Home Selling in Chicago>Question Details

Rand McNally, Home Seller in Chicago, IL

Any specific rules I need to follow when negotiating offers?

Asked by Rand McNally, Chicago, IL Tue Apr 21, 2009

I have my home listed through a flat-fee MLS company where I offer a commission to those working with a realtor but I have the ability to sell by owner as well.

Two people saw my property this weekend, one is a friend who is shopping by owner, and the other is with a realtor. I got good feedback from both, and they each said they may be interested in making an offer depending on what they see this weekend when they look at a few more places.

Are there rules I need to follow if I get an offer from both? Can I disclose to the person shopping with a realtor that I have an offer from someone purchasing by owner, and that their offer needs to be at least 2.5% above the by owner buyer since that is the commission I need to pay out? Also, I would rather sell to a friend since it would offer more flexibility with closing, possession date, lower risk of litigation for any reason, etc. I also would be more likely to accept a lower price from a friend. Is this breaking any laws?

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20
Wow, a lot of you guys on here are cruel. Here's the deal. I foolishly took a 0% down payment loan several years ago and have very little equity in my home. I need to sell for personal reasons, and with the decline in the value of my property, I will certainly take a loss, likely all of the equity in the home. In addition, paying 5-6% in real estate commissions will likely come out of my pocket, which I don't have. Trying to save money by listing it on my own without a realtor is the best solution I have in order to price my place competitively to try and get a quick sale. By listing this way, I can still offer the purchasing realtor 2.5%, which offers a modest savings for my family.

Thank you to all of those that view the Q&A board and offer free, honest advice. But for those of you that are bitter and attacking my decisions, it is ridiculous. As I am sure you realize, this is a site that permits people like me to freely soloicit your advice. I am clearly not doing anything shady by doing that. If you have such a problem with me asking questions and soliciting your opinions, then don't waste your time coming on here. I am sure you have much better things to do with your time, like going out and trying to sell houses or finding leads on listings.

I realize the real estate market sucks and your careers have become much less lucritive. It is awful, and I truely feel for you and your families. I am not in the real estate market, but the economy has taken its toll on me and my family as well. That is why I have to list my home the way I have chosen to do so. But making assumptions and implying that I am trying to take advantage of the situation is truely unfortunate.
4 votes Thank Flag Link Thu Apr 23, 2009
"IMHO it is not ethical for people to offer you advice without knowing all the facts."

The logic of that statement is flawed. Many Realtors provide BPOs/CMAs all of the time on properties without knowing whether the plumbing or electrical wiring is bad. Aren't they also--by that definition--"offering advice without knowing ALL of the facts," and aren't they also behaving unethically? The reason I posed the questions is to demonstrate that it's impossible for anyone to ALWAYS know ALL of the facts. After all, if we knew all of the facts beforehand, then we'd never need to ask any questions.

"If you are saving money by not paying a Realtor to represent your interest, you will need to pay your RE Attorney to represent your interests."

I believe David's comment addressed this comment beautifully. Yet, after having chewed on this awhile, I feel compelled to respond.

First, I find this comment to be arrogant, because it implies that only Realtors--which excludes agents who don't belong to NAR--and RE attorneys know what they're talking about. They don't have a monopoly on the the knowledge. Mortgage brokers, bankers, investors, GCs, non-NAR agents, and plenty of other professionals also know quite a bit about real-estate too.

Second, I find this comment to be presumptuous, because it infers that the poster is being too cheap. Why do so many--but not all--real-estate professionals feel compelled to collect a toll before answering any questions? Do you pay for every piece of advice that you have concerning computers? Have you ever used any unlicensed software? I'll assume the answer to the latter 2 questions is no and yes respectively. Technically, I could use a similar argument for how doing that takes food off of my (and other IT professionals') table. Everyone asks preliminary questions for free about stuff they don't know, before they commit to pay a fee for any product or service.

