For sale by owner! Need help!!

[treehugger]

Does anybody know a good real estate attorney that can process the paperwork for me?

I decided to throw my house out on zillow for sale last week, with the mindset, if I get a buyer at the right price, I will sell. Plan to sell it this spring listing with an agent. This weekend some people came through and looked at the house and said they loved it. Their realtor was out of town so the couple came alone. They just called and want to come back to look a second time and bring their realtor! I had planned to offer any realtor a commission dependant upon their level of effort.

I know they may not make me an offer, but if they do is it reasonable/legal/ethical to offer the buyers agent a full 3% commission and have them process all the paperwork? or should I pander to the baser human instinct and offer the agent a higher commission in the expectation that will provide incentive for them to encourage the client to buy my home?

[sdduuuude]

A wise man once told me that using a real-estate attorney for something like this is a bad idea.

I agree.

Attorneys are necessary only when things go wrong or the process is different from the norm. The whole process is spelled out ad-infinitum.

You don’t need to know the law, you need to know the process, so enlist someone to help who knows the process.

You’ll be better off hiring an agent on a very low commission or hourly agreement. Might even consider getting bids from agents. Maybe agents here would let you know what is reasonable to expect to pay.

Probably a good idea to pay their agent a normal fee. Sometimes agents will steer clear of non-agent deals because they don’t want to deal with people who don’t know the process.

Find a great Escrow agent and pay them a bit more than normal. Escrow agents know the process and aren’t beholden to either buyer or seller.

[ljinvestor]

All you should need is a good escrow officer that isn’t friends with the buyers agent to guide you through the process.

[SD Realtor]

A few comments….

One of the reasons brokerages do not enter into contracts with FSBO (buyers/sellers) is because there is a serious liability incurred by the brokerage when the other side of the transaction is not represented. I say this because you mentioned that the other party does actually have an agent. (I will return to that point in a minute)

As for what commission you want to offer that agent as a coop commission that is entirely up to you. There is no legal/ethical requirement. The “average” coop commission is 2.5 or 3%. I am not saying this is legal/ethical, or reasonable, I am just stating what the common payment is.

Remember all commissions are negotiable. You can offer what you want and the agent can take it or leave it.

Getting back to the first thing I mentioned, if the broker that the agent works for doesnt want to risk dealing with a FSBO you will not have any decision to make at all. You may want to try to contact the buyers and deal directly with them but they may feel much more comfortable having professional representation.

In that case you may want to try to strike a deal with the agent letting the agent be a dual agent and represent you as a listing agent (for these buyers only) at a low commission. Then pay him the listing and the buyers commission as well.

Good luck either way!

[jimklinge]

Many agents are not comfortable with dual agency, or their brokerage discourages or prohibits it.

If you are willing to pay a higher commission, then hire SD Realtor to represent you and have him put it on the open market so every buyer has a crack at it – which also instills maximum urgency, causing the in-love buyers to overpay.

I think this is a fact – if one couple loves it, others will too.

[urbanrealtor]

[quote=jimklinge]Many agents are not comfortable with dual agency, or their brokerage discourages or prohibits it.

If you are willing to pay a higher commission, then hire SD Realtor to represent you and have him put it on the open market so every buyer has a crack at it – which also instills maximum urgency, causing the in-love buyers to overpay.

I think this is a fact – if one couple loves it, others will too.[/quote]

Somehow I accidentally un-ignored Jim (kidding Jim, I actually have a small shrine to you in my office).
But he is right.
Get some input from some agents and either take this offer or list the damn thing.
Most likely, if you got an offer for this with no MLS exposure, other people will offer also (and maybe for more.

[CA renter]

[quote=urbanrealtor][quote=jimklinge]Many agents are not comfortable with dual agency, or their brokerage discourages or prohibits it.

If you are willing to pay a higher commission, then hire SD Realtor to represent you and have him put it on the open market so every buyer has a crack at it – which also instills maximum urgency, causing the in-love buyers to overpay.

