WHO PAYS COMMISSION ON FOR SALE BY OWNER (FSBO)?
A lake buyer I’m working with asked me this week how they were to handle ‘For Sale By Owner Listings.’ I explained that most sellers offer broker participation, meaning the seller agrees to pay the selling broker a selling commission. The selling broker will write the offer, negotiate the offer and move the contract to closing. If the seller refuses to pay a commission, then the buyer could opt to pay the commission at closing.
Most buyers are turned off by the idea of paying ‘extra’ at closing though. Does it really end up costing extra?
How is the buyer to formulate where the offer and ultimate sales price ought to be without the help of a buyer agent researching the market and specifically, the neighborhood? In helping a buyer decide where to start in making an offer, we will pull and review all active listings, pending listings (those under contract scheduled to close) and sold listings for not only the immediate neighborhood, but the area around the property as well. It’s important for the buyer to know what a realistic listing to sales price ratio is.
When we were selling a large number of foreclosures, I made it a point to make sure the buyer knew that the purchase of a bank owned property for less than 15% off list price was unrealistic. And that kind of list to sales price spread was only found after the property had been sitting on the market for a while or had problems, typically. Asset managers for bank and government owned properties can only take a certain percentage off of list price. I submitted an offer on a river cabin in Towns County near Hiawassee right after it hit the market over a year ago. The list price was $119,900 and the buyer offered $100,000. The offer was countered at list price. It ended up selling a couple of months later for less than my original offer some time later. The point is that they wouldn’t and couldn’t take an offer 20% off of list price, especially the first week on the market.
Other then help in formulating offer and sales price, I help with these important aspects:
Sellers Disclosure Statement - Review and point out any red flags that might need further questioning.
Due Diligence Period - Ensure that there is an adequate Due Diligence Period enabling the buyer to have the property inspected and research the neighborhood and area thoroughly. Prior to the Due Diligence Period ending, the buyer can terminate the contract for any reason whatsoever with no penalty, receiving full refund of earnest money. In essence, the buyer has an option to buy during the Due Diligence Period.
Special Stipulations - Offer advice as to Contract’s Special Stipulations, especially when the property is lake property involving a transfer of dock and related permits. Personal property (such as a boat dock, refrigerator, or window treatments) requested as staying at no additional cost needs to be stipulated as a special stipulation or shown on Bill of Sale attached as an Exhibit to contract.
Contingency Exhibits - Ensure buyer is protected with Financing and Appraisal Contingencies (or any other contingencies buyer needs) attached to contract as Exhibits.
Recommend Home Inspector - I have been recommending Chris Taylor with HomeSafe Inspection since he bought the franchise and started the business in Gainesville/Hall County in 2004. Once the inspection is complete, concerns and issues are addressed with an Amendment to Address Concerns. With this amendment, the buyer either stipulates how each problem or concern is to be remedied, or the buyer can stipulate a price concession in lieu of repairs.
Order Termite Inspection - Also, during the Due Diligence period, I order a termite inspection for my buyer client at no cost by Arrow Exterminating. Termite inspections are no longer required with most loans. Therefore, some buyers altogether miss the opportunity to get a termite inspection prior to purchase.
Home Warranty - Offer Opportunity to Buy One Year Home Warranty or have seller pay for it. Sellers are often confused by a contract stipulation where a buyer wants a one year home warranty. The one year home warranty is written by a third party company and typically costs from $375 to $500. When a seller agrees to pay for a home warranty, I have found that the buyer is not as concerned or worried about the home inspection, knowing that the warranty will cover most items that could go wrong and cost substantial money. If a buyer requests a home warranty, the smart and savvy seller will agree and pay for it.
I would say that most smart and savvy buyers can recognize and appreciate the value of a good real estate agent. For helping in finding your next home, contact me thru my website at KimWaters.com.
Most buyers are turned off by the idea of paying ‘extra’ at closing though. Does it really end up costing extra?
How is the buyer to formulate where the offer and ultimate sales price ought to be without the help of a buyer agent researching the market and specifically, the neighborhood? In helping a buyer decide where to start in making an offer, we will pull and review all active listings, pending listings (those under contract scheduled to close) and sold listings for not only the immediate neighborhood, but the area around the property as well. It’s important for the buyer to know what a realistic listing to sales price ratio is.
When we were selling a large number of foreclosures, I made it a point to make sure the buyer knew that the purchase of a bank owned property for less than 15% off list price was unrealistic. And that kind of list to sales price spread was only found after the property had been sitting on the market for a while or had problems, typically. Asset managers for bank and government owned properties can only take a certain percentage off of list price. I submitted an offer on a river cabin in Towns County near Hiawassee right after it hit the market over a year ago. The list price was $119,900 and the buyer offered $100,000. The offer was countered at list price. It ended up selling a couple of months later for less than my original offer some time later. The point is that they wouldn’t and couldn’t take an offer 20% off of list price, especially the first week on the market.
Other then help in formulating offer and sales price, I help with these important aspects:
Sellers Disclosure Statement - Review and point out any red flags that might need further questioning.
Due Diligence Period - Ensure that there is an adequate Due Diligence Period enabling the buyer to have the property inspected and research the neighborhood and area thoroughly. Prior to the Due Diligence Period ending, the buyer can terminate the contract for any reason whatsoever with no penalty, receiving full refund of earnest money. In essence, the buyer has an option to buy during the Due Diligence Period.
Special Stipulations - Offer advice as to Contract’s Special Stipulations, especially when the property is lake property involving a transfer of dock and related permits. Personal property (such as a boat dock, refrigerator, or window treatments) requested as staying at no additional cost needs to be stipulated as a special stipulation or shown on Bill of Sale attached as an Exhibit to contract.
Contingency Exhibits - Ensure buyer is protected with Financing and Appraisal Contingencies (or any other contingencies buyer needs) attached to contract as Exhibits.
Recommend Home Inspector - I have been recommending Chris Taylor with HomeSafe Inspection since he bought the franchise and started the business in Gainesville/Hall County in 2004. Once the inspection is complete, concerns and issues are addressed with an Amendment to Address Concerns. With this amendment, the buyer either stipulates how each problem or concern is to be remedied, or the buyer can stipulate a price concession in lieu of repairs.
Order Termite Inspection - Also, during the Due Diligence period, I order a termite inspection for my buyer client at no cost by Arrow Exterminating. Termite inspections are no longer required with most loans. Therefore, some buyers altogether miss the opportunity to get a termite inspection prior to purchase.
Home Warranty - Offer Opportunity to Buy One Year Home Warranty or have seller pay for it. Sellers are often confused by a contract stipulation where a buyer wants a one year home warranty. The one year home warranty is written by a third party company and typically costs from $375 to $500. When a seller agrees to pay for a home warranty, I have found that the buyer is not as concerned or worried about the home inspection, knowing that the warranty will cover most items that could go wrong and cost substantial money. If a buyer requests a home warranty, the smart and savvy seller will agree and pay for it.
I would say that most smart and savvy buyers can recognize and appreciate the value of a good real estate agent. For helping in finding your next home, contact me thru my website at KimWaters.com.
Glad you shared this! I'm a little lost with regards to these real estate contracts. And just in time, I'm planning to move in one of these apartments in reisterstown md.
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