Home Selling in 96816>Question Details

Mal Smith, Home Seller in Chico, CA

We are thinking about selling our house. We had spoken to a broker but he has not really done any selling

Asked by Mal Smith, Chico, CA Fri Feb 20, 2009

work for us and we have not signed any paperwork with that realtor. When we were at an open house and mentioned that we were thinking of selling our house, the realtor there mentioned it to one of her clients who is now interested. We don't want to do a dual agency but we also feel its not really fair to pay the full 6% since we haven't even signed with our realtor and he hasn't listed it or done any selling work. And, in general, we don't think it's fair to pay a realtor 3% essentially to guide us through paperwork when we could get an attorney to do it for less and probably do a better job. Selling the house is the hardest part of the job and we don't believe we should pay full ride if the realtor we are talking to hadn't done any selling work. At the same time, we don't want to be jerks about it either. What is the best way to handle this? Thanks!

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I just got an email from Ross, evidently I shouldn't have flagged him since my name isn't really Dunes and Alex doesn't need these opinions/advice he needs a PRO and obviously the best PRO available is Ross so what he did isn't Spam it's the best help Alex could possibly get.

Stupid me.............................................
2 votes Thank Flag Link Sat Feb 21, 2009
Mahalo, Rockinblu... I missed it because you said it sooooo much more diplomatically than I!!! Thanks for the great example, I can definitely learn from you!! I just read your blogs and LOVED the question, "Are you a control freak?" Classic!! You make a lot of great points. Especially about trusting referrals. Thanks!! Katie Minkus, R(B).
Web Reference: http://www.hawaiilife.com
2 votes Thank Flag Link Sat Feb 21, 2009
whoa israel, decaf. who said anything about FISBO?

thank you rockinblu, for tossing a pan of water on the tired (and deceptive) NAR propaganda.

alex, commissions are negotiable, so let’s all just accept the fact that the 6% commission has gone the way of the Dodo except for the very low end of the market…where I have seen 7-8% on $50k properties. I am certain that the 96816 zip has none of those...the 96816 zip includes some of the better parts of town.

Just be upfront with the broker who has demonstrated a great deal of goodwill up to this point and strike a deal or part ways amicably. Your obligation is to yourself, an honorable agent knows this and you can return their professional courtesy by assuring him/her that their client will be dealt with only through their agency. It’s the right thing to do, contract or not…you gotta look in the mirror.

There are many ways to get around the dual agency issue…none are deal killers.
2 votes Thank Flag Link Sat Feb 21, 2009
Hi Alex,

You need a good agent to represent your interests and an agent to represent the buyer. Real estate is a professional licensed and monitored occupation. Good agents have invested extensively in their training and their business much like a doctor or a lawyer. You are working with one of the biggest investments of your life. So I have to ask... would you call a heart surgeon and negotiate his rate if you needed surgery? Probably not. The same goes for a good agent. Certainly you can get better rates from those who need to make a sale. Does that get you the best agent? Not necessarily.

There are 5300 'agents' on Oahu. 80% of them who do 2 or less sales a year. 64.7% of that same number haven't sold anything.

Hopefully you are not considering the same agent to do both sides of the transaction. You should still hire an agent to represent your interests and help you negotiate through the process. Opening escrow is just one piece of the puzzle these days especially given the strict guidelines being put forth by the mortgage companies. Gone are the days where someone makes an offer and others are waiting with baited breath in the wings unless you are priced below market. The agents who are successful in this market are the experienced business people who know how to negotiate and to help you avoid future liability. You could try to negotiate the price down and not have representation, but at this point it doesn't sound like you have an offer, just someone who is interested. Either way there is still a lot of work to be done.



Kelly A. Mitchell, (RA) BBA-Marketing
Top 5% Prudential USA
HGTV Real Estate Expert
Prudential Locations Diamond Head
614 Kapahulu Avenue
Office 808.384.7165
Straight Talk~Real Results
1 vote Thank Flag Link Tue Aug 25, 2009
Aloha Alex,
You've had some great answers and input here. I work on the island of Kauai, so I'm not trying to become your realtor :) Perhaps you've solved your issue by now. A couple of topics to touch on...Experience! In this market, the only way it makes sense to work with an inexperienced realtor in selling your home is if they are partnering with an experienced agent who provides maximum exposure on the internet. Agency....as a sellers' agent, bringing an offer is only the beginning of the actual process of selling a home. As mentioned in other posts, working through the issues and hurdles that can arise in escrow is a specific skill set that even attorneys may not have. To give you a real-life example, I agreed to represent a friend of the family as a buyer in a transaction where the price had been agreed to already. The idea was to "just work the paperwork". However, after 1 1/2 years of extensive work, a file that's 4 inches thick, going into mediation and having an attorney compliment my work and use me as a "paralegal"...the sale is still not completed, and I have never been paid a dime. But I made a commitment to my client, and I have honored that. As agents, we take on the same level of risk that our clients do. We only are compensated when the deal is closed. If my client had used an attorney, I can't imagine what her costs would be. I'm not trying to say we're cheap :) but the reality is we're seasoned, knowledgable professionals and the only profession that only gets paid when we "get 'er done!!" So, at the end of the day - it's best to have a seasoned, experienced realtor that you've interviewed, checked references and know that they have a track record of proven results. Wish you the best!
1 vote Thank Flag Link Wed Mar 4, 2009