I think this is a fact – if one couple loves it, others will too.[/quote]

Somehow I accidentally un-ignored Jim (kidding Jim, I actually have a small shrine to you in my office).
But he is right.
Get some input from some agents and either take this offer or list the damn thing.
Most likely, if you got an offer for this with no MLS exposure, other people will offer also (and maybe for more.[/quote]

True, but these also might be the kind of “dream buyer” that sellers are all waiting for. If treehugger lists the house on the MLS, this buyer might get turned off, and not want to go through with the transaction.

I’m not a realtor, and defer to those who are WRT this issue, but if I were in treehugger’s shoes, I’d offer 2.5% to the selling (buyer’s) agent and select the escrow company/officer myself. If the deal falls through, then she can look into listing in on the MLS.

I see no reason for her to throw away an additional 2-3% on commission to a listing/dual agent if it’s not necessary. If something weird comes up, then she can hire an attorney just for that issue.

Just my 2 cents.

[treehugger]

I don’t understand, why would a brokerage not want to work with a FSBO if the seller is willing to pay them? Or even better for realtor to be dual and I pay them a larger commission?

In my case the potential buyer found my listing, contacted me directly, and came alone to view the house, liked it, and wanted to pursue it. We had a discussion where I disclosed that I would indeed cooperate with a realtor and pay the commission, if that is what they the buyer felt more comfortable with. Being me, I informed them up front of the cost of typical commission say 5% would be ~$22,000. I told them if they chose to go direct to an attorney I would split that difference with them and we would both benefit. They felt more comfortable using a realtor, who IF I agree to a 2.5% commission stands to make $11,000….. For what? I can use a real estate attorney to review the offer and help me counter, process all the paperwork, and it will cost me, assuming no issues come up, ~$1000, that is a difference of $10,000!

Of course they may never make an offer and I will list traditionally in the spring and humbly admit I was wrong and there is much more to selling my home than I acknowledged today.

[(former)FormerSanDiegan]

I am not a real estate agent, but I have sold a few houses of mine over the years through agents.

Throwing it out there on Zillow as a FSBO does not give the the highest probability of the highest price. Sure, you got someone interested and you might sell it. But if you had put it out there in the system where there are a bunch of hungry agents talking buyers into buying your house so that they can feed their family it would be exposed to more buyers and perhaps higher bids. Use their greed to your advantage. You don’t have to like the MLS system or the way its set up but you can work it to your advantage. You would get maximum exposure and you might have three bids by now.

Why go half-assed to a limited market to save 5%. The truth is that for most houses you can’t really even estimate the price to within 5% (at least that is my experience when selling my personal and rental properties over the years) until you put it out there on the market. (Unless its a fairly recent tract where the houses are still all the same)

As for waiting for the Spring to place it with an agent if it doesn’t sell as a FSBO … in my opinion the optimal time to put it on the market under the current conditions is the first week or two of February.

Here’s why :
There isn’t that much inventory right now. People are “waiting until Spring” or fixing up a few things before they put their houses on the market. They want to list in April, but Spring Break rolls around, so they put it off a few weeks. Then it’s May and they finally get it out there. Pretty soon its June and all of a sudden you have tons of properties coming on the market, your competition gets harder.

Just my 2 cents.

P.S. – Don’t know your reason for selling, but I wouldn’t be selling in this market unless you are moving up or out and need the cash from the sale to do so.

[jimklinge]

Agreed Former SD, and you don’t need tons of properties being listed, just a couple near you that undermine your price. They can take 5% or more out of your pocket in a minute.

Listing your home the day after the Super Bowl is ideal.

[SD Realtor]

Agreed Jim, late January/early Feb is a great time to list. Personally I think this spring is going to be pretty active as well due to limited inventory of quality.

Treehugger getting an attorney is fine. That probably would constitute enough representation for a cooperating brokerage to work with you and there should be no problem but you need to see if the buyers agent broker will agree to that. Again, it just depends on how risk averse that broker is. Having an attorney simply review a purchase agreement verses representing you may not be enough for the other broker. You are arguing your case to the wrong people, contact the broker and if he is cool with it then you are good to go!

