Home Buying in Texas>Question Details

Star, Home Buyer in Austin, TX

FSBO advice for a buyer

Asked by Star, Austin, TX Thu Sep 18, 2008

I havenot aske my agent this question yet but would like to have a general idea of what to expect before I do.
Working with an agent to buy a property, I have noticed some property for sale by owner. What should I expect to pay the agent, if they approach the owner for me? Since the owner has no contract, should I expect to pay the agent a flat fee or a percentage? How will the agent help me? (realtor answers only please)

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Dear Star,
When purchasing a FSBO your Realtor will contact the Seller to see if they will pay the fee to your agent. Most will pay because they realize the Agent brought them a buyer. (FYI- Typically Realtor represented homes sell 70% faster than FSBOS.) in Texas Realtors get 3% of the sales price, minus their Brokers cut which is anywhere from 5%-50% of that 3%. Your Realtor will earn every penny since the house is FSBO the seller does not have anyone doing the work on their side of the transaction. Often Sellers don't know how much is involved in the transaction process and choose to go with a discount Broker. You have to remember that you get what you pay for. The transaction can be complex and you really need someone to fight for YOU!

Here are some of the ways your Realtor will help you. They will prepare comps to make sure the house is priced right. They will help you get a survey of the property. They will connect you with a reputable "Title Company" to do a title search to make sure the seller has a clear title and CAN sell the property. They will help you come to a fair price and work with the seller. They will help you get the home inspected to make sure it is worth the price that is agreed upon. They can also put you in touch with lenders to help you qualify. After the sale they may be able to help you find contractors to work on the home for you. They are the experts in this area and do transactions every day. Every Realtor is different, some are "Walmart" Realtors and others give clients a more "Nordstrom's" type experience.

I wish you the best of luck! Please call me if I can be of service to you in any way.
0 votes Thank Flag Link Fri Nov 14, 2008
Hey Star,

You need your agent more than ever! He/she will be doing double the work because the seller will "try" to be the Seller's Agent but probably has no knowledge of how to do that.

Most of the time a FSBO will pay for the buyers agent. If they won't just get a X% credit toward non-recurring closing costs as part of the negotiations and pay your agent that.

I know that I have done super well for clients when up against a FSBO. The Seller just does not have the experience that a 20 year veteran closer does!

Good luck!

0 votes Thank Flag Link Wed Oct 29, 2008
You should use a buyers agent. If you dont you might run into allot of troubles. Most Fsbo are sitting there for a reason, Most are over priced. I would not recommend ever going into a FSBo with out an agent.
0 votes Thank Flag Link Fri Sep 19, 2008
You should use a buyer's agent. They will work on YOUR behalf and look out for YOUR best interests. Whatever commission you negotiate should be included in your offer.
0 votes Thank Flag Link Fri Sep 19, 2008
I have been prospecting FSBO's and have found that there are three categories out there: those who will not work with a realtor, those who will pay a commission to a buyer's agent, and those who will raise the price to pay a buyer's commission.

In the first instance, the buyer would have to pay the commission. In the second instance, the seller would pay the commission. In the third, the buyer would end up paying the commission as part of the sales price of the house.

Most sellers I've talked to are willing to offer 3% to the buyer's agent, but as others have said, the buyer's agent would end up doing all of the paperwork and transaction coordinating, so without a higher commission, the buyer's agent ends up on the short end. I've found other's who want to pay less commission so the buyer's agent can do all the work.

Generally, many agents will not deal with FSBO's without adequate compensation from the seller's side. It is usually not in the best interest of their buyers.

Another group of FSBO's that I have run across are folks who are licensed or used to be licensed real estate agents or real estate professionals (investors, mortgage loan officers) who have some knowledge of what is involved in transactions who buy and sell their own property.

