Selling FSBO - buyer's agent now wants to be transaction agent

Gainesville, FL · Member since 2013 · 127 posts · 21 votes

I'm selling a rental house as a FSBO. An agent brought me a buyer. The buyer's agent says that in order for the transaction to proceed, he will transition from being a buyer's agent to being the transaction agent with a 4% commission. I'm assuming that this means the buyer will no longer owe him a commission and I will owe him a 4% seller's commission. Am I correct about that? I've sold as FSBO before, but I always paid 3% while the buyer also paid 3%. I haven't done it the way this agent is proposing to do it, so I'm wondering what others might think about it.

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John Thedford

Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes

Transaction has no fiduciary duties to a buyer or seller. It is a more limited form of representation, and tells the buyer or seller "hey I am not working on your behalf, I am not representing you, but the transaction and I am working to get this deal done".

There are three ways to broker a deal:
Transaction brokerage--which is the default
Single agency--which requires the most duties including fiduciary duties, confidentiality, obedience, AND loyalty
No brokerage...which mean they work with a buyer or seller as a non-representative...which only requires dealing honestly and fairly, accounting for all funds, and disclosing all known material facts that affect the property which are not readily observable.

YOU are paying the commission no matter what the representation is...and whether the other parties' agent is representing the transaction OR acting in a single agency capacity. Because the property was not listed, a transaction brokerage relationship makes sense. They are NOT taking sides...just trying to help the two parties reach an agreement and get it closed. This is why an agent can list a property and sell it too...representing the transaction and not either party.

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Daria B.
Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
8y
@John Thedford
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Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
8y
I will try to stick to your past experience explaining you have only have budget to entertain 3% finder fee. What he charges to the buyer is not your concern.
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Russell Holmes
Real Estate Broker · Apopka, FL · Member since 2017 · 492 posts · 528 votes
8y
That seems like a money grab to me since they brought the buyer and you weren't already contracted with this agent. I'm not a real estate agent yet, but am taking pre license courses. I have a ways to go, but literally within the first few pages it discusses the fiduciary responsibilities of the agent to a buyer/seller or as a transactional agent. By switching from buyers agent to transactional agent, the agent is deciding to give up on their buyers best interest and instead act as a neutral party. If the percentage didn't change, there wouldn't be a downside for you, only the buyer. But upping the commission AND sort of ditching the fiduciary responsibilities to the buyer is a shady move to you and the buyer. I guess most of that doesn't affect you, but the agent is trying to "help" you to the tune of an extra percent. Seems off to me. You pay all commission as a seller, but 3% is less than 4% total. You'll have to see what expenses you'll incur by closing fsbo that you wouldn't with an agent, but if it is less than 1% cost, it doesn't make sense
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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
The default is transaction. Transitioning is common. That basically means they are not representing either party they are representing the transaction itself. The commission comes out of the proceeds so the seller pays that..which is customary. Commissions are always negotiable.
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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
Originally posted by @Kay March:

I'm selling a rental house as a FSBO. An agent brought me a buyer. The buyer's agent says that in order for the transaction to proceed, he will transition from being a buyer's agent to being the transaction agent with a 4% commission. I'm assuming that this means the buyer will no longer owe him a commission and I will owe him a 4% seller's commission. Am I correct about that? I've sold as FSBO before, but I always paid 3% while the buyer also paid 3%. I haven't done it the way this agent is proposing to do it, so I'm wondering what others might think about it.
You do not have to accept the proposed terms you can make a counter offer which would void the original offer if they choose not to accept it or you can accept it as is
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Kay March
OP
Gainesville, FL · Member since 2013 · 127 posts · 21 votes
8y
Thank you all. It seems to me that the agent might have told the buyer that his transitioning to the role of transaction broker would mean that she would be relieved of having to pay her 3% buyer's commission, and that promise to her might have actually clinched the sale. Kind of clever on his part. The upshot as far as I'm concerned is that I have to pay 4% instead of the usual 3% to the agent. I don't hate it! Selling sooner rather than later could well be worth the extra 1%, considering savings on property taxes, utilities, insurance, etc.
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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
Originally posted by @Kay March:

Thank you all. It seems to me that the agent might have told the buyer that his transitioning to the role of transaction broker would mean that she would be relieved of having to pay her 3% buyer's commission, and that promise to her might have actually clinched the sale. Kind of clever on his part. The upshot as far as I'm concerned is that I have to pay 4% instead of the usual 3% to the agent. I don't hate it! Selling sooner rather than later could well be worth the extra 1%, considering savings on property taxes, utilities, insurance, etc.
The seller pays the commission. Before you accept the offer you do have the option of making a counter-offer and offering just a 3% Commission on the transaction. In fact you could offer 2% or 1% everything is negotiable. I suspect they came up with 4% because if you listed the property and you agreed to 6% for the listing then it would cost you more money that way regardless if the listing agent brought you a buyer or not either way it would be 6% out of the sale proceeds.
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Kay March
OP
Gainesville, FL · Member since 2013 · 127 posts · 21 votes
8y
Please see previous post. Or could it be that he is still going to take 3% from her and also 4% from me? If so, why would he transition to acting as a transaction broker?
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Kay March
OP
Gainesville, FL · Member since 2013 · 127 posts · 21 votes
8y
Thank you. So in any case I, as the FSBO seller, am the only one who pays the agent, and I can negotiate that amount. So why does the agent want to transition to acting as a transaction broker rather than as a buyer's agent?
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y
Originally posted by @Kay March:

