HawthorneVillager.com

If your home isn't listed and an agent approaches you with a buyer, how much commission are they entitled to?
I know it's whatever is agreed upon, but what's a fair amount?

What is fair to one person and one scenario may not be in another. Entitlement has to be justified, so if a Realtor has been contracted by a client to find them a home and they match you and their buyers' up, then they need to be compensated for their work.

The typical offering for Buyers' agents is 2.5% of the final selling price, plus HST. This is commonplace in the Milton real estate market. This does not include representing you in any way or any additional costs that may be involved.

The Realtor may save money on staging, marketing, photo's, video, listing fees, etc., if your home is never actually listed for sale, so you will likely be saving some money by eliminating those costs usually fronted by your listing agent.

The key is to speak to the Realtor about this first and sort out both yours and their expectations so that there is no mis-understanding.

Best of luck!


Ariel

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Ariel Kormendy
Real Estate Sales Representative

The Kormendy Trott Team
Century 21 Miller Real Estate Ltd.
647-464-0957 Direct

www.kormendytrott.com
www.facebook.com/kormendytrott

Ariel, excellent post. 2.5% is indeed the standard buyer commission, but what is FAIR could be a slightly lower amount if the agent isn't greedy and if you have exactly what their clients can't find anywhere else, or a slightly higher amount if you actually want their brokerage to represent you as well with the paperwork.

The NUMBER ONE THING to remember when an agent says they have a buyer for you, is to not let them in your house unless they have the buyer with them. Otherwise, they are using an old (annoying) 'foot in the door' trick of just getting to your table when they don't actually have a buyer, and pitching their services to you. They make up an excuse like "The buyer bought another home" or "I have SEVERAL buyers looking in this area". 90% of the time it is absolute baloney and you are stuck with an in-house hour long version of an air-duct cleaning telemarketing call.

There is one way to cut through the crap and that is to make sure they bring their buyer with them, and have NO sales talk about services at that appointment - that can be at a 2nd appointment IF you want it.

The NUMBER TWO THING to remember is if an agent approaches you and actually has a legitimate buyer, is to contact your lawyer right away, and make every offer "conditional for 3 days upon the sellers solocitor's review". Why? Because the buyer has an agent representing them and you don't. Small wording differences in contracts can be a huge legal mess if you're not protected. Ask one of us on here for some free advice or coaching (It would take us 5 minutes to review offer wording), AND contact your lawyer before making anything a firm deal.

Hope this helps!!

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Fred De Carolis
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Two Real Estate Class Acts above have piped in! Trust their insights, LovelyThanks4Asking.

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What is the difference between ignorance and apathy? I don't know and I don't care.

Thanks, that actually helps a lot! He's already been in the house with that exact story, but it was plausible because there was a bidding war on the house a few doors down. Our house is very unique on a unique street so it's possible that a buyer would be willing to wait several months, but knowing that this is an old trick makes me feel better about perhaps going with a different agent. It seemed odd to me that we offered to just sell now and rent until our house was built and he didn't bite... how could he be working in his client's best interest by telling them to wait and driving the price of the house up another year?
For the record we're talking about approx $80,000 in commission if we pay 5% so I (personally) don't think it would be unreasonable to offer a flat fee to an agent to have an open house and take the best offer, but wasn't sure if this would be something customarily agreed to by agents?

5% = $80,000, so your house is worth $1.6M?
In that case, two more pieces of advice:

1) don't pay anybody 5%, ever , and
2) definitely have somebody look out for your interests, at whatever level of service makes sense to you. At 1.6M a flat fee would not be unreasonable for a listing agent, if in addition to the 2.5% fee to the buyers agent. BUT forget the "open house only" idea, just speaking from experience, if I am going to do an open house, I would still want to market the heck out of the home, from staging to HD video, to build as much hype as possible before the open house. $1.6M homes need more than 3 directional signs for an open house to be successful. You can't pay an agent even an hourly rate for a good open house, when a little effort on their part taking on the actual listing could possibly net you 50-100k higher at that price range.

Open houses have far fewer buyers in your price range, and barely a few that work without agents since they want their interests looked after as well, so the house needs to be marketed properly, and the right people need to be attracted (Agents as well as the general public). The last few million+ homes I've sold have all been through other agents, not open houses. You need "open house events" catered to agents from not only Milton, but also Oakville, Campbelville, Carlisle, and some of the more affluent areas of the GTA.

_________________
Fred De Carolis
FREDHELPS.COM or on Facebook
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The thing that concerns me about staging is that the second last house that sold was beautifully restored and sold for over $1m only to be torn down a year later (even their pool was dug out) and entirely rebuilt. Whoever bought the home didn't care what money went into it, they were only paying for the land, which might be the case here. The house is 100 years old. It's well taken care of so COULD be nicely staged but if someone is only interested in it to take a bulldozer to the property, I don't want to waste time and money.
It's a unique home on a unique street and houses don't come up for sale often. The last house sold in one afternoon with multiple offers with a much smaller property and in way worse shape than ours. Our claim to fame is really just the lot and amount of parking.
I'm hoping we have the same luck and I don't have to listen to an endless parade of hagglers.

That's what an agent is for - so you don't have to listen to hagglers hehe.
If you have something THAT unique, why don't you stick a comfree listing up for a couple weeks to see what comes forward? IF you have no competition, who knows what will come out of the woodwork. If you do this, let me know so I can tell you what to do (and NOT to do) with private listings to help out your chances.

At a minimum, have a couple different opinions from agents you invite over, who you tell up front you are probably not going to list but you would just like a home evaluation done. Make sure they have done million dollar properties before.