In any of these scenarios, a buyer's agent is going to be a necessity for you to protect your interests. One of the reason folks decide to go FSBO is that they figure anyone can buy or sell real estate on their own or that they're smarter than any agent will be. I'm a generally trusting person, but I don't think I'm going to put out that kind of money into someone's hands on a "trust me" and a handshake. If you're going to do it, do it right and get the legal protection behind you that buyer representation provides you.
0 votes Thank Flag Link Fri Sep 19, 2008
Depends on the agents. A smart agent can figure in their commission to the sales price of the home...3-5% is typically what is expected by me. I would typically expect a little more than average as I know I'm going to get roped in to providing work on both sides of the transaction, not just the buyer side. This could depend on what you have agreed to in your buyers rep agreement. Lots of buyers think the seller should pay this fee, but if you think about it the buyer is really paying it. If the listing agent has charged the seller X % and the buyer pays Y for the house, who has really paid the commission? If as a buyer you pay for it directly versus trying to build it in to your offer price you can deduct it from your taxes as a closing cost expense. Check with your CPA to see if this will work for you. WOW your agent should do a lot for you. Write the contract, walk you through the transaction, help you go over title work, help you through the inspection, help you negotiate the contract, help you negotiate reapairs, lead you to referrals for all kinds of participants in the transaction, help you evaluate lenders and loans, go over the HUD with you, provide you with access to additional expertise and legal counsel if needed, and on and on and on. I'd think someone would do that only if they're getting what they expect and not for a small flat fee. For a small flat fee you might be on your own for most of that, but could perhaps pay them to help you write a contract. Just beware that FSBOs are often not the deals they might appear to be. What I normally see is that they are overpriced and the owners very difficult to deal with. For example they may not understand the differences in loans types and what that might mean to their bottom line. If they get sideways with you in the transaction not because of anything you did or your agent did, but because they did not have expert advice on their side, they can give you difficulties or may not want to close or perhaps not be even able to close.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Thu Sep 18, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
If you do not have a buyer broker agreement, the normal fee would be 3%. But you should not have to pay this fee, the seller should.

Ask yourself this question; why would a home owner want to sell their own home instead of using an agent? The answer is simple, to save the commission.

Now ask yourself this question; why would a buyer purchase a home without having an agent represent them? It's the same answer, to save the commission. But you can't "both" save the same commission.

The problem is the buyer is the one who is taking the risk and shouldn't purchase a property without having a professional licensed Realtor help them with the sale because how does a buyer know what they are getting?

The Realtor will more than earn their commission by helping you negotiate the contract, secure professional home inspectors and pest and termite inspections. They also know the legal ramifications to the purchase contract.

The Realtor will also be able to go over the comps in the area, and refer you to reliable lenders for you to get the best loan. Do you really think the seller is going to do this for you? NO!

Best of luck Star.

Dave Tapper
Burlingame Ca.
Web Reference: http://Teamtapper.com
0 votes Thank Flag Link Thu Sep 18, 2008

Great question and it should be answered in your Buyer/Tenant Rep Agreement. On page 1 of this agreement, it states that "Property" includes For Sale by Owner properties. On page 3 of the agreement it should state what commission percentage you agreed to with your agent. It also states that your agent will try to collect this commission from the seller, but if he/she fails, you are responsible for paying your agent. Definitely something you should be reading and talking to your agent about. Hope this helps!! Have a great day and good luck on your house hunting!!

0 votes Thank Flag Link Thu Sep 18, 2008
The answer to your question will depend on a few circumstances. For instance, if you have a rep. agreement, this situation may be spelled out in the agreement. On the other hand, some FSBO's are prepared to pay Realtor commissions. In which case, you still have no obligations to pay. There is no set standard fee, and an FSBO that has an offer would be hard pressed to refuse paying the Realtor fee if he or she is motivated to sell.

Worse case, you buy the home and pay the Realtor. This is still a god situation, because you are represented by a professional and have a substantially better bargaining position than the seller. It will pay for itself in the negotiations.

Good luck.
0 votes Thank Flag Link Thu Sep 18, 2008
If you have a buyer's representation agreement with your agent, then the terms would be spelled out on page 2. If you don't have one, then you should discuss it with the agent anyway to avoid any future misunderstanding. Most sellers out there are willing to work with an agent and pay them a commission.

Web Reference: http://www.sumnerrealty.com
0 votes Thank Flag Link Thu Sep 18, 2008
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