I put my home us FSBO a week ago, broker asked if I was open to working with her if she had buyer, I said yes, but wasn't taking on a sellers agent. The agent came the next day with the buyers and I spent a couple hours going through the house with them. The next day they made an offer. This was my fourth offer and so far this is the best (only been a week). The realtor then wrote in 3% sellers commission...(on top of the 6% sellers concession) for me to give her??? Doesn't that defeat the process of selling it myself? Also, isn't this against the buyers best interest since it no longer makes it the best offer?
Hi @Ryan Nelson ,
You If your house is listed for $100k and the agent wants you to pay their commission for bringing the buyer, counter their offer with either:
- Rise the price to offset the cost of commissions
- You agree to the agent's offer and you pay the commission
- You don't sell to them
How valuable is it to you to sell quickly for higher (gross) dollar compared to waiting for a different buyer willing to pay their realtor commission?
Well “working with a buyer’s agent” on FSBO generally means you Are paying them 3% (just the buyer side of the commission)..
You’re a little confused about the items in the offer.
Seller’s concession means that you would agree to allow the buyer to add the closing costs to their mortgage. To do that, they would gross up the offer price to include their closing fees like prepaid taxes, bank fees, title fees, etc. Completely unrelated to sales commissions.
The conmsion to the agent would be 3% that comes out of the proceeds of the sale.
You can have them gross up the price to also include the commission so you net what you need to net, but the property will still have to appraise at the higher amount.
@Christopher Phillips maybe i'm reading this wrong, or it works differently in NY, but a 6% seller concession normally means the seller is giving the buyer 6% of the purchase price to use however they want in the transaction - be that for closing costs or principal reduction or down payment, whatevs.
A seller typically doesn't have a say of what can and can't be included in the borrowed amount, that's up to the lender and the loan program. Again, i might be wrong but I've done my fair share of transactions across dozens of states (NY included) and a seller concession has always been interpreted as a seller's contribution to the buyers closing costs or principal purchase amount.
Most buyer-broker agreements have a stipulation that specifies what the buyer's agent makes, so if the commission offered by a seller doesn't meet that amount, the buyer makes up the difference. Some agents force this, others don't, so might not be a bad idea to check with a local realtor friend and ask them what is customary in your area.
You can always push back at 0 commission - and at that point, the agent either has to force the buyer to pay the 3%, or the agent makes nothing, which really sucks for them but it is what it is.
Also, if this is your 4th offer, if you don't like the commission thing, just reject it. Chances are you'll have more offers.
@Ryan Nelson simply counter back with an amount that still makes you happy even after the agents percentage, or counter back with 0% agent commission. This is a simple one to overcome.
I no haggle priced my FSBOs last year. For example- $226k as-is but with right to inspect. Any agent commissions or closing costs need to be added to the price. I knew it would appraise ok.
Had a buyer with an agent that wanted $4k in closing costs, so they offered the $10k extra.(agent got 2.5%, $5900)
That worked awesome, because their agent was awesome. You do not want to try and hand hold a first time buyer and keep things moving and coordinated with inspections, lending, title, etc. I was so glad they had this agent. I sold my last one completely FSBO. Tracking down the buyers for signatures, providing the proper disclosures and addenda, explaining that all inspection reports are 52 pgs, etc was really draining on me. I wish they had an agent.
I'd counter at a price and term that works for you. A 6% seller concession sounds high, so reduce that or raise the price in your counter offer if an appraisal will support it.
"Also, isn't this against the buyers best interest since it no longer makes it the best offer?"
No, the agent has to get paid by someone. Part of their offer is you pick up that tab. Using your logic, I should be never taking a commission and trying to reach into my own pocket to help them buy as much of the house as I can for them. When the agent asked if you would work with them as a buyers agent and you said yes, they were asking if you were paying a commission. When you said Yes that's how they took it. Now personally I would never have taken a client there without a written agreement between you and me,
If you are not paying a buyers agents commission that's fine and your choice. However when agents have clients looking for a place and they see a FSBO. They usually say "I found a place, it's a FSBO I can call and see if they are paying a buyers agent commission, if they say no, you will have to pick up the commission". I will tell you that 99% of the time they say "Never mind what else is there". Especially if they are asking for 6% concessions, means they can't pay usually. You may be thinking "Well the client will just sneak around and call me later". Odds are there is a Exclusive right to represent where they are bound to the agent and they have to pay, so they just go look elsewhere. Without paying a buyers agent commission you are looking at a smaller buyers pool (Especially in Avon). What price point is your house at?
Just another piece of information to help you decide how you want to go with it. Avon has averaged 3 sales a month since 2012 (I just ran the reports). If you have 4 offers sitting there, I would really start looking at them and weigh that with your motivation for selling. If you look at the chart below the month is self explanatory. The second number is Days on Market (How long it took to sell after being listed) and the last number is sales that month total. Use the info how you want. Just a general suggestion to try and work something with one of those 4.
Best of luck in getting it sold where you want it.
I don't do residential. That broker or agent could have had the owner sign a (showing agreement) in advance. Basically saying the seller would pay a commission of XX percent based on the agreed total amount of an executed purchase and sale agreement.
This way the seller does not play games with commissions. I have in my commercial LOI's that seller will pay me fee of X percent at closing, as a condition of closing. Get's rid of the slimy sellers and the weasels in the business.
A broker/agent wants to know UPFRONT if they are dealing with a sleazy seller that will not properly compensate a broker/agent for bringing a competent buyer to the table.
Yes. Seller concessions go towards closing costs.
Two options, in a slow buyer's market, seller takes it out of their list price.
In a seller's market, it's more like what @Steve Vaughan said. Offer will gross up the price to include the seller concessions. In a seller's market, it's a very weak offer and most sellers won't go for it.
Same thing can be done with the buyer's commission. The buyer grosses up the offer to include the commission funds, allows them to add it to the mortgage.
But, at the end of the day, the grossed up offer number still has to appraise, which makes it tough to ask for seller concessions in a hot market.
You should stipulate earlier you will not offer seller agent since you are marketing your self and buyer agent gets a fee. I will let that offer go if you have that many offers.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.