What and how should I pay my realtor for FSBO I found?

papergirlMarch 16, 2012

Hello again. So the house we were trying to buy from the divorcing couple did not work out. They accepted another offer and did not accept our back-off offer which was $3000 under their asking price and we asked for $4000 in closing. We gave up on that one!

I looked at a for-sale-by-owner home today and like it a lot. My realtor was stuck at the office and I happened to have the day off so I checked it out. It's priced very reasonably and has about 90% of what we are looking for in a house. My realtor is taking us to look at 7 properties tomorrow morning. I told her yesterday that I was grabbing a flyer from this FSBO property but haven't told her I like it yet.

My question is this. Say the house I want to buy is $260,000. Would I have to pay my realtor out-of-pocket in order for her to get some commission if we buy a FSBO? We used her as a selling agent to sell our house and she did a great job. I told her we would use her as a buying agent but we didn't sign a buying agent contract. I would still like her to get a commission when we buy a place but I don't know how it all works. Our first house was new construction so I am new to the buying process. Any advice is welcome, and I apologize if this has been asked before.

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Let her approach the FSBO owners and ask if they will pay her a commission if she brings them a buyer and takes it to close. Every single FSBO I have approached have agreed to do so. It is a win/win for all involved.

    Bookmark   March 16, 2012 at 8:07PM
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You need to try to get the realtor to accept a cut in commission on this FSBO because YOU found the FSBO on your own.

IF a FSBO seller pays the commission to a realtor, it is often 3%. You can call the realtor and ask them what they pay the reatlor. here is the kicker,,, they are paying a realtor that brings a buyer. But as you know, your realtor did not find this property for you. This is why I suggest a smaller commission. First see what the seller says.

In the end, realize that YOU will be paying the commission in the end via a higher selling price. In other words, there is a set amt the seller wants to get for this home. If the seller has to pay 2% or 3% to the realtor, then they are going to come down less on the sales price to you.

I sold FSBO several times. Trust me on this - you are paying one way or another.

Once I was selling in a hot sellers market. I only was willing to give 1.5% commission to agent. This was $5000. No agent would show the home for this price. I was OK with this and sold to someone that did not have an agent. Gave $5000 off to the buyer that would have gone to the agent.

Another FSBO I was selling in a very down buyers market. I offerred 3% to the realtor. Got an offer from via the realtor for someone she represented. At the same time also had an offer from someone that did NOT have an agent. I ended up selling to the person that did not have an agent. I gave that party the 3% agents fee as a discount on the home. In the end, the buyer without the agent got a better price on the home versus the money going to the agent.

If I was in your shoes, I would first approach the agent and ask her what her fee to you would be if you found a FSBO that was not willing to pay the agent's fee. See if she will do for 1.5% or 2%. You can pay this entire amt or you can try to get the seller to pay 1% and you pay 1%.

You do not have to call seller to ask what they pay for commission. The realtor does not have to call them either. Your realtor could present a written offer with the commission details written IN THE OFFER. That can be negotiated back and forth along with everything else.
It can be negotiated as a lump sim (e.g. $5k) or as a percentage.

If your realtor says she wants 3%, keep in mind you can still try to negotiate her down lower. Also if the seller intitally says they will NOT pay commission, you can negotate it with them to split it with you. Nothing is firm until written and signed in the contract.

    Bookmark   March 17, 2012 at 10:14AM
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Sweet Tea,
An agent can not include anything about the commission in the buyers offer. The agent is not a legal party to the transaction. All dealings of the commission have to be on a separate form from the buyer's offer.
And why would you give up the 3% to the buyer w/o the agent if you did not have too? Doesn't that defeat the purpose of doing the work yourself?

    Bookmark   March 17, 2012 at 1:52PM
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In a FSBO, why don't you go directly to the owner?...have them get an attorney to draw up a contract and work out a deal with them. Why do you need to involve a agent/commission at all?

    Bookmark   March 17, 2012 at 2:26PM
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When you visited the FSBO house did you tell the seller you were working with an agent? If I was the seller I might be a bit miffed if you came back later to announce you now want to make an offer (for less) and you also want your agent paid by the seller.
Why is it you want to include this agent at this time?

    Bookmark   March 17, 2012 at 3:11PM
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Thanks again for all of the great advice. It was very helpful. So I spoke with my agent today and she would be willing to take 2.5% which I think sounds fair. I want to pay her instead of an attorney because she has done a great job for us and I would feel like I was ripping her off if I didn't use her. Plus, she is going to tour to house with me and she has so much knowledge about houses that I think she can give some good input on any problems she sees and I can get her opinion on the asking price.

I love this house so much - it has so many great extras - central vac, heated 3-car garage, beautiful granite, backs up to a nice city park, huge yard, hot tub, porch swing, etc. I think the price is very reasonable so I would probably want to bid pretty close to their asking price if my realtor agrees with me. Even if we add the agent's commission to their current asking price it will still be under our max budget and the house needs no work that I can see so we wouldn't have to put extra money into the house right away.

Unfortunately, my husband really loves a new construction house we looked at today. It's a beautiful house on the inside with great finishes I would have picked myself, 2 gorgeous fireplaces, and an awesome master bath. I'm not crazy about the lot itself though. It needs fencing and landscaping and it's already at the top of our budget. It's a great house too and I would be lucky to have it, but I'm pretty set on the FSBO. We are touring both of them again tomorrow with our realtor so maybe we can make a decision then. Sorry to ramble on, but I will let you all know what we decide and how we work the commission and fees out in the end.

