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DublinBuy
Posts: 1
Registered: ‎03-23-2011
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Commission structure

We have an opportunity to buy a home directly from the owner (home is not yet listed on the MLS). We have a couple of questions:

 

1)  We are fairly confident that we can do a good CMA based on sales on similar houses. Should we get a realtor anyways to help with the rest of the process? Is hiring a RE attorney a better option instead?

 

2) We want to understand the potential costs of listing the home on the MLS for the seller (and hopefully divide it fairly). Conventional wisdom says that the total commission would be around 5%-6% and we can probably split it evenly. However, the seller has a realtor's license and claims that she would represent herself if the house is listed on MLS. How does that change the equation? Would she still have to pay the 2.5%-3% to the buyers agent and 1%-2% to a seller's broker if she sells the house by listing it on MLS instead to selling direct to us?

 

 

 

 

 

 

Platinum Super Contributor
Nanomug
Posts: 10,375
Registered: ‎05-30-2009
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Re: Commission structure

1) There are alternative options to using realtors in purchasing a home.  There are transaction coordinators that take care of disclosures and other details. There are FSBO agencies that sell their services piecemeal.  If you take on an agent on your end for a FSBO then its likely that you will end up paying the 2-3% for their services if the seller doesn't want to pay.

 

2) If the seller is an active agent working under a broker then if he/she lists the property the broker gets their cut.  Often FSBO don't want to pay commission and still sell the home at their perceived market price.

 

3) I'd make an offer based on what you think the house is worth backing it up with comps.  I'd likely take 1-3% off that amount and see where it ends up.  If you want the seller to chip in on closing costs then consider that as part of the total offer price.

 

4)  Read a CAR offer form and see the various topics included.  Include these in your offer.  Things like contingency time frames, your expected interest rate, who pays for pest inspection and other details.  Spell out what condition the home should be left in.  A friend put "patch and paint the nail holes" and the owners patched and painted.  Unfortunately they painted with bright blue and the walls were beige.

 

5) Talk to a couple escrow companies and decide who you want to use for the transaction. Put that in the offer.  The escrow company may be able to do some of the "agent work" or direct you to someone who can.  Do the same for the title company.  Remember its negotiable so you might give on something like the escrow company in order to something you want. 

 

6) Be flexible and figure out what the seller really wants and go from there. This may or may not be the deal/property you want.  

Regular Contributor
CarnivoreLamb
Posts: 108
Registered: ‎10-28-2010
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Re: Commission structure

About 20 years ago in a So. Cal. market that had dropped of a cliff, I marketed a house FSBO using the saved 6% to undercut the market and sell the house. A local agent even (unofficially) wrote up the offer for us because she "wanted us off her farm."

 

Since then, when I see FSBOs, usually the owner is trying to keep the saved commissions and is unrealistic about the value of the property. This January, one even said 'this block is special. The problems of '06 and '07 don't apply here.'

Super Contributor
SoBitter
Posts: 221
Registered: ‎10-07-2009
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Re: Commission structure

This January, one even said 'this block is special. The problems of '06 and '07 don't apply here.'

 

LOL where was this?  Pacific Heights?

Regular Contributor
CarnivoreLamb
Posts: 108
Registered: ‎10-28-2010
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Re: Commission structure

>>LOL where was this?  Pacific Heights?<<

 

Berkeley. Their reasoning was that good economy or bad, there is always university staff, instructors and students who need housing.

 

Please don't flame me. This is not my idea.

Regular Contributor
lisrose
Posts: 112
Registered: ‎03-14-2011
0

Re: Commission structure

You could probably also find an agent willing to represent you for a flat fee instead of commission since you have your ducks all lined up.
Visitor
gfreezman
Posts: 2
Registered: ‎03-29-2011
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Re: Commission structure

[ Edited ]

as a buyer why would you ever allow the seller to dictate to you how much money you will pay for representation?  The seller added the cost the cost of representaion to the listing price for both the sellers and buyers realtors.  Pay an Accredited Consultant of Real Estate to represent you.  Pay for the services of your agent as they are performed and pocket the 3% or use it as a reduction in the sales price. 

Visitor
gfreezman
Posts: 2
Registered: ‎03-29-2011
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Re: Commission structure

[ Edited ]

1 other thought on commissions being paid by the buyer!!!  Think about the system as it is today.  The buyers' agent works for the buyer BUT gets paid from the procees that the seller gives to his agent that in turn pays the buyers agent.  Ostensibly, the buyers agent is being paid by the sellers agent.  In what negotiation would anyone ever pay their negotiator if they knew that their negotiator would be paid by the opposing negotiator?

 

 

 

Gold Regular Contributor
lexa
Posts: 1,983
Registered: ‎05-13-2009
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Re: Commission structure


gfreezman wrote:

1 other thought on commissions being paid by the buyer!!!  Think about the system as it is today.  The buyers' agent works for the buyer BUT gets paid from the procees that the seller gives to his agent that in turn pays the buyers agent.  Ostensibly, the buyers agent is being paid by the sellers agent.  In what negotiation would anyone ever pay their negotiator if they knew that their negotiator would be paid by the opposing negotiator?

 

 

 


is it bad but not that bad as you described. buyer agent's comission is not negotiable or avoidable, that's once it is spelled on a MLS listing. That buyers agent does not depend on listing agent's mood as far as comission amount.

Now, to get the contract signed, that much often depends on listing agent, which is wrong, of course.

 

except in short sale case, where lender may not agree to comission and then parties accept its # or deal is dead.

Regular Contributor
CarnivoreLamb
Posts: 108
Registered: ‎10-28-2010
0

Re: Commission structure

Consider hiring an expert to help you with a feasability study. Now imagine that your expert only gets paid if you move forward with the project.

 

What will your expert advise?