My wife and I are pondering selling our house ourselves. We are beginning to look into how to do it and we have a neighbor that is a Real Estate agent that will assist us. I have a couple very high level questions. We are trying to avoid paying the 6% commission so that we can be more flexible with our prospective buyers.

1) I realize we do not have a brokers license so we cannot technically sell the house ourselves. That being said I assume that we will have to pay a brokerage fee to a broker.. is that correct? What kind of ballbark figure are we looking at? We are in the Baltimore / DC area. The figure does not need to be exact but an informed guess would be nice :)

2) Since we will be selling the house ourselves I feel that buyers agents might avoid us like the plague because there is no split of the 6% fee. Is this a correct assumption or will the buyers agent ask for a commission from us? If I am totally off base then how does this work?

Thanks a bundle!

D

I used forsalebyowner.com to sell a home about five years ago.

It cost me $1,000 flat fee.

It may have been slightly unusual in the fact that I already had a buyer, and just needed someone to handle the paperwork and loan closing.

Everything went just fine, but you are in a bit of a different situation in the need to possibly work with another real estate agent representing the buyer.

There are also many Attorney's that do pretty much the same thing as FSBO.com.

I sold my previous home and bought my current one without using a real estate agent. I don't think you need a broker, but you do need an attorney to draw up sales contract and protect you at the closing.

I sold my previous home and bought my current one without using a real estate agent. I don't think you need a broker, but you do need an attorney to draw up sales contract and protect you at the closing.

I am curious then why there are real Estate brokers and real Estate agents and the agents work for the broker because they do not have the brokerage license yet?

I hope I can bypass the whole thing that would be great!

I assume that a legal contract I get from a current Real Estate agent would not be good enough? I am not saying I don't want to use a lawyer just trying to see if it is necessary. Also could you please go into more details when you mean protect you at closing?

If I buy using a realtor then I assume the realtor is the one protecting me at closing?

Thanks

I used forsalebyowner.com to sell a home about five years ago.

It cost me $1,000 flat fee.

It may have been slightly unusual in the fact that I already had a buyer, and just needed someone to handle the paperwork and loan closing.

Everything went just fine, but you are in a bit of a different situation in the need to possibly work with another real estate agent representing the buyer.

There are also many Attorney's that do pretty much the same thing as FSBO.com.

Thanks I will check into them. So do they provide the Attorney / sales contracts / protection at closing for you? If so that is not a bad deal at all.

Our biggest cost was advertising, but we put our house for sale right when the market took a dive. The house was sold by our ad on forsalebyowner.com, which was a trivial cost in comparison to newspapers. The guy who bought it had been watching the ad for months on fsbo.com. When the price got down where he wanted it, he came forward.
Our house took a while (almost 1 year) to sell, but three others in the development, being sold by realtors, never did sell. The realtors didn't keep the other sellers information boxes filled, didn't replace damaged signs, and couldn't respond for showings as quickly as we could.
We bought our replacement house from a seller who had a realtor for 6 months and released them, and sold it fsbo. But he had to wait for months to sell because of limitations in his former realtor contract. His sale in another state was even easier.
I would do it again in a heartbeat. My brother-in-law sold his own house in Baltimore County and had no problems at all, but he was fortunate to sell during the boom market.

Our biggest cost was advertising, but we put our house for sale right when the market took a dive. The house was sold by our ad on forsalebyowner.com, which was a trivial cost in comparison to newspapers. The guy who bought it had been watching the ad for months on fsbo.com. When the price got down where he wanted it, he came forward.
Our house took a while (almost 1 year) to sell, but three others in the development, being sold by realtors, never did sell. The realtors didnt keep the other sellers information boxes filled, didnt replace damaged signs, and couldnt respond for showings as quickly as we could.
We bought our replacement house from a seller who had a realtor for 6 months and released them, and sold it fsbo. But he had to wait for months to sell because of limitations in his former realtor contract. His sale in another state was even easier.
I would do it again in a heartbeat. My brother-in-law sold his own house in Baltimore County and had no problems at all, but he was fortunate to sell during the boom market.

Thank you... you brought up another interesting question. Can you get your house into the MLS (Multiple Listing Service) without having a Realtor? Maybe I could use my neighbor to do that if it requires a license.

I am half tempted to go get my own license. Not sure if the company I would sell through would allow me to split the fee or not :D

i am curious then why there are real Estate brokers and real Estate agents and the agents work for the broker because they do not have the brokerage license yet?


A Broker owns an agency that deals with selling real estate. Agents or sales people work for a broker and can't work independently in most US states. But a broker is not required to process a sale.

A Broker owns an agency that deals with selling real estate. Agents or sales people work for a broker and can't work independently in most US states. But a broker is not required to process a sale.

Thank you! That seems like a total racket to me :)

Thank you! That seems like a total racket to me :)

Of course it is. But there is a significant amount of complexity to real estate transactions that licensing is not a bad thing.

