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I am preparing to put a property on the market that over the years has prompted many friends and acquaintances to ask me to let them know if it is ever up for sale. There is a good chance that I may find a buyer among them who is willing to meet my price.
If that is the case, I'd like to ask my agent (a friend of the family as well as a super agent) to draw up the contract and make sure that I have properly handled the disclosures, etc that are legally required. She wouldn't have to photograph, market, stage, or show the property.
What do you think would be a fair commission to her for structuring the deal? My number is 3%, which would be upwards of $15,000. She normally charges me 5%.
Do you think that would be fair? What % (or flat fee) would you accept?
You need to ask her. You're really asking for transaction coordination. Yes, she does save on the time and effort of marketing,and that counts for something! Even a discount.
However, consider this. Your agent will be representing YOU. The buyer, even a friend... perhaps especially a friend, should be encouraged to have their own agent looking after their interests, including negotiating price, inspections, and repairs. That too should be compensated. You should be looking at splitting the agreed commission between two agents. Don't scrimp on that, or let a friend scrimp on that.
If your agent is also a friend of the buyer, it could be a conflict of interest, and risky to all those relationships.
We have a label here called "Prospects Exempt."
Means that the seller has reserved a buyer or buyers and the commission may be lower if one of those buyers purchases the house. It may even mean that that prospect could purchase directly without an agent at all.
Commonly, a listing agent would put a time limit on such a status, like a week or two, and if the buyer(s) don't move forward within that time period, they can just purchase along with any other buyer.
There is a consideration of fairness that a level playing field would mean that the same offer from various buyers would provide a seller with the same net proceeds. Favoring a reserved buyer with a lower commission rate, meaning you could net as much from a lower offer, is something that should be disclosed.
It is similar to a variable commission, actually IS a form of variable commission.
If you have a buyer lined up, and you're satisfied with the price, I think your much better option is to retain a good real estate attorney. If title companies handle closings in your area (they do here), you can have them draw up the closing statements--which your attorney can review. That will save you a ton of money and won't put the agent in the potential role of providing a legal service (as opposed to a brokerage one).
Last edited by jackmichigan; 03-01-2016 at 01:26 PM..
Well, $15K is generous to just review paperwork. If you aren't entering into a client relationship with her, and are only hiring her for a transaction review of a specific document, then I'd think that $1-2,000 would be appropriate. You may also want to consider asking a real estate attorney for their rates for reviewing documents, too. Keep in mind that a real estate agent is NOT an attorney; so if you are using non-standard contract documents, an agent may not be able to give you an informed opinion. Agents tend to use standard forms provided by their state or local authorities - these standard forms are constantly being reviewed by attorneys for completion and compliance. Agents don't go too far off the contract because that starts crossing a fine line between agency and legal advice.
However, if you are expecting her to act as your agent and represent you in the transaction throughout the contract phase, the inspection phase, and guiding the deal to closing, then yes, up to 3% is appropriate. Without having to market the property, I'd probably be thinking 1.5-2% -- however, keep in mind that the agent will also probably have to share the fee with their brokerage.
You need to decide what, if any, commission you are willing to pay a buyer's agent, because it is common for an unrepresented buyer to get excited about a house, but then when it comes to a contract, suddenly they have an agent, who is expecting to be paid. You can be clear in your own mind up front that you are/aren't willing to pay, and what you are willing to pay so that you aren't taken by surprise when a formrly invisible agent suddenly appears in front of you. :-)
Hmm -- thank you all! But there doesn't seem to be much of a consensus. I'm in CA, and RE transactions are typically handled by RE agents. I haven't heard of an attorney being involved in a routine transaction, though it probably happens occasionally.
The whole issue could be moot anyway; the interest in the property might vanish when my friends/acquaintances find out what the asking price is!
Hmm -- thank you all! But there doesn't seem to be much of a consensus. I'm in CA, and RE transactions are typically handled by RE agents. I haven't heard of an attorney being involved in a routine transaction, though it probably happens occasionally.
I think a number of real estate agents automatically suggest that you work with an agent. If it were me (and I'm a broker, FYI), I would never pay an agent merely to handle paperwork. If you find a buyer yourself, get a real estate attorney or a title company to handle the paperwork, or both. Your pocketbook will thank you.
I think a number of real estate agents automatically suggest that you work with an agent. If it were me (and I'm a broker, FYI), I would never pay an agent merely to handle paperwork. If you find a buyer yourself, get a real estate attorney or a title company to handle the paperwork, or both. Your pocketbook will thank you.
It's the difference between "client centered" and "pocketbook centered" :-)
I think it is quite client-centered to suggest that buying a home is not just a paperwork problem. Even if the friend is happy with the price, the friend should have the home inspected so there are no surprises... and depending on that outcome, there may be negotiation and repairs. If the friend is getting financing, there may be additional matters and negotiations with the lender that a buyer may want help with. An agent is NOT necessarily required for those issues. But buying a home can be a daunting process, and even if the seller doesn't need help, the buyer may want it.
I think this is even more important when buying from a friend.
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