Foreclosure in California>Question Details

ally, Home Buyer in San Francisco, CA

Can you use a buyer's Realtor on a FSBO home?

Asked by ally, San Francisco, CA Sat Jan 19, 2008

I am looking at a FSBO home. They have asked that we not have any Realtors involved. I want to use our buyer's Realtor to present an offer and carry out our purchase because I am busy with work at a new job and don't have time to do attend all the inspections or figure out all the paperwork myself. The sellers say that if we get a Realtor involved, that we, as the buyers, would have to pay the commision ourselves, in addition to paying the sellers. They say they are trying to save me money but honestly, if I am spending $1.5M on a house, I want to make sure it is done right.

Is this a reasonable request from a FSBO property? If so, then how do you convince the bank to lend you another $45000 on top on your mortgage to pay the Realtor's commission? This request seems unrealistic to me, and I want to get a Pro's opinion. We were asked not to discuss this with our local Realtor by the seller. The situation smells fishy to me.

Help the community by answering this question:


What you have going for you is that the market is slow.

Have your realtor write a nice letter explaining that he is your agent and that he will procure an offer for them and handle all the paperwork to ensure that everything is done properly, but that they will need to pay his 3% commission. He will have them sign a "Single Party Compensation" meaning that if they decide to sell to you, they will pay him. He can also explain that they can factor in his commission when considering your offer. You should give him the authority to say that if they don't sign the form, you will not be submitting an offer. They really have nothing to lose. If they don't like the offer they don't accept it, but if they don't sign the form, they will never see the offer. He should not discuss price at this point. Once he has the form signed, he can submit your offer.

I think this is the way to go, because you are better off negotiating this issue before you start negotiating over price. Once you get the form signed, I think it will be easier psychologically for them to accept your offer. You can come in below asking and see how they respond. When they counter too high. Walk away & let them stew. Then submit a counter increasing your price & see if they come down. It is only by giving them time to realize nothing better is coming along that they will reduce the price. Since they don't have an agent talking sense to them, they will need to come to this realization on their own.

Good Luck!
1 vote Thank Flag Link Wed Jan 30, 2008

Tell the seller that you want to use your realtor, and have them pay for it, or simply won't feel comfortable purchasing the home. As for you paying the commission for them, explain to them politely that it is not something you are willing to do, if they are willing to knock off whatever the commission is from the purchase price, then they have a deal. Treat it as a business transaction and explain to them that not only do you want it to be done properly for yourself but for them as well.

If things are not filled out properly, or documents are missed completely, then that could leave you AND the seller open to a tremendous amount of liability in the future.

If the seller remains firm on their decision, then you could always present them with idea of splitting the cost of the commission - however it is going to be difficult to get a bank to loan you money for that - and I don't think it is wise. I would talk to your realtor about what commission they would be willing AND happy (you don't want them holding a grudge) excepting...maybe they are ok with less, in which case the sellers might be more willing to pay it.

You really have to be willing to walk away to see if the sellers are serious about their "we aren't paying a commission" thing. I am not sure about the market there - but another option is to have your realtor door knock or pass out flyers in the neighborhood(s) you like, and see if anyone is thinking of selling - this way THAT seller would only have to pay your agent (usually half of the normal commission fees than if they tried to put it on the market) AND you might be able to get a fantastic deal that way!

At the end of the day, who wants to work with a grumpy seller anyways?

1 vote Thank Flag Link Wed Jan 30, 2008
I am so glad to see this question. What I generally do is have my clients sign a buyers agency agreement with me. Generally I ask for 3%, ...Then as the buyers agent, I do my best to secure the commission from the seller. Most sellers will pay at least 2%, ... There is no listing side, and the buyers agent represents you, but assures all documents are done in a timely manner, contracts are proper and will see the transaction thru.

Just hire an agent and present your is a negotiation after all. Make sure all appropriate contingencies and inspection documents are in place, your lender will hire an appraiser, if you're paying cash...get inspections and appraisals anyway...this is a huge investment. Your buyers agent will check for unpaid leins, taxes, etc., mortgage defaults, Lot line encroachments, ....boy, I cant imagine going into a 1.5 million dollar transaction without someone looking out for my best interests!

Your buyers agent will present the offer, YOU choose AND ask for the fee, and perhaps some closing costs too....the seller is trying to save HIMSELF money. A house is always worth only what someone is willing to pay. He may reject your offer, but its a starting point. Its a buyers market, you're in charge...get the representation you deserve.

If the seller is upside down in his equity position, and avoiding foreclosure, then your buyers agent can negotiate with the holder of the 2nd mortgage, as they likely have Private Mortgage Insurance.

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1 vote Thank Flag Link Sat Jan 19, 2008
You can use who ever you like. The seller must be agreeable however....
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0 votes Thank Flag Link Mon Feb 11, 2008
If I was spending $1.5M on a home, I too would use a Realtor. Using a strong Realtor may work to your advantage as he / she should have the ability to negotiate.

