Can you avoid paying the listing agent in a sale?

[Mike Flynn]

I've been looking a lot more into creative financing (like seller financing, subject-to, and lease options), but was curious how you'd go about that with a property listed on the MLS through an agent/broker. Let's say a property is listed for a very long time and you wanted to get creative with the seller to buy their property. Do you have to use the realtor that listed the property? Or more specifically, does that agent have a contractual obligation to be paid? Is it possible to have the seller take the property off the market and do the sale transaction between the two of us? I'd love to hear if anyone has had any experience with this! I just recently found the Pace Morby episode (#527) that totally blew my mind with creative financing, but now I have a lot of very specific questions around a lot of the options.

Thanks!!

[Sergey A. Petrov]

99.99% of listing agreements are exclusive (so if the seller were to find their own buyer outside of MLS, their agent still negotiates the deal and gets paid) and extend beyond the property going off MLS (so you can take it off the market today, find a seller next week but your agent still negotiates the deal and gets paid).

[Mike Flynn]

That was kind of the vibe I was getting from talking with a few people, but wanted to throw it out to this community to see what people's experiences were. Is there a time frame where that exclusivity expires? Or is just on-going? Like if they took it off the market today and sold it to me 6 months from now? 1 year from now? Just curious if you or anyone know. 

Thanks Sergey!

[Nicholas L.]

@Mike Flynn in general the best deals are never listed on the MLS. Could you maybe possibly do something with an expired listing or something that's been sitting? Sure. But this would be the exception. And the seller agent's commission isn't going to make or break a deal.

[Theresa Harris]

If you view it while it is listed and buy it later, the agent is still to be paid.  If you've never seen it in person while it was listed and their contract expired, then you might be able to not pay them. 

[Jay Hinrichs]

Quote from @Mike Flynn:

That was kind of the vibe I was getting from talking with a few people, but wanted to throw it out to this community to see what people's experiences were. Is there a time frame where that exclusivity expires? Or is just on-going? Like if they took it off the market today and sold it to me 6 months from now? 1 year from now? Just curious if you or anyone know. 

Thanks Sergey!

 you wnat to just troll the expired listings on mls if you have a way to get to them.. those U can go after without the seller being obligated to pay a commish.. most listing agreements have a trail feature IE if the listing was a procuring cause to the sale the seller is still obligated to pay commish for an additional 90 days after the listing was cancelled something of that nature. 

SO just troll the FSBO and expired listings.. we can all get fired up on sub too this method has been used for decades its nothing new or earth shattering.. it works best when markets are soft or depressed.. or with sellers in trouble and have very little equity.. there is a lot more to those deals than the hyperbole though.

[Mike Flynn]

More good points.

The idea is that the realtor isn't involved in any way. I'd like to negotiate directly with the seller and not through a realtor since I'm looking to be creative with financing strategies and the realtor may not understand or communicate those strategies properly with the seller. Plus, creative financing is problem solving, and I can't problem solve very well if I'm not IN the conversation with the seller. 

It may just not be something that's possible, and that's alright. I may have to just find these deals off the MLS. I just wanted to ask BP to see if anyone had experience with doing something like this and see how they got around a realtor, because I've seen a few properties on the MLS that have been there a long time and thought they could be decent opportunities. And maybe the properties would still work with the agent fee calculated in, but it's harder to do creative financing with that fee because the seller has to pay that which would mean they would want a decent amount of money from me upfront when I'm trying to put as little (if any) into the deal up front and focus on seller financing, sub-to, or a lease option.

[Mike Flynn]

Quote from @Jay Hinrichs:

Quote from @Mike Flynn:

That was kind of the vibe I was getting from talking with a few people, but wanted to throw it out to this community to see what people's experiences were. Is there a time frame where that exclusivity expires? Or is just on-going? Like if they took it off the market today and sold it to me 6 months from now? 1 year from now? Just curious if you or anyone know. 

