SUBSCRIBE NOW

Dear Monty column: Can a for-sale-by-owner pay a commission to an agent for finding the buyer?

Richard Montgomery
More Content Now
The Daily Herald

Reader Question: My house is for-sale-by-owner. I want to avoid the commission. I have people coming to see the house, but it has been almost three weeks, and none of them have come forward yet with an offer. I got a call from an agent who wants to show the house but wants to know if I will pay the buyer's commission. For all I know, the customer may be someone to whom I have already shown the house. I have had agents call to list the home, but this is the first one who wants to show the house. Can I do this? And if I can, should I do this?

Monty's Answer: You can pay the agent's broker. If the agent is suggesting that you pay them directly, it may be evidence of a dishonest agent, unless the agent is the broker. If you decide to cooperate and ask for clarification on whom to pay, and the agent clarifies by apologizing and stating they meant the broker, it sounds like just a poor choice of words initially. If the agent is not the broker and suggests you pay him directly, you may want to reconsider.  

What should you pay the broker?

As a for-sale-by-owner (FSBO), you are in charge, as long as what you decide to do is not illegal. You can do whatever you choose because, currently, you have no contract with a broker.

Because your home is not in the MLS, the agent will have to negotiate with you for the fee. The agent is used to the MLS split, and will likely ask for that percentage. They may negotiate from the stated co-broke split in the MLS because of their fear if they cannot reach an agreement with you, the buyer will want to see the house with or without them. Why should this matter to you? Consider: What exactly are the responsibilities the agent is going to take on? Is it just an introduction? Will they write the contract? On whose behalf will they negotiate, or are they a transactional agent (one who takes no position)? Will they handle the closing? Negotiate the fee based on the responsibility they are accepting.

Your comment responses

There is a high likelihood the prospect that wants to see your home is already aware of it. You could ask for exceptions if you know the names of the people who have toured your home. Still, if they have aligned with a real estate agent, their actions suggest that they chose instead not to negotiate directly with you. You could assume the prospect has already seen your home in your decision to cooperate. Three weeks is not an unusual length of time to go without an offer.  

Here is an article about the myths of real estate, and one of the myths deals with for-sale-by-owners. Here is another column that is a comparison between a full-service real estate company and the services of an FSBO real estate company. They may add some color.

Richard Montgomery is the author of “House Money - An Insider’s Secrets to Saving Thousands When You Buy or Sell a Home.” He is a real estate industry veteran who advocates industry reform and offers readers unbiased real estate advice. Find him at DearMonty.com.