    Bookmark   March 17, 2012 at 3:23PM
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We tried to find a way to compensate our agent when we negotiated the purchase of a FSBO a couple of months ago. We found the house on our own after looking for several months with our agent. This same agent had sold our house last year and got a nice commission on that sale. We were willing to pay a flat fee of $10,000 for him to help with the negotiations and shepherd the contract through the purchase process. However his broker wouldn't allow anything under 2%, which would have been $20,000. We regretfully and nicely said "forget it" and did everything ourselves with the help of a title company.

The seller would have been ok working with a buyer's agent, but would have added on that $20K to the purchase price.

We close escrow next week and there have been no issues at all that we needed a Realtor for, fortunately.

    Bookmark   March 17, 2012 at 3:42PM
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I just saw your question cmarlin. Yes, I did tell the seller that I am working with an agent and that I would want to use her if we were to make an offer. She mentioned they have an attorney we could use but I said I would really like to stick with my agent. I told the seller I wasn't sure how FSBO usually works but I did mention to the seller that I thought my realtor might accept a lower commission in this case.

annkathryn, I'm sure your agent appreciated that you guys tried to make it work with him. I'm guessing he understood you guys not wanting to pay an extra 20k for a house that you found yourself. Congrats on your new home!

The more I think about the house my husband loves that is not FSBO, the more I like it. The interior layout and finishes are great - I just don't love the small lot and how it backs up to other yards. I guess I will see how we feel tomorrow after viewing both houses again. I'm glad we found 2 good options. My husband initially refused to move to this subdivision, but now he is starting to like it and that has opened up more options for us.

    Bookmark   March 17, 2012 at 4:13PM
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We have always worked with an agent but do look at open houses alone. What is the protocol if a house is found that way?


    Bookmark   March 17, 2012 at 11:59PM
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We have always worked with an agent but do look at open houses alone. What is the protocol if a house is found that way?

Tell the agent at the open house that you are working with an agent. In fact, your agent should give you some of his/her cards to give to open house agents.

    Bookmark   March 18, 2012 at 11:58AM
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With the internet, and prior to that a great listing format in a local paper, an Agent has never found a house for me, and I have bought three and made offers on others. I always found the houses I wanted to look at, first.

I didn't think that was really the agent's job, I thought the agents job was to carry out the negotiations and do all the paperwork. That's what I pay my agent for when buying. Finding what I want is the easy part.

    Bookmark   March 18, 2012 at 10:31PM
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DING DING DING DING>>>> palimpsest wins a prize for the correct and obvious answer.

    Bookmark   March 19, 2012 at 7:45AM
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"I want to pay her instead of an attorney because she has done a great job for us..."

Where I live in NJ using an real estate attorney is a common practice for house purchases. Wouldn't it be cheaper and safer to have an attorney review the contract of sale and advise you if there are problems with the transaction?

    Bookmark   March 19, 2012 at 11:51AM
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Last night we put in an offer on the FSBO for over asking price but asking for closing costs. Haven't heard a response yet but I feel confident the sellers will think it's a strong offer.

I realize we could have saved money using an attorney and I appreciate the money-saving advice, but I feel comfortable having our real estate agent guide us through this process. She is one of those agents who gives 110% effort and really works her butt off and I feel like she has earned her commission! She will handle our end of the paperwork, look out for our best interests and give us advice throughout negotiations, home inspection, etc. Plus, the realtor was recommended to me by a great family friend who used to give me all of her kids' old clothes back when I was a young mom and that helped out SO much back then! I really appreciate the family friend recommending my realtor because our last realtor only seemed to give about 30% effort and it was very refreshing to work with a new agent who is such a hard worker and very knowledgable about all things real estate!

I will post an update with more details once we hear back from the sellers, hopefully soon!

    Bookmark   March 19, 2012 at 1:23PM
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Good luck on your offer.

    Bookmark   March 19, 2012 at 7:27PM
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Thanks NC and thanks for your quick reply to my initial question. It was so logical but I had no idea how FSBO worked.

We are under contract to buy the FSBO. I am so excited and am crossing my fingers that inspection and appraisal go well. We ended up offering above their asking price in order to pay our realtor her commission. We agreed on us paying the commission, sellers paying half of our closing cost, and sellers leaving their washer and dryer for us.

I feel that even with adding in the commission we still got a great deal on the house. When they had it listed with a realtor in the past it was listed for about $10k more than what we are paying for it and I am happy with what we are getting for our money. We are getting a finished house with great private outdoor space and a heated 3-car garage and I can't wait. I live next door to my in-laws right now and need a little more peace and privacy in my life! I also can't wait to have a garage. We have rough winters and have not had a garage for 10 years. No more scraping windshields in the morning before work. Wooohooo! Thanks again for all of the great advice on this board. I got a lot of helpful advice on this site a few months ago about finding a better realtor after our last one slacked off a lot and I'm glad I took that advice to heart too!

    Bookmark   March 21, 2012 at 3:31AM
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I wish I had 20 buyers just like you...

    Bookmark   March 21, 2012 at 5:10PM
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What nc said!!!!

    Bookmark   September 19, 2013 at 10:09PM
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