You can sell your house yourself. You friend can't put it in the mls for you and you can buy real estate contracts at office max. you are right a agent helps protect your interest throughout the process, but they can't give legal advice. Hire a attorney. It's money well spent.

you can sell your house yourself. you friend can't put it in the mls for you and you can buy real estate contracts at office max. you are right a agent helps protect your interest throughout the process, but they can't give legal advice. hire a attorney. it's money well spent.

Thanks, I believe we will use a lawyer because we will have to have a contingency in place (that we can find a suitable home) so it would be best to get that right. As far as MLS I think I can pay a broker to do it for me but with the internet that may not be necessary.

More questions:

1) Say a prospective buyer is using a buyers agent. Will that buyers agent steer him away from our home because there won't be pot of money for them?

2) In this situation would an agent ask for a fee or is it customary for me place a 2% or whatever fee when I put the house for sale.

I don't think a Realtor by law can refuse to show a property for sale but I know they do not have to recommend one if there is no brokerage fee that awaits after the sale.

A buyer's agent is paid by the buyer. They don't care about how the property is being sold. The only thing is a buyer's agent will generally find their listings through MLS. They may not search sale by owner sites. However, if they are good they might.

If the buyer goes to a realtor, they won't have your listing. A buyer knowing it's a for sale by owner will generally not check your home out with a realtor in tow.

A buyer's agent is paid by the buyer. They don't care about how the property is being sold. The only thing is a buyer's agent will generally find their listings thru MLS. They may not search sale by owner sites. However, if they are good they might.

If the buyer goes to a realtor, they won't have your listing. A buyer knowing its a for sale by owner will generally not check your home out with a realtor in tow.

I think I don't understand something. When I said 'buyers agent' I mean finding a real estate agent to help you (the buyer) find a house. You as the buyer do not pay this agent per se. They typically get 1/2 the commission from the selling broker. Does a 'buyers agent' mean something different than what I stated? I want to make sure I have my terms right.

A buyer's agent is something hired by and responsible to the buyer to help them find a house. The buyer is responsible for their payment. A seller's agent is responsible to the seller. I don't see what they would share the commission. I would see that as a conflict of interest.

A buyer's agent is something hired by and responsible to the buyer to help them find a house. The buyer is responsible for their payment. A seller's agent is responsible to the seller. I don't see what they would share the commission. I would see that as a conflict of interest.

Well when I bought my first home I contacted an agent to help me find a home and I did not have to pay her. She received part of the commission from the selling company/selling agent. Unless I truly did not get a buyers agent then this really is not all that beneficial for the client as they would have no interest in bargaining down the price of the house

If they weren't paid by you, they weren't a true buyer's agent. I suspect they only showed you listing from their agency.

If they weren't paid by you, they weren't a true buyer's agent. I suspect they only showed you listing from their agency.

Wherever I've ever lived this is not correct. A buyer's agent can negotiate a payment from the buyer in the case of a FSBO or something unique like that. But for 99% of the listed houses that they will lead their buyer to they are compensated (typically half, or 3%) of the price of the home. It's a separate line item on the HUD 1 closing statement listed under settlement charges. It will then say "division of commission" and list out which agency gets what. Then the total is listed under the column titled "Paid from Seller's Funds at Settlement".

They solely REPRESENT the interests of the buyer, but they are almost always paid by the seller.

The actual legal term for buyers agent will differ by state. In some they have to be a paid agent who does not list property but only helps others find and deal with buying.

What you found was a real estate agent that you assumed was working for you, that showed you properties that their broker had listed but also other MLS properties. While they were not the listing agent, they are also for from a buyers agent, since their job is to sell you a house, not always work in your best interest. Also in those cases, the commission is split with 1/2 going to the selling brokerage, and 1/2 going to the buyers brokerage, in each case the broker gets a percentage, then the listing agent gets some, and then the selling agent gets some. So what most people call a "buyers agent" really is not, they are still a selling agent, just not the listing agent.
All real estate agents will try to sell you things they have listed first, things listed by their brokerage second, and then any other property.

If the buyer has a agent, when they make a offer on your home ( although most likely they won't since it is not MLS listed) when they make a offer, their agents commisison will be part of that offer to be paid at closing.

Wherever I've ever lived this is not correct. A buyer's agent can negotiate a payment from the buyer in the case of a FSBO or something unique like that. But for 99% of the listed houses that they will lead their buyer to they are compensated (typically half, or 3%) of the price of the home. It's a separate line item on the HUD 1 closing statement listed under settlement charges. It will then say "division of commission" and list out which agency gets what. Then the total is listed under the column titled "Paid from Seller's Funds at Settlement".

They soley REPRESENT the interests of the buyer, but they are almost always paid by the seller.

Maybe its different in your area. I am aware of that line on the closing statement. It's there because there are frequently situations where commission is shared, especially on MLS listings.

The usual scenario is Mr and Mrs Doe walk into the Century 25 real estate office and tell the agent they are looking for a house. This agent then interviews the Does to find out what they are looking for and goes through the listings for matches. The agent then takes the Does around to view the possibles. If they find a match and the Does buy, then the agent shares the commission with the listing agent.

But that's not a true buyer's agent. I maintain that a true buyer's agent is not paid by the seller in any way, That would create a conflict of interest.