Finally, I don't have a problem with anyone who feels compelled to nickel and dime others for the information that they know. They have a right to do so. Yet, I also have a right to share whatever I want to share freely, and I refuse to continue to remain silent after having encountered several veiled attempts--like this one--to herd me (and others) onto the Nickel and Dime ranch.
4 votes Thank Flag Link Thu Apr 23, 2009
Dp2,

There are times I wish I had multiple profiles so I could give more than just one helpful vote. Reading your last post is one of those times.
3 votes Thank Flag Link Thu Apr 23, 2009
the most obvious "rule" (as there really aren't any rules) to follow, is attempt to treat both (or more) parties equally.

In other words, if you've told the first offer that there are no other offers yet.... then the second offer comes in... and you tell them that "we already have an offer"... the 2nd offer would have an "edge"... because they were aware there was a 1st offer in place, so they have to come in harder and stronger to override offer #1.

Make sure you go back to offer #1, and let them know, too... that there is a 2nd offer in place, and give them the option to amend their offer accordingly (if they want).

OR, you could tell neither offer that they're in a "multiple offer situation". As log as they're both playing on the same level with the same information... that's how to keep it fair, and avoid litigation (or at least angry feelings).

and rockin... I'll give Dp2 the other thumbs up for you... "there"... did it... (anybody with a Mac icon is okay with me!).
2 votes Thank Flag Link Thu Apr 23, 2009
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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Know what you want to get out of the negotiation, before you begin to negotiate.

Kipp made an excellent point about selecting the offer that's "most likely to close," but I disagree with his point that you'd NEED to work with an agent to determine which buyer has the stronger profile. Although I agree with him that an agent can be an excellent resource in this regard, I know (from personal experience) that other professionals (mortgage brokers, bankers, investors, sales persons, etc) can be excellent resources too.

Although I agree with Jeff that selling to your friend might not be the better option, I disagree with his following assertion: "odds of a deal going through without at least one realtor as very slim." I agree 100% with what Rockinblu stated, and I'll go one step further. Keep in mind that the title company (or title attorney) that you hire to handle all of the paperwork IS your last line of defense. They are responsible for issuing and policing the closing instructions. Stated another way, they're responsible for catching all of the errors and omissions that no one else caught. So, it's important for you to work with a good reputable title company (or title attorney).
2 votes Thank Flag Link Wed Apr 22, 2009
Most professionals--whether they're Realtors, doctors, lawyers, consultants (as I am), accoutants, etc--have some kind of ethical standard, have various certifications (some voluntary and otherwise), receive continuing education, and are aware of what kinds of advice they may or may not offer freely, legally, and ethically (according to the standard). True professionals, who are on top of their game, don't need to be taught or reminded of their professional obligations in this forum, because they have their continuing education for that purpose.

There's a difference between asking a physician friend, "Does this blemish on my arm look serious enough for me to go see my doctor?" and asking him/her to administer one's chemotherapy. There's a difference between asking a real-estate attorney a general question about easements, and asking him/her to (re-)write one's offer. There's a difference between asking a CPA a general question about the tax implications for doing a 1031 exchange, and asking him/her to review or do one's Schedule E form. There's a difference between asking general questions about negotiating, and asking someone else to write one's offer.

Incidentally, Realtors aren't the only ones who CAN write offers, and they're also NOT the only ones who can facilitate a transaction. I expect that Realtors should have already learned this--just as many real-estate and title attorneys, title agents, professional investors, etc have learned this too--via their training.

Christopher, normally I agree with you nearly 100% of the time, but I have to agree to disagree with your interpretation of my previous comment. The point of my previous comment was not to harshly judge Realtors, brokers, other agents, or anyone else for opting to not answer the posted questions or participate in the dialogue. They have that right. I focused the scope of my rebuttal on 2 comments: the latter one was an attempt to indirectly coerce everyone here to refrain from posting anything else on this topic, and the prior one judged everyone else here using ethics with flawed logic. My point was--and still is--to point out that one to not judge unless one wishes to judged by the same standard, and to proclaim my rights too.

