Profile picture for user329143

Working with Realtor, but want to buy FSBO

I've been working with a Realtor for a couple of months and have seen 10-15 homes. I found a FSBO (visited without the agent) and would like to make an offer. The seller, however, does not want to work with any agents and is unwilling to pay the 3% to my agent. On one hand, I feel badly about my Realtor not making any commission because he has worked very hard for me, on the other hand, there are few houses in my price range in the neighborhood I'm looking in and I need to take what is available. What is the ethical thing to do?
  • May 06 2012 - US
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Answers (20)

Best Answer

Do you have a buyers agency contract with the Realtor you have been working with? If so, chances are the contract says you would owe the agent a commission even if you bought a FSBO. If you do not have a buyers agency contract you're not obligated to use your agent (although, it would be nice of you since your agent has done a fair amount of work for you). 

In any case, I would just explain the situation to your agent and see what they say. I have let a buyer go to purchase a FSBO without bringing me along, because it was the house they really wanted and the seller wouldn't have anything to do with an agent. 

I should also mention, it may not hurt to have your agent write an offer on this property and work with you even though the seller says they don't want to pay/work with an agent. It's hard for a seller to turn away an offer in front of them just because there's an agent involved. Others have made some very good points about the benefits of using an agent.
  • May 06 2012
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First of all everything is negotiable when working with seller and buyer but ask yourself a very important question... Would you feel more confident having your agent negotiate and work the sale for you that has dealt with many transactions and closings or direct with a seller desperate enough to work on his own and most likely would protect himself rather than work on the ethical standard that your realtor works under. I would just have my realtor present the offer and let the seller and realtor work the terms. You will have a successful transaction with a realtor who has the experience and understands every aspect of the escrow.
  • October 22 2013
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Profile picture for wetdawgs
Woah Jeff!  If you are really an agent (and you've not bothered to share a license number) do you think that your name calling of former clients is something you want to post on the internet so it will remain there forever? 

That one statement would make me move on if I were searching for agents.  Yeah, I expect more respect from those I hire.    Name calling can get one fired from minimum wage jobs too.
  • October 22 2013
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Profile picture for sunnyview
"Haha......moron"

Not a very professional way to describe the client that hired you. You are right about one thing though--real estate is not for everyone whether they have a license or not.
  • October 22 2013
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I like the $15/hour post as if realtors work that hard for such a small sum. An hour of a good agents time is worth way more than $15/hr. Also, comparing us to someone at a department store is ludicrous. First of all, a department store worker gets paid a base salary whether they sell anything or not. Everyone thinks they know about real estate (oh, its so easy, anyone can do it).....sure. I had a girl who I showed several homes to, and she ended up finding a FSBO on her own. Long story short she came running back to me after the FSBO kept her money when it didn't appraise because, get this, she took the FSBO's word on what the home was worth!! Haha......moron
  • October 22 2013
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Profile picture for sunnyview
"Also paying money directly to the seller without using the Realtor's escrow account, what happens if during an inspection you find that half the house is infected with wood rot and termites?"

Buyers can place money into escrow with an title company along with the signed contract pending inspections. Prior to close, FSBO sellers get no buyer money to hold.

"How do you get your money back?"

If the house does not pass inspection, the buyer terminates the contract in writing and the neutral title company returns their money based on the contract terms.

"Most Realtors have access to attorneys who perform title searches to make sure that the property has "Clear Title"

Title companies guarantee that the title is clear before escrow closes and the house is recorded to the new owner. No agent or special attorney is needed to ensure clear title.

Agents provide a service, but buying a FSBO is not a mystical endeavor. There are simple steps that all buyers and sellers can follow to make sure that their FSBO transaction is financially safe and successful.
  • July 28 2013
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The Realtor is more than just a 3% commission agent, they work to represent you and limit your liability with their exhaustive resources behind them. Most Realtors have access to attorneys who perform title searches to make sure that the property has "Clear Title", did you know that many financial institutions will not offer financing without a clear title?

Also paying money directly to the seller without using the Realtor's escrow account, what happens if during an inspection you find that half the house is infected with wood rot and termites? How do you get your money back? I just encountered this type of issue with clients who found a FSBO and they paid money to the seller without my knowledge, I had to work with them and lead them through a number of issues. I represent my buyer and I want them to be happy with their new house. As it turned out, our inspector found issues with the roof, that they would never have found without an inspection.

