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"I have learned so much thanks to the searchable articles on the FHB website. I can confidently say that I expect to be a life-long subscriber." - M.K.
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The seller would pay 3%
That's what I thought. I wonder how negotiable that 3% might be these days.
k
Good question. In my job I would split the 3% commission with my boss, if I were the Buyer's agent.I would get 70% and he would get 30%As the price goes higher the commission get more negotiable.I would want the full 3% for a $100,000 home. I can't reduce the commission on a low priced home. There's just no money there.Right now I'm putting an incredible amount of work into a home selling for $45,000.I'm putting in a ton of hours on a $1,500 commission.He will get about $500 and my check will be about $1,000I've been working on this deal for three months!!!!!
Wow.
I've never been in the camp that assumes all realtors are crooks getting rich for a couple of weekends a month, but that sums it up right there. I do know that the "desk fees" can be 50% or more at some offices.
And I don't neccesarily want to squeeze every last cent out of a deal any more than I want to be squeezed on my jobs. Still...
This sale would be somewhere around 600k, so 3% would be about 18k. Just musing aloud here, but if I was a hungry buyer's agent, I might rather have 12k than zero k, regardless of the theoretical 18k I "should" get.
On a professional level, how offended would you be if a FSBO was saying stuff like that to you and your client?
k
There are several debating points.Some Buyers would take the position that you are getting off easy by paying only 3% rather than the standard 6% (as you don't have it listed)Some Buyers would want you to reduce your price since you don't have to pay a realtor.Another thing to consider is the Buyer's agent will probably be doing the work of the Seller's agent.He will spend time with you and will bring all the forms and paperwork and coordinate everything from both sides.Some realtors would complain "this is twice as much work and I should be compensated"In summary, you asked about negotiation - go ahead and give it a shot!It's a high priced home that any realtor would be licking their chops wanting that 3% commission.Be prepared, the realtor may counter you on commission reduction by pointing out to you a detailed accounting of all the things he will be doing to earn his commission: writing the contract, handling addendums, forms, various paperwork, phone calls, hand holding, inspections, repair estimates, financing issues and decisions, working with title company, price analysis & recent solds info given to buyer to confirm purchase price, and even doing things in the end that will help you and protect you and all parties involved.Good luck!
Mmm. Good points. I've done an in-family sale with the help of a title agent, so I could offer to take on some of the paperwork through that agent. (I was assuming some of the seller's 3% would go to the title agent.)
And actually, the $600k figure is low average for the bay area, so I don't know how the local realtors would look at it. I'm sure their overhead is proportionally high as well. Still, 12-18 grand is 12-18 grand...
I'm on the fence as to whether I want to attempt this FSBO or not. Just trying to get all sides of the story before I make a decision.
thanks for your advice.
k
PS- do you know anything about tax law and the capital gains exemption?
Here where I'm at, at closing, the title company will fill out a form which is forwarded to the IRSAt closing they will ask you if you've lived in the home, how long you lived in the home, dates you lived in the home, etc.The following is my extent of knowledge on this subject (I just copied this from a website):.
The Taxpayer Relief Act changed this A single homeowner can now exempt $250,000 in capital gains from the sale of a principal residence ($500,000 for a married couple or 'certain taxpayers' filing a joint return) providing only that the homeowner had occupied that home as a principal residence for two of the five years preceding the sale. And this can be done over and over again ' as long as a sale does not occur more than once every two years.
You asked about paying the Title Agent and it sounds like things are different here.If you were selling your house here, these are the expenses you would have on a $600,000 home:Realtor Sales Commisison (3%).......................$18,0002009 Property Taxes Pro-rated up to day of closing........?50% of Title Insurance.................................$807.50% of Residential Closing Fee.........................$200.There are a couple of other expenses you may or may not incur.It's very common for a Buyer to ask for a Home Warranty. I'm selling my house right now and have agreed to pay $500 for a Home Warranty.It's also common around here for Seller to pay part of the Buyer's closing costs. I have agreed to pay $2,000.Around here the Residential Closing Fee at the Title Co is higher if there are no realtors involved (because the title co has to do the additional legwork).I guess the title company will probably charge you a small fee to overnight mailing the payoff to your lender? So that would be an additional fee of $25 or so.Am I missing any expenses you will have as a Seller? If so, what are they?Here in Kansas you would be responsible to pay for a termite treatment if one were needed. Termite treatment gets paid at closing.