I believe it's hypocritical for Realtors (or anyone else) to "not be judged too harshly for guarding their proverbial turf," while harshly judging me (and others) for guarding my turf (anything computer-related and pertaining to real-estate investment). Online forums are domains of the mind. Other IT professionals and I designed and implement them for the purpose of exchanging knowledge and other information. They're not just another place where someone may plant a sign, and start dictating to everyone else the rules for sharing any information that gets conveyed via this means. We designed the software to work somewhat like telephones. There are no thought police guarding the phone lines, and I believe there shouldn't be any thought police guarding the forums too. The moderaters here have done a wonderful job of helping to facilitate excellent dialogue--just as many agents (not just Realtors) have done an equally wonderful job of helping to facilitate various real-estate transactions. The moderaters and IT professionals don't trample into realty offices trying to dictate how things should run there, so I think it's only fair to expect to receive the same respect here.
1 vote Thank Flag Link Thu Apr 30, 2009
Dear Scholes,

Rockinblu's first post is correct in that it will be imperative that you have a very good real estate attorney. Typically the attorneys would come in to review your documents "after the fact" of having executed an offer/contract to purchase rather than during any negotiation. While the attorneys can agree to modify any part of the contract, you want to make the initial deal as clean as possible.

Regarding selling to a friend, I think that most people given a certain level of comfort with someone will be less likely to be as diligent as they typically would be if they were entering into an agreement with a stranger. Don't let your legal or negotiating guard down just because you're dealing with a friend. You need to be just as cautious in this scenario as you would be otherwise.

Regarding the offering up of free advice and Dp2's point about people "collecting a toll" before offering their advice, there are a few different views on this. While Realtors are free to offer up whatever opinions and comments that they'd like on forums like these, Realtors are governed by rules, standards of ethical practice and professional "malpractice" (for lack of a better term) concerns.

While lots of consumers have never had experiences with truly professional Realtors, consumers must understand that Real Estate Brokerage is in fact a profession (much like the practice of law, accounting or medicine). Like any profession Realtors must be (although many are not) very careful about what they advise with respect to real estate matters. I would not expect any "Realtor friends you can consult with" (in Kipp's words) to step up and offer you any advice outside the governance of a professional services agreement (for both your protection and the Realtor's).

I would not ask a physician friend of mine what the blemish on my arm is, nor would I ask an accountant what types of deductions I should take on my taxes without having entered into a more formal professional relationship with them. Many Realtors put their own careers and their brokerage's license in jeopardy by casually tossing off advice for which they could eventually be sued over or otherwise inconvenienced. This is the reason that many Realtors will not offer any advice for free, publicly or without requiring a formal agency agreement with a client. And for those who aren't aware there is a TON of potential legal liability surrounding real estate transactions.

As much as some may see this as nickel and diming- to be properly protected via their Errors and Omissions insurance policies (the Realtor version of malpractice insurance), this practice should have been more formalized and standardized over the years so that customers understand that they are entering into a professional services relationship when they begin working with a Realtor.

Via past practice attorneys have set the completely reasonable expectation that before they can advise you, you and they must come to an understanding about the nature of the professional services about to be delivered BEFORE they will even talk to you about a potential case. Retainers are paid up front. Historically Realtors have been extremely remiss in setting similarly clear expectations with the public about how our business is conducted (much to our detriment I might add).

While this type of forum has developed into a pretty reliable source of information for most general real estate inquiries, no one on this forum should be surprised that Realtors are reticent to offer up their knowledge and expertise without being compensated for doing so. Realtors should not be judged too harshly for guarding their proverbial turf in this way.

People can get fined and prosecuted for helping other people fill out blank forms that "require the assistance of an attorney," but not many people are complaining about that (particularly attorneys because they wrote the law(s) punishing consumers for getting assistance from non-attorneys). Realtors do not have the same sort of stranglehold on real estate transacations which allows forums like this to exist (and consumers to conduct their real estate transactions without the assistance of a Realtor).

Understanding market realities I have no problems with you attempting to sell this way to reduce the amount of commission that you'll pay out at closing, and I wish you luck. I appreciate your acknowledging the purchasing agent for their time and effort in procuring a buyer for you. I've found that in more challenging markets such as this one, a Realtor's value is more obvious than markets in which homes are flying off the shelf. The playing field of Realtors is dwindling as many non-professional and non-full time agents leave the business, so in fact those of us who are committed professionals (while putting in longer hours) are doing OK in this "sucky" market.

