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This may all be premature but we are in the process of listing my mother’s condo in the super-charged, utterly no inventory San Diego market. It will be with a good friend, with whom was our buyer’s agent for our first (and only) home purchase over 25 years ago as well as for my mother’s purchase of her nearby condo 23 years ago. Thus, I’ve never been through the process of selling a property.
We are just beginning to clean things out, find an estate sale professional as well as have not actually signed an agreement to list the property yet but met with our friend last week to discuss it. A couple of days ago the friend/agent mentioned that he has a new client from L.A. who wants to buy here in San Diego and asked if he could go ahead and show her it even though it is not ready really ready for showing. He showed the property today and relayed to us her seemingly very positive response to buying it.
If she ends up indicating her intentions of putting in a full price (our initial educated estimate) offer, would approaching our friend the realtor with a potential adjustment from his typical percentage fee given his, thus far minimal effort as well as potentially completing the deal from both ends? We fully expect, appreciate and wish to fairly compensate him for the good work he will I’m certain yet provide for even this “fall in your lap” kind of deal but we also don’t want to give up the likely opportunity of a potential bidding war should this scenario fall into place in the next day or so.
Even as this is all precipitated by the passing of my mother a mere month ago today and the discussion of money and fees, especially with friends, strikes me as course, I am nonetheless the executor of the estate and have a responsibility to it and the heirs with its management and sizable disbursement.
Appropriate or not, what do you say, professionals? I absolutely value the close friendship we have (and he had with my mother) and wouldn’t want to sully that in any way but still have a compelling feeling of being responsible and smart (especially with my total lack of experience - I like to say I’m smart enough to quickly recognize when I’m ignorant and then seek out a way to remedy that) with this business deal.
In this market I wouldn’t just take the first (off-market) offer I received — you could be leaving tens of thousands on the table, even if you get your friend to accept a lower commission.
"Great, Joe. What would your fee be for this sort of easy deal?"
Joe: "High."
"Oh. Since we are paying full fee anyway, we might as well just wait and list it and see what the market tells us when the condo is really ready to go."
The market never lies.
And, as the condo will be vacant, showings are no hassle, right? Why not get the showings and offers the market will deliver?
You should offer him whatever you plan to offer a buyer's agent as co-broke if this sale doesn't happen and you list it. You'll be saving half the commission and he'll be fairly compensated. He could be taking that buyer client to another listing that pays more but is bringing them to you so he should be paid fairly.
You should offer him whatever you plan to offer a buyer's agent as co-broke if this sale doesn't happen and you list it. You'll be saving half the commission and he'll be fairly compensated. He could be taking that buyer client to another listing that pays more but is bringing them to you so he should be paid fairly.
Seems reasonable.
Question 1
What would be the agency role in California in this instance? Dual Agent? Transactional? Full advocacy for the OP?
I might add: The buyer and the OP are two likely income potentials for the agent. He can get his full split with either of them in the market. If the OP lists at 5%, 2.5/2.5, the agent loses one "side" if only paid the typical buyer's agent fee.
2.5% unrealized potential revenue.
If the agent takes the buyer somewhere else, agent may well make 2.5% twice, once each transaction. I Can I assume this is not a $90,000 condo, so another 2.5% is not chump change?
So, the agent has two incentives to close this deal at 2.5%:
1. Easy, quick deal, rather than chasing the buyer all over town and losing in multiple offer situations.
2. Friendship.
Is it that strong here?
Question 2.
Is the agent the final decisionmaker regarding actual fees, and free of onerous splits with a brokerage?
If either is not True, wiggle room on the fee may be minimal.
First, I'm sure the market in San Diego is similar to what we have here in Boston. If the market is that hot why on Earth would you ever entertain the idea of selling off market? Even if you chip a few percent off the agent fees you're probably still leaving tens of thousands on the table. Where I am you can't judge sale price by comps because buyers are so desperate due to low levels of inventory (there are currently 7 houses for sale in the town I live in) that they often offer INSANE amounts of money to secure a house that defy comps and they pay cash so appraisals don't matter or they have cash to bridge a gap.
Second, as the executor of the estate you have a fiduciary duty to the estate to obtain the highest price possible for the estate's assets. If you sell the property off market, you open yourself up to liability as a beneficiary of the estate can claim that you did not fulfill your obligation to maximize the estate's value.
I always tell people . . . don't hire your agent based upon the fact that they're your friend. Hire them because they're good at what they do. If they're your friend as well that's just icing on the cake. If someone stops being friends with you because you didn't hire them then they probably weren't really your friend in the first place. Just be up front about it . . . "Hey Joe, I'm not hiring you to sell my mom's condo because I don't feel comfortable working with a friend" or something along those lines. "Hey Joe. As the executor of the estate, I have a fiduciary duty to maximize the value of this asset. I don't want to open myself up to liability by selling to your client off market. I'm sure you can understand." If you don't want to hire him at all maybe add on "I'm also not comfortable with the idea of dual agency and since you already have an interested buyer I think it best that I hire someone else to list the property.'
I have a similar situation going on right now. I'm going to be listing a house for a friend in the Spring. We have a mutual friend that's an agent and she keeps asking me to show the property. My advice to my client is . . . you sell to this buyer and you're going to leave money on the table. I strongly feel their home is going to be a HOT listing in the Spring and they'll do well. So, I keep telling this agent that we're not going to be showing it to her buyer. So she keeps contacting the seller directly which is completely inappropriate. The other day I found myself on the phone with the rainmaker of her team so I informed him of her behaviour so hopefully that will stop.
"Great, Joe. What would your fee be for this sort of easy deal?"
Joe: "High."
"Oh. Since we are paying full fee anyway, we might as well just wait and list it and see what the market tells us when the condo is really ready to go."
The market never lies.
And, as the condo will be vacant, showings are no hassle, right? Why not get the showings and offers the market will deliver?
^^^
Great answers with exactly the kind of information spelled out better for me to consider. Thank you very much. Since we have to get the place ready to sell, or released from our hands anyway it does seem best to let the market decide. I am sure my friend/agent is ready, willing and able to proceed with the traditional marketing and showings to achieve that.
^^^
Great answers with exactly the kind of information spelled out better for me to consider. Thank you very much. Since we have to get the place ready to sell, or released from our hands anyway it does seem best to let the market decide. I am sure my friend/agent is ready, willing and able to proceed with the traditional marketing and showings to achieve that.
Smart marketers and sellers know this truth: "You never get a second chance to make a first impression."
People who say, "Oh, we can overlook xyz," nearly never really can.
1. Too bad friend is already involved. It's easier to ask a stranger for a concession on the commission.
2. Focus on your bottom line, not how much the agent makes per hour.
3. If the market is strong, and it's not too much trouble to get the house ready for showing, I would want an above-asking offer to sell before the house hits the market.
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