Question about selling a house without a realtor - Fees?

[Meghan54]

Here is a question I have, the OP says his mom is selling as FSBO, but was it with a FSBO agency? Did she at anytime ever list the house with any type agency?

Damn, Classy, reading comprehension just isn't your strong suit, is it?

The only place her house was listed was on the sign in her front yard.

 

[runzwithsizorz]

Buyer/Realtor agency agreements will outline how an agent will get paid by the client they represent. A buyer will often want to have an agent represent them as they may not be familiar with the market and want someone working in their best interest. The fee for a buyer's agent is typically paid from a split (and not necessarily 50/50) from the selling agent's commission, which could be anything, although 6% is common.

If a sale from a FSBO (for sale by owner) occurs, and the seller does not have an agent and is not offering in their listing to pay a commission they have no obligation to do so.

If they present you an offer and it includes a commission to the buyer's agent...then it is up to your mom at that point to negotiate the agent's commissions come from the buyer's funds. There has to be a purchase and sale agreement of some sort agreed to by both parties. It dictates the terms of the sale.

Otherwise all you need to complete a real estate transaction is to hire a lawyer or title agency to draw up the paperwork and file necessary forms with the registry of deeds.

THIS is good info right here OP! On my last sale I had an agent/broker/lawyer/friend,(all the same guy), representing me for 3% which was unheard of at the time in San Diego. A lady just 4 houses down really, really, REALLY! wanted to buy our house for her son, and had CASH. By this time she had already seen the house inside, and out, so there was no *showing*. She met our asking price,(range), just 10 minutes after it was listed. However, she brought in her friend/agent/freeloader. My agent then told me I could kiss the 3% goodbye. I countered by upping the price 10K just to help defray the cost of her friend, who, other then look over the paper work, did absolutely nothing, (about 8K out of my pocket). They accepted, all of this happened in an hours time. I can't help but wonder want would have happened if we had waited at least another week, and gotten more offers. Alas, my agent said, "Dude, she's paying in cash, and you've started construction on your new place". Agents, can't live with em, can't live without em.

 

[Stuxnet]

A lawyer can't negotiate for you.

This is 100% false. I have had my attorney negotiate my last three real estate transactions without an agent, and co-negotiated two before that (and in one scenario, corrected a grave mistake my agent made). I have no idea where you're getting your information from, but this is just WRONG.

They can't access records normally that follow trouble properties. Lawyers typically don't have access to bank foreclosures, the ones worth actually buying.

This is also 100% false. In fact, everyone has access to this "secret" information, not just attorneys and real estate agents. They're called Public Land Records (or sometimes Public Indexed Records). Go to any county clerk's (sometimes called the County Recorder, County Recorder of Deeds, Clerk of Courts, etc) website, and you'll have access to all of this information (sometimes requiring a paid subscription, but access is not restricted).

A fool who thinks he can buy his house without a trained professional [sic] ain't [sic] to far removed from a fool who thinks he can represent himself in a court case. Agents are not needed 100% of the time, but you run risks, can be very serious risks without using one.

Who said you shouldn't be represented by a trained professional? All I said was that you should hire someone who had three years of formal legal training and passed the bar exam.

Not only are they better trained, but they come at a fraction of the cost of a real estate agent: ~ $300 vs. 6% of a home sale. [EDIT] - and they're working for YOU, not THEMSELVES. Agents have SEVERE conflicts of interests that are inherent to their job. A lawyer (in this scenario), not at all.

 

[classy]

This is 100% false. I have had my attorney negotiate my last three real estate transactions without an agent, and co-negotiated two before that (and in one scenario, corrected a grave mistake my agent made). I have no idea where you're getting your information from, but this is just WRONG.



This is also 100% false. In fact, everyone has access to this "secret" information, not just attorneys and real estate agents. They're called Public Land Records (or sometimes Public Indexed Records). Go to any county clerk's (sometimes called the County Recorder, County Recorder of Deeds, Clerk of Courts, etc) website, and you'll have access to all of this information (sometimes requiring a paid subscription, but access is not restricted).



Who said you shouldn't be represented by a trained professional? All I said was that you should hire someone who had three years of formal legal training and passed the bar exam.

Not only are they better trained, but they come at a fraction of the cost of a real estate agent: ~ $300 vs. 6% of a home sale. [EDIT] - and they're working for YOU, not THEMSELVES. Agents have SEVERE conflicts of interests that are inherent to their job. A lawyer (in this scenario), not at all.