For example, your Realtor could go in with an offer at $1.15M and indicate that you are offering $1.1M plus the real estate commissions (roughly $.05M). Then ultimately you both end up agreeing on $1.3M including the commission as the final sales price. Your Realtor just saved you $200,000 off the asking price, paid his commission and you get what you want. If the seller is choosing not to have an agent representing him, then you as the buyer have a distinct advantage as a Realtor representing the you only has no obligation to represent the seller's interest.
0 votes Thank Flag Link Wed Jan 30, 2008
Hi ally,
I read in the thread that you have dismissed this original FSBO home. I was sorry to hear about the reception you received. It might not reflect the whole community. but rather be isolated to these individuals.

For future reference...... you can always write an offer based upon having representation, and then, the seller can provide a counter. You are simply negotiating. They seller has indicated an initial position that they do not want to pay commission and you write an offer asking that they do pay. It can be compared to the seller asking that you pay 1.5M and you writing an offer for 1.45M. Buyers and sellers often start out with expectations that are not in sync and through dialog and counteroffers, try to meet a satisfactory compromise for both parties. Simply because a seller indicates they prefer not to have a Realtor involved does not mean that is the end of the line. Sellers might also think differently once they have a bonafide offer signed and in front of them. You are entitled to representation.

Good luck.......Hope you find some nice down-to-earth people!

0 votes Thank Flag Link Wed Jan 30, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
Sorry, Ally, the little comment on your none-photo said Marina Del Rey earlier. Don't know much about Alamo, but I suppose you have to live in East Bay due to work/commute?

Funny, my husband lived in Brentwood, L.A. (before he went to Denver for college), still have some great friends in L.A. - they are great - and then we moved to Manhasset, NY (on Long Island). Like you said, people are all very different, but nice (once you get used to N.Y. style).

Maybe you want to move to Marin, probably the northern part of Marin - safe, very down to earth, great schools, beautiful outdoors, involved parents, a decent size town but you feel that you know everybody,etc. But my hunch is it might not work for you due to work, commute, etc.… (O.K. everything is realtive)…

Just a thought :-)

0 votes Thank Flag Link Tue Jan 29, 2008
Sylvia Barry,…, Real Estate Pro in Marin, CA
Thanks, Sylvia, we'll keep that in mind for next time.

This house we were looking at is actually in Alamo. We are actually moved FROM Marina del Rey. We have lived in Brentwood (LA neighborhood) and Santa Monica (and before that in San Francisco, NYC, and Boston) and people there are definitely not as snobby as what we have encountered in this part of the East Bay. Yes, coming from Los Angeles area, I find that the people in the East Bay are more snobby and materialistic than in LA. It just surprises me because I thought the Bay Area was more down-to-earth. Are these the kind of people I have to put up with in order for my kids to go to good schools.
0 votes Thank Flag Link Tue Jan 29, 2008
Hi Ally:

I came in late on this question, now that you have decided not to buy. However, I am wondering if you will feel comfortable with Marina Del Rey or not; reading about how you wonder if the neighbors might be a bit snobbish also - you have to be comfortable with where you are going to settle down.

On the buyer paying commission for FSBO property - just for future reference- everything is negotiable. If you feel more comfortable with going with your buyer agent; I would go ahead and write that in the contract. It all depends on the whole package. The seller then have to decide whether he will that the offer or not; and I would think it'd be foolish for him not to seeing your just a bit below, offering price, 30% down and 30 days close. .

Everything is negotiable.

0 votes Thank Flag Link Tue Jan 29, 2008
Sylvia Barry,…, Real Estate Pro in Marin, CA
Just to update everyone...

we decided to pass on this FSBO home. When we went back to take a 2nd look, the sellers (owners) gave us attitude, implying that their community was an elite and exclusive community. Even though the address is in Alamo, the home (ranch house) was not that spectacular, but suited our needs and was well kept. There were beater cars and run-down looking homes down the block. My husband and I are middle-aged professionals (in our 40s), but look youthful (can be mistaken for 20s) with 2 babies in tow. We didn't tell them this, but if we felt comfortable in the house that day, we were ready to make an offer for a little below their asking price with a 30% down payment and a 30 day close. We left the house with somewhat of a sick feeling and could not imagine living there, especially if the other neighbors share this elitist attitude even though they live in a little ranch house. They tried so hard to make their house seem "high class" by being snobby to justify their overpriced asking price! Come on people, it's a 2000 sq ft ranch house... its not a 5000 sq ft mansion in Rockridge with views of the Bay.

