Profile picture for merrifield21

What's a fair price to pay my Realtor if the seller won't pay the Realtor commission?

I found a house on my own which is for sale by owner. The seller refuses to pay my Realtor's commission since she's under no legal obligation to do so. I too am under no legal obligation to pay my Realtor since I don't have a contract with him. However I feel like I have a moral obligation to pay him for the time he's spent with me up to this point. What's a fair percentage to offer since he didn't find the house? Should I still provide the 2.5 - 3%?

What would be a fair offer if I moved forward with the buying process without his assistance? He's been with us for about a year but has only showed us about 7-8 houses which is mostly due to my pickiness and unwillingness to expand my search to new areas.
  • August 17 2011 - US
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Answers (23)

Realtor's do have to make a living but in these situations I tell my clients that if they refer me to friends and family in the future and always keep me in mind for services if they ever need me again then all is good. It truly is about making sure the client is happy and finds a home that fits them no matter what the circumstance.
  • August 18 2011
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Profile picture for Dunes....
SteadyState

I felt the same about a thread a month or so back..it was from the other side. (Wish I would have bookmarked it)

A Seller doing an FSBO felt they wanted to know if they should offer Buyer Agents a Commission so they'd tell clients about his property...
Agents you see posting..It's FREE for the Buyer..The Seller Pays showed up and said

Factor it into the Price, it what we tell all our clients/Sellers to do..Set your price and add 3%/other expenses so the Buyer covers your costs

Then they went back to other threads and said...
It's Free for the Buyers...The Seller pays
LOL
  • August 18 2011
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I agree - they're definitely a cost for the buyer. I never tell them I'm free, how would I justify my existence? I explain what I do, how I'm paid, and I define my value in the services I provide. It creates loyal, knowledgeable clients and helps me sort out the duds or tire kickers.
  • August 18 2011
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Profile picture for SteadyState
I believe this thread should be archived and referenced whenever any irresponsible agent says that REA fees are at no cost to the buyer!
  • August 18 2011
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Profile picture for Dunes....
I've been persuaded...
Well put and I find myself in total agreement .

TU and I nominate Bradley for Best Answer

PS..I like shasta_steve's post also,,appreciate hearing your take on things
  • August 18 2011
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If all the agent has done is show you 7-8 houses in a year, and hasn't explained commissions (including finding a FSBO), nor exclusive agreements, has done no negotiating, and has done nothing to help make sure the deal is carried through smoothly, then he hasn't done anything to earn a commission and shouldn't expect anything. A thank you card a small gift card would be above and beyond in my opinion.

Being a real buyer's agent is much more than showing you houses and slapping a contract together. Buyers deserve to be educated about the entire process they're going to be going through, understand everything they're signing, understand pricing, commission, negotiating, legal disclosures, etc. It's a job like any other, and compensation should only be due when work has been performed.
  • August 18 2011
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Profile picture for shasta_steve
My position is you do not owe anyone anything.  I know that the agent spent time and if you feel like you should give them something then more power to you.  The way I see it your agent tried to find you a property and you tried to use the agent to find that property in good faith.  It just did not work out.  If you would have found a house the first day, as I did once, or found a house and then hired an agent, as I have done twice, would the agent have given you a discount because they did not have to do much?  I know none of mine ever did.  To me it is just part of the business.  

Another thing to remember here is your agent probably works for a broker.  There is a very good chance that he will have to split the commission but if you just pay him he will probably get all the money.  I do think it shows very good character that you are thinking of your agent and to tell you the truth in your situation I would probably want to give my agent something too. It would not be anywhere close to 3% though. 
  • August 18 2011
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It does seem like your Realtor has put a lot of time and effort in. You should compensate him with something. 2.5% - 3% is standard, as you mentioned, but it is all up for negotiation.
  • August 18 2011
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I think that the Realtor has earned the right to some compensation. Obviously had the purchase gone through the traditional channels the comission for his firm would most likely have been 3%. Since the Realtor did not assist with the contract and has no liability I think that 1.5% would be fare and equitable for both parties. By the way I just want to commend you for your ethical position in the matter. As a Realtor myself I wish there were more people out there like you. Good luck with your new home!
  • August 18 2011
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Building a commission into a sale price would be a great thing to do. However your realtor should have broached this issue prior to an offer being submitted. Definitely $50 or $100 would in my opinion be half insulting, kind of a "thanks, I gotta give you something." Keep in mind this guy has been searching and doing market studies the entire time. Many people don't understand or appreciate the behind the scenes time invested. The best thing you can give him/her is simply refer him/her to everyone you know and if he/she has any websites drop some good feedback for others to see.
  • August 18 2011
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Profile picture for sunnyview
By law, there is no "standard" commission. It is completely negotiable. Based on what you said, I would probably not pay your agent 2-3%. I think it is really nice that you want to make sure your agent is compensated for their time and effort. If it were me, I would sit down with the agent and tell them that you have appreciated their help and that you would like to negotiate a commission for just this FSBO house.

