Handling Real Estate Agents

Real Estate Agents: Tricks; Listing Contracts; Buyer Brokers

Q: A real estate agent recently told me that only 1% of the houses sold are by for-sale-by-owner, or only 1% of the houses that are for-sale-by-owner actually sell... something like that. Do you have any statistics on this?

In 2023 the number of For-Sale-By-Owner homes that sold were around 7% of all home sales nationwide - but we believe that number could be a lot higher if people like you had the right information ahead of time -- that's were we come in!

Q: I have to relocate in a month and would like to sell my home before I leave. I'd like to sell on my own, but don't think I have the time. Do you have any information on how long it takes to sell by owner vs. a broker?

All things being equal a private seller will sell a home faster than an agent because the buyer prefers to deal directly with the owner. In our experience in the marketing business, we have seen thousands of homeowners who have previously listed their homes listed with agents without luck, then advertise their home through (Picket Fence Preview) and sell very quickly...sometimes within a week or two! Overall, you'll sell your property TWICE as fast if you sell it by owner...provided you have effective advertising resources and information.

Many factors affect how fast a particular home sells... the price, of course; market demand for the type of home and its location; time of year, and the effectiveness of the marketing and advertising. You will be able to sell faster on your own by offering a good price and advertising aggressively. If you have to pay a commission you won't have as much (if any) negotiating room in your price and might be forced to take a significant loss in order to make a quick sale. Your best bet would be to try to sell it yourself first.

Q. Can the buyer broker collect a 6% commission -- 3% from the seller, and 3% from the buyer?

Typically, an agent only makes a maximum of 3% for a residential property when representing the buyer. While it is not illegal to ask each party for 3%, or even to ask one party for 6%, but either party would be foolish to pay this. Remember, in a private sale you are representing yourself, and are not obligated to pay the buyer's agent anything.

Seller: I'm in a hurry to sell my home, and want to reach as many prospective buyers as possible. I'd like to sell it on my own, but am afraid that I'll miss out on all the buyers out there looking with agents. Any suggestions?

First, don't underestimate the number of buyers who are looking at Private Sale properties. Even if they're working with an agent, chances are they are also looking at homes offered by owner as well. In fact, many pursue this option first, before looking at agents' listings.

To maximize your chances of reaching all prospective buyers, though, you might include "Brokers Welcome at 2%" (or whatever percent you are willing to pay) in your advertising -- and even on your sign. This tells agents that you welcome their buyers, and are willing to pay a "transactional fee" (i.e. commission) for their services. Just be sure that you have enough "cushion" in your price to cover their fee!

Seller: Our house inspection didn't go well, and now the buyers want to buy the house for less (which we've agreed to). The problem is that there's a buyer broker involved, and in the original contract the broker wrote in a dollar amount for her commission fee, rather than 3%. Now that the sale is less, isn't she entitled to less?

Lawyer: Perhaps. How is it worded in your current sales contract?

Seller: It just says the dollar amount. Basically, we just used the original contract and crossed out the old sales price, put in the new, and both initialed it. However, when my wife realized that we were paying the broker too much and brought it to her attention, she said she wouldn't renegotiate her fee and that she had a legal contract signed by us.

Lawyer: Ouch. In this instance, a new contract should have been prepared to replace the previous, now null and void, contract. By modifying the original you unwittingly set yourselves up to signing an agreement based upon all the previous terms, including the dollar fee stated for the broker's fee. Sorry.