What should I pay a realtor for bringing a buyer to my FSBO?

12 Replies

I have a FSBO sign in the window of a house we're rehabbing. A realtor was in the neighborhood showing houses to her client, and the client saw my sign and called me. I meet her and showed her the house. She asked me to stop the rehab and we agreed on a price, and she said she wanted to discuss it with her realtor. She wants to meet me tomorrow with her realtor and sign a contract. The realtor has now sent me a Sales Commission Agreement. The % line is blank. My question is what % do you normally pay in a situation like this?

I probably wouldn't pay them anything. The Realtor didn't really "bring" them to you, they just happened to be together when the buyer saw your house for sale. If the buyer isn't comfortable doing the transaction without the realtor then I'd let them know whatever the Realtor wanted for compensation would be tacked onto the sale price. 

Quick correction: There was another attachment of a One Time Showing Agreement. It said I will have to pay the realtor 3% if I sell the property to her client within the next 180 days.

That's a hard question. Personally the realtor did nothing to add value to you or assist you. How much leverage do you have in this deal? If you could do just as well with the next client, I would be tempted to call the buyer back and say if you involve your realtor the price goes up 3%. If it doesn't appraise the difference comes out if your pocket.

If you do not want to lose the deal than I would pay the 3% and go on! Your choice!

Originally posted by @Julie Underwood :

I have a FSBO sign in the window of a house we're rehabbing. A realtor was in the neighborhood showing houses to her client, and the client saw my sign and called me. I meet her and showed her the house. She asked me to stop the rehab and we agreed on a price, and she said she wanted to discuss it with her realtor. She wants to meet me tomorrow with her realtor and sign a contract. The realtor has now sent me a Sales Commission Agreement. The % line is blank. My question is what % do you normally pay in a situation like this?

 Why "stop the rehab"? Is the buyer going to be making design choices? What if they're oddball choices and they back out at the last minute and now you've got a house "designed" by this buyer? Just curious about stopping the rehab and, if you've stopped it for them and/or changed design choices, what happens if they back out later on? 

As to paying the realtor, I guess it depends on the price you agree on. If you're getting what you think is a fair price including the 3% realtor fee deducted, I may be inclined to pay it. If you think you're in a good area with a good property at a good price, tell them they can pay the realtor. 

The real question is are you willing to let the deal fall thru over 3%. If the answer is No. Pay it and smile all the way to the bank. If the answer is Yes. Then contact the buyer and make them aware of the situation. Find out if they have signed and agreement with the RE agent. If they have give them the option to pay the fee. If they haven't advise them to seek an attorney for the rest of the transaction. 

Check with the buyer. Some unsophisticated buyers(i.e. bad realtor's prey) sign an exclusive representation agreement with their buyer's agent which forces them to give him 3% of the purchasing price whether he showed them the home or not. In that case, if you don't agree to his blackmail the buyer may have to come up with his comission themselves.

On the other hand you don't have to give this particular agent any commission since he did not bring you the client. Your house is not even on the MLS so he cannot claim that he knew about it.

But if you decide to post it there(on the MLS), I would recommend giving the buyer's agent a full commission otherwise they'll refuse to bring buyers to your place thus lowering your pool of people to sell to.

Thanks for all of your replies! I started the price as a wholesale deal, and then have increased the price gradually depending on the work that has been done. I'd like to take the cash and move on to the next project. I do have room in the deal to pay the realtor. It's just frustrating to pay someone who hasn't contributed.  The buyer is a young single mom, and I feel certain she signed an agreement with the realtor. I think I'll go ahead and pay the 3% and count it as a lesson learned. And if she backs out of the contract, I'll pick back up where we left off on the rehab.

If you are satisfied with your net profit then pay the commission.   Other wise no.

Frank

Frank Romine, Real Estate Agent in CA (#01957844)

Young single mom, maybe she has an exclusive with the realtor and cant get out, but just as likely she has never bought a house before, this realtor may have showed her numerous properties, and the buyer wants someone with experience to help her through the sometimes complex and scary process of buying a first home. 

If I was making a good profit, I would pay the 3%.  Also nothing wrong with 2.5 or maybe 2%, depending on the price of the home. I wouldnt make it so low, that by the time the agent splits the comission with her broker that she isnt making enough money to be worth her time.

I personally would rather pay an agent to handle a first time home buyers multitude of questions and concerns, as well, as schedule apprasials inspections, financing issues etc

I have paid the 3% numerous times to agents that brought buyers before a house was listed.  Also 3% is better than paying 6% to two agents.

(330) 432-6927

In this case the buyer has requested assistance and she want's the agent. The agent is not the procuring cause of your agreement by driving her client past your sign and isn't due anything from you, unless you agree to pay.

That agent also has to have an authorization to show before stepping on your property with a buyer and they will need a fee agreement prior to contracting or discussion of price, the agent isn't yours and they can't show properties that aren't listed.

You shouldn't stop work without money down.

If the buyer wants the agent, she can pay as a buyer, your fee agreement would need to show the fee was being paid by the buyer and the agent still needs an authorization to show.

Or, if you have a good price, with an able buyer buying cash since it's a rehab in progress and not finished, the buyer needs to have the money, loans will be difficult on an unfinished house, you pay the fee and keep everyone happier. :)

I agree with @Dell Schlabach  .  All that really matters is you're comfortable with the net price.  And while we don't know, it's likely that this buyer has a buyer's agency agreement with the Realtor, so they can't really buy your property without paying the 3%.  I gather you have not yet received a written offer.  So understand that when you get the offer you decide whether it meets your expectations AFTER the commission.  If it does not, you counter the offer.  The least important factor here is how much work the Realtor did.  The Realtor managed to position themselves in terms of the buyer, so at this point that's a done deal if you want to sell to this particular buyer.  Personally I would pay the commission, always subject to what that offer ends up being.  And understand too that the buyer has inserted a new factor into this deal that she did not mention.  I think that means you have the right to raise your offer, always subject to what you believe the property will appraise at.

In my area buyers usually pay Realtor commissions for wholesale investment properties. If the buyer is buying for personal residence then they probably should pay it. Negotiate a split if necessary. If its retail then I wouldn't let 3% get in the way of a quick sale.

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