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So what is the deal if your agent finds a buyer

Posted by kam76 (My Page) on
Wed, Sep 25, 13 at 23:07

I guess someone has contacted my agent (they are not working with anyone) and my agent has shown them our house. They really like it and might be putting in an offer.

I asked if they needed to get their own agent and my Realtor said no. That she would still be representing me but that she could do all the paperwork etc. How does this work? Does my agent then get all the commission. Seems kinda like they should take a break on the % if they are getting it from both ends. I wasn't sure if this was going to be a touchy subject with her so I wanted to see what you guys thought.


Follow-Up Postings:

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RE: So what is the deal if your agent finds a buyer

In my office we can only do this when both parties agree. I have only done this once, and it went very smoothly. A lot less running around. As for commission, she is doing all the work, so yes, she gets all the commission, after her office takes its cut. You can ask her about lowering it, but she isn't obligated to do it. It shouldn't matter anyway. She may need permission from her broker. Different companies have different rules. Hope this helps. Good luck.


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RE: So what is the deal if your agent finds a buyer

When we bought this house last Fall we weren't looking. The house belonged to a friend who had moved out of state, we knew her agent socially, arranged for him to meet us for a walk through and made an offer. He handled both ends and it went like clockwork. A few months later when I had our former house updated and ready to list, I called him - he handled that sale too. No problems, no issues, the man had such attention to detail I can't imagine having needed anyone else - did not question his commission.


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RE: So what is the deal if your agent finds a buyer

Why does it matter to you who sells your house? You're willing to pay the full commission if another agent sells your house but not your agent?

Your agent would be doing "it from both ends too". She not only does the work the listing agent does, she would be doing the work the buyers agent would be doing.

In reality, she will be able to keep things moving along. She will be very motivated to get the house to closing because "she is getting it from both ends". (Its a nice commission for her). She is going to work just as hard if not harder to keep this deal together, why would you question what she is getting paid?

You dont get any less then you would have gotten if another agent from another company had brought you an offer. All that should matter to you, is that you are happy with the sales price and that it got to closing, not how much your agent is going to make 'now'.


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RE: So what is the deal if your agent finds a buyer

The time to negotiate the commission was when you signed the listing contract. We bought our previous house in just the same way your transaction is happening. The sellers at that time had negotiated 5% commission and 4% if the agent also represented the buyer. Both parties were reasonable people and it was an easy and quick transaction. This was on the east coast with high real estate values, so the 4% was a pretty good amount.


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RE: So what is the deal if your agent finds a buyer

I have to chuckle a bit at the characterization of the dual agent doing twice the work because they're doing "both sides." As I've observed our transaction going down, the bulk of the "work" has been passing communication back and forth between sellers. Sellers ask their agent a question.
Sellers' agent asks our agent
Our agent asks us.
We tell our agent
Our agent tells their agent
Their agent tells them.
Seems rather convoluted. I'd rather the buyers just asked me. It'd be a lot quicker. Taking one agent out of the mix streamlines communication, it doesn't double it.


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RE: So what is the deal if your agent finds a buyer

Yes that is what strikes me as so "off". Basically my agent stands to earn and EXTRA $10,000 simply for showing this seller my home. It is not like they had to show this seller multiple locations or help them over a long period of time. Just, oh you like it, lets sign the paper work and where is my extra $10,000?

Just seems like maybe some of that % should go to the buyer. Why this is a particularly bitter pill to swallow is I work part time and so the $10,000 represents 6 months of work for me. I cannot even fathom earning $10,000 for a few hours worth of work.

My agent works with her husband as the broker so they don't have a percentage to pay an agency or anything.


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RE: So what is the deal if your agent finds a buyer

  • Posted by morz8 Z8 Wa coast (My Page) on
    Fri, Sep 27, 13 at 21:59

If you could only hear the gentle tone in my voice when I tell you what you do or what you earn has nothing to do with your agent closing a more prosperous deal than might be the usual. It's the line of business he/she has chosen. There may be months with no income, and happily at the end of this transaction possibly a higher profit. That's life :) If I spent my time begrudging those who have months with higher income than mine, I wouldn't be very happy.