Well now you're back to square one -- having annoying agents over to pitch their wares hehe...

_________________
Fred De Carolis
FREDHELPS.COM or on Facebook
Thanks for your support in the
search for Milton's Favourite Realtor!
REVEL REALTY -- MILTON'S FAVOURITE REAL ESTATE BROKERAGE, as voted by YOU!!!

i went with comfree and sold to a private buyer. cost me $600 to sell my house but i was lucky to get a private buyer. Go with a realtor if you don't have the time or feel uncomfortable making negotiations, plus they provide many other great services. But if you have a month or two extra, try comfree as it can save you thousands. in your case, at least $40,000.

All excellent posts above but here's a few more tips.
Some agents are famous for showing up with a "buyer" when it's actually another agent in their office or a friend of theirs posing as a buyer. The seller does all the paperwork and...surprise...the "buyer" couldn't get financing or the deal falls apart for some other reason. In the meantime the agent has already established a relationship with you and most importantly of all for him/her, he's managed to get you to sign a contract to list with him/her probably for at least a couple of months.
Another tip too...
if someone comes up to you and says they have a buyer for your house and it's not even listed, imagine how many potential buyers you could be missing out on if you sell it to them without putting the home on the market. I've had this happen over a dozen times where clients have said an agent knocked on the door and said they had a buyer. Guess who that agent is working for? The buyer, not you so if they're acting in their clients best interest they're going to try to get the home at a steal. The last thing they want is to see it listed because then it'll be open to competition.
In each case we sold for much more than the door knocker offered and way more net after all commissions.
Hope this helps

Cliff

_________________
Cliff Barron
Selling in Milton for over 14 years!
Sutton Group - Summit Realty Inc. Brokerage
#1, 07-18 company wide!

cbarron@sutton.com
http://www.callcliff.ca
905-286-5888

Thanks for this, that's exactly what seems to be happening... If there does happen to be a real buyer, and we're happy with the offer, is there any way to go about it without getting burned? I was thinking maybe take a deposit and not sign with the agent? Or would another agent work with us for a small fee, seeing as the buyer has already (allegedly) been found?
My guess would be if we told this agent that's bringing us the "buyer" that we're with another agent, there would be very little point to him continuing with this if there wasn't a real buyer?

There are a few really smart ways to go about handling this buyer agent.

However, the right approach would depend on when your planning to move.

That being said, when are you planning to move?

_________________
LEON VAYMAN, BROKER
RE/MAX Real Estate Centre Realty Inc., Brokerage (MILTON Office)
Direct/Text: 905-616-7307
www.LEONVAYMAN.com
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CLICK HERE to Listen to what Leon's past clients are saying!

It would be June or July.

Do not sign with an agent in this situation, unless it is a "Customer Service Agreement" for selling to this particular buyer ONLY, which expires almost immediately as well. (A customer service agreement worded correctly does not tie you to that agent for anything outside of that buyer).

If you are worried about getting burned, email or call me before signing ANYTHING and I will gladly look through all your paperwork to make sure you're protected. I hate seeing people get taken advantage of in my industry - it happens all the time. I will charge you the huge fee of $0.00, and tell you what questions to ask your lawyer as well. And sure, tell the other agent you already have an advisor, but some sly ones have answers for everything and they'll keep pushing until their sign in on your lawn.

REMEMBER - if an agent actually does bring you a buyer, they are legally working in the best interests of that buyer, NOT you, so they will word certain clauses in favour of their buyer.

Don't be shy, email me for anything, and you know I'll never shove a contract in your face. Just here to help a neighbour!

_________________
Fred De Carolis
FREDHELPS.COM or on Facebook
Thanks for your support in the
search for Milton's Favourite Realtor!
REVEL REALTY -- MILTON'S FAVOURITE REAL ESTATE BROKERAGE, as voted by YOU!!!

Ok that's perfect!

Assuming the buyer will still be around next year, I would strongly advise that you do not agree on any amount of commission with anybody at this point. Instead, I would suggest that you keep the contact info of all interested parties and let them know that you will contact them closer to the time you are actually moving to review any and all offers.

When the time comes that you want to sell the home to these potential buyers, I would then advise that the agents submit their offers in writing along with the amount of commission that they would like to receive from you, and definitely with a deposit in the form of a bank draft made out to your lawyer (most likely though, the buyer agent will try to have their brokerage hold the deposit in trust).

Please never negotiate anything verbally because in our industry talk is cheap and a written offer with buyer signatures is always a more serious offer.

Once you have received a signed written offer you will now be in a position to negotiate the price, terms, and agents commission. But please, only do this in writing by way of a counter offer and make sure the buyer agent shows it to his client.

If your property is one of a kind and the agent does not have similar properties to sell to his client and the buyer agents client really wants the property, then you may have leverage to negotiate the agents commission down to whatever pleases you, and the buyer agent is willing to accept.

If you are a seasoned negotiator you will be able to gauge how low of a commission the buyer agent will take during the negotiation process.

Also if buyer agents are pressing you to commit to a commission now, just tell them that the commission will depend on the terms of the offer, and that you will be happy to discuss it once the submit a signed offer.

Hope that helps.

_________________
LEON VAYMAN, BROKER
RE/MAX Real Estate Centre Realty Inc., Brokerage (MILTON Office)
Direct/Text: 905-616-7307
www.LEONVAYMAN.com
facebook | Linkedin | YouTube
CLICK HERE to Listen to what Leon's past clients are saying!