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I'm planning on selling my house FSBO. I live in a very seller-friendly market in West Michigan. I have not listed my house yet and already some people have found out (through word of mouth) that I'm planning on selling and expressed interest. Two separate families have walked through the house and both have said they are very interested. Neither of these walk throughs were arranged by the buyers agents - their agents weren't involved at all.

Given that the buyer's agents didn't do any work to find this house, arrange showings, or anything, and I know that the buyers are very interested, what should I pay the buyers agents - if anything? Is it an option to offer to pay a flat fee, similar to how you might pay a real estate attorney?

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    Seems to me like that'd be part of the negotiation – Daniel Mar 9 at 1:38
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    I don't know what it's like in Michigan, but the FSBO transactions I'm familiar with have had the buyer compensate their agent directly. You should negotiate what you want to receive for your home, and any agent compensation is between the buyer and their agent. If there's no agent, just find yourself a real estate attorney to do the transaction. – Todd Mar 9 at 1:59
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    FSBO is a huge pain in the butt, with lots of legal pickayunery you have to get right. Are you sure you're ready for all that? Do you have good track record with deep, wide super-fastidious geeky stuff? – Harper - Reinstate Monica Mar 9 at 19:13
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As a matter of contractual obligation you owe them nothing. It is normal when two agents are involved that they split the commission, but you have signed nothing to that effect. Buyers agents have contracts with the buyers that cover this situation, and normally the buyers pay the agent their commission. It's typically half a seller's commission.

This leaves a problem in that the buyers agent may use their influence to persuade the buyers to not buy your house, but instead buy a house sold by an agent that will give them a commission. Doing that would be highly unethical, but very possible.

I recommend the following:

  1. Talk to FSBO and get their advice, paying for it if necessary. (Assuming you are with FSBO the organization and not just selling with no help) Or get some advice from an agent on a strictly non-commission basis.
  2. Talk to the buyers about this at the first opportunity. Find out what their deal with their agent is. Make sure they are aware of the potential for conflict of interest. The buyers' agent may try to persuade you not to talk to the buyers directly. Get the buyers' contact info.
  3. Talk to the buyers' agent about their expectations. Having them not actively opposed to you would be a good idea.
  4. You may want to consider paying the buyers' agent fees yourself (of course raising the price you will accept by that amount - you may or may not want to tell the buyers that).
  5. If the buyers haven't yet signed a contract with an agent, remind them they don't have to. Then you can do the whole deal without commission.
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    I'm not familiar with FSBO the organization. This is my first time selling. Is that forsalebyowner.com? – PICyourBrain Mar 9 at 11:41
  • I was thinking of fsbo.ca but that one works too. in any case they provide specific assistances for flat fees, and might be worth it if you are in an unusual situation. – DJClayworth Mar 9 at 13:28
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    "buyers agent may use their influence to persuade the buyers to not buy your house, but instead buy a house sold by an agent that will give them a commission. Doing that would be highly unethical, " Actually, finding better options for the buyers is precisely the realtors job. There are unethical arguments and persuasion techniques they could employ, but as far as you've described, I see nothing out of ordinary. To be clear: Being in a conflict of interest and being unethical are largely different things. – Mefitico Mar 10 at 13:39
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I am not an agent, but I have both bought sold real estate dozens of times and wanted to share a few thoughts in response to your question and to add to the accepted answer:

... what should I pay the buyers agents - if anything? Is it an option to offer to pay a flat fee, similar to how you might pay a real estate attorney?

Yes, (at least in my state) compensation to an agent can be just about any percentage or flat amount that is agreed upon. Get it in writing, and you're good. In my area, 3% is standard for a buyer's agent, but you may be able to negotiate something else.

Given that the buyer's agents didn't do any work to find this house, arrange showings, or anything ...

It depends on the deal, but oftentimes much of the value that an agent provides a buyer is not in simply finding the right property, but everything that follows after: negotiating the deal, making sure their client and their interests are contractually protected, keeping on top of deadlines and drafting addenda as needed, connecting their client with the right people to do inspections/financing/etc, more negotiation after an inspection, dealing with unforeseen issues that arise, etc.

Finally, as others have mentioned, there are what are known as "discount brokerages". These are still Real Estate Brokerages with agents, but they offer minimal services for lower pay -- often flat rate, and often upfront. This may or may not be a good option in your circumstance.

Personally, I've done enough to know that I would never buy or sell without a good agent, and I would never do so with a bad one.

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FSBO is harder than you think

Wow, you are new to this. The deal is that selling a house is a huge proposition, certainly the largest business deal an average person will ever do. This is a place where scammers and swindlers would run roughshod. Obviously, if citizens were losing their nest egg, that would have a very chilling effect on the real estate market. To preserve the market, there are sophisticated controls in place to protect buyers' and sellers' interests. Some are law, some are best practice. These are done so smoothly and habitually that it makes it look easy. It is not.

What realistically happens the seller doesn't know what to do. The only person who knows is the adversary, whose job is to trick the seller into giving away the store. The seller necessarily is put on the defensive, and thus resists everything, even normal stuff. The buyer and agent deem the seller "too much of a PitA to deal with", and either lower their offer or walk away.

If you want to learn the skills, then pursue a real estate agent's license in your state. It's not thaaaat hard, and it will at least force you to touch the training material.

The standard way broker fees work

Normally, when you list a property with an agent, you agree to a 6% commission for the agents. That can vary in certain markets, for instance it's the same work to sell a $20,000 Detroit home as a $1,200,000 Berkeley home, so you may see lower agent's commissions in top markets. But the gist is, the buyer's and seller's agents split that fee 50/50 if it's 6%, or they work out an equitable or customary split if it's not.

So in most cases, the buyer's agent expects to see 3% for their half of the labor of all that "harder than you think" stuff.

If paying the buyer's agent 3% is a big problem for you, then you may have trouble marketing the property. I've replaced a buyer's agent with an attorney twice in the past; that bill wound up being 7-12% of property value not including the environmental site assessment.

Taking care of the buyer's agent in an FSBO

In an ideal world where cash flow is never a problem, the buyer would simply reduce their offer by 3%, and then pay the buyer‘s agent 3% out-of-pocket.

However, in a world where cash flow matters, the buyers will very much want to fold that 3% into the mortgage, just as they already can in an agent sale. So if you want to be competitive, you will need to help them do that. As a bonus, this will allow them to compare your house at par with other properties.

So this adds up to you paying the buyer's agent the customary amount for your area, out of your end. Of course, that's a slap in the face if your whole point of FSBO was to avoid agent's fees, but welcome to FSBO.

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