The agent I used did quite well with the two transactions where I was involved. Instead of being annoyed, I sent him a bottle of Makers Mark and a thank you note.

This post was edited by morz8 on Fri, Sep 27, 13 at 22:27


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RE: So what is the deal if your agent finds a buyer

Weedy, that's the only part of the transaction that you would see as the buyer or seller. There are a ton of obstacles, that can and usually do come up during a real estate transaction. In fact it is so common that when agents get a transaction that runs smoothly, with very little hiccups, they ALWAYS comment about how nice the transaction was, trust me it is not the norm. Ive been in the business over 25 years and still learn something new with almost every deal. The bulk of the transaction is not showing the buyer the house. It is getting that buyer to closing.


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RE: So what is the deal if your agent finds a buyer

Linda:
I know that obstacles can arise. But my point was that having 2 people in the middle of them is a less efficient way to resolve them than a single person. Most efficient yet is for the buyer and seller to work through stuff directly.


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RE: So what is the deal if your agent finds a buyer

'Why does it matter to you who sells your house?
You're willing to pay the full commission if another agent sells your house but not your agent?'

yep, that's a good question.

(edited to clarify that 'yep' means 'yep, good question', not 'yep, I agree.' & I'm the one who makes fun of people's brain-fog MLS ads!)

This post was edited by sylviatexas on Sun, Sep 29, 13 at 10:27


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RE: So what is the deal if your agent finds a buyer

First I want to say I appreciate all of your comments and you must read my response in the same calm, sane tone that I read all of your responses.

Yes, I realize everyone gets paid differently depending on what field they go into. We cannot all be pro-football players. I am not saying I do not want my realtor compensated. I believe earning $10,000 to sell my house (which she has told me we have done a dream job getting ready and keeping 'show ready') is fair compensation. I am not begrudging people making money. What I am calling into question is how this "double dipping" seems to be an accepted practice - I guess at least in my area.

This question was asked:

'Why does it matter to you who sells your house?
You're willing to pay the full commission if another agent sells your house but not your agent?'

My realtor's #1 job is to represent me- as written in my contract. How could she then represent another client who is in the opposite chair for negotiations? She would certainly be offering this client less than #1 service wouldn't she? Is she offering them $10,000 worth of service? I can't see how someone offering secondary service to a client could earn the same level of pay. Frankly it concerns me that perhaps I would be on the end of not getting the best representation. She knows all the details about my house, how am I to be sure she isn't letting something "slip" in the negotiation phase that could reflect negatively on me? If she is fully representing me she might not push the buyer to offer a lower price or something she thinks is fair because she has my best interest in mind = not fair to them.

I realize now this should have been something I negotiated before-hand and there is likely nothing I can do. I guess I am not real estate savvy enough to have even fathomed needing to negotiate something like this. When I heard "You are my client, my #1 job is to represent you" I didn't think she could represent anyone else. My ignorance.

Just a note, we are going to need to bring money to the table to close on this house, so this isn't equity we are taking off the top. If it were me in the realtor's position, I guess I wouldn't be giving myself high fives about making double commission when it is all coming directly out of my clients bank account. But that is just me.

For many of you I guess we can agree to disagree.


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RE: So what is the deal if your agent finds a buyer

In that case, kam, I think you'd do better to ask your Realtor to help out rather than arguing that she doesn't deserve to be paid what you agreed to pay or that she isn't doing the job for which she was engaged.

My opinion is that she was engaged to get your house sold, get it off your back, get rid of it, & she's done so.

Whether I myself would reduce my fee in such a case depends a number of things which would vary from person to person, house to house, closing to closing.


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RE: So what is the deal if your agent finds a buyer

I think the real issue -- at least for me -- would be whether I was comfortable with my Realtor representing both sides.

