Yes, you will owe the buyer's agent a commission unless you specifically listed that home as exempt from the contract.

A good buyer's agent is hard to find. We signed with one and soon found out we missed seeing a lot of homes because she was stuck on our original boundries and didn't look past them. We fired her, but we knew she would be the agent on anything she had previously shown us.
You are your best agent. There are so many resources on line, you can easily look for exactly what you want and call the listing agent for a showing. Nobody is more motivated to show a house than the agent who listed it. He gets both commissions if you buy!

We called one listing agent who showed us the house of our dreams and we made a full price cash offer that day. We didn't get the home (someone offered higher), but now he knew we were serious so we didn't have to sign a contract and he put us on an email list to get immediate notifications of new homes just listed.

3 full price cash offers later, we bought the dream from the dream LISTING agent. He was not the listing agent on the home we ended up purchasing, and he didn't limit the search scope to just HIS listings. He let us look through all the new listings and was happy to show us anything we found interesting. Good luck to you!

So that FSBO has been on the market at least since last fall? Any reason why it hasn't been sold yet? That would be a red flag for me in any event.

Good luck!

I can *fire* her?? i signed a contract......

and yes, it's been on the market awhile. It's an older couple and they have it priced too high. They are very stubborn and feel it's worth a higher price (It's his family home so lots of sentimental value). Also, there is damage in the bathroom (he fell in the shower and went thru the wall--tile and drywall so there's probably dry rot in there) and he refuses to fix it----says the new owners can fix it----he just put plastic wrap over it O_O

In my company, these contracts are cancelable. If you buy something she has shown you during the time of the contract, someone would owe her a commission.

Read your contract. What's the scope of what you'll owe her commission for? Is there any mention of FSBOs, or properties that you find without her?

If she wasn't involved in finding the house and isn't involved in the purchase, then you don't owe her anything.
I think what Sophie is describing is when you are selling a house then any potential buyers that existed before the listing agent became involved should be mentioned as an exemption. Or maybe it's some kind of unique contract in her area. In general, what schnoodlemom described is normal.

Great! We'll see just how desperate I become :) She really isn't providing much advice either. Like I asked in a different thread, what to offer on a house priced at $205K At the time, I thought I could only afford to offer 185K but I talked to my banker and he said I could go up to $200K.

She originally said $185K would be a reasonable offer but when I told her what the banker said, she said I should offer as much as I possibly could??

A buyers agency agreement is just as binding as a selling agreement. You are using a realtor to searchfor and to buy a home. She is compensated for that usually by a nominal deposit, and then a % on the sale of the home. For the HO to not owe compensation to the realtor, specific homes that she viewed before she hired representation would need to be listed. Just like a selling agreement can specifically exclude certain buyers who toured the home before the contract with the realtor was signed. Sure, the contract may be canceled. Not without some form of financial compensation to the realtor, usually the loss of the deposit, or some flat fee is stated in the contract. The specific contract details would need to be consulted to evaluate if the cost of canceling the contract was worth having no representation in negotiations with what sounds like a real pickle of a seller. With that seller description, frankly, you need all the help you can get. If you don't run away screaming first.

Our buyers agent contract had a time frame. Frankly, I'd rather have an agent to deal with unreasonable FSBO sellers.

As for the house you refer to, that is one you lost out on, isn't it? While $185K could well have been an acceptable offer to attempt, she probably thought any other offer made would trump yours and you might lose out on purchasing the house. So when you had the ability to pay more, suggested you offer a higher amount to increase the odds of your getting the house. Or at least be the one they negotiated with first. That advice sounds perfectly reasonable to me.

OK, I just wasn't sure. I only want a house on water and there just aren't a lot of true comps out there for these types of properties, so it's hard to know what is "too much" to pay.

And, yes, I really don't want to pursue anything with this particular FSBO but am feeling desperate. I wouldn't want a Realtor involved because he would just jack the price up (this is exactly what he did over the Winter when he had it listed---listing has since expired).

Sure, the contract may be canceled. Not without some form of financial
compensation to the realtor, usually the loss of the deposit, or some
flat fee is stated in the contract.

I'm not saying you're wrong. Maybe that's the way it works in your area, but I've never heard of paying a buyer's agent any kind of deposit. In my area, the buyer's agent only gets paid from the proceeds of the sale. No money passes directly from the buyer to the agent.