Thanks Sergey!

 you wnat to just troll the expired listings on mls if you have a way to get to them.. those U can go after without the seller being obligated to pay a commish.. most listing agreements have a trail feature IE if the listing was a procuring cause to the sale the seller is still obligated to pay commish for an additional 90 days after the listing was cancelled something of that nature. 

SO just troll the FSBO and expired listings.. we can all get fired up on sub too this method has been used for decades its nothing new or earth shattering.. it works best when markets are soft or depressed.. or with sellers in trouble and have very little equity.. there is a lot more to those deals than the hyperbole though.

Thanks Jay! I'll look into that trail clause. I've been looking at the FSBO listings a lot but didn't think about the expired ones.

[Nathan Grabau]

Quote from @Mike Flynn:

More good points.

The idea is that the realtor isn't involved in any way. I'd like to negotiate directly with the seller and not through a realtor since I'm looking to be creative with financing strategies and the realtor may not understand or communicate those strategies properly with the seller. Plus, creative financing is problem solving, and I can't problem solve very well if I'm not IN the conversation with the seller. 

It may just not be something that's possible, and that's alright. I may have to just find these deals off the MLS. I just wanted to ask BP to see if anyone had experience with doing something like this and see how they got around a realtor, because I've seen a few properties on the MLS that have been there a long time and thought they could be decent opportunities. And maybe the properties would still work with the agent fee calculated in, but it's harder to do creative financing with that fee because the seller has to pay that which would mean they would want a decent amount of money from me upfront when I'm trying to put as little (if any) into the deal up front and focus on seller financing, sub-to, or a lease option.

In my experience, sellers that hit the MLS aren't looking for seller financing. That being said, you can always call the agents and see if their client is interested in something like that. Listings that have been on the market for a long time or get expired are often because the seller does or did not want to drop the price and are not really interested in seller financing. That is not always the case of course, but there are more bountiful areas to find creative financing deals.

[Jay Hinrichs]

Quote from @Nathan Grabau:

Quote from @Mike Flynn:

More good points.

The idea is that the realtor isn't involved in any way. I'd like to negotiate directly with the seller and not through a realtor since I'm looking to be creative with financing strategies and the realtor may not understand or communicate those strategies properly with the seller. Plus, creative financing is problem solving, and I can't problem solve very well if I'm not IN the conversation with the seller. 

It may just not be something that's possible, and that's alright. I may have to just find these deals off the MLS. I just wanted to ask BP to see if anyone had experience with doing something like this and see how they got around a realtor, because I've seen a few properties on the MLS that have been there a long time and thought they could be decent opportunities. And maybe the properties would still work with the agent fee calculated in, but it's harder to do creative financing with that fee because the seller has to pay that which would mean they would want a decent amount of money from me upfront when I'm trying to put as little (if any) into the deal up front and focus on seller financing, sub-to, or a lease option.

In my experience, sellers that hit the MLS aren't looking for seller financing. That being said, you can always call the agents and see if their client is interested in something like that. Listings that have been on the market for a long time or get expired are often because the seller does or did not want to drop the price and are not really interested in seller financing. That is not always the case of course, but there are more bountiful areas to find creative financing deals.

on our MLS systems you can put in your search seller financing and every listing that the listing agent notes in the remarks that seller will finance will pop up.. Just like looking for only 3 bd 3 ba searchs. a lot of time though seller finance will be something like this.. Seller will finance with 50% down for 2 years. and these folks drinking the sub too cool aid are looking for no money down or 5k down or whatever and taking over long term fixed debt.. problem with that is said debt stays in the sellers name and most sellers if they talk to an attorney will advise them of the huge risk they take and do not do that.. but not everyone goes to an attorney if they did wholesalers would be out of business by and large.

[Mike Flynn]

Nice, I didn't know you could search for seller financing interest on the MLS. I don't have access, but I work with a great realtor consistently that could check that our for me. And I understand that most sellers don't want to finance or consider sub-to's and all that, but I want to keep it in my tool belt for when I'm talking with sellers. It seems like a great go-to to start with because there's not much flexibility with banks and I don't have capital to always put 20%-30% down on a property. We also want to scale much quicker than we have been.

