Broker, I need you… broker, get lost!

24 Jan

The above sentence describes the biggest love-hate relationship in the residential real estate business. More and more I’m seeing FSBO’s (For Sale by Owners) trying to sell on their own while at the same time inviting a broker to bring a buyer if they can’t find one themselves. If the broker does and the sale closes, they’ll pay that broker a so-called “co-op”; i.e., about half of a typical commission for their trouble. But in addition to beating the seller at the who finds the buyer first game, the catch for the broker is that she has to show up at the seller’s door with that buyer in hand. No advertising, marketing, knowing the owner or even much about the property itself is required ahead of time! Just get that buyer to show up and make a good offer, and everything will be ok.  In theory.

There are a few more complications, like at what point does the seller sign something to promise to pay that commission at closing? Normally, that’s a listing agreement.

But while our seller embraces this marriage of convenience with a “buyer’s agent” for as long as he or she is needed, they’ll sic the dogs on anyone who shows up wanting to get a relationship in writing ahead of time. You may have seen the ads saying “will work w/ a buyer’s agent, but please no calls from listing agents!” Of course sellers do get hassled to death hearing from ambitious brokers who may want to list their property. But that annoyance does not mean the seller should completely trash the idea of working with a good listing agent.

It doesn’t have to be stay away you agents who want to know for whom you’ll work and what you’ll have to do to earn a commission. Yes, that’s called a “listing.” But some sellers think its easier to fly without one, feeling a buyer’s agent and a listing agent are two different kinds of people that work under two sets of rules. Its as if one had 3 legs and 2 arms, and the other 2 legs and 3 arms. While its true that any agent can specialize in working exclusively with buyers or sellers, by and large most good ones do work under one set of rules and can competently and fairly handle both sides of the same street. If I were a buyer, I wouldn’t want to work with a buyer’s broker who had no “on the street” experience with representing sellers. And I couldn’t see the reverse either. One broker has to know what that other broker is thinking since neither one can represent both parties at the same time for the same property. In Colorado, one broker can represent the buyer or the seller, or neither as a neutral third party (a transaction broker), if non-representation is what the customer really wants and just needs someone to shuffle the paper.

Listing agents look for buyers for properties their clients are selling; buyer’s agents search the MLS for homes for buyers they already have (though many buyers checkout properties they find themselves online).

But too many buyer’s agents don’t even look at FSBOs, as they’re not all organized into a single database and thus hard to find. Even if they found the right FSBO, they would have to work with both their buyer and the seller at the same time in some capacity. Some don’t want to do all that work for a half commission (they’d rather do half that work for half the commission). Easier for them to steer their buyer towards an MLS listing that comes complete with another broker ready to share the work.

ADVICE: Sellers, think about working with someone smart enough to market and understand your property from both points of view. Find someone who knows the subtleties and nuances of this complicated market, including the psychology and economics of selling solo. Define the relevant relationships and put it in writing.  Look for someone savvy enough to snag a prospective buyer to come out, take a look, and write an offer maybe. Or at the very least, work professionally with another broker who is already working with their buyer.

Two more Important Safety Tips: 1) with the proper agreement, a FSBO can continue to sell on their own for no commission while their broker seeks a buyer, and 2) all commission rates are negotiable!

A good broker tells his or her client about this stuff, and then does the job professionally for both buyers and sellers, spelling out who does what for whom and how they intend to do it ahead of time. Listing agent or Buyer’s Agent, they’re just two sides of the same coin.


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