been going on in the Zillow forums about buyer agents since the forums have existed.  Some agents will admit they refuse to help their buyers with FSBO and will try to talk them out of one if asked.  Other agents admit to doing what the agent that called you did (after all they have sold there buyer that buyers agents are free).  I think you are confusing a buyers agent with a professional service provider.  A professional service provider will be able to provide the services you are hoping for.  However it is possible and common practice and legal to call oneself a buyers agent, and do nothing more than hard sell inventory listed on the MLS for a commission from the seller a buyers agent.  After all is said and done the buyers agent is typically compensated as a sub-agent of the listing agent and listed as the selling agent in the paperwork.

There is absolutely no additional or different licensing requirement for agents to call themselves buyers agents.  All of the required training for licensing has remained focused on sales.  MLS boards with the full support of Realtor organizations at all levels, have done everything in there power to keep brokers from setting up and providing anything consumers like you and I would recognize as a professional buyers service, even after losing several anti-trust lawsuits with the US DOJ. 

While there are no doubt individual agents that actually provide professional buyers agent services.  Finding such an agent is kind of like finding a unicorn.  The reality is buyers agents are agents of sellers at large for MLS listed properties.  If they have a signed or implicit agency relationship with you they can't share information with the seller and their agent to help them make the sale, but they can still use it against you directly to make the sale.
  • May 26 2012
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Profile picture for Ofe Polack
All agents can see the commission that the seller is willing to contribute in their internal remarks on their MLS
  • May 26 2012
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Profile picture for Optimus012
I don't work in real estate, but I can say you're just being cheap. 1.5% is nothing really. Even in my area, 2.5% is kind of low but probably the lowest you can go and still attract some agents and buyers.

Realtors don't want to work for free or for chump change. It's their career. Even if it's priced 5K lower, you're listing will probably sit for months with no traffic and you'll have to lower your price even more defeating the purpose of only giving 1.5%.

Here's something to think about. I sold my house earlier this month, but first listed it in January. I priced it at around 285K offering only 2.5% buyer agent commission. My listing agent was a friend so she only took 2K commission, a big discount, which was almost selling it FSBO. The reason was I'm using her to buy so she was ok with it. I got alot of traffic but no offers. Then I lowered it to 280K in February and still had no offers through March. My agent advised me to lower it more but I said no, offer 3.5% commission and keep the same price. I received 2 offers a week later.

My advice to you is instead of listing it at 215K and 1.5% commission, list it at 220K and offer 3% to 3.5% commission. Your bottom line will be the same, but you should be in escrow pretty quickly.
  • May 26 2012
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Profile picture for 446parkwynne
I'm sorry but it's sad that 3.5% commission is what got your house to sell. That tells me that the buyer's agent possibly swindled or really pushed for their clients to buy your house with the intent of gaining a larger commission and not for if the house was truly the best one for them. Nor am I being cheap. It is not my fault that some agents have made their clients feel their services are free. I'm simply splitting the cost of their services which I feel is fair. At my current price point and commission contribution, it's a win-win. The seller pays less for my house and the agent gets paid.

I'm not in real estate either, but I do know that real estate is a business of relationships and who you know. I also know that people will tell 5 others about a good experience and 20 others about a bad one. I'll be sure to remember those who don't at least work with me for the best interest of their clients. I definitely would not want to be on the other end in this situation.
  • May 26 2012
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Profile picture for wetdawgs
@user:   I'm not in real estate, but after reading thousands of posts on Zillow's advice as well as other real estate forums, I suspect that very few buyers have an addition 1.5% cash at hand for paying their agent in the process of purchasing a home.  (this is not money they could roll into their loan, but they could if it was part of what the seller paid.)    Many buyers are struggling to come up with the 3.5% down payment for FHA.  

I'm sorry you are in this difficult situation.  IMHO, the department of justice's document about alternate compensation models in real estate is a worthy read.  I think the current approach is broken.

  • May 26 2012
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I think you missed the point that while your home is priced $5,000 less than the competitors, if the buyer was contractually obligated to pay their agent even 3 percent, then they would have to fork over $3,000 out of their pocket to pay the agent. Suddenly your home isn't as competitively priced as your competition.
  • May 26 2012
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Profile picture for 446parkwynne
@wetdawgs - thanks for your insight. i will definitely be taking time to read it.

@MikeEmery - They are saving $2,000, are they not? Given a choice to save the money or not, I would imagine most rational people would want to.
  • May 26 2012
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Profile picture for wetdawgs
@user:    While a paper exercise may say they are saving money, if they don't have the cash in pocket for paying a fee they can't finance, what do you propose they do?

  • May 26 2012
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Profile picture for SoCal Engr
Just some thoughts from the peanut gallery...

My first instinct is to argue that $2K is a small amount when you consider the overall value of the transaction. However...

From a seller's perspective, that $2K likely represents a much larger percentage against the realized profit/gain. If the seller is walking away with a $100K gain, $2K may be easier to swallow. Then again, if the seller is looking at $10K, $2K could be a much bigger issue.

From a seller's perspective, it is easy to feel antagonistic towards people who stand to realize a gain on a transaction that seems disproportional to the seller's.

From a general perspective, I agree with Wetdawg's observation that many seem to barely be able to bring the minimum 3.5% down. I really feel that buyers should have more skin-in-the-game than 3.5%, but that would also reduce the buyer pool and increase downside pressure on pricing. Personally, that would be painful...but likely a good thing to thin-the-herd.

Add to everything to the REA spiel that "REAs are "free" to the buyer", that means everyone eats off the seller's plate. Good when you're the buyer (unless you stop to realize that you're financing the commissions), sucks when you're the seller and actually see the money leaving your pocket.