My name is Mike Gallagher and I a Broker in Charge at RE/MAX Honolulu.
If the question is whether or not you want to pay a 6% commission to sell your home, the answer is only yours to make.
Every thing in life is negotiable. This includes the commission.
I suggest you sit down with a minimum of three agents who come recommended by friends and associates you know. I would ask for copies of their Transactions Reports. This is KEY. Transaction Reports will allow you to see all the experience these agents have in selling and what % of the Sold Price to List price was the final result. The Transaction Report will also tell you right away whether or not they have experience in your Neighborhood. The Transaction Report should also tell you what OTHER properties these agents currently have on the market FOR SALE. I would recommend NOT going with an agent that already has a home LIKE YOUR HOME already on the market.

As for the question on what you pay for a commission. Let the agents tell you what they think the home should sell for WITH SUPPORTIVE ANALYSIS. How well an agent knows what is going on in the market and particularly in your Neighborhood will be KEY to picking the right agent and sucessfully selling your home.

You will most likely want to pick the agent who gives you the highest number for your For Sale Price. This could be a BIG mistake. A REALISTIC sales price is absolutely necessary in today's market. Choose the agent who KNOWS exactly what the home will REALISTICALLY sell for and ask for an explanation for their reasoning. If it looks good, choose this agent if their Transaction Report is acceptable to you.

List for a shorter period such as 3 months and ask for a reduced commission. After all, if this agent truly believes they can sell the home for the price quoted within a short time then a reduced commission should be a reasonable expectation.

If an agent has to work with a Seller under an UNREALISTIC Asking Price several things will happen:
1) The Home may not sell within a resonable period and the agent will be coming to you for Price Reductions.

2) The agent will conduct Open Houses and sell potential buyers at your Open House a different home with a REALISTIC Price.

I hope this helps.
If you need more help I recommend you visit my website at http://www.hawaiirealestatestatistics.com to really know what is going on in the markets around Oahu and read my Real Estate Articles on Oceanic Cable at http://www.aroundhawaii.com

I wish you much Aloha,
Mike Gallagher
Broker in Charge, RE/MAX Honolulu
1 vote Thank Flag Link Sun Feb 22, 2009
Read the Community Guidelines for less SPAM and more ideas on how the Q&A works. Flag
1 vote Thank Flag Link Sat Feb 21, 2009
This just in Rockinblu has been announced as the President of The National Assosiation of FSBO....

Oh wait The National Assosiation of FSBO's has been disbanned it seems no one wanted to pay the annual membership fee...
1 vote Thank Flag Link Sat Feb 21, 2009
David, Katie, Rockinblu,Mike, Dawn, Bill, Cindy, Sasha, Frank......High quality answers

Chris, please read the Community Guidelines as your Spam deluded the quality of this thread.

Two words I never thought I'd see in the same sentence.....diplomatically, Rockinblu... : )

Armchair Quarterback, Dunes
1 vote Thank Flag Link Sat Feb 21, 2009
It seems that whether or not the agent lied or not shouldn't be an issue unless you plan to list with that person.

Lets assume for the moment that the agent has a buyer. You should work the deal. If the buyer puts an offer in on the house, that agent could have saved you a lot of money even if the home was only on the market for three months, carry costs for example.
How much are you saving by not having to pay your mortgage?
How much are you saving by not having to advertise?
How much time are you saving by not having to clean the house to be able to show everyday?
Selling a house is stressful look at all the people having to make price reductions.
If the house sells in 1 day or a 180 days does not mean the agent is due less money in means more money should be paid, because your time is valuable.

If you are not prepared to pay a Realtor then do not deal with one, Do not pitch your home, do not waste their time. That agent was going to get a commision with or without you because they had a buyer that trusted them and wanted to work with them, his commision has already been earned.

