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I think you can I think you can I think you can
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My RE Agent said if I sell the house myself AND the buying party uses him as their agent, he will "only" charge us "3 to 3.5%." That sounds excessive to me. Is it reasonable? Am I just a tightwad? (Maybe don't answer that...) I thought 2% was much more reasonable as he won't have to list on MLS, won't have to do ads in newspapers or elsewhere, won't have signs to put up - NOTHING except a little paperwork. Right?
What am I missing? Can I negotiate with him or should I find another agent?
Why would your RE agent represent the buyer? Are you referring the prospective buyers that come look at your home to your agent? Why wouldn't you just negotiate directly with the prospective buyers, unless of course they bring their own agents? Sometimes buyers would prefer to deal directly with the owner (if it's a FSBO) because they usually think that you will reduce the price to adjust for realtor's commissions. Then you could hire a real estate attorney to draw up the documents and get a title company to run/issue title. The buyer could hire an appraiser and inspector, if he wants, and everything could be done without a realtor getting involved. Personally speaking, if I could sell the house myself and the prospective buyers were coming without a realtor, then I wouldn't voluntarily involve a realtor -- just use an attorney and title company. On the other hand, if you're depending on realtors to bring prospective buyers to your home, then, yes, I think the going commission is 3%.
Our home is going on the market this Thursday. A friend of ours, who owns her own real estate company, is listing it for us in MLS. Her involvement will be as little as possible, other than drawing up the documents and negotiating the sales contract if we want her to. Once a contract is negotiated and the appraisal and inspections have been done and title run, then we will schedule closing if everything checks out. She's not charging us the customary 3% commission (because she's a friend and doing us a favor), but we will have to pay the 3% commission to the buyer's agent. Her advice to us was if you do a "FSBO" and you get a prospective buyer who just passes by and sees the sign and decides to go ahead and make an offer, then there are no commissions -- we would just have to pay an attorney to prepare the documentation. However, if we want our home to be shown to as many prospective buyers as possible, then we will have to pay the 3% commission to the buyer's agent because agents will NOT show your home on a FSBO basis unless you're willing to pay their commission.
Just thought I would share what I've experienced and been told. Best wishes for a speedy sale and closing of your home!
My RE Agent said if I sell the house myself AND the buying party uses him as their agent, he will "only" charge us "3 to 3.5%." That sounds excessive to me. Is it reasonable? Am I just a tightwad? (Maybe don't answer that...) I thought 2% was much more reasonable as he won't have to list on MLS, won't have to do ads in newspapers or elsewhere, won't have signs to put up - NOTHING except a little paperwork. Right?
What am I missing? Can I negotiate with him or should I find another agent?
I can tell you that there's more to it than "a little paperwork," Father John, at least in CA. One disclosure form alone--just one--was 10 pages of fine print! We did paperwork for three days here in NC after we thought we had done all the paperwork before we left CA. It's a real headache.
You're also paying for your realtor's legal responsibilities. In CA, for example, realtors are required to inspect and "disclose" any defects they are able to find in any property they sell. Our agent listed things like four-year-old caulk that had shrunken away a bit from kitchen granite... a minor crack in a 50-year-old driveway.... things we would never have thought to mention!
And she did all that before she dealt with this couple that just made an offer last weekend--an attorney married to an attorney using a realtor who's an attorney married to an attorney, and all four are friends! Talk about "gangin' up" on her!! Our realtor went over a barrel of paperwork with her broker as well just to be sure we were all protected.
We think the three professions in the world most overworked and least appreciated are mothers, teachers, and realtors!!!
Having said that, we still think you should get another bid or two. And I'd want to know the going rate in your area for a house in your price category when the realtor does all the advertising and selling--that should be the jumping off point for negotiations, IMHO. ("In your price category" because lower-end houses may well bring realtors higher percentage commissions than higher-end houses.)
Why would your RE agent represent the buyer? Are you referring the prospective buyers that come look at your home to your agent?
Yes, my agent asked me to refer buyers to him so he could discount the rate.
Why wouldn't you just negotiate directly with the prospective buyers, unless of course they bring their own agents?
I would negotiate myself. I would make the sale myself. But there is paperwork required...
Sometimes buyers would prefer to deal directly with the owner (if it's a FSBO) because they usually think that you will reduce the price to adjust for realtor's commissions. Then you could hire a real estate attorney to draw up the documents and get a title company to run/issue title. The buyer could hire an appraiser and inspector, if he wants, and everything could be done without a realtor getting involved.
This I did not know. I need to check AZ laws and see what i can and cannot do and how much it would save me.
Personally speaking, if I could sell the house myself and the prospective buyers were coming without a realtor, then I wouldn't voluntarily involve a realtor -- just use an attorney and title company. On the other hand, if you're depending on realtors to bring prospective buyers to your home, then, yes, I think the going commission is 3%.
I am not depending on Realtors to bring clients to me - I am doing all that myself.
