How can you best represent your buyers — and yourself — when they’re interested in homes that are “For Sale By Owner?”
Working with “For Sale by Owner” home owners can be more complicated because the sellers may not be up to speed on commission expectations and other important aspects of the transaction.
Here are five tips from buyer’s agency expert Lynn Madison that can help you reach a deal that both you and your buyer can be happy with. For more of Madison’s expert tips, sign up for the ABR Buyer Agency course through RE/MAX University.
Pick up the phone
- Reach out and ask the seller if they’re cooperating with Realtors. Most are looking to save on the listing side and not necessarily on the buyer’s agent commission, but it’s best to be sure so you can prepare your buyers.
- You have the option to write in a minimum commission requirement in your Buyer Representation Agreement. If the For Sale By Owner seller is offering less than your desired rate, you may be able to ask the buyer to fill the gap according to your contract.
Ask how much the seller is willing to pay
- A “For Sale By Owner” seller is not thinking about the nuances of your commission payment, so make sure to establish expectations up front. Ask if the seller will be paying the commission or if they expect it to come out of the sale price of the home. For example, say a home has a listing price of $100,000 with 3 percent commission offered. If the commission will not be coming out of the sale price, you’ll need to add $3,000 to the offer the buyers submit – with their full permission, of course.
Break down the commission agreement for your buyer
- Be transparent about how you’re getting paid. Your buyers need to know if your commission is being added to the listing price. If your commission will be taken out of the sales price, buyers need to know that, too.
Make sure you have a representation agreement in place
- Without a signed agreement between you and your buyers, there may be nothing stopping them from walking away from you.