Before you worry about whether the agent lied or not WORK THE DEAL YOU HAVE NOW. Do not sign a listing agreement, sign an agreement based on the agent an their specific buyer.
1 vote Thank Flag Link Sat Feb 21, 2009
Aloha, Alex... one of the points that is missing from all the answers below is that (gasp!) the Broker holding the open house may have "lied" - let's call it "stretching the truth" - about their having a client for your home, just to make a connection with you and try to get your business as the listing Broker of your house! It is a commonly held belief in the Real Estate industry that people who come to open houses are sometimes people like you who want to SELL their houses and are using the open house as a "soft interview" of the Broker's selling skills! Don't be surprised if the potential buyer doesn't materialize, especially in this market.

Selling your home is typically one of the largest financial transactions most people go through in their lives, so hire a professional. Just like you wouldn't perform surgery on yourself or represent your self in a court of law, it's a mistake that is liable to cost you thousands or possibly hundreds of thousands of dollars to sell your home yourself. Sure you could use a lawyer instead, but I know the good ones in Honolulu cost upwards of $250/hour and when you're talking about reviewing a purchase contract that at minimum is 12 pages, and can go up to 20, 30 pages and more - think how long and how much money that will cost a lawyer just to review, let alone write up a counter offer, negotiate with the Buyer's agent, etc. And that's just to get you into escrow to start, that's not including the typical 40-100 hours that a good listing agent will put into a transaction after it's in escrow to guide it through to closing. While we always encourage our clients to use their lawyers to review paperwork or to answer specific questions, unless you have unlimited funds, it's simply overkill to use a lawyer in Hawaii to sell a home (in my opinion).

My advice to you? Interview at least THREE Brokers - I know there are at least 20 that serve your zip code - and ask them why should you hire them to sell your house? Negotiate your commission with them, and here's the important part: If the other agent has a buyer, call that agent and ask for the buyer's name. Then, when you're negotiating with the person you've decided to hire as your listing agent, give that Broker the possible buyer's name and their broker's info and ask that they be an exclusion to your employment contract with the Broker you're hiring to sell your house. That way, you get the best of both worlds - you hire someone who is a professional to sell your house, but should that other Broker with the buyer actually come through, you would have the option to execute your plan above to cut out your listing Broker from the deal and work only with the Buyer's Broker and lawyers. At that point if you felt like "jerks" you could still compensate your listing Broker at the close of escrow with whatever amount you want.

Hope this helps! Best of luck to you! Warm aloha, Katie Minkus, R(B)
Web Reference: http://www.hawaiilife.com
1 vote Thank Flag Link Sat Feb 21, 2009
Alex, you may be fixating on the wrong elements of the deal here. The name of the game is to get the home sold and closed. Agents do more than plant signs and make stupid slogans out of their names…we make and maintain a market in homes and sales. The longer we’ve been at it the more likely we are to have a client who is appropriate for a given property.

I would encourage you to do both of the following: 1. Ask the agent what his/her bottom line commission is and then (if you like that number): 2. Go ask a neighbor who is on the market for a few months what they’d be willing to do to get that ONE buyer to their door who wants the deal in a day.

A couple of years ago I sold a $3.5 million dollar apartment property with a single call…not because I got lucky cold calling but because I knew a broker who had a client looking for EXACTLY that type of property AND had just happened to be discussing such properties a week prior with that broker. The call took just a few minutes but the transaction took months and dozens of principles/agent meetings, conference calls, several visits and meetings with the building department, and a few too many trips to the property for inspections, appraisals, estimates etc. It also took about ten agent hours, and even more attorney hours, to sort out the status of the condo map that was thankfully still alive and valuable.

The point is that a tremendous amount of the work in getting a buyer to make a move is most frequently behind the scenes, and that getting an offer to the table is most often just the start of the heavy lifting…especially in this market.

Also, the proposed sales price of the home make a big difference here…I am familiar with your zip code and the prices can be VERY high. I think all here will agree that a higher sales price makes a reduced percentage rate for the commission more likely and reasonable. If you were in a $100k leasehold condo the numbers wouldn’t be as meaningful as if you are talking about an fee simple estate on Black Point Rd.

Aloha, mike

p.s. the seller of that apartment building was from Kona...small world huh?
1 vote Thank Flag Link Sat Feb 21, 2009

This is a real delema.....

you wish to avoid "dual agency"
you know you need professional support to close
you don't feel the full 6% fee is fair
an agent MAY have a buyer
your property is not listed

It appears you are leaning toward paying the agent with the buyer his/her 3% for professional services but this does not resolve the issue of youe closing needs & guidance.