For now, we are still searching for our new home. Hopefully, more homes will be listed after Superbowl weekend. All the ones that are coming up as "new listings" are the empty homes that were taken off the market for the holidays, probably to reset the DOM.
0 votes Thank Flag Link Tue Jan 29, 2008

It IS fishy. I don't know a single FSBO that is selling a 1.5 M property that won't pay a buyer's agent. If I were a FSBO and an agent brought me a ready, willing, and able buyer, I would write that check so fast it would make your head spin! Seriously! What is the deal with these people? I seriously doubt it's money.

I would get my agent involved. This request IS unreasonable. Why keeping it quiet? Like I said, on a 1.5 M house, most FSBO will pay an agent...what's $45,000 compared to 1.5 M?? These people are either paranoid, don't know the local market conditions (house staying on the market longer, price reductions, etc), have something to hide, just plain greedy. I would tell my agent, have my agent write an offer, have my agent present it to the FSBO. When they see a contract, I'm not sure how dumb they have to be to refuse working with you and your agent.
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0 votes Thank Flag Link Sun Jan 20, 2008
Hi Ally,

It is always a reasonable and down right smart business decison in any market type to have a Realtor representing your interests. I, personally would not even consider entering into a transaction like this one without a seasoned professional on my side.

Based upon what you have shared here, it does not seem that the seller's are trying to save anyone but themselves money. I don't blame them for this because everyone wants to get the best deal that they can whenever they purchase or sell anything. But the money they are trying to "save" you could very well wind up being spent in legal fees when something goes wrong. And in the best of circumstances, something ALWAYS goes wrong.

Think of how many lawsuits have occurred with educated, competent Realtors representing each side of the transaction. Scary, huh? Doing your own Real Estate transaction without Realtor assitance, for most people is about as intelligent as doing your own apendectomy. Sure, people have done it and survived, but why on earth would you want to?

Without the benefit of a Realtor how are you going to get an accurate assessment of the value of the home? How are you going to ensure that all of the documents that need to be prepared are being done in a timely manner? How are you going to see to it that the transaction does not wind up starting with the best of intentions and ending with "Yes, your Honor".

I think that if the seller is unwilling to even have you discuss this transaction with your Realtor the "fishy" smell is the least of your worries.

If it were me, with all the homes currently available, and knowing that well qualified buyer's are in a shorter supply, I would have my Realtor help me find another home that met my needs and desires.

I am reasonably confident that the home you are considering will be available for a while to come and, if these seller's are truly serious about selling their home they will wind up hiring a Realtor for themselves as well.

I think that I will paraphrase a quote here. With regard to the law, it has been said that the man who represents himself has a fool for a client. The same is true where Real Estate is concerned.

Take care and have a wonderful day!

Tisza Major-Posner, Realtor, Keller Williams (909) 837-8922
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0 votes Thank Flag Link Sat Jan 19, 2008
in case I wasnt perfectly clear.....the offer your buyers agent would present includes the agent compensation. Give it to him in writing.....with your letter of prequalification (many fsbo's never get to closing and your agent knows this).
0 votes Thank Flag Link Sat Jan 19, 2008
Do these sellers have so many people fighting for their home that is isn't worth 2 or 3% to actually SELL it? Are they really motivated. Can you have your agent make an offer which includes the commission which will be given to you as, much as they would give you credit for closing costs?
0 votes Thank Flag Link Sat Jan 19, 2008
Nick, you mention that "in the current market", that my request is reasonable. Am I to understand that my asking for my buyer's Realtor to be involved, and my expectations that the commision is paid by the seller would otherwise be "unreasonable" ? Does this mean that traditionally, FSBO homes are supposed to be do-it-yourself for the buyer, as well? I just want to know if it is reasonable for these owners to insist that no Realtors be involved, and for me to be responsible for paying my own Realtor the commision? Essentially, they are offering 0% commision, so do I set what % I pay our Realtor? or am I rocking the boat for the whole FSBO world by asking this?

I just sold our old home not too long ago, and we, as sellers, paid all of the 6% commission to the Realtors. So now, I will be responsible for paying 3% (or however much) to my Realtor as a buyer? This doesn't make logical sense to me, so that is why I am presenting the question.
0 votes Thank Flag Link Sat Jan 19, 2008
Hello Ally, I agree with Nick that the request is reasonable. I would, if I were in your shoes, also request representation from a Buyer's agent just to make sure that everything was completed and done as per legal obligations and procedures for your area. As to the lender, if the commission is made part of the contact, as is generally the practice, I don't see that a lender would object to funding the loan when taken into a total purchase price and the commission is being made part of that price. However, as a precaution, be sure that everything is above board and no third party 'relatives' are involved in the commissions, and that the transaction is conducted at 'arms lenght' with all parties involved. Good luck!
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0 votes Thank Flag Link Sat Jan 19, 2008
in the current market your request is very reasonable. I would have your Realtor bring over a CAR form, they will know what that is and still submit your offer at the price you feel the home is worth regardless of commission. A lot of sellers sing a new tune when money is in front of them.

Hope this helps,
0 votes Thank Flag Link Sat Jan 19, 2008
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