And I've heard of people cancelling the buyer's agent contract without any kind of penalty. Maybe it's a case of the agent letting the buyer off the hook as opposed to sticking to the letter of the law in the contract. Maybe it was more of a mutual desire to break the relationship because neither person wanted to work with the other.

Either way, I think buyer's contracts are pretty short time periods. Worst comes to worst, just wait it out. It doesn't sound like the FSBO is going to be snapped up.

Your agent is a professional. Tell her what your issue is with her. Give her a chance to fix it or quit.

As far as FSBOs, there is probably a statement that she will be paid a certain percentage to help you buy your home. She probably has a "One-Party Agreement to Pay a Fee" (or something like that) that she can present to a FSBO seller to pay her fee, which would be negotiable. For example, if your contract says she'll get paid 3%, and the seller only agrees to 1.5%, then you're responsible for the other 1.5% (you pay the full amount either way - think about it).

If I had a buyer who wanted to work with a FSBO who refused to pay, and the buyer didn't want to pay, I'd let them out of their contract and walk away.

There is so much risk to dealing with a FSBO that it is barely worth it, to be honest. I much rather work with someone that I know is bound ethically to deal honestly and fairly, disclose all material facts (etc). The longer I work in real estate and hear the horror stories, the more I am thankful for the E&O insurance I pay for and the legal back-up we get from NAR - there's a reason for every single one of the 11 pages of a standard contract and the bazillion addenda to cover every scenario. For buyers, this is a huge purchase and documents and legal issues, and there are so many lawsuits that I think it is worth paying a commission to trained, licensed, insured professionals, but I understand that many are willing to take the risk on themselves.

You should be able to cancel your Broker Buyer's Agreement with an email (in writing) - just be sure to get a response in writing. If you purchase a home that the agent showed you, you will be bound to the agreement for a certain amount of time outlined in the contract (usually 6mo in ours). There may be a statement about owing actual expenses, but I've only seen that with listing agreements. Again, it would be the polite thing to state what your reasoning is. The agent may continue to send you listings or take you to showings (if you want) unless you state that you want to work with a different agent, in which case she shouldn't contact you again.

In my market, making a "reasonable offer" will lose the home. It's a seller's market, and if what you want becomes available, be prepared to make a full-price offer. In that price range (in my area) you'd be competing with cash offers, too. Very frustrating when I have a (for example) VA buyer (that nobody wants to deal with). In the end, the house will have to appraise, so those unreasonable sellers won't ever get sold until they get real.

"I much rather work with someone that I know is bound ethically to deal
honestly and fairly, disclose all material facts (etc)."

Isn't a FSBO seller also required legally (not ethically) by disclosure statements to disclose all material facts. I know this varies by region, but my area has legal disclosures. We all know some people don't disclose, doesn't matter is it is a FSBO or an agent rep.

I would like to know these risks of FSBO. We are selling our home currently FSBO because we didn't see any reason for an agent and have done all the hard work ourselves. We will likely hire an attorney or transaction agent but we didn't see any reason to not do the FSBO and save ourselves some money.

You want to save a commission by going FSBO? Well, you have seriously limited your market because no Real Estate Agent will bring your home to the attention of buyers. Also buyers aren't stupid. They KNOW you have factored in the RE commission in your price, so it's no deal for them, and worse, there is a huge risk that you are not disclosing everything. We have purchased many homes, but have always steered clear of FSBO sales. Too much can go wrong.

Wrong! We listed with a buyers commission available. We've already had seven showings in two weeks and expect at least one offer soon (they are conferring with their realtor and lender).

We want to save the 3% sellers agent fee and priced the house to sell since we are saving that money.

We will hire an attorney to make sure we've done all the proper disclosures. Used a flat fee listing agent to get it on the MLS and he provided us with all the relevant forms for our state.

Please explain to me how buyers would be upset that a FSBO factored in the RE commissions and would steer clear? The market determines the price. It's the sellers who lose if they owe more then they are getting and still have to pay a sellers agen commission.

Are you and agent?? Seems agents are the ones who get most upset about FSBO properties. Had two agents come to the home about a year ago to interview (before we considered FSBO). Actually kept in contact with one of them and told him if we couldn't sell it on our own we would consider using him. He saw us on the MLS and commented what a nice job we did (pretty simple to stage, get good pictures and use sellers wording).