Maybe its different where you are. Here in NJ, they can, but usually don't negotiate housing contracts. Now commercial or busniess, yes. And here its $200 just to have an attorney review a sales contract so $300 might be for you, but ain't no way any attorney is going to close a real estate deal for $300. I just find that hard to believe with all the documents and paper work which is a ton, any attorney would do all that for $300.

Passing a bar exam doesn't make a person any better or knowledgeable in real esate. Let me clarify this. Being succesful in real estate goes beyond just school training. Agents who have multiple years of experience and training in real estate, know real estate law as good as any attorney. They may not be able to present a case, but they know state law. In NJ you will study many actual cases that have established real estate law. I have never practiced in any other state, but there are a lot similarities.

But it seems to be an air in your post that real estate agents are not needed or unknowledgeable and that is bogus. I have seen many do it themselves, both buyers and sellers be in a bad situation after the fact, that its highly possible if they had used an agent, they may have been better off. I don't have a grudge either way, there are bad and good people in every field of life. Real estate agents are no different.

I'll just keep a eye on the thread to see what the attorney says.

 

[MikeyIs4Dcats]

as others have said it is simple:

If a buyer signs a contract with a buyers agent, they owe that agent a commission on ANY purchase the agent was a party to.

Since they brought the agent into the picture, the agent must be paid.

They simply were asking your mom to pay that as part of the offer. Nothing shady about it, it is common practice.

Your mother has no obligation to accept the terms, but only she can decide if she wants the deal badly enough to accept it.

 

[Mermaidman]

Buyer's agent gets a fee. In OP's scenario, the question is who pays that fee. A good FSBO listing would clearly state whether or not the seller pays that fee. IMO, since the buyer initially did not have an agent and then later "surprised" the seller with one, then the buyer would logically pay the agent's fee. But if the seller doesn't want to lose the sale over this issue, then the seller could pay a portion of it.

(Disclosure: I didn't read the whole thread.)

 

[edro]

Your mom has 2 realistic options:
1) Pay the 3% (or negotiate it lower) and sell the house.
2) Tell the buyers she will not pay the 3% and the buyers will need to pay it at the closing. Basically put it back on the buyers and let them decide what to do.

The buyers have numerous options:
1) Buy the house and pay the 3%.
2) Demand the 3% is covered by your mom.
3) Drop all contact with agent and not pay 3%. Risk getting sued by agent.
4) Buy another house.
5) Wait months until agent contract is up, then buy house.

 

[Stuxnet]

Maybe its different where you are. Here in NJ, they can, but usually don't negotiate housing contracts.

You're right, attorneys don't usually negotiate housing contracts, but that's only because they're not usually asked to. Most people don't realize that they can receive all of these services from an attorney who specializes in real estate (probate attorneys are a great place to look/start since they deal so much with real estate anyway).

ain't no way any attorney is going to close a real estate deal for $300. I just find that hard to believe with all the documents and paper work which is a ton, any attorney would do all that for $300.

Sure they would. They do. My attorney will negotiate a deal and close it for $600. For $300, he'll review the contract/paperwork and accompany you to the closing and provide qualified legal advice on the spot. The one thing he won't do is go searching for property for you, but I have the Internet, so that's not a problem.

Passing a bar exam doesn't make a person any better or knowledgeable in real esate.

An attorney has had far more legal training than a real estate agent has, so years of experience being equal and personality traits being equal, an attorney who specializes in real estate is more qualified than a real estate agent, simply by the measure of their training. When an attorney specializes in real estate, he often goes through the same training courses/materials/certifications as an agent, too. So in those, cases, you're getting a full blown agent+attorney all in one package.

But it seems to be an air in your post that real estate agents are not needed or unknowledgeable and that is bogus.

Since you just inferred that you are a real estate agent, I do not want to sit here and dismantle your own personal profession. I will say, however, that I believe agents do not always act in their clients' best interests; their job inherently prevents them from doing so. It's not a reflection of themselves, but rather the conundrum their profession puts them in. In addition, their services and expertise can be had at much lower cost from an attorney who - worst case - is as equally qualified as they are.

And they do not have the conflict of interests than agents have.

I don't have a grudge either way, there are bad and good people in every field of life. Real estate aganets are no different.

