Pre Listing Offers On My House

[RockyMtn]

so, it's been a busy real estate month for me. We are almost done with our Scottsdale remodel (one more month) and our house in Denver is under contract .

Last loose end to tie up is our current Scottsdale home. It's in a nice gated development of about 50 homes. It is not on the golf course but is a short walk down a path and through a gate and you are in the golf course parking lot.

The neighbors and folks at our club all know we are moving and so we have been approached by four parties interested in buying our house. There have been a number of sales in the last year so comps are pretty easy to come by. All of the houses are similar floor plans so the only variable is finishes and any remodeling that has been done. There are no other houses in the development on the market at this time.

We have agreed to let the interested parties see the house. We have not hired a realtor as yet. I will tell any interested parties that they are welcome to have their realtor submit and offer. My plan, if we get an acceptable offer from one of the parties, is to use a real estate lawyer to handle docs and closing.

My question is the buyers agent. Obviously they expect a commission from someone. Does that someone have to be me? I haven't agreed to pay any commission as the house is not listed with any realtor. Should that be the buyer's obligation? Does it even really matter? I am just interested in what my net proceeds are going to be and if I have to pay a commission I will take that into account in what an acceptable offer is or isn't?

I know that by not listing I may leave a few $$$'s on the table but at this point I am so over all of this I just want to move the thing. Maybe by having this sell "off market" I can get what I want and the buyer can get what they want in a quick and relatively painless transaction.

Thanks for the help folks!

 

[Senator]

It can be the buyers obligation, but you are telling the buyers to submit an offer through their agent. That implies someone pays, and it is typically the seller.

A realtor will not present an offer to you unless they have a commission agreement signed. It may be 2.5%, 7%, or $500. It will be something.

 

[Chuckanut]

I know little of real estate law, but when my neighbor sold his house as a FSBO - For Sale By Owner, he offered a flat finder's fee to any agent who brought him a buyer who ended up buying the home. I think it might have been $1000.

Generally, if a buyer approaches you first, before an agent representing him does, you are under no obligation to pay an agent. IIRC, most agents who have a buyer will present you with a document that gives the buyer's name, the propose fee, and some time limit. For example, "if Mr. RockyMtn sells his home to Mr. Earl E. Retire within one year, Mr. RockyMtn will pay the agent $1200." Of course, they do this before taking the potential buyer to see you home.

 

[pb4uski]

We sold out home directly, buyer to seller, no agents involved at all. We each had our own lawyers for the documents and closing but that was it. I don't see what an agent for either party adds.

We've bought two properties and sold two properties without an agent involved in either side. I would not pay an agent if you have four very interested parties.

If none of them make you a reasonable offer, then reconsider.

 

[RockyMtn]

We sold out home directly, buyer to seller, no agents involved at all. We each had our own lawyers for the documents and closing but that was it. I don't see what an agent for either party adds.

We've bought two properties and sold two properties without an agent involved in either side. I would not pay an agent if you have four very interested parties.

If none of them make you a reasonable offer, then reconsider.

The parties each have a realtor already. Three of them the same one! I don't see how I'm going to be able to cut that one out. The other realtor isn't involved yet (I was approached directly by the buyer) and can just let them know I'm not paying any commissions like you suggest.

 

[pb4uski]

I guess it depends on their contract that if they find a house that they like that is not through the realtor whether they owe the realtor anything or not. Around here, they typically would not owe anything to a realtor who they were working with if they found another property on their own, but at the end of the day it is between the buyers and their realtors and none of your concern.

 

[wmc1000]

When I last sold a house without a realtor listing, (June 08), I had a buyer call me to see the house and after we arranged a viewing, their realtor called me to see if I would pay a fee. I told them that my price was firm and f their buyer wanted to offer over list they could have the difference. This was in Fishers, IN and they ended up offering $5000 over my price so their realtor got paid.

 

[athena53]

Question on this for those who understand real estate law better than I do: if the potential buyers learned of the house being for sale on their own, through connections at the golf club, why do they have to work through their realtor to buy it? Are they liable for a fee to their realtor even for a place they find on their own, e.g. an FSBO they find driving through a neighborhood?


If you do list the house, definitely have an agreement with your realtor about these potential buyers. Years ago a friend told another friend of hers, "if you even want to sell this house, I want to buy it". They decided some time after that to sell the house and listed it without telling my friend. They had to pay a price that included the full realtor's fee, of course. I think I would have walked.

 

[W2R]

My question is the buyers agent. Obviously they expect a commission from someone. Does that someone have to be me?

Anything is negotiable, AFAIK (I am not a realtor). Just include in the counter-offer that the buyers will also refund to you (at closing) any amount that you are to pay their agent at closing up to a specified amount.

It's quite common for buyers to ask for the seller to do the same with closing costs up to a specified amount. It's all part of real estate negotiation, something that you are choosing to do yourself rather than to pay an agent to do for you.

 

[Fishingmn]

I'm a Realtor.

You are under no obligation contractually to pay a commission to the buyer's agent.

There are 2 primary contracts that obligate people to pay commissions -

1) Listing Agreement - This Agreement between the seller and listing broker outlines the broker compensation to be paid upon a successful sale. The Agreement allows the broker to share part of the compensation with the buyer's broker. It typically doesn't even dictate which part of the overall commission goes to he buyer's broker. The amount of the commission going to the buyer's broker is communicated through the MLS which then obligates the selling broker to payment when an offer is accepted and closed.

