Profile picture for user049689

FSBO, should I pay a buyers agent the commission if I already am paying an attorney?

I am selling FSBO and had a agent contact me with a client and they made an offer.  In the offer the buyer wants me to pay 2.5 percent commission to the agent.  I already have an attorney representing me on my end.  Why would I agree to this?
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February 23 2012 - US
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Profile picture for lindsaylien
k
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March 30
Profile picture for nooga2queencity
The Buyers Agent could have spent 3-6 month schlepping the buyers all over the countryside.  IF they  see the FSBO shingle hanging outside a humble abode, and the buyer wants that house, they the buyers should pay their agent for all that schlepping.  The FSBO purpose is NOT TO PAY  $$$$  to "THE AGENT"
   . IMHO.
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March 27
Profile picture for wetdawgs
@user903xxxxx

A FSBO seller is under no obligation to compensate a buyer's agent.  Were you advertising "will work with buyer's agent"?     If the buyer's agent has appeared on the scene since the original showing and you hadn't been advertising "will work with ba", and you have the disclaimer in the contract with the listing agent, you can simply say that the buyers are going to have to pay their agent's commission.

However, rather than being totally hardnosed, I'd do some calculations of net to you with paying their agent's commission vs not paying the commission and losing the deal (and other variations on the theme).   Use that to drive your decision. 

I think that the commission based structure in real estate is broken, but there will be a lot of screaming (as you noticed) as it dies and gets replaced with more reasonable approaches.


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March 13
Absolutely.
Would you have sold your home to this buyer if the agent had not been there to submit an offer? NO.
The buyers agent deserves to be compensated for their work. Your attorney doesn't do the buyers agent work, so why should the bueyrs agent work for free?
Would you want to work for free?
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March 13
Profile picture for user90340517
Hello, I am looking for some answers regarding a real estate deal.

We are in the process of selling our home.  During the winter months we tried selling our home on own…"For Sale by Owner".   On January 19th, because of our sign out in our yard a potential buyer came into our home to see it.  We exchange names and email addresses.  After touring our home the buyers communicated with us on several occasion that week.  On our last email, they indicated that they really like our home but needed to sell their house first.  We told them we would be signing up with a real estate agent in February.

On February 11t,h , we signed up with a real estate agent but had an addendum saying that if these buyer we show in January wants to buy our house that our real estate contract and commissions are voided and we would give her $2000 to do the paperwork.  Both parties signed.

On March 10, we had a showing and on March 11th, we received an offer from buyers.  Which happen to be the original people that saw our home in January.  

My questions are:  Are we, as Seller have any legal obligation to pay the 3% commission under any circumstances?  Does the Buyer's Agent legally entitle to this commission.
And if the buyer's signed a contract with this realtor and he was aware that we had original showed his clients our home does this allows him this commission.  Do we have any recourse?
 
p.s.  I know for a fact that the buyers had told their Agent that they have seen our home prior.

Thank you for any input.  Do we have a case?
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March 13
 With out that agent you wouldn't have a buyer . Yes you should pay him 100% .
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January 21
It depends on how soon you want to sell.  The Buyer's Agent brought you a ready, willing & able Buyer.  If you want to sell ASAP, then you should pay the Buyer's Agent's commission without question.
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January 20
Here's the challenge when you expect buyers to pay their representative: buyers have limited funds for their downpayment (typically 0% - 20%) and rarely have 'extra' to pay an additional 'Buyers Agent's fee.' Typically, sellers contract with a Listing agent, to pay their company a full commission (i.e. 5-6%) who will market and expose their home for sale to the largest 'audience.' (you've elected to skip that process.) 

The Listing company then publishes a "Selling Office Commission" which is a split off of what the seller has contracted to pay them. This SOC is offered to the office who closes the sale. 

By not listing your home, you essentially become the 'listing entity' --- presenting your home for sale. That may save you money. But now your desire is to save it all --- yet have an agent bring a buyer to work for your benefit to sell your home?  When a Buyer's agent finds a FSBO and the seller isn't willing to pay a fair commission, your home will not be shown to buyers: 

Real estate sales is a career, not a hobby. [i.e. Pays the family bills, medical, food, gas, expenses … ] Brokers are paid only for their success - which are equally the sellers' and the buyers' successes.

You may feel you are "saving" money by not offering a fair commission to buyers brokers for bringing that illusive, qualified buyer you need, but 3% of zero Net Proceeds is zero.The real estate industry has the largest available pool of buyers.

