What if the seller has no agent, i.e. the owners are selling their house, and the buyers have a broker. Who pays the broker's fee then?

Asked by Rp61070, 02451 Wed Sep 23, 2009

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Donna Moy-Bruno’s answer
Donna Moy-Br…, Agent, Hudson, MA
Wed Sep 23, 2009
I'm sure you'll get many different responses to this question! When representing my buyers, I ask the seller before I show a FSBO home (For sale by owner home), if they are offering a fee to a buyer agent who brings the buyer. Usually, the homeowners want to sell the house without the benefit of a Realtor because they hope to net more money by acting as their own agent and "pay themselves" to list and maenage the sale of their own property, but even in these instances, most sellers can still see the advantage of allowing the showing and accepting an offer from a buyer who has full buyer representation. Typically they agree to co-broke and pay all or part of the buyer agent's fee. The buyer agent generally takes great care in making sure the buyers are preapproved and quallify for a mortgage, understand the inspection process & legal disclosures and requirements, and the buyers have a professional guiding them through the entire transaction form start to finish...in the end both sides benefit from having the buyer agent involved in the process. When a seller refuses to pay a buyer agent fee, the buyer under contract has the option to purchase the home with the benefit of his or her realtor's assistance and pay their realtor out of pocket as per their contract with their buyer agent, or they can simply look for and purchase another home that offers a co-broke to their agent. Since the seler has no contract with the buyer agent, the " fee " is written into the offer to purchase contract and there are a number of different ways this can be done. It is strongly recommended that buyers and sellers have legal representation in any real estate transaction to assist with contracts and explain rights and obligations of both parties, reducing risk and liability on both sides, but it is crucial for the seller to have legal representation when not enlisting the services of a licensed Realtor.
2 votes
Marilyn Mess…, Agent, Concord, MA
Wed Sep 23, 2009
Real estate is a negotiation so there is no one correct answer. Generally sellers are willing to pay a buyer agent, but they don't have to. If you have a contract with a buyer agent you would need to discuss it with your agent since that person would be writing and negotiating your offer.

If you are not represented, it may be leverage and again it depends on what you are able to negotiate with the seller. Unrepresented sellers are looking to maximize their $$$s and they think saving the commission will net higher proceeds for them - not really true, but that's what they think. From the buyer side, being unrepresented doesn't mean you'll pay less for the house, it just means you don't have anyone working on your behalf and that can cost you a lot more you think you're saving.

Good luck!
1 vote
Anne Meczywor, Agent, Lenox, MA
Tue Sep 29, 2009
In response to your follow-up message, you are following the same line of thought that the seller is. He already is "saving" the fee in his mind, so in a sense you are both trying to "save" the exact same commission. You can't save it twice.

If you two can reach an agreement on price and terms and everything goes smoothly, congratulations. Sometimes, though, it is really wise to consult professionals, and they are usually worth their weight in gold. Are you sure the price you are offering is really not above fair market value? When you lender orders the appraisal, the number that comes back may surprise you. You may find yourself turned down for finanacing because of it, especially these days of HVCC regulation.

Also, avoidable delays and misunderstandings can cost both of you much more than the commission you "saved".

I really do hope things go smoothly for you, though. Good luck.
0 votes
Michael Giles, Agent, Beverly, MA
Wed Sep 23, 2009
It is good leverage provided you know what the property's market value is in the first place. If you can knock $10-15k off the asking price, it sounds like a good deal. If the property is priced $20k more than what other similar properties have sold for then what did you really save? Were building permits pulled and inspections performed on all updated services? Is there any history of underground oil tanks that should be addressed? Are there any easments on the property? Has the property ever been tested for lead paint and if so was the work done or not? Have there been any problems with the water/sewer lines recently and were they addressed by the city/town? If the seller wants to go unrepresented that's their call, but you will have much more peace of mind if you have a Buyer's Agent that does the due dilligence that it takes to know that you made a good deal.
0 votes
Deb Nicholls, Agent, Concord, MA
Wed Sep 23, 2009
In Massachusetts most buyers have an agent, and most sellers without representation know that. If the listing is on MLS, the sellers are offering a co-broke (i.e. will pay the buyer agent whatever they offered on MLS). I have represented buyers who are buying from a seller without an agent, and I have never had a seller object to paying my commission.

But if you stop and think about it, the buyer is the one paying all the commissions, because they are the ones bringing the money to the table. Commission is built into the price. When a seller without representation sells on their own, they are doing it because they expect to "save" the commission, and pocket the difference... but the buyer is still paying it. So the buyer wants the service they get from representation by an agent. Home sales today have become more complicated and buyers want to play it safe.

Deb
Web Reference:  http://homes.debn.net
0 votes
Rp61070, Home Buyer, 02451
Wed Sep 23, 2009
Ok, I was the one asking the question. In reality, we do not have a broker either. I was just wondering whether it would be a good leverage for us when negotiating, telling the seller that we are both saving money since there are no brokers involved, and to cut us some slack for the pricing!
0 votes
Bill Eckler, Agent, Venice, FL
Wed Sep 23, 2009
Rp,

Your agent should confer with the owner and procure an agreed arrangement that covers their fee for services prior to showing the property. Under this arrangement the sellers would be covering this cost.

We recommend having a conversation with your agent to make sure they understand it is not your intention to cover their fee for professional services. This is normally a seller's accepted responsibility.

Good luck
0 votes
Territory.c…, Agent, MA,
Wed Sep 23, 2009
Either you would have to pay the broker (perhaps you could negotiate a flat fee: bostontre.com) or you could add the fee into your offer to the seller and require they pay for your broker fee as part of the sale (those typs of concessions aren't that uncommon).
0 votes
Michael Giles, Agent, Beverly, MA
Wed Sep 23, 2009
The Seller does not have to offer out any compensation to a Buyer's Agent. You can write the commission into the offer to purchase, but if they counter with no commission then you will need to decide if you want to pay the commission and go forward or move on. If the property is on the MLS then they more than likely are offering out a Buyer's Agent commission. Feel free to contact me for more detail. Best of Luck!
0 votes
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