Never mind. I can tell by your picture that you are an agent.

loveumms - if you really have done all the hard work and know what you are doing, then you have greatly reduced the problems of FSBO. There are some inherent problems such as showings that you just can't get around without representation (buyers usually don't like to have the owners there when they are looking at a home, but unless it is vacant, you probably aren't going to let random strangers wander through your home unsupervised).

You can get some agents to show your home by offering to pay buyer's agents a fair commission (you can state this on Zillow and it will help with traffic).

But as Suzi says, buyers and their agents aren't stupid. They know that you are "saving" the commission and they want that savings, too (since they are the ones who end up paying for it). Not that this applies necessarily to you, but in my experience, FSBO sellers tend to overvalue their homes, and FSBO buyers tend to low-ball, and it is difficult to bridge that gap.

There are a lot of resources on this board that will help you FSBO.

And there are a lot of stories that will make you think twice.

Best of luck to you!

\

The biggest problem with FSBO is that the sellers are often delusional about the value of their house and make the whole process too personal. Agents create a buffer between the sellers and buyers and make the whole process run smoothly. They've experienced all of the hiccups that can come up and know how to handle them.
That isn't to say that ALL FSBO turn out that way. Some sellers may be great. But it isn't the norm and it isn't the reputation that FSBOs have. The reputation is the killer.
In a seller's market, FSBO can work out great because buyers will take a chance on an FSBO because there aren't a lot of houses available. But in a buyer's market where the buyers are few and far between then going FSBO can dwindle that pool to an even smaller group of buyers.

The biggest risk in FSBO are wack job sellers with delusions about the value of their home. See above. That is FAR more the rule than the exception to the rule. A realtor isn't going to collapse in tears when the offer comes in 50K under the asking price with the reason given being the horrible kitchens and baths with the seller's beloved ''custom'' cabinets in faux RED cherry and bright green fake marble laminate counters, acres of floral wallpaper,and an unnatural love of mauve carpet. A homeowner can't detatch and treat it like a business negotiation. And they invariably suffer from the endowment affect that makes their ugly choices OK, but someone else's ugly choices worth much less.

I think that was the first thing we agreed on when going this route - to price it in line with other homes that are in our neighborhood with similar size/upgrades and to not be offended by feedback. Our home is pretty new and completely neutral so we have not gotten any terrible comments but many don't like the layout - which is fine and I understand.

On the realtors association website it says 12% of homes were sold sans realtor last year so enough people are doing it. I'm not trying to put anyone out of a job but we are already losing a good deal of money on this home and paying someone 3% to do what we can do didn't make any sense.

loveumms, you can tell by my picture that I am an agent? See? YOU are wrong. I am in sales, but not real estate! We are in Southern California and have sold and purchased many homes, but through agents. If I were to fall in love with a FSBO home, I would need to hire an attorney at $200 per hour to go through the contract, and also an inspector to make sure I'm not being taken advantage of, so... list your home really low, don't think your hard work equals a commission, and maybe the money I spend to check your home out might just be worth it, or ... not. If not, I'm not going to bother with a FSBO.

And could you please explain your statement "They KNOW you have factored in the RE commission in your price, so it's no deal for them, and worse, there is a huge risk that you are not disclosing everything." ... I'm not following.

IF you list your FSBO at less than the comps, maybe.

In my area (Southern CA), the buyer pays for the inspection. The seller generally pays for termite tenting though. And the local FSBO folks are generally overpriced and not very knowledgeable. So I understand what Suzi's saying from the local perspective.

Got it.

We had a hard time at first realizing that our house is worth a lot less then we paid. But, quickly we figured if we wanted to sell it, we had to price it to sell. Guess only time will tell ;)

I would assume buyers would much rather have part of the realtors commission in their pockets then in the sellers agents. Saving that money has given us just a little room to negotiate (otherwise we couldn't give anything at all and everyone wants something).

If we had an older home and were more worried about disclosures (our home is only a few years old) or marketing then I would have used a professional.

So yours is a short sale, loveumms? That complicated things even more. Has the bank agreed to accept the lower amount? The only FSBO short we encountered like that, the sellers wanted us to contract to purchase for the stated price and agree to wait three months before they even submitted it to the bank. Of course, the bank could have just said "No." There wasn't even a price break over other area offerings. They did manage to find someone willing to play along.

No short sale - we just owe more then the home is now worth. That is why we wanted to try and go FSBO first saving the sellers commission (b/c every penny saved helps).