Sincerely,
Christopher Thomas
Broker Associate, Sudler Sotheby's International Realty
1 vote Thank Flag Link Thu Apr 30, 2009
Scholes, pay no attention to those crying behind the curtain.
1 vote Thank Flag Link Thu Apr 23, 2009
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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Neither person made an offer at this point so there is really no need for speculation.

The house is only worth what it is worth, whether or not someone is using an agent.

This is a business decision, treat it like one.
1 vote Thank Flag Link Wed Apr 22, 2009
Thanks for the replies. The flat-fee MLS company I am working with helps with many of the things mentioned, and we have a good experienced real estate lawyer representing us as well. I will keep everything in mind as I go through the process.
1 vote Thank Flag Link Wed Apr 22, 2009
What's the address? Maybe I want to make an offer too!

Seriously though. This is where a qualified agent on your side earns their commission. You might even be under-selling. Don't go for the highest offer, but the one that is most-likely to close. Is there a realtor friend you can consult with? You need someone to look over the offers and tell you who is the stronger buyer.

You've had success so far, and I hope you sell...but you could be in for a bumpy ride! Good luck!
1 vote Thank Flag Link Wed Apr 22, 2009
Good comments and advice from Stacy. However, protect yourself at all times. Get a good RE attorney. If you decide on selling to your friend, simply get the paperwork from a title and escrow company you both decide on, and use those documents as basically work sheets. Take those to the attorney with all the changes and additions, and have final ones prepared suitable for signing and submitting to the buyer's lender. The attorney will go over the disclosures and make sure everything is in order. If your friend has been approved for the needed loan amount, and the house appraises with the inspection going well, it can be a breeze.
1 vote Thank Flag Link Wed Apr 22, 2009
I totally disagree with your assumption to the friend is the better option. Your chances of the sale actually going through smoothly are greatly enhanced by the presence of at least one realtor running the show. We direct all the players, including attorneys, inspectors, and in my case appraisers and underwriters, so that the sale goes through without a hitch. I place the odds of a deal going through without at least one realtor as very slim.
Will it cost a bit more, yes, but it could be worth it. The risk of litigation is much lower with a realtor completing all the disclosures and managing the process because they know all the rules.

Just my two cents, good luck!
Web Reference: http://www.1sthomegroup.com
1 vote Thank Flag Link Wed Apr 22, 2009
if you get two offers.. ask each for their best and final by a particlular date and time. You can disclose to the agent that the other offer is not represented, but I wouldn't go into any more detail than that.. they will be smart enough to figure that out. You can accept any offer you are comfortable with.. it is more than price, it is financing, closing, other terms that determine the offer you select to go with.
1 vote Thank Flag Link Tue Apr 21, 2009
Thank you Dp2, It makes me feel good when people think my information is useful. Here are some exerpts from previous posts that are about marketing to save you some time, I know you have two potential buyers but til the deal is done you should market it.

Blog the heck out of it(agents only on some sites), where: http://digg.com/ , http://activerain.com/ , http://talk.realtor.com/ , http://www.blogger.com , http://bloodhoundblog.net/ , http://hubpages.com , http://www.realtown.com/ , http://www.folkd.com , http://www.subbmitt.com/

Tweet the heck out of it, set up an account with twitter and post twice a day about it you wont start out with many friends but you will get some exposure in the front page

Do a radio show about your home: http://www.blogtalkradio.com/

Let me explain how I do my open houses. I hold an open house once a month and I spend a lot of time and money on them because they are important. I pay for the advertising in the newspaper with the map if possible. I hand out flyers to all the neighbors, I put signs on the major intersections leading to the home in advance to let the public know the date, address and times I will be holding the open house. I send post cards to neighboring communities with the same information. If the seller agrees, my wife&I supply & prepare food and beverages. On the day of the open house I handout flyers to the gas stations in the area and make sure there are enough signs out, so that from any direction they may be driving they are visible to any potential buyers. Before I became a mortgage broker, I made sure I invited one to the open house or had one available by phone to qualify the potential buyer in case they wanted to write an offer on the spot.