Realtors are more than just 3% commission mouth pieces, they represent you on your largest purchase of your lifetime. If you think using a professional is expensive, try working with an amateur.
  • July 28 2013
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Profile picture for user0656247
Well if you really feel bad about it you could pay him for his time.  You say he showed you around 15 house's, average a hour per house.  Then maybe add 5 hours for phone and drive time he had.  That's a total of 20 hours he worked for you.  Reasonable rate of $15 an hour, that's $15 x 20hrs = $300.  Cut him a $300 check, thank him for his time and go buy the house you want from the FSBO.  Everybody wins I think.
Good luck in whatever you decide.
  • July 28 2013
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Profile picture for user4409738
Wow, YOU ARE selling homes not performing open heart surgery. Your level of long term success as an agent may come at the price of loosing the commission's from some clients if that is what they have chosen. When a salesperson at Nordstroms spends a lot of time finding the perfect outfit for a guest, they do the work sometimes requiring special orders being made, searching inventory from other locations, countless dressing room changes and still there are those who will decide they don't need what they once had asked for. Even worse some make the purchase, even wear the clothing and then return it for the money back. Nobody honestly would take the approach of paying for a salesperson on a per service pay structure. Can you imagine asking to see some sunglasses that are inside a glass case at Saks and being given a bill for the salesperson who took the out and polished the lens before they handed them to you. The retail industry builds a personal trade by consistently providing a service, knowing that one who is just looking today is likely to return to make a purchase, refer friends and hold a positive opinion of the product and company for which the salesperson represents. This will and without exception assist, and you will sell more properties in the future.  Asking the right types of questions in the beginning and verifying your clients ability to make a purchase is a critical step in the beginning with a buyer and the agent who seeks to represent them. 
  • July 28 2013
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Profile picture for user268537
LOL
I love the woman who says she "let" a client look at a house on their own. 
  • July 27 2013
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Profile picture for user268537
If it is a FSBO, you just tell your realtor that you found something on your own. Dont ask for advice on this site- these people are all realtors!
When a realtor shows you listings he or she knows that you are looking for a home and if you happen to find one on your own- that's the way it goes. It's an occupational hazard! He or she needs to understand. If you liked your realtor send some friends to him.
  • July 27 2013
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Two things here:
1) As an agent, our responsibility and fiduciary duty to a buyer is to find you a home that you find suitable, regardless of compensation. Usually, a FSBO that doesn't want to work with an agent would still take your offer and may consider even paying the agent something.

2) In most agreements between any agent and buyer no form of compensation is listed. In an agreement between agents and sellers a form of compensation is listed.

I hope that you got this issue resolved and I would like to hear the resolution but HOPEFULLY this will help buyers in simular situations down the line who read it....
  • September 17 2012
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Oh, well, of course - the ethical thing to do is to just go ahead and buy the FSBO without your agent, right?

I'm guessing from the tone of your post that you want to feel really badly about your agent taking you to a dozen or more homes, educating you about the market, so that you could go off and visit a FSBO and recognize a bargain when you see it. Feel really badly, because that's somehow a substitute for the agent receiving a commission for their work.

User, I can't help you with this one. In my experience, it is easier for some people to feel really bad while keeping their wallets closed, than it is to feel good while writing a check.

All the best,
  • May 07 2012
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Profile picture for blub blub blub

If buyers paid agents on an a la cart basis for services, then some buyers could end up paying far more than eh the commission would be. 

Every weekend for months, cost per showing, phone hours during the week, time spent negotiating etc. can start to add up.

Oh wait...REAs are just "salespeople" and it only takes a couple hours of their time.

  • May 07 2012
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Profile picture for hpvanc
If you want to do right by your agent you will have to offer to compensate them yourself, a fee for the services already rendered and any additional services that you wish to use them for in the process of completing the sale. 

Personally I don't see a reason why agents cannot be compensated like a professional with a fee for services rendered instead of on commission, and have them act like a professional facilitator in a transaction instead of just a salesperson if you believe they are capable.  If you have signed a buyers representation agreement with them, you may be on the hook to pay them a commission regardless of any other circumstances if you buy now.  So far all of the buyers representation agreements I have seen solely protect the agent and force buyers to agree to pay a commission or let the seller pay a commission like an agent for sellers at large, rather than allowing the buyer to pay their agent on a professional services basis.
  • May 07 2012
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Profile picture for Ofe Polack
Now, now....if you have a buyer agent, why on earth did you decide to go solo on this property?  Your buyer agent could have contacted the FSBO directly.  Read your Buyer Agency contract, you may owe your buyer agent a commission on the sale of the property since you were under agreement to work with him.  Remember that the role of the Buyer Agent encompasses more than searching and showing a property.....ask him to explain the scope of his duties. 
  • May 07 2012
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I am happy to see that you know how hard agents work to look for the home you want. That being said, an agent does much more than just that. We write  the contract, negotiate for you, schedule home inspections, advise you of the process of buying a home, and work with you till the end of the sale.

I would not let the homeowners lack of knowledge be your problem. You want to have an educated real estate agent on your side. Talk to your agent and let them try to talk to the homeowner. The homeowner must know unless the price for the home is low, there might not be another for a while. If that doesn't work, consider paying a commission to the agent. It will be well worth the price.
  • May 06 2012
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Would the seller object to you having a Realtor if they didn't pay the agent commission? You could pay a negotiated comission to your agen. That way, you're still protected. If the seller objects to your buyer agent and they don't have to pay coomission, I'd wonder what they are hiding or if they are on the up and up.
  • May 06 2012
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Talk to your realtor and tell them exactly what you stated here maybe the seller will consider a 2% commission if you were to pay a little more for the home. Buying a home from owner without the advice of a realtor has its liabilities, are you willing to take that risk? Again, talk to your agent
  • May 06 2012
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Chances are you will be back here asking for advice about the seller not agreeing to make repairs or the house not appraising, like most other buyers who don't have an agent representing them as the buyer.

The ethical thing to do is to tell the seller you are working with an agent whether he likes it or not and to make sure your agent gets some kind of compensation for their work on your behalf.

  • May 06 2012
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