The lesson learned is that buying a home is not a very good investment in my part of the country unless its a longer term investment. Of course we bought six months before the bubble burst in 2008.

It was a new community and although the builder finally finished the community, they put up a bunch of much cheaper units driving down the price of the existing homeowners value even more. Some of the newer units have such cheap construction it's laughable (no trim around the windows, cheap materials). A buyer doesn't know the difference unless they were looking at the newer models versus ours and since the development is finished there are not any new units to show for comparison.

A short sale? Wow! We purchased the home in which we now live here in Southern California as a short sale (through a realtor). Prior to that, it was a foreclosure. Neglected for 7 years by 2 previous owners. The bank accepted a lower price on a previous offer, but the whole thing fell through. So we offered that same low price (on advice from the seller's realtor), but now the bank wanted more. Luckily we could afford that AND the money it took to repair and restore the home, decks and gardens. We would not have considered a FSBO in this case. There is a website you might find interesting.http://www.theshortsaleguide.com/

You might get new first time buyers. We were so stupid looking for our first home, we bought the one that was so freshly painted and clean with trendy colors and new carpet. What we found out was the paint had sealed the windows shut, and the carpet was so cheap, and we didn't notice there were no screens on any windows or doors. We bought the look.

I'm not clear on this, luveumms: No short sale - we just owe more then the home is now worth. You will likely have to sell for less than is owed on the mortgage. Are you planning to pay the difference out of pocket? There were some government programs to help people in your situation. I am not sure what is available currently though.

It's not a short sale and our units were well constructed - or at least we have always thought so. It was built right before the bubble burst when the builder actually had money to do things right. About four years after the bubble burst, the builder started taking short cuts to decrease the cost of the homes (at the same time, driving down all the existing home prices even though they were well constructed). They also did a bunch of other things which added to our declining value but, whats done is done.

We have had no problems at all with our home but some of the others in our neighborhood that have bought in the last two years have not been so lucky. Wish the builders would have stuck to original quality and our neighborhood would have been outstanding. I've been told that this has happened all over our area though and we were told "you should be happy the builder didn't go bankrupt and can finish the community". One of the neighboring communities were not so lucky and those people saw their home value decrease by a third.

Good point to make - don't buy from a builder who isn't well known with a decent amount of cash flow.

Yes gyr - we are going to have to come to the table with a check to make up the difference between the sale price and what we owe on our mortgage. Honestly, at this point we just want to be done with it and are going to pay. No point in trying to find one of those programs and most are aimed towards people who want to stay in their home. We are buying a new home which is going to be our forever home.

Get a good realtor and do this right. An FSBO isn't going to help you.

I think you should start a new topic because this topic belongs to another.

Thanks you for the advice I didn't ask you for suzi. I'm confident in my decision and don't need a real estate agent telling me what I already know. I was curious on c9pilots comment regarding FSBO. I didn't want to hijack anyones thread but sometimes that is where things go.

Thank you for clarifying, loveumms. Good luck with your sale.

My apologies to Kati if you were upset by the branching-FSBO topic. I tend to lean towards thinking other examples and case info is useful on a thread, as long as the original post query has been answered. If you feel differently, I am sorry for causing the diversion. It is often difficult to transfer every sub question to a new thread, and sometimes it is not easy to predetermine if the expected two sentence answer is going to produce more questions or be the end of it.

If you owe more than the home is worth, then I am assuming you are going to pay the difference? If you are trying to sell it for more than it's worth, then it probably won't appraise...

Whoops..just read that you will be paying the difference...never mind

Loveumms - if you are referring to your query:

And could you please explain your statement "They KNOW you have factored in the RE commission in your price, so it's no deal for them, and worse, there is a huge risk that you are not disclosing everything." ... I'm not following.

I did not write that. Suzi did.

Was there another question regarding my FSBO remarks? I think someone is interpreting what I wrote that "FSBO is risky" while I thought I was clear that "dealing with a FSBO - or FSBO seller - is risky". It's rather like Craigslist - while it can be a legitimate way to buy & sell used items, it's risky because there are a lot of scammers (and flat-out criminals). If you go to a real store with a business license, you're reducing the risk, even though it might cost more.

Loveumms - I wish you the best in your sale. Looks like you are making the best of a bad situation and are using good information to make your decisions. There will always be posters who hate FSBO's, ignore them and do your best. Keep asking questions, there are plenty of people here willing to help you.