2) Buyer Representation Agreement - This document between buyer and broker obligates the buyer to pay their broker for helping complete a successful transaction. The Agreement specifically obligates the buyer to pay dollar amount or percentage of the sale price. In our contract there is language that states "Broker is authorized to negotiate and receive compensation paid by the seller .... Any compensation accepted by broker from seller (checkboxes for Shall or Shall Not) reduce any obligation of buyer to pay compensation by the amount received by seller or broker"

Almost always the "shall" box is checked. Therefore, if the seller is paying a commission that reduces the amount required from the buyer to pay their representative. This amount may or may not cover the amount that they agreed to pay. If it doesn't cover the full amount the buyer would make up the difference.

So basically, I would tell you to NOT agree to pay out any commission and that any offer should factor that into any offer they submit.

 

[Texas Proud]

I would not pay the agent... I did not agree to anything with them....

As far as being a buyer... I did not sign any doc with my agent that said I was going to pay them... it was understood that they would be paid with the share from the listing agent....

My sister is selling her boat dock... no agent involved... the buyer submitted a bid and DS accepted... but, they are going through a title company for closing... the buyer paying that fee...

 

[Big_Hitter]

I was a buyer in a "private" deal like this last year - the seller paid a 3% commission to my realtor.

 

[Fishingmn]

I would not pay the agent... I did not agree to anything with them....

As far as being a buyer... I did not sign any doc with my agent that said I was going to pay them... it was understood that they would be paid with the share from the listing agent....

If you don't sign a Buyer's Representation Agreement then you are NOT represented and the realtor you were working with is not obligated to any fiduciary duty other than confidentiality. If you are represented then all of these obligations exist -

Loyalty-broker/salesperson will act only in client(s)' best interest.
Obedience-broker/salesperson will carry out all client(s)' lawful instructions.
Disclosure-broker/salesperson will disclose to client(s) all material facts of which broker/salesperson has knowledge which might reasonably affect the client's use and enjoyment of the property.
Confidentiality-broker/salesperson will keep client(s)' confidences unless required by law to disclose specific information (such as disclosure of material facts to Buyers).
Reasonable Care-broker/salesperson will use reasonable care in performing duties as an agent.
Accounting-broker/salesperson will account to client(s) for all client(s)' money and property received as agent.


MLS will dictate what portion of the listing commission is paid to a Facilitator. As an FYI - I always put 0% in MLS for Facilitator's. That means I am not obligated to pay the buyer's agent unless they actually have a Buyer's Representation Agreement which would leave the buyer paying them themselves. Now I don't really check if they have an Agreement but legally this would be a big gotcha.

 

[youbet]

Does it even really matter?

No, it doesn't matter. Only consider the bottom line dollars you will receive net of all (including commissions) costs to you. Make sure you absolutely understand what the final dollar amount (taking into consideration who is paying what costs) is.


You might want to mention to anyone making an offer that your decision will be based on the final, bottom line so they are clear that any commission to their agent reduces, dollar for dollar, what they are offering.

 

[Fishingmn]

I was a buyer in a "private" deal like this last year - the seller paid a 3% commission to my realtor.

The amount paid to the buyer's agent is often different by local standards. For example, in the Twin Cities 95% of the time it is 2.7% but 3.0% and 2.5% are also options that are seen.

 

[Fishingmn]

No, it doesn't matter. Only consider the bottom line dollars you will receive net of all (including commissions) costs to you. You might want to mention to anyone making an offer that your decision will be based on the final, bottom line so they are clear that any commission to their agent reduces, dollar for dollar, what they are offering.

Net price after commissions (if you pay them) and seller paid closing costs are good to compare. Factoring in "all" of the costs to you isn't really done. These include taxes, payoff costs, title fees, closing fees, recording fees.... A lot of these aren't even totally figured out until the file goes to title.

 

[youbet]

Net price after commissions (if you pay them) and seller paid closing costs are good to compare. Factoring in "all" of the costs to you isn't really done. These include taxes, payoff costs, title fees, closing fees, recording fees.... A lot of these aren't even totally figured out until the file goes to title.

Obviously other costs that occur in equal amounts whether a commission is paid or not could be ignored as they are moot. My point is that seller needs to understand the bottom line and how it varies under terms of the offers being considered. For example, if buyer insists, for whatever reason, that seller pay the buyer's agent commission, that might be OK. If the offer is enough higher than other offers which do not include such a commission to fully offset the commission, then I'd have no problem paying the commission. I'd accept the highest bottom line net of all the clutter.

To me, it's akin to buying a new car. You have to watch the bottom line which reflects the so-called "out the door" price to you.

 

[RockyMtn]

An update....


None of the pre listing offers worked out. We moved into our remodeled home in mid September. Listed the old Scottsdale home on Friday, got an offer that was 98% of list on Monday and accepted it on Tuesday.


That's two homes sold with a total of 65 days on the market! Closing is on Nov 16th if all goes according to plan and will finally be down to one house from three at this time last year.


If I ever mention I want to buy another house will someone please hit me in the head with my 6 iron!

 

[Dreamer]

That is great that you received an offer so quickly. I hope all goes through without any problems. I never want to own more than 1 house.