That's fairly similar. I don't believe there's any requirement for termite treatment, although the "pest report" is almost always done.
The only thing that I know is absolutely required here is the sewer upgrade.
My/our capital gains issue is a little involved, maybe I'll start a different thread for that one. I don't know if it really belongs on FHB, but what the heck.
k
"The seller would pay 3%"Only if they agree to.They don't have any contract with anybody saying that they have to.Now some FSBO's will have in their ads that they will. But if the seller says 'I ain't paying because that is why I went FSBO to save the commission' then it is up to the buyer..
William the Geezer, the sequel to Billy the Kid - Shoe
Agreed - you are correct I think the process would typically go as follows though.Realtor or Buyer sees FSBO and writes down phone number.Agent calls Homeowner to talk about showing the home and the commission.If there is no commission, the agent would either not show the home OR would ask the Buyer if he is willing to pay the 3% commission (per the typical Buyers agency agreement)They would probably address this prior to showing the house.The Buyer could say "sure I'll pay the commission"This is kind of touchy subject - I've known very few who would make the above statement. I guess if they felt the price was right and they were getting a good deal, they would be more than happy to pay the commission.
That's right.I bought my first place from a FSBO - we did the transaction w/out agents. Two family that we fixed up, flipped in 2 years and this time we FSBOd... the buyer was a mortgage broker, so no agent fees there.That's two transactions completely devoid of agent fees.Owner built our next house - a repro Saltbox - when I bought the land the seller paid out to the RE agent (from my money)...We then FSBO'd that too (decided to have wife stay home, "downsized" our mortgage (i.e. cashed in our "sweat equity" just before the market really started to sink).For that sale, as the RE market was flatish where we lived, I offered a buyer's agent fee of 2.5% stated clearly and up front in my ads, with a bonus .5% to any agent that attended one of the three open houses I held (with or without clients). I also printed up 10 page brochures about the house with detailed information and plenty of photos, and printed up stacks of copies and dropped them off at the top 4 RE agent offices in town - on Friday mornings, accompanied with a dozen dunkin donuts. Did that before each open house.We got an offer w/in 5 weeks, and only had to do the offer/counter thing once... got 98% of asking price.So, FSBO can be anything.But it's smart to offer buyer agent fee as it opens up a wider pool of potential buyers (mine was via one of the agents that attended open house to get "bonus" - came back a week later with a buyer).
So, FSBO can be anything.
But it's smart to offer buyer agent fee as it opens up a wider pool of potential buyers (mine was via one of the agents that attended open house to get "bonus" - came back a week later with a buyer).
I think that's exactly right. It can be anything, but with certain pools of buyers it'll work better one way or another. I kind of doubt there'll be a lot of buyers without agents here (few DIYers), so I want to maximize exposure while minimizing costs.
I like that you put your buyer's agent fee up front.
k
The thing I would worry about, in this day & age, is getting buyer to your door. It's a buyers market today, I would think twice about trying to pull ANY cash away from someone who is bringing a potential buyer to you. It used to be many hands feeding offeres on houses... but if this is the only one feeding you, do you want to bite it?
Tu stultus es
Rebuilding my home in Cypress, CA
Also a CRX fanatic!
Look, just send me to my drawer. This whole talking-to-you thing is like double punishment.
It's a balancing act, for sure. I don't know if I want to try the rocket science of aiming for the trajectory where exposure meets savings. Kind of kicking it around to make that call...
Still, I'm not in Stockton or Tracy, properties around here seem to move relatively quickly. And frankly, there are a lot fewer sellers, too. I don't know who's buying, but their options are limited also.
6% of 600k is 36k.
That's about my take home pay for a year (which is admittedly a problem in itself). Gotta take a look at it, right?
k