Save 1/2 your Listing fee, but be willing to pay a Selling broker for bringing the qualified buyers who will close your sale. ** And if you already have an offer from a broker??  
Agree to the commission; it is only paid at close of sale ---  and your Net Proceeds will then be a lot more than zero! (And you'll be amazed at the work put in by that agent between contract agreement and closing…)
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January 20
Profile picture for gdwolgast
Horses are supposed to go in front of the cart.  What kind of farm did you grow up on?
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January 20
Profile picture for wetdawgs
@pclark:   In the lingo of posting FSBOs, the words "will work with buyer's agents" or "entertain agents" implies that you will pay their commission.  If you have no interest in doing so (which is fine) make it very clear in your advertising that you will not pay any commission for a buyer's agent and don't use any of those phrases.  If it is clear up front, then all is set and you can do what you want to do.

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January 15
pclark133- Agents do not like to be entertained, they like to be paid.

If you are not willing to pay them a fair commission for bringing you a buyer then don't say you will work with them.

You want your cake and eat it too.

There is a reason most buyers want an agent to represent them. If you haven't figured out how it works, you are going to be on the market for awhile.
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January 15
Profile picture for pclark133
There seem to be a lot of agents replying to this question.  I am currently in the same situation.  I have my house listed as FSBO.  I will entertain agents, but it is not my responsibility to pay them.  They work for the buyer and not me.  If buyers make an offer and want to get their agent paid, that is all good.  It does not mean that I need to pay them.
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January 15

They brought you a buyer - right?

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March 27 2012
I work as a buyer's agent and try to contact FSBO properties before bringing a buyer to them.  I want to see the condition of the home and also work out if they would be okay with my commission.  You do not have to pay this commission but it all depends on how successful you have been in marketing your own home.  How long has the home been on the market and how many offers have your received?  In this instance you are really paying for a buyer's agent to market your property and bring ready, willing, and able buyers to you.  The bottom line here is the amount of money that you have in your pocket from the sale of the home.  If the proceeds minus the commission are too low for you then your best option, in my opinion, would be to counter for a higher price.
-Good Luck
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February 27 2012
You would want to pay a buyers agent to get the buyer.  The attorney would be representing you, the buyer without their agent would have no representation.
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February 27 2012
As abuyer myself and a seller too from time to time, I guess the bottom line is what you will agree to as the obvious answer. If you want to sell at the net price you will get, great! Counter-offer if you like and good luck!
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February 26 2012
Looks like you posted this a few days ago, so hopefully you have mutual acceptance with your new buyer. Many good comments from some experienced brokers. I like looking at the glass being 1/2 full vs 1/2 empty. If the property was listed I would imagine the total real estate fee would be closer to 6%, so if you are getting fair market value, you just made an extra 3.5%. Plus if your attorney is only review the paperwork generated by the real estate broker, vs drafting it from scratch  you should be saving a few hours of attorney fees. The attorney get paid either way, the  broker only gets paid if it closes 2.5% of the sales price seems like a small insurance amount to help keep the transaction together and the buyer interested in the proeprty. Sure you could offer the broker $2000 - who knows what would happen? the broker may even try harder to locate this buyer a different home with a more typical comission. I would be happy you have a buyer - bset of luck.
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February 25 2012
Isn't that alot of money for a couple hours of paperwork, I was considering a flat fee of $2000.00. I wouldn't mind paying him the full 2.5% if I would have contacted him, however that's not how it all started. He was showing his cleint a home in my neighborhood and they drove by mine and saw the FSBO sign and the client was interested.

The only thing is he may have spent days (weeks and months even) showing houses to this client. So the reality is for him to put together this sale may have literally taken much more of his time than that. I know his time and effort is not your problem, but he could just as easily have picked your house apart and steered his client toward something that he would have collected more like the 2.5% commision.

If you had contacted a seller's agent to list your house, you would be paying that person a commision AND a seller's agent's commision....so likely DOUBLE the amount he is asking for. Just something to consider.
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February 24 2012
Profile picture for sunnyview
From what you have said, the offer does not sounds unreasonable. It really depends on what your local market is like. If properties are moving, but slowly, I would probably take offer or maybe even offer the agent a slightly lower commission like 2% since you have an attorney for your end of the contract already.

I do not know your pricing or how long you have been on the market, but I before you decide I would really evaluate whether the overall offer including the commission is pretty close to what you are willing to accept or not so close. If it is close, I would probably take the bird in the hand instead of gambling on another buyer in the bush, but it's a personal decision.
 
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February 24 2012
Profile picture for user049689

To Kristin's response.  No a commission was never talked about and I never signed anything.  The agent called me one evening and said his client wanted to see my property, I said sure.  They came looked at it and a day later the agent called me and said they wanted to place a offer.  They e-mailed it to me and the 2.5% was in the offer.