Thank you. So in any case I, as the FSBO seller, am the only one who pays the agent, and I can negotiate that amount. So why does the agent want to transition to acting as a transaction broker rather than as a buyer's agent?
Likely so they can also execute the duties that would typically be handled by the listing agent such as dealing with the appraiser, sell side of title company stuff and so on.
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Kay March
OP
Gainesville, FL · Member since 2013 · 127 posts · 21 votes
8y
Thank you! That sounds right. He said something along those lines.
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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
Transaction has no fiduciary duties to a buyer or seller. It is a more limited form of representation, and tells the buyer or seller "hey I am not working on your behalf, I am not representing you, but the transaction and I am working to get this deal done".
There are three ways to broker a deal:
Transaction brokerage--which is the default
Single agency--which requires the most duties including fiduciary duties, confidentiality, obedience, AND loyalty
No brokerage...which mean they work with a buyer or seller as a non-representative...which only requires dealing honestly and fairly, accounting for all funds, and disclosing all known material facts that affect the property which are not readily observable.
YOU are paying the commission no matter what the representation is...and whether the other parties' agent is representing the transaction OR acting in a single agency capacity. Because the property was not listed, a transaction brokerage relationship makes sense. They are NOT taking sides...just trying to help the two parties reach an agreement and get it closed. This is why an agent can list a property and sell it too...representing the transaction and not either party.
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Kay March
OP
Gainesville, FL · Member since 2013 · 127 posts · 21 votes
8y
Thank you for explaining those scenarios. I understand that as the seller I will pay any commission that is negotiated, so I will just have to decide whether the price offered by the buyer is acceptable given the amount of the commission that will be deducted from the proceeds.
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Brent Coombs
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
8y
Originally posted by @Kay March:
Thank you for explaining those scenarios. I understand that as the seller I will pay any commission that is negotiated, so I will just have to decide whether the price offered by the buyer is acceptable given the amount of the commission that will be deducted from the proceeds.
Makes me wonder why you didn't just look for a good listing Agent to begin with. Do you really have the market that well sussed, that you would net more by listing it yourself?
Have you even settled on an acceptable offer price yet?
How do you know it's as good a (net) price as you could get?
It does seem like this Agent is trying to have their cake and eat it too. Do you reckon the story they're telling their Buyer is exactly the same story they're telling you? Will the Buyer even know that as soon as their Agent become the transactional Agent, that the Agent's duty is at least as much to the Seller as it is to them? Anyway, good luck...
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Patrice Boenzi
Real Estate Agent · Geneva, IL · Member since 2015 · 403 posts · 172 votes
8y
@Kay March as a Realtor it seems a bit "off". Here in Illinois, if I approach a FSBO (and I can only do that if I have a viable client who is looking for that particular kind of property) I would need to have them sign an agreement - one time deal- to allow me to bring my buyer in. At that time, on that form, we would negotiate commissions to be paid by the seller. I never "up charge" the FSBO party. These deals can be win-win for both sides since the seller is still saving half of the commission fee. Like other have said, you can negotiate the terms.
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Matt Shields
Broker · Phoenix, AZ · Member since 2015 · 351 posts · 273 votes
8y
The agent is probably procuring cause (owed the agreed commission) because he brought the buyer to you. The question is who agreed to pay him and how much. Since you don't know, I assume that the buyer has a Buyer/Broker agreement signed, and whatever commission is stated the buyer owes to the broker, unless the commission was written into the contract, then who pays and how much could be stated there.
Be careful of the agent just doing the "transaction" paperwork. Make sure you get a disclosure for who the agent is representing, or not. And even if the agent doesn't represent either party, ask yourself "Who is paying him?" If you are not represented, I would advise running things past a real estate attorney. Good luck.
FYI I'm in Arizona and the laws here may be different than Florida. Your mileage may vary.
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George SkidisPro Member
Rental Property Investor · Belleville, IL · Member since 2017 · 875 posts · 529 votes
8y
The agent is trying to make sure they are paid. Nothing wrong with them receiving compensation. Make sure you run the agreement past a qualified attorney before signing it.
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Stan Hill
Investor · McKinney, TX · Member since 2014 · 189 posts · 93 votes
8y
Originally posted by @Kay March:

