Realtor commision question??

[Twoply 0]

If I sell my house myself, by owner, and someone comes up to buy ti who has some realtor looking for a house for them, how does the commision work?

Does it come out of my pocket?

Can some one straighten out this to me?

If I'm owner/ seller and he's buyer/ alone- no realtor?

If I'm owner/seller and he's buyer with realtor?

[tetra316 0]

I started the process of buying a place a little while ago. Even though I didn't actually buy the place I did have a contract drawn up. I, as the buyer, would have been responsible for paying both my realtor's commission and the selling realtor's commission. I did have my realtor substantially lower his commission but the selling realtor would not lower his. My understanding was the buyer pays both and the seller pays nothing. Not sure if that is standard or can be negotiated further.

[Phillbo 11]

If the buyer uses a Realtor, they pay for it.

[dynamicedge 0]

I am a house flipper so I deal with these overpaid lowlife crooks all the time. I can assure you(at least where I live) no realtor is going to show their client a house for sale by owner. They will only show homes listed with another real estate agent or themselves. Since you signed no contract that says you owe anybody commission and a buyer never pays commission, only the seller does, the realtor would steer clear of your house.

[tetra316 0]

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a buyer never pays commission, only the seller does, the realtor would steer clear of your house.

Not true. I would have paid mine and the sellers as the buyer. (or maybe that was one of the inherent reasons why I didn't go through with the purchase. Although I was looking at a townhouse in a HOA.)

[dynamicedge 0]

Holy crap that's fucked. I've never heard of that happening. Maybe the rules are different where I live but having buyer pay commission is absolutely and completely ridiculous to me. If a seller told me I had to pay his commission I would most likely break his teeth.

[tetra316 0]

Well, the seller was the builder of the community, not an individual seller, so I'm sure that had something to do with it.

[DrewEckhardt 0]

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If I sell my house myself, by owner, and someone comes up to buy ti who has some realtor looking for a house for them, how does the commision work?

It depends on how you have the property listed. If you list it in the MLS with a 3% commission to the buyer's agent it comes out of your pocket.If you don't list it in the MLS, the buyer's agent (who is already upset they didn't have a chance at 3% for doing nothing) might not bring their people by or may prefer that their buyer go for something which pays 3% (Personal experience says agents shun FSBOs, but that's just me)

If you don't have a listing arrangement and the buyer's agent doesn't manage to talk them out of the deal (You've talked to the guy once. They've driven around with him to see a number of properties. You give them nothing. They get 3% for some other property. How likely do you think the deal is to go through? If it doesn't go through the agent is out nothing and may gain 3%. If it doens't go through you may be out the taxes, insurance, and mortgage costs. ) , the agent gets nothing from you. Their contract (if any) with the buyer might specify something from the buyer.

My wife (she's smart and an awesome negotiator) has sold two properties without agents. We'd have sold a third that way if the relocation contract didn't reimburse us for expenses incurred by one of their agents getting a kickback but not FSBOs - that one sold at less than 1% off asking price the week it went on the market. And we bought one without agents too. We're very big on hiring real-estate lawyers and paying for listing services with fixed costs independent of however sensible or insane the local market is. Appraisers are more accurate than agents' comps and a lot cheaper (at a flat $300-$400) when you're looking at 200K or 400K times .03 or whatever.

Practically speaking it's a racket. A buyer's agent is unlikely to bring their guy by when you don't have an agent, but if you've agreed to the bribe they're not going to talk them out of the deal.

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Can some one straighten out this to me?

If I'm owner/ seller and he's buyer/ alone- no realtor?

If I'm owner/seller and he's buyer with realtor?

It depends on what contracts you've entered in to. If you've said 3% (typical ) to licensed agents representing a buyer and he has a Realtor, you give them 3%. If you've said that or "2% off to buyers without an agent" and they come without an agent they get 2% off. There are companies who act as "agents" and kick a percentage back to the buyer which you want to beat since the goal is to maximize the amount of money _YOU_ get and not the magical sale price listed in county records. If you have no contract he pays you what you agree the sales price is and might have to pay his Realtor if his contract stipulates that. If the contract doesn't say anything about the Realtor's cut he might get talked out of entering into a contract on the property.

Your state laws might be more interesting - the Realtor's lobby is a powerful one.

You should have a real-estate lawyer that you've hired on a flat fee basis to answer your questions and look at up to X (3) contracts. He can give you better answers to these questions than those of us who've only traded in a handful of properties.

[DrewEckhardt 0]

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Holy crap that's fucked. I've never heard of that happening. Maybe the rules are different where I live but having buyer pay commission is absolutely and completely ridiculous to me. If a seller told me I had to pay his commission I would most likely break his teeth.

A real estate lawyer will look at your contracts for $400/hour if you don't negotiate a flat fee of < $400 for up to N contracts. An appraiser will look at each property for $300-$400.

Your buyer's agent is asking for 3%, which is $7500 - $36000+ for the price of a town house or nice 1500 square foot 3-bedroom home someplace where real-estate ranges from not cheap to downright expensive (lesee.. 36000 is over 1400 skydives at 200 per year which is 7 years+...)

If your buyer's agent is getting more than $1000 for their services, you're getting extra special hand holding and ought to pay for it yourself instead of expecting the seller to pony up for it.

Smart sellers will have the sense to list it as a discount though - 3% comission, 2% rebate to buyers without an agent. Buyers without agents are more likely to flake-out so they don't get the full commission themselves.

[cocheese 0]

From a child of real esate and one of the best offices in the country at one time, I'm going to suggest you list your home with a real estate company to get the highest price in the shortest time with the fewest problems.

