FSBO Can I counter offer by reducing the buyer's agent commission (3%, clause)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
My situation is that we are trying to sell our house without any agents. A friend of mine mentioned to her friends that we were selling the house. They came to see it and they liked it. The problem is that they had signed a contract with their agent (3%). They gave me an offer for the house (lower than asking price), and now I'm planning to counter offer. So my question is. Can I counter offer by reducing the buyer's agent commission? To how much? I can pay the agent, but given that they found the house via a mutual friend, does this give me space to negotiate the commission? Any thoughts on this are highly appreciated.
Your counter can't interfere with their agent contractual agreement. Your friends are likely responsible for the full 3% fee to their agent depending on the terms of their broker employment agreement. Unless their agreement has a clause exempting the fee in this situation, they are still responsible to pay it. They would likely have to make up the difference for whatever you don't cover.
My situation is that we are trying to sell our house without any agents. A friend of mine mentioned to her friends that we were selling the house. They came to see it and they liked it. The problem is that they had signed a contract with their agent (3%). They gave me an offer for the house (lower than asking price), and now I'm planning to counter offer. So my question is. Can I counter offer by reducing the buyer's agent commission? To how much? I can pay the agent, but given that they found the house via a mutual friend, does this give me space to negotiate the commission? Any thoughts on this are highly appreciated.
Thanks.
No, you cannot do that, sir.
The agent represents and has a employment contract with the buyer. That agency relationship has two parties, the buyer and the agent. You are not a party to that contract, thus you have no power to change its terms.
Good luck!
P.S. As there is no seller's agent in this transaction, this agent will need to do some additional work as well.
Last edited by learningCA; 02-02-2010 at 10:43 PM..
You cannot negotiate to reduce the commission of someone with whom someone else has a contract because you are not a party to that agency contract. Did you sign permission for the agent to show your home to the buyer? If so, does that agreement spell out who pays the Buyer's agent?
The time to decide who would pay the agent was prior to the Buyer writing an offer. The Buyer's should have known, going in, that you were refusing to cooperate with their agent or that if they were to bring a contract that they would also be responsible to pay their agent. Did your sign out front or on your flyer say "no agents"?
Sorry, I have no sympathy for Sellers who, rather than countering on their price or condition of their home want to right away go after the paultry 3% Buyer Agent's commission (which gets split again with the broker).
FSBO's should build in "paying themselves" in the price of the house rather than to negotiate down the one who really does the paperwork for both parties, the Buyer's Agent.
Actually, you can choose to not pay any commission at all, but then you put the burden of paying on the buyers. They may not have the money for a dp, cc, and commission so it could cause you to lose the buyer. They may could add it to the price, but most buyers won't do that in this market. So you could refuse to pay anything, but you have to decide if it's worth losing an oh so precious buyer in this market or if you're better off absorbing the 3% and doing what you can to sell it.
Since the rest has already been addressed, I'd like to point out the irony is most FSBO's are such to try and save money. However, the first thing that happens is the price gets knocked down since there is no commission. The result FSBO ends up doing more work, spends more time on market, has increased liability, and results in the same net if not less than if they had hired an agent. Of course there are exceptions, but generally speaking the FSBO doesn't do any better.
My first question to you is... does the offer say anything about the buyers agent's commission? As in are they asking you to pay it? They must be otherwise I'm not sure why you would be concerned about it. If they are, you are certainly within your rights to negotiate just how much of that commission you are willing to contribute. It's part of the negotiations if they put it into the offer and are asking you to pay it.
It's called...seller's concession. Those are always up for negotiations.
Since the rest has already been addressed, I'd like to point out the irony is most FSBO's are such to try and save money. However, the first thing that happens is the price gets knocked down since there is no commission. The result FSBO ends up doing more work, spends more time on market, has increased liability, and results in the same net if not less than if they had hired an agent. Of course there are exceptions, but generally speaking the FSBO doesn't do any better.
Even if the fsbo pays the 3% commission, they're still doing better because they're not paying the 3-3.5% commission for the listing agent. They obviously have to do more work than if they listed it with an agent, but they can also save a good amount of money.... plus if you understand your current market and the real estate process, price it correctly, put it in mls (using a flat fee mls listing) and offer the buyers side agent's commission, it shouldn't stay on the market any longer than a listing by a seller's agent.
Even if the fsbo pays the 3% commission, they're still doing better because they're not paying the 3-3.5% commission for the listing agent. They obviously have to do more work than if they listed it with an agent, but they can also save a good amount of money.... plus if you understand your current market and the real estate process, price it correctly, put it in mls (using a flat fee mls listing) and offer the buyers side agent's commission, it shouldn't stay on the market any longer than a listing by a seller's agent.
Theoretically, I suppose.
But I will say the most God awful photos and copy in our MLS are typically flat-fee listings.
And they can be a huge pain in the rear end to show. Tough to get a hold of, slow to call back, making a big deal about carpeting when my buyer only wants hardwods ...
FSBOs need to be smart and professional. If they can't take pictures, they should hire a professional for $200-$250 to take pics and a virtual tour. As for price, price it competively and offer 3% (if 6% commission is normal) if there's a seller's agent or if there's no agent, give the buyer a 3% discount in price, so that it's a win-win. FSBOs shouldn't think they can save 6% and people are going to run to buy their home. As for realtor pictures, I've also seen some aweful realtor pics on the mls or only one pic of the front of the home.... plus I've seen several realtor flyer info boxes empty for several weeks.... not sure exactly what these realtors are thinking, but if you're a fsbo, you want your marketing material and house presentation (staging) to be on the same level as the better realtors in your area.
I disagree with the people who said "you can't do that"
I guess it is semantics. You indeed cannot negotiate how much the buyer's agent is going to be paid, as that contract is between the buyer and their agent, but you CAN counter how much you are willing to pay them. If you don't pay the full amount, the buyer would pay the rest.
And, in my (not an agent) experience, when a FSBO seller says "I would pay a buyer's agent 3%", what they really are thinking when they say it is "I would pay a buyer's agent 3% if they brought me a full priced offer". What the agent is thinking when they hear it is "I would pay a buyer's agent 3% on an ACCEPTABLE offer". If the seller accepts it, it is an acceptable offer.
Its another one of those Mars/Venus things. What is said and what is heard are not the same thing. "In writing" is a good thing, but FSBOs and commission agreed to in writing before the offer is made are seldom combined.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
