If you want him/her to take the offer to closing, I would offer whatever fee is fair to a buyers or sellers agent in your area. If he/she would have charged you 6% to market the property, offer him/her 3% to take YOUR offer to closing.

I was certainly thinking more along the lines of the $1,600 that you paid a RE attorney. If we paid the realtor half of a 5% commission on a $500K house, that's $12,500 when essentially all I would ask him to do is the paperwork for the transaction--if that took eight hours of work (and I'd bet it's less), he'd be making $1,562/hour. I just don't like cutting him out of the deal and going straight to an attorney since he did provide some guidance to us (in the hope that we would hire him, of course).

Explain your opinion to the Realtor and ask him what he thinks is fair. #1 rule of negotiating is the first person to say a price, loses. If you dont like his opinion, negotiate, or tell him to pound sand.

We are friends with our agent and she's provided help on the house we're purchasing even though she has absolutely no skin in the game. She gave us some verbal advice on getting our condo ready before we put it on the market too.

We recently listed our house with her but had it listed within our building for about 3 weeks before listing with our agent. (We're in a condo and many of the owners have friends looking to buy within the building.)

If we had sold it on our own, we would have give our friend 1% of the sale for her help beforehand.

Does your state require an attorney for real estate transactions? Many do, and if so, work through the attorney and when all is said and done give your realtor friend a personal stipend of say, $1,000 for all his help in the past.

While it might not be a legal obligation I would definitely reimburse him. I am not sure of the amount. I know in the case of my own mother where her neighbor is trying to help sell her home, if I had any say I would give him the realtors fee.

Kosmokitchen, it depends on how much you want the realtor involved. There are many things between the offer and closing that the realtor does besides the paperwork. Personally, I would not take the responsibility of taking the house to closing for $1600. (which could be as little as $800 depending on what his broker takes) Do you plan on handling objections and negotiations with home inspection issues, appraisal issues etc? If you are and you are just looking for the atty to handle contract, then i would go in that direction.

Thanks for the additional insights. And Linda, your point of wanting to be compensated for the liability of a home purchase makes sense. Probably the best way of going forward is simply to talk with him and see if we can agree with as the fairest way of going forward.

Bingo!... just be open and honest and the rest will fall into place.

Linda didn't say liability, she said responsibility (meaning the paperwork and phone calls).

I'd DIY this, hire an attorney to do the paperwork, and write the agent a check for $1000. Then it's not a commission that they have to split with a broker and all that nonsense.

How much time has the guy spent helping you so far? If it's been 10 hours total and you give him $1000, that's plenty of compensation IMO.

weedyacres....along with the responsibility of handling the paperwork and phone calls comes liability and that is why Realtors have E&O Insurance. A funny thing about E&O Insurance at least for me anyway....I have no E&O insurance unless I am directly involved in a transaction and for me to be directly involved in a transaction means that my Broker also assumes Liability and for this to happen all commisisons/payments for services must go through my Broker.

If someone wants to pay a Realtor for mowing their yard, painting their house, or many other tasks then pay them direct...if a Realtor is being compensated for being helpful in terms of some of the legal issues then in my area any funds paid better go through the Broker. The helpful in terms of some of the legal issues is even a slippery slope for Realtors to be on.

I would hope that the Realtor would advise you that he couldn't be paid direct for his services rendered and must go through his Broker....unless of course he is the Broker/owner.

For clarity's sake, when I first spoke with realtor about this and said I'd like to hire him when I eventually took possession of the house, he pointed out a potential legal issue and referred me to an RE attorney and title officer. He didn't actually provide advice, but his referral was helpful and I wouldn't have known there were legal hurdles otherwise. Subsequently, he gave me referrals to a roofer and a cleaning service. So he's been helpful and I'd hate for him to not get any compensation if I end up selling to the neighbor, so I thought one way would be for him to handle the paperwork for that transaction. (If it happens...)

Kosmokitchen, whatever compensation you give him, he has to turn in to his broker. You stated you may need his assistance if your offer with your buyer comes to fruition. What would make that sale any different than any other sale with a buyer? I dont know of any realtor that would take this on for $1000 or $1600. I certainly would not. And weedyacres, you obviously have no idea what a realtors job entails. There is so much more than paperwork and phone calls. The agent cannot legally take a check from the seller for whatever work he did. It sounds like you think its more of a secretarial job. I wasnt referring to phone calls and paperwork at all. FWIW, i have been negotiating on home inspection issues on a transaction since last sunday. Who would take care of this if something like this came up? Who would take care of battling with the appraiser if the house doesnt appraise? That doesnt get fixed with a phone call.

All real estate activity by a licensee must go through the licensee's broker.

