Dear Monty: My house is for-sale-by-owner. I want to avoid the commission. I got a call from an agent who wants to show the house but wants to know if I will pay the buyer’s commission. For all I know, the customer may be someone I have already shown the place to. I have had agents call to list the home, but this is the first one who wants to show the house. Can I do this? And if I can, should I do this?
Monty’s Answer: You can pay the agent’s broker. As a for-sale-by-owner (FSBO), you are in charge. You can do whatever you choose because you currently have no contract with a broker. Because your home is not in the MLS, the agent will have to negotiate with you for the fee. The agent is used to the MLS split and will likely ask for that percentage. They may negotiate from the stated co-broke split in the MLS because they fear that if they cannot agree with you, the buyer will want to see the house without them
Your current position
There are several factors to consider. Are you in a seller, buyer, or balanced market? Do you have other serious prospects? How long have you been selling? Do you have other deadlines you need to meet, such as occupancy?
What exactly are the responsibilities the agent is going to take on? Consider the value of their work as the basis for the commitment they are proposing. Is it just an introduction? Will they write the contract? On whose behalf will they negotiate, or are they a transactional agent (one who takes no position)? Will they ensure the buyer meets any contingency deadlines? Will they handle the closing? The option you choose may depend on your current situation. Remember that all future events are hypothetical.
Option One: Reach an agreement with the agent. Ensure they state that the duties they promise are in the contract and that the fee arrangement is clear. You want to pay them out of your proceeds from the title company and only if there is a closing.
- You sold the house.
- Your equity is lower.
Option Two: Tell the agent that the buyer must pay their fee.
- You retain your equity if that buyer closes on your home.
- The agent may tell them you said ‘no.”
- The buyer may back away.
Option Three: Tell them they must wait until a specific date.
- You may have a strategy for the starting date.
- It may encourage a higher offer.
- They may back away.
Option Four: Tell them “no.”
- They may go around the agent or make a settlement with them.
- They may return in a month if the house is on the market.
- You may have saved a commission if the house sells to another party.
- If the home hasn’t sold, you may have lost a buyer.
Finally, if someone looked at the house with you earlier and is now coming back with an agent, assume they prefer to work with the agent. Don’t take it personally because the reason likely has nothing to do with you. It is far more likely that there is a relationship.
Richard Montgomery is the Founder of PropBox.co, the first advertising platform in history to bring home sellers and buyers directly together to negotiate online. He offers readers unbiased real estate advice. Follow him on Twitter at @dearmonty or DearMonty.com.