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February 24 2012
Profile picture for user049689
Thank you all for the answers.  The offer is a good offer for the property. The transaction would be fairly standard if we come to terms on everything.  I asked the agent if it made everything move smoother, could he handle all the paperwork on my end for me instead of my attorney drawing up the same papers that he could.  He indicated that he could handle the deal inhouse for both of us.  I know that it would be money well spent to have an attorney look at the final documents and make sure that I was covered.  I also realize that he deserves some commission for this. Question is in the end the 2.5 percent would net him $4750.00.  Isn't that alot of money for a couple hours of paperwork, I was considering a flat fee of $2000.00.  I wouldn't mind paying him the full 2.5% if I would have contacted him, however that's not how it all started.  He was showing his cleint a home in my neighborhood and they drove by mine and saw the FSBO sign and the client was interested.
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February 24 2012
Congratulations on receiving an offer on your property!

I would suggest you spend some time verifying the ability of the buyers to buy your home.  Did the offer come with a financial disclosure sheet? What institution is doing the loan for the buyer?   What kind of a loan is involved? Is it a VA or FHA loan?  Buyers using these loans frequently have little extra cash to pay for closing costs or commissions. You may be able to roll the commissions into a higher sales price, but the property will have to appraise for the increased sales price.

I'm curious as to whether or not the buyer agent asked you about paying a commission before he showed his client your home. I would have asked you to sign a form agreeing to pay xxx% of sales price if my client(s) xxxxx and xxxxx purchased your home. I would have told my clients the percentage commission you were willing to pay or whether you would not pay any commission. If you had refused to pay a commission or had agreed to a commission percentage lower than that in my buyer brokerage agreement, I would have discussed the financial implications of your decision with my clients. My buyers may or may not have opted to view your property. 

Good luck negotiating a win/win contract with these buyers.






 
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February 24 2012
Profile picture for hpvanc
If you are unwilling or would strongly prefer not to pay the "buyers" agent commission counter with a contract that does not include it.  The buyer then has the choice to accept (pay it themselves since the "buyers" agent supposedly works for the buyer), counter with the "buyers" agent commission in the buyers counter offer (hopefully at a higher price to cover the sales commission), or the buyer and their "fiduciary" paid by the seller "buyers" agent walks away.  It may make it difficult or even much more difficult to sell, but the seller does still have a right not to play along with the "buyers agent is free to the buyer," now you see it, now you don't shell game "buyers" agents attempt  to represent to the public on "buyers" agent commissions.  At this point someone (either you or the buyer) probably will have to pay this commission to get this particular offer closed.

If you do decide to pay the "buyers" agent commission, you will still be better off to keep your attorney to review the contracts and advice you on how to legally represent your own best interests in the transaction.

Good luck!
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February 24 2012
Probably 85% of FSBO are sold through a Realtor. It's standard practice to pay them since they are not only brining you a buyer, they will be doing the work of two realtors. You always needed an attorney or title company to close the deal for you. If the agent has brought you a ready, willing and able buyer and you want to sell, think of it this way, you saved yourself the listing broker commission. I don't think it's a bad deal at all. Especially in this market ...Good Luck!
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February 23 2012
The agent has brought you a buyer, and you seem to want the deal. The commission will come out of the transaction.  You have a much better chance of the transaction being successful and closing if the buyer is being guided by an experienced realtor.  I suggest you agree to the fee, and also insist on seeing the buyers' mortgage preapproval.

Good luck to you.
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February 23 2012
It's a little sneaky for the agent not to explain in advance how his/her commission would be paid.  On the other hand, just look at the net to you.  If it's enough, why not pay it.  If it isn't, continue to negotiate on that basis.
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February 23 2012
Profile picture for wetdawgs
If I were looking to purchase a FSBO, I would want my own representation and most commonly that comes as a buyer's agent.   I would not go into it with the seller represented and me, the buyer, not. 

Why would you agree to it?  If you are marketing at fair market value, the tradition is that the buyer's agent costs are paid for by the seller.  If you chose not to, you may lose a sale.



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February 23 2012
The agent made an offer on your house before asking if you would agree to pay a commission to them? That is like putting the horse in front of the cart, it should be the other way around. Most FSBO sellers are doing it themselves to save the 5 or 6% commission of which half goes to each agent (lister and buyers) who then splits it with their office. The buyers agent is asking for the half they would have gotten had you listed it for 5%, so you are still saving the other 2.5% which should more than pay for the lawyer. Saying no to the agent now might still get you a sale with the buyer or the buyer might have some loyalty to the agent and walk away with them to see other homes.
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February 23 2012
 
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