Commission for closing on a off-market property?

Question

I’m currently looking for a property as primary residence in the greater Cincinnati area. I wonder if I find an off-market house myself and eventually close it with the help of a realtor, then what’s the typical commission for this type of transaction? Any suggestion would be appreciated.

Sean Cole · Answer

@Champak Shah why the heck would a real estate agent run comps for free? Zestimates are garbage and we've ended more meetings with people who bring in Zillow printouts than I care to count.

If you want the help of a professional, pay them for their time and expertise, @Haiyang A. I'm not fan of most realtors because many don't add value. If, however, you want help negotiating a contract, running comps, scheduling the inspection and negotiating repairs after, etc. you should expect a realtor to expect to get paid for doing so.

Where most folks have missed the correct course of action, however, is that your scenario would start with your realtor going to the current owner of the house and asking them if they'll pay a real estate commission on the sale of the home to you. If the seller refuses, either you can offer to pay it yourself or you can expect a realtor to elect to not get involved. Because the commission is generally paid by the seller, the amount of the commission to be paid is negotiated between the seller and the agent - NOT between you and the agent unless the seller refuses to pay. In that case, your agent will/should present you with an Exclusive Buyers Agency agreement that outlines the commission that you will be paying to them.

Can you buy a house without a realtor? Of course. If you have no idea how to do so, should you? I don't think so.

Sarah Ziehr · Answer

If the house is off market, and you are the buyer, first you need an agreement with your broker that you will pay them. It can be a flat fee, or it can be a % of the purchase price. There are no standard commission rates, but generally speaking on the buy side you are paid 2.5-3% of the purchase price. If you are procuring the property then perhaps you can settle on 2%.

When you make the offer if you do not have the cash to pay your broker, then your broker should write up the offer for an amount that would include their fee, and ask the seller to pay it at closing. Effectively you are financing the brokers fee in this scenario.

Champak Shah · Answer

ZERO ...ZERO .. why do you need to have a Realtor and pay commission?

I have bought direct from owner  adn clsoed with an attorney -- NO commission paid.

A  Do a  good market analysis - get some comps from RE Agent - FREE    or by Zillow.com - compare features and square feet .. and derive your price - then    negotiate with owner - offe 15 %  less in first offer --then decide where to stop..

C   Have a bank - prequalify you for loan amount

D    Ask bank or two RE agents for referal - name of closing attorneys. Talk to those attorneys --in person - face to face - and ask about total closing fees -then tell him to pay extra $ 300 for drawing up Purchase Contract.

E    You should also - read through this forum - different Contracts to understand terms -- also buy ready made contract from offcie depot.

Good Luck - save 3 % commission - to take trip with family --to Disney

RJ Winberg · Answer

If you've already identified a property and are talking to the seller about terms, then you don't need to bring a Realtor into the transaction... unless you feel you need the advice/guidance and don't mind paying for it, which doesn't relly apply for most active investors.

However, if an agent is introducing you to an off-market opportunity, then the value isn't really in "doing the paperwork" it's in procuring the opportunity. And that is worth a pretty penny. If you're not willing to pay for that, then you're probably missing out on some opportunities.

Champak Shah · Answer

I have personally purchased a house - BY owner ( FSBO ) -- without an agent ---

and rented out for 20 years - it was my first rental -bought in 1981. I was a First Time Investor with my full time job.

Talk to 5 to 10 RE Agents and some one will do the comps free or for nominal amount.

Also- talk to some appraisers - and get as is and after renovations - appraisal - for

$700 or $ 800.

You can also get an inspection ( NOT Free)  done and contractor give estimate for repairs for Free.

Haiyang A. · Answer

Jeff Beard: Thanks for your input. So even if the house is off-market, the seller still needs to pay 3% sales commission, and I'll pick up the rest 3% commissions, is that what you're saying?

I'm not trying to burn my bridges with realtors, but I wonder if their portion of the work is minimal and pertaining only to paper works, they would still require full commission (i.e., 6% if he or she serves as both listing and buyer's agent, for a off-market house)?

Andrea Castor · Answer

We are in a similar situation where the suburb of Cincinnati we are trying to move into doesn't have a ton of houses for sale. Houses are selling within hours of being listed. I've started putting my feelers out for FSBO possibilities and came across a few leads. The most probable one was very clear they want no realtors involved because they like to do things on a personal level. Personally, I appreciate that. This will also be our primary residence.

So far we have been given a price. It's a little higher than I had hoped, but only because of my budget, I think the price is fair. We are doing a walk through in the next month after they do some remodeling (new paint, carpet, etc). If all goes well I plan on paying outright for an inspection. Assuming that all goes well we'll have a lawyer draw up a contract (which we also plan on paying for). I figure the appraisal will be done during the financing process so I'm not super worried.

Champak Shah · Answer

I had owner take second mortgage also - for $ 10,000 ( 20 % value) and I took over existing mortgage.

Rachel Pervis · Answer

Hi @Haiyang A. the typical commission in Texas for the selling agent is 3%; however it's negotiable.  I would talk to different real estate agents and get an idea of how much they would want in regards to the commission percent based on your deal being off market. We all have in our minds what we want to pay for something or what we feel is fair. If there are above what you feel is fair then share your position and allow them to share theirs, which should include why they believe they are entitle to a certain percent. Also I wouldn't ask the seller to pay my Realtor's commission on an off market deal, but I would make sure that I'm getting the best deal possible on my future primary residence.

Haiyang A. · Answer

@Merry Briotta, @Champak Shah, Thank you both for the very attractive idea!! I will learn more by reading this forum on how to proceed of buying without a realtor. I wonder if there are some pitfalls or areas that need special attention without the assistance of the help of a real estate professional?

Commission for closing on a off-market property?

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