I'm selling a rental house as a FSBO. An agent brought me a buyer. The buyer's agent says that in order for the transaction to proceed, he will transition from being a buyer's agent to being the transaction agent with a 4% commission. I'm assuming that this means the buyer will no longer owe him a commission and I will owe him a 4% seller's commission. Am I correct about that? I've sold as FSBO before, but I always paid 3% while the buyer also paid 3%. I haven't done it the way this agent is proposing to do it, so I'm wondering what others might think about it.
"Transaction agent"... My BS detector is going off. As I understand it, a real estate agent represents buyers and/or sellers- not "transactions". Tell the agent to take a hike.
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y
Apparently a lot of people in the thread are completely unaware of how much agency laws vary state to state. They are making the assumption that the laws in Florida for agency are the same in where they are. Make sure you heed the advice of John Thedford the most as he is a broker in Florida.
[email protected]301-893-4635 Podcast Guest on Show #192
District Invest Group545 Reviews
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Brian Pulaski
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
8y
@Russell Brazil nailed it on the head. States are Very differently in how these things are done. Having sold a bunch of FSBOs, I have never had to sign any paperwork by the buyers agent other than a standard contract, and never had to negotiate the percentage after I listed it in my disclosures.
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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
Originally posted by @Stan Hill:
Originally posted by @Kay March:

I'm selling a rental house as a FSBO. An agent brought me a buyer. The buyer's agent says that in order for the transaction to proceed, he will transition from being a buyer's agent to being the transaction agent with a 4% commission. I'm assuming that this means the buyer will no longer owe him a commission and I will owe him a 4% seller's commission. Am I correct about that? I've sold as FSBO before, but I always paid 3% while the buyer also paid 3%. I haven't done it the way this agent is proposing to do it, so I'm wondering what others might think about it.
"Transaction agent"... My BS detector is going off. As I understand it, a real estate agent represents buyers and/or sellers- not "transactions". Tell the agent to take a hike.
As @Russell Brazil stated laws vary state to state. Transaction representation is the default representation in FL. Unless agreed to and put in writing, all representation is to the transaction and NOT to buyer or seller. Buyers or sellers CAN ask for single agency representation, but that is not usually the case. An agent MAY NOT represent a buyer and seller in the same transaction. That is dual agency which is illegal in FL. However, that agent MAY represent the transaction, not taking sides nor negotiating for either party, but simply as the facilitator working with both parties to reach a deal and get it closed. I see no glaring questionable points in the OP post, and I see why the agent came in asking for 4% (which the seller could accept, reject, or counter on). Basically, they are bringing the buyers and sellers together as if they procured a listing and then, in transactional capacity, brought in a buyer.
It is ILLEGAL in FL to knock on a FSBO with the intent of listing it, but not illegal to knock on the door, ask to take a look, and then see if a buyer is interested in viewing the property. Personally, if I am knocking on that door, I am looking at the possibility of purchasing it for myself:)
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Stan Hill
Investor · McKinney, TX · Member since 2014 · 189 posts · 93 votes
8y
@Russell Brazil. Thanks for posting this. You got me curious, so I looked up Texas' view of the matter. In Texas, a realtor can represent both sides. However, as another BPer noted, and assuming this were to happen in Texas and not Florida, that the buyer's agent decided to abandon the buyer's interest to make a higher commission.
Also of note, unless you have a contract with a realtor to represent you as a buyer, by default they represent the seller- again, in Texas.

The takeaway for all- know the rules in YOUR state. Thanks again!
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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y
Originally posted by @Stan Hill:

@Russell Brazil. Thanks for posting this. You got me curious, so I looked up Texas' view of the matter. In Texas, a realtor can represent both sides. However, as another BPer noted, and assuming this were to happen in Texas and not Florida, that the buyer's agent decided to abandon the buyer's interest to make a higher commission.
Also of note, unless you have a contract with a realtor to represent you as a buyer, by default they represent the seller- again, in Texas.

The takeaway for all- know the rules in YOUR state. Thanks again!
Seller pays the commission. Buyer doesn't care if the agent earns 1% or 20%..they only care about what they are paying for the property.
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Kay March
OP
Gainesville, FL · Member since 2013 · 127 posts · 21 votes
8y
Thanks all. After looking at some law firm websites, I gather that not only does transitioning to transaction agent status allow the agent to jack up the commission to 4% from the 3% originally agreed to by the buyer under her single agency contract, it also greatly reduces the agent's potential legal liability -- an understandable consideration when the agent has to begin working closely with both parties to the transaction.
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Kay March
OP
Gainesville, FL · Member since 2013 · 127 posts · 21 votes
8y
Correction to previous post. I guess the agent's contract with the buyer does not specify a commission. It's just a matter of convention, and therefore negotiable, that the commission paid by the seller to the buyer's agent is 3%. It will be helpful to look up some sample documents.
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