Buyers’ Agents and the FSBO Home Seller

The main reason a homeowner decides to sell For Sale By Owner (FSBO) is to keep the real estate agent’s commission in their own pocket.  On a $250,000 home, that could be as much as $15,000!

But there are two parties in any home sale - the seller…and the buyer.  You may feel quite comfortable with the entire selling process from the pricing to the prep to the paperwork.  You may have a title company, a mortgage broker, and a lawyer all lined up.

That doesn’t mean your buyer does.  Indeed, most real estate transactions use real estate agents, and most buyers and sellers think that way.  They turn to the ‘experts’ because they simply don’t feel comfortable doing it all by themselves.

As a result, many FSBO sellers will be approached by potential buyers who use what are called buyers’ agents.  All that means is that the buyers have a real estate agent to represent them and their interests. 

Interestingly, most real estate transactions already involve a buyer’s agent.   Were you to use a realtor, chances are she will have to split her commission with another agent…the one who brings the buyer to the table.  This is actually in both parties’ best interest as it’s impossible for a real estate agent to get the seller the best deal possible if she also has to get the buyer the best deal.  (Keep that in mind if you decide not to sell FSBO after all!)

There are pros and cons for a FSBO seller to consider when deciding whether or not to allow buyers’ agents.

The big negative obviously relates to the commission.  As the seller, you are responsible for paying it to the buyer’s agent even though that person isn’t representing your best interests.  It’s what you would be doing if you also used a realtor.

You do have some flexibility, however.  There is no rule or law that requires you to pay a certain commission.  The standard commission in your area might be 6%, which means that the buyer’s agent would get 3%.  But you can offer less.   Or you could negotiate.  For example, you could say “I’ll pay you 3% if you do all the paperwork or I’ll pay 2% and you do none of it.”   On your $250,000 home, that would be $5,000 for simply bringing someone to meet you!  But even if they take the 3%, you’re still ahead by $7,500 by not having an agent of your own to pay.

There are notable benefits to allowing buyers’ agent, however.

As just mentioned, you could have the buyer’s agent do all the paperwork and still make a tidy profit.

More important, though, you could expand your pool of potential buyers exponentially. 

Over 80% of homebuyers start their search on the Internet, and Realtor.com is one of the first places they look.  The only way for a FSBO to get listed there is by using the MLS through a realty program for FSBOs…and you would have to agree to pay a buyer’s agent for that to happen.   

Regardless of the ‘best interests’ of their clients, real estate agents aren’t going to show homes that don’t at least have the potential to put money in their pocket. 

If you’re in a seller’s market, it definitely could make financial sense to say “No Buyers’ Agents”.  Why pay for something you don’t need.

But if you’re not, you might seriously want to consider that option.  A buyer’s agent could make the difference between “Sold!” and ‘sorry.’

I hope this information helps you in your efforts to successfully sell your home FSBO!  Please feel free to contact me if you have questions.