[Carlos Ptriawan]

Quote from @Mike Flynn:

I've been looking a lot more into creative financing (like seller financing, subject-to, and lease options), but was curious how you'd go about that with a property listed on the MLS through an agent/broker. Let's say a property is listed for a very long time and you wanted to get creative with the seller to buy their property. Do you have to use the realtor that listed the property? Or more specifically, does that agent have a contractual obligation to be paid? Is it possible to have the seller take the property off the market and do the sale transaction between the two of us? I'd love to hear if anyone has had any experience with this! I just recently found the Pace Morby episode (#527) that totally blew my mind with creative financing, but now I have a lot of very specific questions around a lot of the options.

Thanks!!

You could use some discounts brokerage where the seller agent fee is only 1-2% or even flat price. It's much much better than FSBO,etc.

[Dan DiFilippo]

@Mike Flynn so essentially, you want the seller to perform in such a way that the agent will not get paid for the work they did preparing and marketing the property, potentially including paying for staging and photography.

If it's not unethical, it's just downright reprehensible.

I wonder what you do for a living.

[Quintin “Q” Grant]

Honestly this can get very tricky dealing with properties on the MLS. Most agent/client contracts are exclusive meaning the broker gets paid even if the seller finds their own buyer. Unless seller financing or the like is specified on the listing the agent will more than likely advise their client not to take such a offer. I'm not sure if someone else on the post mentioned this, but What you can do is get a list of expired listings and market to these sellers and make creative financing offers to them because you know they want to sell and depending on the situation might be pretty desperate to sell.

[Mike Flynn]

Quote from @Dan DiFilippo:

@Mike Flynn so essentially, you want the seller to perform in such a way that the agent will not get paid for the work they did preparing and marketing the property, potentially including paying for staging and photography.

If it's not unethical, it's just downright reprehensible.

I wonder what you do for a living.

Hey Dan. Not sure how your rude post contributes to this discussion... I didn't claim I wanted to screw over the realtor. I just wanted to know if they get paid regardless, or if there's way to negotiate that fee or something. This is a hypothetical discussion because I'm trying to learn what happens in this situation if I were to pursue it. 

[Jessie Walls]

Like how you are thinking however based on other agents brokers replies if your source is a MLS operated and owned by agents , agents may have lingering dibs on the property even after expiring.
however it could still be worth sending out a mailer or walk the neighborhood and strike up a conversation that you are interested to work directly after all agent relationships have expired. 
soliciting your interest to sellers isn’t a problem , it’s taking the seller away from their contracts are. 
Could get a lot of no’s but there could be a yes maybe a year down the road. 

[Mike Flynn]

Quote from @Quintin “Q” Grant:

Honestly this can get very tricky dealing with properties on the MLS. Most agent/client contracts are exclusive meaning the broker gets paid even if the seller finds their own buyer. Unless seller financing or the like is specified on the listing the agent will more than likely advise their client not to take such a offer. I'm not sure if someone else on the post mentioned this, but What you can do is get a list of expired listings and market to these sellers and make creative financing offers to them because you know they want to sell and depending on the situation might be pretty desperate to sell.

Thanks Quintin! Yeah I think someone mentioned that earlier but I like it. Can you find the expired listing owners on a site like listsource.com (or similar) or does it have to be like an MLS search?

[Quintin “Q” Grant]

Quote from @Mike Flynn:

Can you find the expired listing owners on a site like listsource.com (or similar) or does it have to be like an MLS search?

I know you can find these type of leads on Propstream not sure about listsource. Also if you have a realtor friend, family or a very helpful BP agent can help you as well. Good luck 

[Marcus Auerbach]

@Mike Flynn Expired is a label that listings get on MLS, so you can't find the data elsewhere. As long as you did not engage with the listing while it was active on the market there is no issue with procuring cause.

The issue with expireds is that they are usually overpriced (at least relative to condition) and sellers are often stubborn and would not listen to their agent about lowering the price. So you have to expect to call quite a few of them, but that's just putting in the grind no different than what agents do. Also, you have to learn how to build rapport with a seller first, before you get to the point - expect a bit of a learning curve.