[CSpenceFLY 1]

To answer your question. If your house is not listed and you sell it yourself you are not responsable for any commissions unless you negotiate that with the buyer.

To the person that was buying and was going to pay both sides of the commission, you were getting screwed unless the price of the house was dropped to add in the commission.

[tigra 0]

A commission is something you agree to pay via contract. If don't have a contract with a broker/realtor agreeing to pay a commission, you aren't under any obligation to pay one. In Illinois, commission is normally a seller's expense. You enter into a contract with the listing broker to pay a certain % in exchange for them listing your home for sale and showing it. The listing broker will normally pay a portion of that to the selling (buyer's) broker, the brokers then pay the individual agents.

And like anything, there are good brokers and RE agents who will work hard for you, get you the best price, do a lot of the leg work for you and essentially earn that commission. There are also bad ones who will list the property then sit in their office waiting for a check.

[BIGUN 1,490]

If both parties use an agent, they both pay...

The seller pays the direct costs and the buyer pays the indirect costs (the home price is increased to cover the % commission).

If one or both parties don't use an agent; they can wind up paying much more for one contractual faux pas.

There are so many hidden gotchyas that can come back on you... Environmental testing document, psychological disclosure (did some die in this house can actually "haunt" you), even down to who pays for the structural engineering inspection.

I once started out on a FSBO and just the logistics of scheduling showings and no shows with my crazy schedule made me re-think an agent. I'm glad I did. She was so good that when a year later I was sued by the buyer for "mold" that Realtor had our ducks so in line that ultimately I won the case, but had spent about 10K in legal fees. Had the Realtor not been on her game and the one little box declining an environmental test could have been my ass and would have wound up with my having to buy the house back. In the end, I was awarded legal fees also; but the buyer declared bankruptcy.

There's a lot more to this story and its two-year shenanigans (the buyer had paid for the structural engineering inspection which was another saving grace in this saga), but in the end, and to the point, that Realtor saved me a couple of hundred K.

Nobody has time to listen; because they're desperately chasing the need of being heard.

[cocheese 0]

You can't tell me anything about real estate. Tell Two-ply.

[BIGUN 1,490]

I was endorsing your comment and hoping he had "watch threads" on since he started it.

Nobody has time to listen; because they're desperately chasing the need of being heard.

[DrewEckhardt 0]

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There are so many hidden gotchyas that can come back on you... Environmental testing document, psychological disclosure (did some die in this house can actually "haunt" you), even down to who pays for the structural engineering inspection.

Right. Which is why you hire a real-estate lawyer to review your contracts and write counter offers.

We did a FSBO on the last property sold and hired a lawyer. The company that relocated me hired an agent to do the one before that.

The lawyer had a few interesting paragraphs to include in our counter offer. The real estate agent didn't.

Lawyers spend years in law school. In some states Realtors start with 60 hours of training total, renew the first time with 30 hours, and do 15 hours every couple years in continuing education. There just isn't a comparison.

We paid our last real-estate lawyer about $400 in a flat-fee contract. The company that relocated me paid our last real-estate agent $8500 less its kickback for the referral. There's no comparison in price either.

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I once started out on a FSBO and just the logistics of scheduling showings and no shows with my crazy schedule made me re-think an agent.

I think we paid the last on-line discount brokerage an extra $75 for the showing service where they gave out the lock box code to buyer's agents. All three of the properties we've sold in the last five years were priced right (we hired appraisers in two cases where pricing might be complicated, in the other we had close enough comps we could figure it out ourselves), had the right "updates" (more like repairs. For example white painted cabinets with new hardware instead of worn 70s brown), and were under contract within weeks with only a few showings in spite of buyers' markets in at least two of the cases. You could count the number of people we had to see personally on one hand for each of the FSBOs.

If you're selling the property in good condition (this is relative. If the competition has new rental carpet, carpet you'd want to live on for a couple bucks more a square yard and details like new wall plates beat it) for a fair price (which isn't based on what you have in it or want) and it's in an area with a lot of traffic there may not be much in the way of showing.

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There's a lot more to this story and its two-year shenanigans (the buyer had paid for the structural engineering inspection which was another saving grace in this saga), but in the end, and to the point, that Realtor saved me a couple of hundred K.

With more training and focus on the legal aspects of real-estate, a lawyer specializing in real-estate should have done as well.

[DrewEckhardt 0]

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From a child of real esate and one of the best offices in the country at one time, I'm going to suggest you list your home with a real estate company to get the highest price in the shortest time with the fewest problems.

A real estate agent did manage to sell a 3-bedroom unit in our complex for $444K versus the $440K we got as a FSBO so agents may yield higher prices. OTOH, the competing unit having a 3-car garage versus our 2 and not being located on the main street may have had more to do with it. And although they got a "higher price" we only paid about $1200 for the lawyer and MLS listing versus $13K for the selling half of the market's defacto standard selling commision so we came out $8K ahead inspite of the lower price.

We were on the market for less time, so not having an agent didn't hurt or time on market like it did our sales price.

Properties need to be priced right and marketted enough to sell. You need legal advice to protect yourself. But when the property is one of 100 similar units or tract homes an agent is the most expensive way to accomplish that.

[bjjman 0]

There are a lot of long, drawn-out responses here, but the answer is simple:

If you do not agree to pay the Realtor's commission, then you do not have to pay it. If you agree to pay the Realtor's commission, then you have to pay it.

Depending on how desperate you are, I would either pay half a normal commission (since the Realtor doesn't have to split it), or pay nothing and make the buyer pay.

"Great spirits have always encountered violent opposition from mediocre minds." -Albert Einstein