I do not know how much the house is but you might offer 1.5% if you plan to handle the details of the sale from here on your own or a larger % or fee if you want them to coordinate your side of the transaction. You might also suggest a split of a commission with the seller. Sometimes that can work too. Be honest with your agent, do not feel pressured and do the best that you can to refer them to other people if they have done a good job for you.
  • August 18 2011
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If your agent has been working for you and you are satisfied with the services they have provided a fair payment for these services is 3%. Thats what a normal selling commission is in my area. Some areas are diffrent. By paying your agent this commission it also assures that your agent will continue to work for you until the closing by representing you. Keeping you informed & helping you with any questions that should arise thoughout the purchase process. Good luck !

  • August 18 2011
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Profile picture for Blue Nile
me too...
  • August 18 2011
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Profile picture for Dunes....

Yawn
  • August 17 2011
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Profile picture for Blue Nile
"A $100 dollars? ..Dumb" -

You are right; $50 sounds better...; 7 houses at 1 hr per house, at $7 per hour.
  • August 17 2011
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Profile picture for Blue Nile
I think someone didn't read... but I guess that is normal for so called "professionals", especially when they don't have a license.
  • August 17 2011
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You found the house on your own, but now you have a realtor? Why.. If you signed a buyer's agent agreement, it will have the ammount spelled out. If not, ask the agent how much they want for the paperwork.

David Cooper
  • August 17 2011
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Profile picture for KevinLUzzle
I think 1.0% is fair, that ultimately will lower your cost and should offer fair compensation for someone who was going to be uncompensated.  This is not surgery, nor science, its a simple contract.  Do not wate anyones time, however, your agent is working to make a living
  • August 17 2011
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Profile picture for hpvanc
Are you going to ask them to assist you with the paperwork and the closing process?  If so:
   
    Negotiate a fair fee for the services you will ask with his help on, plus
    something for the time from the 7-8 house showings.
           
                or

    Negotiate a fair hourly rate for his services and demand a full
    accounting of time spent including the 7-8 showings.

There is absolutely no reason buyers agents can't be paid like the professionals they claim to be for services rendered, instead of like a common door to door huckster/used car salesman/cold calling telemarketer/etc.
  • August 17 2011
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Profile picture for Dunes....
A $100 dollars? ..Dumb


.


  • August 17 2011
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Profile picture for Blue Nile
I think $100 is fair.  After all, the selling agents keep stating they are "free" to the buyer, and that there is no need to pay them anything if they can't find you a house, negotiate the contract, and get it closed with no encumbrances.

I'm sure they would not say such things if that was not what they meant.

They also state they put in so many hours that they typically work for less than minimum wage.  Thus, multiply the hours out and pay them $7 per hour.  It is more than generous.

And don't forget, if you pay the agent, the agent's broker will take a cut; maybe 50% of what you pay them.  So, the agent is better off if you hand them cash directly skipping the broker.  (There was no "sale" recorded with the broker's name, so why would the broker expect a cut?)
  • August 17 2011
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Profile picture for Mevin Barnes
Just my opinion - but I think 3% would be more than fair.  Why 3% - because that is what we typically get (in Central Florida) after splitting the commission with the listing agent.

I'm also in agreement with auctionsaver's comment.  Make the commission part of the offer, especially if its being financed. For example, if the asking price is $100K make an offer of $103K.

Good Luck

Melvin
  • August 17 2011
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Have you considered making the realtor commission part of the offer?
  • August 17 2011
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