Profile picture for ourangelsnest

I am interested in possibly buying a house from a for sale by owner. Do I need a realtor?

Who would pay commission, what if house doesn't appraise for what they are asking?
  • April 07 2014 - US
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Answers (9)

Profile picture for nwrealty

Any commission that is built into the price is equally shared by both the buyer and the seller (** Per US Department of Justice and US Federal Trade Commission **). 

You are never required to work with a realtor in order to purchase any property.  If you have already selected the house you want to buy, then it may be in your best interest to just hire an attorney to represent you.  But attorneys don't really want to directly handle contingencies like inspections, repair work orders and financing ... although they will do it, and charge their regular hourly fee for the service.  Your attorney can identify if such tasks are advisable, guide you in the hiring of a brokerage firm, and make sure you (and the seller) only pay for the brokerage services that are needed.

Good luck with your home purchase!

  • April 07 2014
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Profile picture for Dunes ..
You have options and depending on your situation you may decide it's best to go with one over the other...but you need to understand the important steps you need to follow, the process and just what your options are in your situation


You for example may be able to take advantage of using a Flat Fee or Fee for Service arrangement
I'd suggest checking out just what options you do have (Flat Fee, Rebates, Full Service ect.) if you decide you need assistance
DOJ anti-Trust division web site..
Competing models of real estate brokerage

What are the laws in your state?

I'd take a look at some of the info available (there is a lot of it on many various sites) to assist in forming an honest opinion of just what you are capable of doing or committing yourself to do...
Info like: Guide to buying a home step by step (Written by a Realtor)
Look around there's lots of info about the process/steps/requirements/forms ect. on the internet

It's a business transaction and possibly the largest you might be involved in so be honest with yourself about your commitment, time, needs and abilities/liabilities...know your options ;)

Best of luck whichever road you travel
  • April 07 2014
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You either need a Realtor or a lawyer, and in some states both. If you hire a lawyer, you'll pay the bill. If you hire a Realtor to represent you, more than likely the commission will be paid out of the seller's proceeds at closing.

Attempting to buy a home without a professional to guide you through the process is simply a flawed plan.

Good luck!
  • April 07 2014
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Agree with the others.  Some FSBO are happy to just save 3% in commission and will still gladly pay a buyers agent 3%.  Others simply want to avoid paying a commission alltogether which means you would have to be willing to do everything yourself or pay the agent you hire a commission.   As for your appraisal question, if the house won't appraise for what they are asking you are going to have trouble getting a bank to finance it.  in those situation you generally would ask the seller to come down in price or if you really loved the house, you would need to up your down payment to make up the difference.  If you are planning to buy all cash, an appraisal isn't necessary.  

FWIW, the statistics show that FSBO sell for less money than if they had hired an agent.  so people are looking to maximize dollars but in the end, it ends up costing them.
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You do not need a Realtor or a real estate agent, really. You could use an attorney or title company or your own wits (or some combination of all three). If that were the case, there would be no commission to be paid.

In fact, in most states that I know of, the state real estate commission will provide you with blank, attorney written forms to use to buy and sell real estate. If you take the time to read those forms carefully, you might have very little trouble closing your own deal. Your question about appraisals, for example, is dealt with very clearly in the New Mexico purchase agreement. A careful reading will tell you if the home does not appraise, you can re-negotiate or walk away.

However, if you do the wise thing and plan to use the services of an attorney and title company, you'll realize that it might be just as simple to use the services of a good real estate agent or Realtor. In that case, that commission is going to need to be ponied up by either you or the seller and that will depend on how the deal is negotiated (in fact, it'll depend on how you first work out your deal with your agent).

Ultimately, if a commission is to be paid, you will pay it - the buyer always does. Whether it's a FSBO or a listed property, until a buyer brings their money to the closing table there is no commission to be paid. Once the buyer brings the cash, the commission gets paid, thus the commission comes from the buyer. That could be argued many different ways, of course, but if a commission is to be paid, it's factored into the price and does not get paid (with some rare exceptions) without a buyer. Make sense?

Interview a couple Realtors and attorneys and see what seems to make the most sense to you.
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First make sure that the FSBO is willing to pay your commission. Otherwise you can hire an agent who will assist you and you may have to pay him or at least hire an attorney who will handle the contract.

Many sellers will pay a fee to a buyers agent. Make sure you are and your interest protected in dealing with FSBO. Would not recommend to go through the process without any assistance on keeping the deal together and having an overview what need to be done and dates to be kept. 

Good luck to you.

Annett T. Block
Florida Connects Inc.
  • April 07 2014
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Profile picture for Dan Tabit
OurAnglesNest,
An agent can assist you and the commission can be paid by either party or as part of the transaction.  You can do it on your own, but it's very risky.  How do you know the value?  A Zestimate is not reliable for this, it's only a starting point and may be way off.  An agent can help both parties determine a value, provide access to reliable vendors for Title, Insurance, Mortgage and inspections.  In many states they can prepare the contract and protect both sides in various ways depending on if the home appraises, needs repairs, has boundary or Title issues, etc.  If you are not confident in your knowledge of this process, it's too much to learn while under stress of buying a home on you own.  Get some professional help, it will be well worth it.
  • April 07 2014
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I have assisted many buyers when purchasing a FOR SALE BY OWNER
YOU as the BUYER want to be represented. Buying a home is one of the single most
important decisions you will make. The seller wants to sell and is not concerned about
RESALE for you, but I know as an agent I would. I always look to advise my clients on their needs for now and future. Most sellers who are FBSO are willing to work with the buyers agent. The seller most times would rather have an agent in the process as the agent guides the sale to the CLOSING TABLE where the seller gets paid. Many deals fall apart during negotiation of price, terms and then home inspection. Also, you need to know if a seller is upside down on their mortgage and a host of other questions your buyers agent will ask. I would highly recommend speaking with a buyers agent and I am available to assist you if needed.
  • April 07 2014
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Profile picture for sunnyview
Who pays the commission and the commission rate would depend on the contract you with your buyers agent. Sometimes the FSBO seller agrees to pay a partial % commission or fee to your buyers agent or agrees to split the commission with you in escrow, other times if you want your agent to handle the deal you pay your agent out of pocket. 

Every contract is different. Most standard ones used by agents and draw by real estate attorney include an appraisal clause where if the house does not appraise the earnest money gets returned and the deal ends. Your contract should also include an inspection clause to allow you time to get inspections and really go through the sellers disclosure.

If you are not familiar with the buyer process, you would be wise to read about it and get legal advice before you sign the seller's contract. An agent can guide you, but if the seller is unwilling to pay or split the agent commission know that you may be required to pay the commission yourself depending on your contract. 
  • April 07 2014
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