But that's not a true buyer's agent. I maintain that a true buyer's agent is not paid by the seller in any way, That would create a conflict of interest.

Well, Scott, I'm not trying to set up an argument with you - you ALWAYS have true, honest, helpful advice. I just know that I have a written representation agreement with my BUYERS agent (that's what it says on the document). And I've had the same contract with several other agents in several other states. (Residential and commercial). I've closed over 100 real estate deals in the last 5 to 6 years as a buyer, and have never paid the agents a penny. Their sole form of compensation was from the seller at closing as I previously stated. My agent represents me and only me. There's no conflict of interst. She gets paid if and when we successfully close on a property.

I've always operated in the middle of the country, and I know things can be quite different on the coasts.

Original Poster,

What I've seen happen several times - usually when I've been the seller - is that you may have a Realtor call you and say, "I have a client who's interested in your house. They want me to represent them. If we work out a deal and they buy it, would you be willing to pay me 3% of the sale price?" Then you can negotiate from there. Sometimes it's a ploy on the part of the agent to get a listing. Sometimes they really have someone interested. It's a crap shoot.

You can say that you won't pay them, the buyer would have to pay them, but in over 15 years, in 6 different states, I've NEVER seen or been part of a real estate transaction where a buyer has paid a realtor a cent.

I've always operated in the middle of the country, and I know things can be quite different on the coasts.

P.S. If a realtor brings a 'close to full price' offer with good terms and a pre-approved buyer, I've usually just paid them. Sometimes negotiated it down to 2.5 or 2% on higher priced stuff. I try to build that in when I figure my initial price.

It appears to me that there is no clear consensus on what a Buyers Agent is. That is fine however I have personally have not heard of a buyer paying an agent directly. So that being the case if I am doing a FSBO then I should expect an agent representing the buyer (no matter what you call them but the ones that split the sellers commission) to not show my home for fear of not getting half of the commission. I assume I may get a few more nibbles if I mention that I will offer a 2% commission to an agent representing a buyer.

My question is this, if a buyer (with an agent) sees my house online and asks to see it I know the agent has to legally take them to see it. If they want to put an offer on my house what does the agent do? Would they typically ask me for a commission? What if I say no?

Also 'Rockinmommy' what does "close to full price' offer with good terms" mean exactly? I assume that they accept your full price but is that it?

Thanks

Ok, I will give you the actual teaching that they do with real estate agent, This is from the National part of the testing, from Dearborn Real Estate Education from the Ethics section, This is used in most states but I know is the law for Georgia and Tennessee where I am licensed.

To have a true buyers agent, you have to create a buyer agency agreement, this is not merely a agent that is representing you to find property for you. There is seldom a true buyer agency agreement ever done. For two significant reasons. First if someone chose to hire an agent to represent them in the transaction as their buyers agent, the buyer client would be expected to pay the agent a fee or at least a commission. So if the person is not actually paying the agent thierself then there is no true agency agreement.

Also a true buyers agent can not show the person any property that their brokerage has listed, since by law they are not allowed to try and sell their own listing as a conflict of interest.. Which would be a violation of the fiduciary duty of a true buyers agent.

The major change that stopped the use of a real buyers agent was the National Association of Realtors and the MLS system. Any cooperting broker of the MLS is considered a cooperating broker or subagent of the listing agent. So when you have a agnet show you property off the MLS, they in fact become legally a subagent of the listing agent if they are to be paid only by commission if they sell you a home.

Since it is the selling broker who is now spliting fees, and the selling agent is being paid in fact by the selling broker, there is no buyer agent status since the buyer is not the one paying the agent.

In fact most states require that the true agency disclosure be made, and it prescribes staturory duties for all agents.

So officially, if the buyer is not paying the agent directly, they are not legally a true buyers agent, and they by law are suppose to notify the buyer that there is no true agency agreement between them.

My question is this, if a buyer (with an agent) sees my house online and asks to see it I know the agent has to legally take them to see it. If they want to put an offer on my house what does the agent do? Would they typically ask me for a commission? What if I say no?

My experience has been a call from and agent saying, "I have a client who is interested in seeing your house. If I show it to them and they buy it, are you willing to pay me a commission?" I typically inform them that they're welcome to set up a time to come see it with their client. At such time that they would present an offer, based on the strength of that offer, I'd be willing to consider compensating them.


Also 'Rockinmommy' what does "close to full price' offer with good terms" mean exactly? I assume that they accept your full price but is that it?

thanks

Right, the price part is self-explanitory. Other things to consider... they may write in contingencies about selling their house before they can close on yours. They may or may not be pre-approved. They may not want to close for 2 months. They may want you to include appliances or other items that you didn't intend to include with the sale. To me "good terms" means that they're pre-approved, want to close in a month or less, the sale isn't contingent on any other houses selling or being bought, and if they're asking for things that normally wouldn't convey in the sale they're increasing the price accordingly. Of course everything varies from place to place across the country, and from transaction to transaction. What you don't want is to put it under contract with someone only to find out a month later that there's no chance of them qualifying for financing, or the house they're trying to sell is a pit and they're asking way too much for it. Does that help?