I also agree that a different compensation model is needed, but the REAs (as a group) are closed to the option, and consumers (again, as a group) aren't willing/able to force the issue.
  • May 26 2012
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Profile picture for 446parkwynne
i guess im one to live within my means. i would always have 20% to put down, and would never purchase a house that we couldn't afford on one salary. 3.5% sounds too risky for all parties involved. if you can 'barely' bring 3.5%, you shouldn't be buying a house - period.
  • May 26 2012
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Profile picture for Optimus012
Now that's just dumb. Plenty of people just bring 3.5% downpayment and do just fine paying their mortgage. Some people might be younger and haven't had years to save up a 20% downpayment.

Paying only 1.5% commission is being cheap. You're already selling it FSBO and not paying a listing agent's commission. All agents on this site are all thinking the same thing but they don't want to write it because it might be offensive to you. However, sometimes it takes being blunt to get the point across.

Why would any buyer want to come up with the extra 1.5% cash to their own agent if they can just buy a house for 5K more and finance it in their loan. This is much easier and we're talking about an extra $5 a month more in a mortgage over 30 years. The only way you'll learn is by having your house sit on the market with no offers.
  • May 27 2012
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Profile picture for user553223
You have got to be kidding me. Real Estate agents have gotten out of control. 1.5% (or $3,000) is being cheap? Really!?!? How many hours are you actually spending on the client as a buyers agent? Even if you're actually working 30 hours on them (which you're not... you're waaaay under that) you're still making $100/hour! I'm a CPA and am required by my firm to be 75% billable. If you were 75% billable at $100/hour and worked full-time, you'd be making $156,000 a year.

You all have lost your mind. 
  • May 31 2012
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Profile picture for sunnyview
It is your house and you have to market it the best way that you can. Sometimes that may mean paying a partial commission if you are unable to find a buyer without an agent. The choice is up to you.

There is a FSBO blog that was written by someone who sold themselves with a lot of helpful information from an owner's point of view that might be useful.

I have also seen some FSBO's offer a different price to buyers with an agent and one without. I do not know if that is something that is common in your area or would be helpful since I have not seen many like that, but it's a thought.
  • May 31 2012
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Profile picture for user764591
You have answered your own query about a real estate agents reponsibility to find the best home for their client.  Self interest trumps all with brokers.
  • June 01 2012
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Profile picture for Kriston Gallop

Where is the house? I will sell it for 1.5% :) I am a Realtor and I agree that it is very low for a buyers agent, but if it was in the best interest of my client, I would talk to my broker in charge and see if they would let me take a reduction. If they wouldn't, then I would propose to the buyer that they would have to pay the difference and at that point, it would be their decision. However, most on this forum are correct, most buyers will not go for that!

  • June 01 2012
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FSBO - Buyer's agent commission

It all comes down to this:
[hotlink removed by Zillow moderator]

Sellers, Buyers, Realtors, Banks, Kids, Churches, Employees...every one of them has a pay plan & all behavior is dictated by it."Pay" can be monetary, but it doesn't have to be. Attention (good or bad) is a form of payment. So are compliments, affection, & time.  That's not greed, it's enlightened self-interest.

Don't be mad because that Realtor worked her pay plan. Would you take a cut in pay because someone else judged it to be the "right" thing for you to do?  

Homeowners think Realtors are overpaid because, well, most of them are. Very few Realtors earn a living in this business, perhaps because most are Accidental Agents (they maintain R/E license in case they accidentally sell something) and treat it like a hobby or whim rather than a business.  
  • June 01 2012
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"It is not from the benevolence of the butcher, the brewer, or the baker thaqt we expect our dinner, but from their regard to their own interest." Adam Smith  

  • June 04 2012
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Profile picture for realtorss
A Realtor has the obligation to find the best house for their client regardless of the benefit to the agent. A real estate agent is not held to the higher standard which is why it benefits everyone to use a Realtor and not just a real estate agent. 

That being said, even Realtors do not work for free. The agent could have asked the buyer to share in the commission and if the buyer truly wanted to see or buy the house, they would most likely agree. I agree with a previous post that you should agree to pay what is usual and customary in your area if an agent brings a buyer to your door. You will not have to deal with all the issues that the buyer's agent will encounter while working their buyer through the process. 

Good luck with the sale of your property.
  • June 04 2012
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Profile picture for user5172299
Let me tell you agents something. I used to be an agent AND a Home Inspector! It's a joke how much you people make for doing so little. Back in the day prior to the internet, you had to earn your money. Now? A couple open houses, MLS and boom! $40K+ in your pocket. There's a saying about Lawyers that goes, "what's 800 Lawyers at the bottom of the sea?"...a good start! I say the same about Real Estate Agents! Greedy, two faced and liers for the most part. What other occupation MAKES you take an ethics course????
  • October 15 2013
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The buyers agent should have shown your property if his client wanted to see the home.  As far as the 1.5% you were offering, he could have explained this to the clients and asked them to pay a fee as well or it could have been disclosed in his buyers agency agreement.  Not enough information to give you specific answers but I hope this helped.

Did you know the Owner of FSBO used a Realtor to sell his home.
  • October 15 2013
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User5172299

I note you used to be an AGENT and a home inspector.  I imagine that is the same as a HAS been agent and home inspector.

You need to get into the real world and up to date on todays costs.  There are some agents on this site who pay $2,000 a month to get leads.  Now times that by 12 and subtract it from 40K.

Oh and open houses?  Better bring along a book to read.

  • October 16 2013
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