The other point that others brought up is that you may be perhaps limiting your exposure. Really what is most important to you is what you net correct? So if you get a higher sales price that covers the higher commission wouldn’t that suffice? There are no gaurantees but that is the point.

This is not the argument of what good is a listing agent for and why should I pay that commission. I understand that argument and that dovetails into the whole discussion about the entire real estate model and its current faults.

So given that as a starting point, there are simply 2 issues here.

1 – If you feel that there is not a potential to fetch a higher price using the MLS to cover the commission costs then that is fine.

2 – If you have verified with the buyers agent that his brokerage will co-op with you given your representation model, then you are good to go. Seems like a quick call to the buyers broker will answer this question.

[sdduuuude]

Also consider this – if the agent doesn’t want to deal with an FSBO, but you have direct access to the buyers. Tell the buyers to tell the agent to either deal with you or step aside and do a direct seller-to-owner deal. Then you get the escrow agent to manage everything and neither buyer nor seller is represented. I have done this before and the process is remarkably smooth when there are not two agents involved who are trying to manage not only their clients’ needs, but are also trying to limit their own liability. A surprising amount of the paperwork involved is there to protect the agents.

[CA renter]

[quote=sdduuuude]Also consider this – if the agent doesn’t want to deal with an FSBO, but you have direct access to the buyers. Tell the buyers to tell the agent to either deal with you or step aside and do a direct seller-to-owner deal. Then you get the escrow agent to manage everything and neither buyer nor seller is represented. I have done this before and the process is remarkably smooth when there are not two agents involved who are trying to manage not only their clients’ needs, but are also trying to limit their own liability. A surprising amount of the paperwork involved is there to protect the agents.[/quote]

Very true. I’ve done a number of deals with and without agents, and it was always smoother without an agent. That’s not to say that agents aren’t necessary. They are absolutely essential when buying or selling in an unfamiliar market or when you don’t have enough time to deal with buyers/sellers yourself. It’s just that by inserting people with different interests into the middle of a transaction, things can get lost in translation, and the deal often becomes adversarial.

You’re also right about the paperwork. It feels like 80-90% of it is for the agent’s/broker’s protection — there is a lot more paperwork when dealing with agents. Case in point: a land sale we made in another state done without an agent. Total number of pages involved in the transaction: 1 1/2. One was the warranty deed, and the other was a half sheet of paper asking for my social security number. That was it. The money was wired into my account the next day. I kept waiting for lightening to strike or something. It was strange to be involved in a transaction that required so little paperwork.

Treehugger has no obligation to this agent. If the agent/broker doesn’t want to cooperate, then the buyer can work directly with the seller or seek other representation. I’m not even sure why treehugger would want to talk to the broker. It’s the buyer’s issue to deal with, not treehugger’s.

[earlyretirement]

I agree it could just be a dream type situation with the buyer. I had a situation like that back in 2008 on a vacation summer home that I owned. I didn’t even list it for sale. I bought a house and totally gutted it, added an in-ground heated pool and used it for myself for long weekends and rented it.

I was a bachelor at the time so it was GREAT! I rented it during high season for insanely high rental prices.

One of my rental guests from Europe (wealthy banker) asked me once how much I’d sell the house for. I explained to him that the house wasn’t for sale and I just bought it and gutted it and furnished it. It was a ton of work. He kept upping his offer.

Long story short, I ended up selling the house to him at an insanely great profit. He even ended up buying everything in the house with all the furnishings.

All with no realtors involved for either of us. We just had a lawyer draft up the paperwork and it went super smooth. It was an all cash deal so that made it easier.

It was a dream like situation. Wish that sort of thing happened more often! I never intended to flip it but it would have been crazy not to have sold and I don’t regret it for a second.

[treehugger]

They chose to use a realtor I did not. I am paying their realtor a 1.5% commission. We release contingencies today.

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