Our home is going on the market this Thursday. A friend of ours, who owns her own real estate company, is listing it for us in MLS. Her involvement will be as little as possible, other than drawing up the documents and negotiating the sales contract if we want her to. Once a contract is negotiated and the appraisal and inspections have been done and title run, then we will schedule closing if everything checks out. She's not charging us the customary 3% commission (because she's a friend and doing us a favor), but we will have to pay the 3% commission to the buyer's agent. Her advice to us was if you do a "FSBO" and you get a prospective buyer who just passes by and sees the sign and decides to go ahead and make an offer, then there are no commissions -- we would just have to pay an attorney to prepare the documentation. However, if we want our home to be shown to as many prospective buyers as possible, then we will have to pay the 3% commission to the buyer's agent because agents will NOT show your home on a FSBO basis unless you're willing to pay their commission.
Just thought I would share what I've experienced and been told. Best wishes for a speedy sale and closing of your home!
I can tell you that there's more to it than "a little paperwork," Father John, at least in CA. One disclosure form alone--just one--was 10 pages of fine print! We did paperwork for three days here in NC after we thought we had done all the paperwork before we left CA. It's a real headache.
Of course there is more than "a little" paperwork, but we are asking $520,000 for the house and the prospective viewers are interested at that price. Three percent to 3.5% of that is $15,600 to $18,200. When I was working, it took me 3 months to make that much. There is no way an agent is spending 3 months, 40-60 hrs a week, on the paperwork.
You're also paying for your realtor's legal responsibilities. In CA, for example, realtors are required to inspect and "disclose" any defects they are able to find in any property they sell. Our agent listed things like four-year-old caulk that had shrunken away a bit from kitchen granite... a minor crack in a 50-year-old driveway.... things we would never have thought to mention!
No such law here, but we are required to have (and pay for) a home inspection. Those responsibilities belong to the inspector.
And she did all that before she dealt with this couple that just made an offer last weekend--an attorney married to an attorney using a realtor who's an attorney married to an attorney, and all four are friends! Talk about "gangin' up" on her!! Our realtor went over a barrel of paperwork with her broker as well just to be sure we were all protected.
We think the three professions in the world most overworked and least appreciated are mothers, teachers, and realtors!!!
I agree with you on the first, but then come PREACHERS , and then dads.
Having said that, we still think you should get another bid or two. And I'd want to know the going rate in your area for a house in your price category when the realtor does all the advertising and selling--that should be the jumping off point for negotiations, IMHO. ("In your price category" because lower-end houses may well bring realtors higher percentage commissions than higher-end houses.)
In our area, in our price range, 6% (3% for buyer agent and 3% for seller agent) seems to be the going rate. The seller pays both (although I don't know why that should be - seems terribly unfair to me).
Good luck, be joyful, stay calm.......
Jan (& Bill)
Thanks. I'm going to look into a DIY with legal assistance. If a lawyer sepnds 40 hours at $300 per hour doing paper work (an extreme I think), it would only cost me $12,000 - not what this REAgent is asking.
I know that real estate law is different from state to state, but I don't think any state mandates that you MUST use a realtor to do a real estate transaction. I worked for many years as a legal assistant in real estate law and have been to real estate school myself here in Texas (Houston), and I know we did many closings where there were no realtors/brokers involved. If you are negotiating and doing everything yourself, I don't see any reason why you would need a realtor because an attorney can do all the documentation for you. Most of the paperwork is standardized and all the attorney has to do is fill in the variables and add any additional stipulations agreed to between the parties (usually his/her secretary or assistant does this part and the attorney reviews everything). Of course, the title company will have its attorney (which is part of the title policy fee) and the lender will have its attorney (which is part of the mortgage fee, but that's the buyer's responsibility). As far as an appraisal/inspection goes, if there is a lender involved, it will require a current appraisal. Here in Texas, the inspection is usually up to the buyer if he wants one. And, of course, if the buyer is represented by a RE agent, the agent usually always recommends an inspection. From a buyer's standpoint, I would always use my own inspector (not an inspector recommended by a real estate agent). Here the inspectors are usually tied in with the agents, so I think it's best to use an independent inspector.
I say all the above to offer you some additional angles to approach your transaction IF YOU ARE DOING EVERYTHING YOURSELF! I'm also assuming that it's a pretty smooth transaction, because, if not, and you have to pay your attorney to do a lot of negotiating back and forth, then the fees can add up. I would definitely check around and see what a real estate attorney would cost. I don't think it would be any $12,000. We used to charge $750 to draw up the documentation and attend the closing on a typical home transaction.
IMO, you use realtors when you want your home listed in MLS and you want them to bring prospective buyers to see your home.
Here is what my mortgage broker (and friend) said:
3 to 3.5% sounds very high to me. I'm not sure you need him at all. If he's not listing it for you and didn't help the buyer find it you really don't need him.
You can do the paperwork yourself. It's a little bit of a hassle but well worth $12K+.
Hopefully everything works out. If you can sell your house that quickly it will be fantastic.
I have contacted "Help You Sell" in their local office to see what they would charge. Heck, I would go for $2,000 in a heartbeat! LOL.
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(hubby works for Lowe's) 