When I bought my place a couple of years ago, my Realtor was privy to a lot of information that she didn't share with the seller's Realtor (most importantly, my top price). This, of course, goes both ways (when/if I sell, I'm not going to want the buyer's Realtor to know my lowest acceptable price). There are a myriad of other things, too, largely relating to price negotiations, where it was important to me that she was on my "side" (and I have a lot of respect for her and her knowledge/advice/professionalism).

There's an inherent conflict of interest if the Realtor represents both sides. If you've agreed to it (in my state, you have to sign a waiver), then I guess it is what it is. If you haven't, and you have concerns, then I think you should talk with her about it. Maybe the answer is a lower commission, but maybe it's something else -- like her handing off the buyer representation to a colleague (and, obviously, setting up a "Chinese wall"), and dealing with the commission split between themselves.

Good luck!


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RE: So what is the deal if your agent finds a buyer

StellaMarie - this is exactly what I could see as problematic here. How is this dual agent going to represent both side's interest equally in negotiation etc. It is clear she wants to get this house sold and the higher the price the better it is for her, no? So not exactly in favor of the seller. Or she might be willing to cut her commission a little in order to get the deal done and still make more money then when having to share commission with another realtor.


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RE: So what is the deal if your agent finds a buyer

Isn't one of the reasons you hire a realtor to list your house is because you hope she might be able to sell it?

When we sold our house, we hired our realtor because ( when we interviewed realtors for listing) we asked, "why should we hire you?". She answered, " because I will sell your house". She did. In under 3 days.

And isn't that why realtors put their names and phone numbers on their signs, so interested buyers might call them?

ML

This post was edited by maddielee on Mon, Sep 30, 13 at 20:29


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RE: So what is the deal if your agent finds a buyer

I get your concern. You may need her advice during the inspection and negotiations and if she can't advise then what is the point of hiring her?

When I listed my house I discussed it with my realtor and told him if this happened he could not represent the buyer. Yours could refer the buyer to another realtor and she would likely get a referral fee. If you tell her you want to go this route be sure to talk about any concerns you have now, ie can't be referred to a family member, a realtor you may have interviewed or a particular firm. Be sure to have reasonable business concerns for any exclusions.


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RE: So what is the deal if your agent finds a buyer

You appear to have made a mistake by believing your realtor when they said "You are my client, my #1 job is to represent you." This was never true and you are lucky to be learning this before negotiations begin.

Unfortunately you are now stuck - agree to the dual agency, or deal with an agent who has just had you take dollars out of their pocket.

The good news is that the buyer is also saddled with an agent whose #1 job is also not to represent them, and in fact is *more* invested in selling them the property than an independent realtor.

If you are comfortable negotiating terms, I would suggest agreeing to to the dual agency, but ignoring all input from your realtor regarding negotiations and absolutely not sharing anything other than your formal counteroffers. (Hopefully you didn't make the mistake of sharing your bottom line already!)

If realtor (and broker) are set to make an extra $10k on the deal, I would shoot to reach an impasse with the buyer of where you are $5-8k higher than the buyer is willing to pay and hope the Realtor is willing to pay the hero and save the deal by "cutting" their commission to something slightly above what they would have received if they weren't double dipping. As others have noted, this situation often represents less work than when two realtors are involved in the transaction and presumably supports your goal of selling timely.


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RE: So what is the deal if your agent finds a buyer

My husband had his realtor represent both sides in a transaction before (he was the seller) and he was dissatisfied. He felt his realtor wasn't 'on his side' when it came to negotiations. Mind you, he kind of disliked that realtor anyway and regretting signing with her in the first place.


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RE: So what is the deal if your agent finds a buyer

You just gotta love it...
They tells us to get it sold fast, and then when we bring a buyer ourselves, they want to penalize us!
When you signed the Listing Agreement, I can bet you that you checked a paragraph that explains that dual agency could arise. The Listing Agreements that I have seen all give the seller a choice as to accept dual agency or not.