Your option of hiring an attorney is a consideration and they will certainly be able to bring you to a successful closing but will the savings warrant taking this avenue. There is one thing for certain....you will NOT recieve the high level of additional services that a real estate professional will provide.

Our recommendation is for you to do a cost analysis to determine what it will cost you paying the standard 6% commission vs. splitting the expense between an agent and an attorney. You may be suprised....

good luck
1 vote Thank Flag Link Sat Feb 21, 2009
It is wonderful that you have a potentially interested buyer. I think you are correct to be wary of dual agency, while this can be done well - it can also cause potential problems with the transaction and I'm sure you'll prefer to have someone 100% looking out for your interests and making sure that all is handled well from your side of things. The 6% commission is customary, but it is negotiable. Perhaps the agent you have spoken with would be willing to reduce the amount of commission considering this buyer may work out and the normal amount of marketing, advertising and time invested in Open Houses wouldn't be necessary. You could even write in "special terms" something to address this specific buyer and if it turns out not to work out, you could agree to pay a 6% commission. As for what the hardest part of the job is, when it comes to representing the seller - it varies widely as each transaction is unique and as the cast of characters involved changes each time with the buyer, seller, cooperating broker, lender, escrow, etc. Different transactions pose different challenges and selling the house is not always the hardest part. A good Realtor will take care of what needs to be done and shelter their client, as much as possible, from the stress. I know that sometimes this makes it all look a bit too easy, but wouldn't you rather have a smooth transaction, rather than work with a Realtor who doesn't handle it well and stresses you out with each and every challenge?
1 vote Thank Flag Link Fri Feb 20, 2009
The agent's fee should be negotiable, but agree on it before he starts bringing clients over. Tell him you'll pay him 3 percent, or whatever you think is fair, if he brings you an interested client. (You'll have to offer him something, otherwise he is not going to bring his client over!) He doesn't have to represent you if you don't want him to. You can get your own agent and tell him or her that you already have a buyer and just need an agent to do the paperwork and representation and agree on a percentage or a flat fee. Or you can hire a lawyer to do the paperwork. Or you can go the dual rep route and ask the agent what % he would charge for representing both of you. You can negotiate with him a little.

In any case, he should not be offended if you don't want to do dual agency. You are completely entitled to your own representation. And whether with a dual situation, a lawyer, or a separate agent, you will have to pay someone to represent you (otherwise, why would they agree to represent you?)
1 vote Thank Flag Link Fri Feb 20, 2009
If you don't want to do a dual agency, then don't. You can encounter a lot of problems with dual agency if you're not careful.If you haven't signed anything with the first agent, then you are not obligated to use that person, but you should consider that carefully. You at least owe that person an explanation as to what you plan to do. If the 2nd Realtor has an interested client, you are still a long way to getting a completed transaction. The right thing to do is tell the 2nd agent that you were considering another agent, so the 2nd one is not involved in an ethical or legal conflict.

As to the 3% (to guide us through paperwork) - that is not a good description of the transaction. First of all agents sometimes work for years with a client to find them the right home. How much is 100 hours of your time worth? Secondly, it is not just paperwork. It takes years of experience to write the offer correctly, then take it through closing. As times have gotten harder, you need an agent more, not less. I don't agree that an attorney "can probably do a better job" than a good Realtor. They know contracts, but they don't work with buyers and sellers every day in the field. You may need to talk to an attorney about this situation though.

If the 2nd agent ends up in a dual agency situation, they can negotiate the commission with you. They should have done it when they brought a buyer. If not, you (and the agent) are in a gray zone.
1 vote Thank Flag Link Fri Feb 20, 2009
Hello, as other people said is very important to get an agent that you can work with and feel comfortable with. I suggest you interview three different agents and asked them what they can do for you. Some people are concerned only with the commission that they play so they look for the cheapest commission. This is not always the best idea cheapest commission might end up with the agent doing nothing apart from putting the listing on the multiple listing service. I really wish it was as easy as that but unfortunately it isn't a good agent will do a lot more to market your property. At Coldwell Banker they have brokers in charge that are management and are not in direct competition with the agents and help us with strategies to sell your home. I wish you every success in selling your home and moving on with your life.
0 votes Thank Flag Link Mon Jun 29, 2015
This realtor that you met was already working with their client and this may have been a client they have been working with for months or even years, and since the realtor told their client about your home he/she should be compensated. One approach may be to ask that the realtor acts as a buyer agent and collects their commission from the buyer and not from your selling price. You would hire an attorney to represent you through the transaction and do not have to use the realtor to represent you.
0 votes Thank Flag Link Sat Feb 28, 2009