If all the realtor has done is give you referrals to other people (lawyer, roofer, cleaner), I wouldn't feel the need to compensate them. It's not like that took much effort.

Send them a $200 belated Christmas/birthday gift card and make sure on the card you write some garbage about wishing them a perfect 2016...

There are many ways to send a thank you gift without binding them to a contractual relationship, which is what you are asking anyway. You want to thank them for the referrals they provided, so just do that.

The realtor that has helped you sounds like they are doing it without expecting anything in return. However, it would be very prudent of you to ask them to help you sell it to the neighbor with all the necessary disclosures and legal documents. There is so much time that goes into preparing those forms, making sure it all gets done right, explaining the details to each party and coordinating it so everyone signs. What would it cost if you had to hire an attorney to draft a contract with your neighbor? You may consider talking frankly with them and offering a small percentage. I have offered a low commission on a small property to help with the paperwork. Remember, the realtor has professional insurance. I like the thank you gift, free dinner and other ideas. Think about how much time they invested on your behalf....just talk to them frankly about it.

One important point, the real estate agent may market your property and put on the multiple listing service to get the most money for you. Your neighbor's offer may not be market value....find out by listing it. Real estate prices are rising!

There is so much time that goes into preparing those forms, making sure
it all gets done right, explaining the details to each party and
coordinating it so everyone signs. What would it cost if you had to hire
an attorney to draft a contract with your neighbor?

Um, about $500. So much time? It's a stack of boiler-plate, fill-in-the-blank forms. My attorney did it all in a couple hours.

linda, fyi - Weedy is an extremely experienced and competent real estate investor. She has, and could done everything a realtor could, but I doubt a regular realtor could work at her capacity.

One attribute of this profession that has me coming back is that it is not boilerplate. Every deal I am involved in has it's own set of circumstances, as does every buyer and seller. Every single deal is different than the last, and the forms and addendum and details are tailored to each one's circumstances.

I am not saying it is difficult, but I am saying that one has to be learned and current and detailed or you will get your clients and yourselves in a big mess, real quick.

If you come to an understanding with the potential purchaser, hire a competent real estate attorney to draw up the documents. They will make sure all legalities are properly observed. Just be sure to disclose anything in writing that you attorney advises you to disclose. Your attorney will write a contract of purchase that will protect you from liability. That's why you hire them.

The agent, a friend, is offering you advice. There is no contractual relationship or obligation. However, it would be good business practice to pay your agent friend a nominal fee for their time and advice. $1,000 should do it.

People buy and sell real property privately all of the time. Realtors are not a requirement. Under your circumstances, an attorney is all that is needed.

As the OP, I appreciate everyone's thoughts on this thread. It seems like the realtors in the crowd (understandably) see the value in their services and the benefits they could add even in a private sale, while others certainly see this as a job that a RE lawyer could efficiently handle at a lower cost.

In case anyone cares, I think this is where I'm landing: see if the realtor would take a 1.5% commission. 5% is standard here, and if he's not splitting the commission with a buyer's agent that gets us down to 2.5% and then we'd be knocking another 1% off since we don't actually have to market the house. On a $500K house, that's $7.5K, presumably half of which goes into his pocket.

If he's not game for that, I'll hire an attorney and compensate him with a gift card.

Still, 1.5% commission on a house is FAR more than you would pay an attorney (and the Title Company, if you are in a Title Company state), and the attorney is competent to make sure you are legally protected. The Realtor is not qualified to draft any provisions, but is only able to fill out forms (of course they violate this all the time and draft provisions, mostly harmlessly, but once in awhile, it comes back to bite them).

A Realtor who has no real role in selling your house should jump for joy at $7,500! Goodness. You are quite generous. I'd send a gift card or a small financial gift and get a REAL ESTATE (not just any) attorney to draft the documents.

Way too generous for the described services. Your relationship created no obligation. Doing what you described might create a business relationship that would obligate you even further. Private sale is just that, Private. I'm not being cheap, I just saying you have no obligation. It is only generosity on your part.

Do each of us that commented on this thread get 1.5% too? We've given you valuable advise too! ;)

Email me and I'll send you the address where you can send my cheque.

I'm a Realtor, and any good Realtor will offer you assistance with all kinds of referrals, advice, etc in the hopes of getting the listing. But that does not obligate you in any way if the agent did no marketing of the home and wasn't the procuring cause of the sale. We all provide that kind of assistance to people all over town so that we're viewed as friendly, professional, knowledgeable, and available in the event that you actually do need our services. Once you have a buyer and you are using an attorney for contracts, the attorney should be able to handle whatever comes up, along with a title company to do necessary paperwork and prep for closing.