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RE: So what is the deal if your agent finds a buyer

"When you signed the Listing Agreement, I can bet you that you checked a paragraph that explains that dual agency could arise. The Listing Agreements that I have seen all give the seller a choice as to accept dual agency or not."

While I don't doubt the legalese mentioned is in place, my bet is that the realtor who was (naively) hired as a trusted adviser and fiduciary by the OP didn't bother to highlight the potential conflict inherent in this arrangement, didn't note that there are entire states (Colorado, Florida, and Kansas) which prohibit dual agency and didn't advise the OP to have their lawyer review the contract to protect their interests before they signed.

Of course the OP should have known better to sign something they didn't fully understand, should not have trusted their realtor, and should have hired a lawyer to review.

I'm not sure why it is any surprise that the OP and many commenters are bothered by the trap set by a "trusted" realtor so they earn twice as much as the OP expected to pay.


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RE: So what is the deal if your agent finds a buyer

so, Invisible Hand, you think people are stupid, they must be protected from signing things they don't understand?

& their Realtors (those real estate practitioners hired by competent adults to represent their interests) set 'traps' to ensnare unsuspecting victims?

& state real estate commissions are likewise too dumb to realize what's in the contracts & forms they've promulgated?

interesting world in which you live.

I think that people can understand contracts, & that any real estate practitioner who sets 'traps' won't last long, & that no real estate commission would make provision on contracts & forms for dual agency or any other practice that is disallowed in their state.

edited to add:

& this just doesn't make any sense at all:
'so they earn twice as much as the OP expected to pay.'

The amount the seller pays is set forth in the listing agreement.

There's no way any real estate practitioner can change the terms without the seller's signaturre on an addendum to the listing contract.

'

This post was edited by sylviatexas on Tue, Oct 8, 13 at 17:35


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RE: So what is the deal if your agent finds a buyer

The same people that gripe about their listing agent never bringing by a buyer for a showing are the same people that gripe that the agent gets 100% of the already agreed upon commission when they do bring by a good buyer.
I suppose we are just victimizers.


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RE: So what is the deal if your agent finds a buyer

What if the buyer doesn't want representation at all and is willing to do the paperwork (which where I live is zero for the buyer)?

I would assume your real estate agent would get the usual commission and you would not have to pay the buyer's agent commission because there is no buyer's agent.

Of course in this case the buyer has no motivation not to use your realtor.

So maybe tell your realtor (who represents YOUR best interest) to offer a cheaper price to the buyer (maybe 1.5% off) if the buyer doesn't use an agent at all? This would be bitter for your agent but shouldn't your agent have your best interest in mind?


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RE: So what is the deal if your agent finds a buyer

' This would be bitter for your agent but shouldn't your agent have your best interest in mind?'

I love this kind of nonsense.

Why in the heck would a seller think that a buyer is concerned that the seller is paying too much for...anything?

A buyer wants to buy the property for the lowest amount possible; he doesn't want any fee reduced or eliminated if it benefits *him*, the buyer.

A buyer would never ask for the seller to not pay for, for instance, a title policy.

& I would never allow a buyer to think for one minute that it's okay for him to 'do the paperwork (which where I live is zero for the buyer)?'

Firstly, the term 'paperwork' minimizes & trivializes the importance of a legally binding contract involving hundreds of thousands of dollars in assets.

State governments know the importance of real estate 'paperwork';
that's why states make people become licensed before they're allowed to handle real estate sales & purchases for the public, & the state makes sure that those licensed persons *know what they're doing*.

If it were easy enough or foolproof enough for buyers to do their own 'paperwork', there would be neither licensing of nor need for real estate practitioners.

(Who needs drivers' education? Who needs drivers' tests? Wouldn't it be easy for each person to study & practice himself & to judge when he's ready to drive a car? OK, but please let me know when this independent-minded driver is coming down the street. Oh, wait, I bet I can recognize him!)