For the list you need MLS access or you can pay for a service like landvoice - they sell expireds and fsbo. (In our MLS in Milwaukee I can set clients up with a search portal and then create a search for expired listings). Takes 2 minutes. Some agents may not like to do that, I think that's just good service.

[Larry Turowski]

Quote from @Mike Flynn:

Quote from @Dan DiFilippo:

@Mike Flynn so essentially, you want the seller to perform in such a way that the agent will not get paid for the work they did preparing and marketing the property, potentially including paying for staging and photography.

If it's not unethical, it's just downright reprehensible.

I wonder what you do for a living.

Hey Dan. Not sure how your rude post contributes to this discussion... I didn't claim I wanted to screw over the realtor. I just wanted to know if they get paid regardless, or if there's way to negotiate that fee or something. This is a hypothetical discussion because I'm trying to learn what happens in this situation if I were to pursue it. 

 This is a good example of how real estate agents sometimes have their own interests in mind more than their clients. Yes, the listing agent should get paid--IF they get the house sold. I've bought a number of listed properties where sellers have contacted me and I've told them to let me know when the listing is expired.

[Mike Flynn]

Quote from @Larry Turowski:

Quote from @Mike Flynn:

Quote from @Dan DiFilippo:

@Mike Flynn so essentially, you want the seller to perform in such a way that the agent will not get paid for the work they did preparing and marketing the property, potentially including paying for staging and photography.

If it's not unethical, it's just downright reprehensible.

I wonder what you do for a living.

Hey Dan. Not sure how your rude post contributes to this discussion... I didn't claim I wanted to screw over the realtor. I just wanted to know if they get paid regardless, or if there's way to negotiate that fee or something. This is a hypothetical discussion because I'm trying to learn what happens in this situation if I were to pursue it. 

 This is a good example of how real estate agents sometimes have their own interests in mind more than their clients. Yes, the listing agent should get paid--IF they get the house sold. I've bought a number of listed properties where sellers have contacted me and I've told them to let me know when the listing is expired.

Great info, Larry! Thanks!

[Dan DiFilippo]

@Larry Turowski How greedy of someone to want to get paid for the work that they did to market a property which caused you to be interested in it.

[Dan DiFilippo]

@Mike Flynn oh, yeah, that's clearly what you were saying.

We can all read and comprehend here, bud. We know what you were saying.

[John Clark]

Have a lawyer in your state check for cases involving a broker who was the "procuring cause" for the sale. I bet you will find lots. The seller would probably be liable for full commission by contract, or by some equitable remedy. The buyer could also be liable by some equitable theory.

Much as I despise real estate agents, they don't deserve to be cheated out of their fees.

The MLS should be opened up, though.

[Dwayne Poster]

Quote from @Mike Flynn:

I've been looking a lot more into creative financing (like seller financing, subject-to, and lease options), but was curious how you'd go about that with a property listed on the MLS through an agent/broker. Let's say a property is listed for a very long time and you wanted to get creative with the seller to buy their property. Do you have to use the realtor that listed the property? Or more specifically, does that agent have a contractual obligation to be paid? Is it possible to have the seller take the property off the market and do the sale transaction between the two of us? I'd love to hear if anyone has had any experience with this! I just recently found the Pace Morby episode (#527) that totally blew my mind with creative financing, but now I have a lot of very specific questions around a lot of the options.

Thanks!!

Nothing stops you from approaching any seller at anytime and engaging in negotiations. They may have any number of obligations, which are not your concerns, other than understanding their motivations. If you have chosen MLS properties as a market segment, you may want to reevaluate that, as organized realestate inserts their interest in between you and your prospect.

[Luka Milicevic]

Short answer is no.

The listing agent has to get paid. There's a contract in place.

Only way around this, is to wait for the listing to expire and the contract to no longer be in place (Expired) and then reach out to the owner. There is a way on the MLS to look up expired listings.