I agree wholeheartedly, but agents have motivations that frequently cause them to act not in their client's best interest, but their own. There are "good" agents out there, but they are few. Good agents don't last long in the business because they don't close enough deals to cover their fees and/or meet their brokerage's goals. They're under far more pressure from themselves and their brokerage than they are from their clients, so they're naturally pressed to act in their brokerage's best interests, which amounts to - bottom line - closing deals.

You also have a lot of agents out there who like to play attorney and start marking up contracts without having a solid understanding of what they're doing and what unintended side effects there could be. Attorneys are far more qualified in this area.

A "good" agent is hard to define, and it requires ignoring how overpriced their services are. "Overpriced" does not require taking into account their own personal expenses of being a licensed agent. It only requires comparing their price to the price of an attorney who can provide the same services. At this point, you're comparing thousands of dollars to a few hundred dollars.

Also, a "good" agent will solely look out for you and not be at all motivated to "close the deal," but only close a GOOD deal. Unfortunately, this will of course place themselves at considerable financial risk, so it rarely happens in the first place.

A good agent will also know to keep his/her paws/ink off the contract and let an attorney do that... and at this point, you're paying an attorney $300 to review the contract anyway - as you should and as a reputable real estate agent will recommend - so why not start there, too?

 

[kevman]

IF they buyer was brought to you by the realtor, they will expect a fee. In this case it sounds like it was after the fact that the realtor was brough it.

 

[murphy55d]

Quick update, turns out the buyers had signed a 6 month exclusive contract with ReMax back when they moved here, and conveniently forgot about it until the agent showed up with the offer I had been referring to. So if she wanted this sale, the agent was getting paid one way or another. Rather than push all the commission onto the buyers and scare them off, she decided it was better to eat some of the commission and still sell the house, than it would be to lose it.

After her lawyer friend looked everything over, rather than lose the sale, they agreed that the agent would only get 1.5%, due to my mom (the seller) not being aware of an agent's presence in the first place. The agent agreed(though was not happy, she felt she was doing my mom a great service by getting this deal done) and the offer was signed by both parties, pending a home inspection. Scheduled closing is Nov 1.

Thanks to all who provided their input into this. Much appreciated.

 

[edro]

Yes! I love updates.

 

[KK]

Is the buyer eating any of this 1.5%?

 

[Lifted]

turns out the buyers had signed a 6 month exclusive contract with ReMax back when they moved here

It takes a special kind of stupid to do something like that in this market.

 

[spidey07]

It takes a special kind of stupid to do something like that in this market.

You got that right. And the agent should be too pissed, a few hours work and she still gets 1.5%. Easiest deal she'll do all month if not year. She probably hasn't spent 2 hours on this whole thing yet and likely won't spend more than 4 from here on out.

Then again, contract signed by both parties, so it's not mom's problem anymore. And mom avoided 4.5% commission (6%-1.5)

 

[3chordcharlie]

You got that right. And the agent should be too pissed, a few hours work and she still gets 1.5%. Easiest deal she'll do all month if not year. She probably hasn't spent 2 hours on this whole thing yet and likely won't spend more than 4 from here on out.

Then again, contract signed by both parties, so it's not mom's problem anymore. And mom avoided 4.5% commission (6%-1.5)

Don't forget, 1.5 of those hours were spent exclusively trying to get paid for the other half hour.

 

[Jadow]

I'm really lucky, my mom's HS friend is a killer real estate agent and helped us a ton when we sold our house. She listed the total buyers/seller's commission at 5% and split it 2.6 buyer, 2.4 seller, which is 1% less than normal. Took us about 90 days to sell our house and get a top dollar offer very close to our asking price, even in this crappy down market.

 

[spidey07]

Don't forget, 1.5 of those hours were spent exclusively trying to get paid for the other half hour.

Yep, that's why she took the deal. She's not going to walk away from easy money. She can be pissed all she wants as far as seller is concerned. It's just business. Not all FSBO can work out this well, sounds like win/win.

It's like I said earlier, the agent was already involved no matter what once the offer was given, so give her the crumbs and sell the house.

It's just business, no emotions allowed. It's just business.

 

[3chordcharlie]

Yep, that's why she took the deal. She's not going to walk away from easy money. She can be pissed all she wants as far as seller is concerned. It's just business. Not all FSBO can work out this well, sounds like win/win.

It's like I said earlier, the agent was already involved no matter what once the offer was given, so give her the crumbs and sell the house.

It's just business, no emotions allowed. It's just business.

Absolutely, either -3% was an acceptable offer, or it wasn't. There's no sense worrying about why it's -3%.