advertise in all of these:

http://www.webclassifieds.us/ , http://www.classifiedsforfree.com/receiver.php/do/PostAd_ghf… , http://www.lighthouselistings.com/ , http://www.oodle.com/ , http://www.figleeg.com/ , http://www.classifieds.aol.com/ , http://www.backpage.com/classifieds/index , http://www.usnetads.com/ , http://www.iupost.com/ , http://www.classifieds.myspace.com/ , http://www.geebo.com/ , http://www.hoobly.com/ , http://www.kaango.com/ , http://www.lifeplat.com/ , https://ilist.com/login , http://www.sell.com/ , http://www.classifiedszoom.com/ , http://www.yourfreeads.info/ , http://www.corkin.com/ , http://www.kijiji.com , http://www.fizber.com , http://www.listingvue.com
http://www.classifiedads.com , http://www.inetgiant.com/ , http://www.bravenet.com/ , http://www.domesticsale.com/ , http://www.freeadposting.com , http://www.houselist.com ,

If you advertised on craigslist post an ad every three days, mix up the ad and see what gets the best resonse.

If you advertise on http://www.kijiji.com post another ad under a different name after a couple of days. Kijiji lets you track your ads, see which titles get more hits and what content gives you the most calls or hits to your agents website then repost the best ad again on all classified websites.

Ok, here is the power of twitter: http://www.trulia.com/blog/dj_waldow/2009/04/why_i_love_trulia and http://mashable.com/2009/04/06/twitter-and-facebook-post-hug…
0 votes Thank Flag Link Thu Apr 23, 2009
Scholes, you might also consider selling your property using seller financing, and check out Barbara Q's post (see the link below) on offering buyer incentives. The main reason I suggest this is that you appear to be less concerned about the sales price than you do about the terms of the deal (flexible closing, perhaps extra time for move out, etc). If you'll need some money to move, then just make sure that you (work with someone to) structure your deal so that the down payment will supply you with the minimal cash that you'll need to pay your closing expenses (including the commission[s]), and pay you enough to be able to move into your new place.

You should also take a look at David Chamberlain's post on marketing properties via the Internet, and check out Jefferson's post on on some ideas to improve one's sales presentation. Doing this will help you to increase your exposure, and make your presentation pop.

Additionally, if you really need to sell your property quickly, then you should attend one of the local real-estate investor club meetings. Talk with some of the investors there, and tell them that you're thinking about selling your property with seller financing and Barbara Q's 3-2-1 interest pay down. I'm sure you'll get some love over there, and you probably should get at least one serious inquiry. Also keep in mind that when you sell with seller financing, if you need/want the buyer to refinance you out of the deal ASAP, then you could structure your note to have a balloon payment in 1 to 2 years.
0 votes Thank Flag Link Thu Apr 23, 2009
Scholes,

Have you considered renting it? I've been losing money on a property I'm renting...but the tax benefits were substantial. My hope is that the market will improve and I'll be able to sell at a higher price.
0 votes Thank Flag Link Thu Apr 23, 2009
Hey Scholes,

Good luck and keep us posted. BTW, your post was another one that I wished I could have given more than one thumbs up. At least I can return the favor for Alan. I'm sure he gave you his quota while wishing for more as well.
0 votes Thank Flag Link Thu Apr 23, 2009
Nice job Dp2, Here's another Thumbs up.... One for you also Scholes for asking a good question and one for your comment.

Alan, please stop telling people where I'm located and what I'm doing.........
0 votes Thank Flag Link Thu Apr 23, 2009
S.
If you have a great RE lawyer then why post a question that would require knowledge of the paperwork and real estate laws?

IMHO it is not ethical for people to offer you advice without knowing all the facts. If you are saving money by not paying a Realtor to represent your interest, you will need to pay your RE Attorney to represent your interests.

Good luck.
0 votes Thank Flag Link Wed Apr 22, 2009
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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