Secondly, the comment about 'paperwork' being nearly zero for the buyer is so far from the facts that it tells me that this potential buyer doesn't have the expertise or experience to know what to expect & what to ask for

When you buy real estate, you'll do about 5 times the amount of 'paperwork' you have to do to get married or make a will.
*& it all matters*.

As for 'shouldn't you be looking out for your client's best interest?', the answer is of course yes.

The contract is between the seller & the seller's representative, & that's what it says:
for the fee stated in the listing contract, the broker agrees to represent the seller's best interest.

That agreement does not involve the buyer, & the buyer has no say in it.

If the buyer doesn't want representation, that's his decision, but it has no effect on the agreement between seller and broker.


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RE: So what is the deal if your agent finds a buyer

Like Sylvia says, the listing agreement is between the seller and the agent. The offer To Purchase is a contract between the buyer and the seller. Pretty simple.


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RE: So what is the deal if your agent finds a buyer

Sylvia:
You're way overstating the complexity of the paperwork process in a RE transaction. Yes, it's a big deal, but it's boilerplate. People (and agents) don't re-invent the documents on each transaction, for heaven's sake. It's straightforward enough that a lawyer will "do the paperwork" and protect your interests for a few hundred dollars. That tells you realtors are overpriced.


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RE: So what is the deal if your agent finds a buyer

I based my comment on my own experience. I never used a realtor to purchase a house (which I did 2 times). I hired a realtor to sell my house, because that's where the value of a realtor matters.

What paperwork does the realtor do for a buyer ?!

The sales contract here is total boilerplate. It's actually for download from the state real estate commission's web-site.

The difficult paperwork are the mortgage docs and the title insurance, which are not produced by the realtor (the realtor may coordinate that but that's real easy to do).

And no-one takes responsibility if something goes wrong. So the minimized risk when hiring a realtor means you can sue the realtor without any realistic chance of winning because they used the boilerplate contract which is tested and legally bullet-proof.

"Why in the heck would a seller think that a buyer is concerned that the seller is paying too much for...anything?

A buyer wants to buy the property for the lowest amount possible; he doesn't want any fee reduced or eliminated if it benefits *him*, the buyer."

Well, in this case, if the seller offers a 1.5% discount (half the customary buyer's real estate agent's commission) if the buyer does not use an agent, the seller saves $5000 and the buyer saves $5000, given that the 3% buyer's agent commission would be $10000.

It's a win-win for the seller and buyer and either a small loss for the seller's agent (in case the buyer would otherwise hire his own, other agent) of 1.5% of the 3% commission (s)he gets or a big loss for the seller's agent ($10000 loss) if otherwise the buyer would have hired the seller's agent.

So it can be a savings of $5000 for each the buyer and the seller (ca-ching!!) or a win of $10000 for the seller's realtor for basically less than 1 hour of additional work.

I know which one I would choose!


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RE: So what is the deal if your agent finds a buyer

'That tells you realtors are overpriced.'

cool.

Don't use them.

but you still don't have any business interfering in someone else's contractural or professional relationships.
--------------

edited to add:

HUD, Fannie Mae, Freddie Mac, VA, & every lender who forecloses on a home or who participates in a short sale use Realtors.

You can bid on one of their properties only by going through a Realtor.

This post was edited by sylviatexas on Thu, Oct 17, 13 at 14:29


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RE: So what is the deal if your agent finds a buyer

Weedy,
What was it worth to you to use your Realtor to finally find you a buyer that you alone could not do for close to two years?
When you think of it like that, maybe the commission was worth it for you.


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RE: So what is the deal if your agent finds a buyer

Hoo boy, are we going to start up this debate again? :-)

First of all, note that my response above was to Sylvia's assertion that seller's agents work extra hard when they play dual agent because of all the paperwork. To that, I say "poppycock."

That said, I'll answer NC's question. I intend to post a retrospective thread, after we close, on the whole experience and learnings. BTW, we weren't on the market for 2 years, we went under contract ~8 months after listing with a realtor, ~14 months after we listed FSBO. With the 4 month closing period (buyer's request), that's a total of 18 months from first FSBO list to cash in the bank.