Thanks cmarlin20 - I have nothing against sales people or realtors - my husband is partially in sales. I have several friends who are realtors and we all deserve to be paid for our work. Our situation really called for us trying to save the commission and the good news is we have TWO offers ;) Waiting to get the paperwork faxed to us so we will see how it goes ... maybe the hard work paid off b/c we don't have anything really to negotiate with and hoping we can make one of these into a sale. I will definitely be sharing my details if it does pan out and we move into contract ... hopefully it will help some others considering FSBO (I do everything full steam ahead and have done so much reading on home selling).

The thing is that whenever we say we are doing a FSBO, it's often a realtor who poo-poos it and talks down on us like we are too stupid to sell it ourselves. I'm glad there are forums like this where we can vent/ask questions and some people will answer with respect. I've found there are always people on any forum who think they know better and are superior.

c9pilot - I was just referring to the 'risky' part and was curious you meant. I totally understand with FSBO you are taking a chance and that is why we are more then happy when a potential buyer has a realtor - mostly b/c they are already vetted and we know it's safer them just opening our door and letting anyone in. My husband has been doing the showings and I've been waiting in our development while he does them - I take a picture of their drivers license and time how long they are in the house (neither of us have ever done it completely alone b/c of the safety factor for us ... and I would hope the potential buyers would take the same safety precautions when looking at homes). That definitely was one of my biggest concerns regarding doing this ... the safety issue.

LOL---came back to the thread to find this---no worries---hopefully the info can help people.

Also, I told my realtor I wanted to cancel the buyer's agreement and she said no problem. I just feel like I'm better off looking for myself and contacting the listing agent directly if I find something. Also, I am going to do a "Real Estate Wanted" post on Craig's List and see what I get. Thanks everyone for all the excellent input!

Long comment ahead!

We are looking for vacation property on water and inventory is super low in our desired areas. We looked for two years on our own, because we were looking at a mix of FSBO and MLS properties. Listing agents were happy to show us the MLS properties, although we would have used our own buyers agent in the end had we bought an MLS, and likely would've used him had we bought FSBO as well.

We finally did bring our buyers agent on board when we wanted to make an offer on an MLS property. I'm glad we didn't waste his time with two years traipsing back-and-forth to every lakefront vacation property Nova Scotia, but I'm also happy to have his advice now, and would use his services to close on any FSBO that we find. That particular offer we brought him in for fell through (partly due to him as he deservedly thought the property was sketchy - he referred to the trout pond as a septic pond) and we are still on the hunt.

My experience as a buyer looking at FSBOs has been mixed. Some sellers are in a dream world WRT price, but I'd say about half were priced more or less fairly for the area and desirability of their houses. It didn't bother me to have the sellers around... generally they would give us a tour and then let us poke around by ourselves. Would have offered on two places but they sold.

Vacation property in my area is a weird mix because there aren't a lot of sellers, but there also aren't a lot of buyers, and stuff that is even just a little overpriced can sit on the market for a very long time.

I will say, whether or not it's price or visibility, FSBO do tend to sit for a little longer on the vacation market. I have seen quite a few FSBO vacation property sell, a few times right out from under my nose, so I don't think this is an insurmountable problem.

Sad part is I think at least that we are quite reasonable buyers with cash in hand and a not insurmountable wish list but the inventory just is not there to support what we want right now regardless of price, and I think that can be true of waterfront in many areas.

As well, many of the properties change hands privately among friends and family with no listing whatsoever, or even a sign, so it's been difficult to penetrate a market that is closed to outsiders. No realtor that we've met, whether or not they were in the area, has been able to offer us an "in" into this private market. We even have family in the area, but it hasn't helped. If you can find a waterfront specialist in the area who might be able to dig into these listings for your desired area it would be very valuable for your search. This would be someone who has lots of friends and family in the area and can put feelers out for you.

I do post an ad on kijiji (our craigslist) every month and have pulled a few leads this way, so you might want to keep going with that. Three of the leads were realistic but just didn't work out for us. Three in two years.....not great but I'll take anything at this point!! I have not yet been desperate enough, but have considered, physically posting "wanted" signs at my favorite lake and also mailing the guy who owns the lot I want the most (I paid the registry $5 to get his mailing address).

But fingers crossed, last week we found a place we all like for "only" 80k over our initial budget. Here's hoping there aren't too many skeletons in its closets!