can we get a report back on the state of your sale. have you made any decisions? it is nice for us to get an "end of the story".
0 votes Thank Flag Link Sat Feb 28, 2009
I have to admit, I haven't read all of the responses so forgive me if I repeat someone. I'm a broker in Northern California that takes a little different approach than most others in the industry. Don't forget that you're the one selling your home... not the agent. At the end of the day, you're the one keeping it clean and show-ready, you're the one reviewing the offers and ESCROW INSTRUCTIONS, you're the one that makes the decision of who to sell your house to. If you have the tools to sell your house without representation or guidance, then by all means you should. (As I mentioned, the offer typically includes the "instructions" for the sale to be completed [without including disclosure requirements]). As such, you would not have to pay the agent a listing commission... because you didn't list it. If the agents wants to bring you a buyer then perhaps the agent should be figuring out how/who is going to pay him at the time the buyer signs the representation agreement... not the purchase offer. Typically the commissions are paid by the seller, but that's not mandated anywhere. Additionally, it might be wise to pay a "finder's fee" to the selling agent (buyer's agent) for bringing you the buyer... afterall, they didn't have to show or discuss your house. Granted, it would have been foolish business practice for the buyer's agent to show it without a discussion of payment with you... the seller, first. But, then it begs the question of whether the agent is looking our for the best interest of his client or not.

You can see the complexity of the situation. Therefore, you should be able to see why it is so valuable to seek counsel when doing such a transaction, whether it be with a lawyer or real estate salesperson or the county courthouse or even a textbook.
0 votes Thank Flag Link Fri Feb 27, 2009
Realtors are worth their weight in gold. We work hard for our clients. If you don't want to do dual agency, that's fine. But if you don't think it's fair to pay a realtor "to guide us through paperwork when we could get an attorney to do it for less and probably do a better job." Then, go ahead and do that.
Reatlors do more than just paperwork. If you're the seller, your Realtor will work hard to make sure that 1) buyers stay on track and don't default on their contractual obigations (via their Buyer's Rep) and 2) you,as the seller are taken care of (as well as being sure you stay within your contractual obligations).

As someone else suggested below, everything is negotiable. Nothing is set in stone. I think you'll be grateful if you turn to a Realtor to assist you in your transaction. I always advise buyers & sellers to seek legal and professional counsel regarding legal matters. If you choose to just use an attorney and not a Realtor, that's up to you.
Remember, it's a Realtor who is bringing you the Buyer. Realtor's are worth their weight in gold.
I wish you the best of luck with your transaction.
0 votes Thank Flag Link Fri Feb 27, 2009
Hi Alex!

It seems that your major concern is the potential amount of commission to be disbursed to the agent at closing. I agree that 6 percent is a good sum of money, especially if one considers the state of the economy today. However, let's suppose that the agent has indeed a buyer for your home, what are your options?
You could:
1)Interview several listing and select the agent you feel most comfortable with. List the property.
2)Attempt to sell the home yourself & negotiate with the buyer's agent, terms & commissions.

If you have sold homes before or are familiar with the process, then option 2 just might work for you and can save you some of the final proceeds. However, be aware that often times "unforeseen" circumstances typically come up during the escrow process. It's not as easy at it may seem from the surface. Agents are not only marketeers for your property but also "watchdogs" of the transaction, making sure that each contingency is met during the alloted timeline. When working with an agent, you not only hire the agent but you essentially hire the entire brokerage that he/she is affiliated with. (called agency). Working with an agent facilitates the process providing for some piece of mind and can save you time.
You may retain the services of a lawyer specializing in real estate to assist you with the "paperwork"; whether or not if it will be cost effective is something you may have to figure out by simply crunching the numbers and comparing the two.
Finding buyer's who have the capacity or qualifications to purchase your home in this market is a challenge, so don't discount the agent's offer to bring in a buyer for your home. However, walk carefully and seek the assistance of the appropriate service professional when necessary.

Geoffrey Guzman (RA) e-PRO
0 votes Thank Flag Link Sun Feb 22, 2009
The broker should not have lifted a finger to help you without a listing agreement. He brought you an interested party that you would not have found yourself and now you want to not pay him. When this falls through, do a for sale by owner and see what that gets you. FISBO's typically get about 16% less than if it is listed. When you list, you have 100's of people trying to help you sell it. When you are trying to do it yourself, you have one. The 6% you are paying will actually make you an extra 10%. Hopefully the broker learned a lesson and won't try to help people without a contract anymore.
0 votes Thank Flag Link Sat Feb 21, 2009
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