What our agents brought to the table that we couldn't do ourselves:
-Listing in the MLS (no flat fee available here).
-Access to MLS data in a way it could be analyzed and used more than I could get from county property records and realtor.com. Things like which realtors had clients looking in our price range. Or watching a buyer's agent's sales to see if the buyer that looked at our house had bought something yet.
-Networking with other realtors, which provided us better feedback from showings than we got FSBOing. Our agents could follow up again with the agent later when they saw them, to see if the buyer had bought something else, etc. They also typically got more info about the buyers from their agents than we would have gotten.

What they didn't do better than us: photos, website, write-ups. And it was a bit frustrating/slow at times in the process because we had 2 middlemen passing messages back and forth without adding value.

And keep in mind, I don't think realtors add no value. I just think they're overpriced. The local cartels they form keep the prices up. And I abhor markets that are economically inefficient. Education and health care are 2 other examples that rankle, but I'll find more appropriate forums to whine about those. :-)


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RE: So what is the deal if your agent finds a buyer

Because there is a conflict of interest, my realtor will bring in another agent if he is representing a party of the listing (i.e. if he lists the property, someone else will represent the buyer).


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RE: So what is the deal if your agent finds a buyer

I didn't say Realtors 'work extra hard' when we act as intermediaries:
I said we are trained professionals who are licensed by the state & held accountable by the state, & that we are entitled to our fees, which are earned by results, not by hours on a time clock.

Who's this 'we' who's 'stirring up a debate'?

As far as I can tell, it's just weedy griping because he couldn't sell his house & had to pay someone to get the job done.

'poppycock'?
'local cartels?'
' I abhor markets that are economically inefficient. Education and health care are 2 other examples that rankle, but I'll find more appropriate forums to whine about those. :-)'

don't know if that's *quite* 'inflammatory' terms, but it's definitely subjective opinion, not factual statements.


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RE: So what is the deal if your agent finds a buyer

"I would assume your real estate agent would get the usual commission and you would not have to pay the buyer's agent commission because there is no buyer's agent. "

The listing agreement and therefore the agreed upon commission is a contract between the seller and his agent. If the listing agent sells the house (which is the whole goal) then the commission is paid. Period. It makes no difference who gets what percentage, the listing agent or the buyers agent, the commission is still due and payable to the LISTING Agent. It is customary for the LISTING AGENT to pay the selling agent a co-broke fee to increase your chances of selling the house. So, just because there is only one agent, you still owe the full commission.

Now, do you reimburse your listing agent for all the time (time is money, how much are you worth?),expense of advertising, schooling, licenses, insurance,Car expense MLS Fees, etc., when your house is on the market and doesn't sell because you are over priced and refused to lower your price?

It's not about a "few hours work", it's about all other stuff that your Realtor does for you that keeps your Butt out of jail.


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RE: So what is the deal if your agent finds a buyer

In my area a typical commission is 6%, but most times you can negotiate up front that it will be 5% if the agent finds the buyer. Sometimes the agent will offer to cut his commission to make a deal work out when he is representing both. Both the buyer and seller sign documents stating what the agent's role is as a dual agent, and it works out fine.

By the way weedy, I think some people are confused about how long your house was on the market because you had more than one house for sale.

Around here an agent is almost always worth the money because many buyers won't consider a FSBO house and they expect a lower price because you aren't paying a commission.


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RE: So what is the deal if your agent finds a buyer

In my area typical commission is 5%, here it is also common for an agent to agree upfront to reduced commission if the LA represents both sides. But, it should always be discussed and agreed to upfront. I also think it can be brought up if the agent brings a reduced offer, the seller and LA can work together to make an offer work.


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RE: So what is the deal if your agent finds a buyer

Back to the original question: So what is the deal if your agent finds a buyer?

Your house is sold! Isn't that the goal of putting it on the market?


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