Today many homebuyers are finding their homes through internet searches without the help of a Realtor. However, when they go to buy that home they are often unwillingly and unknowingly providing the listing broker with an opportunity to hog both commissions (the listing commission and the buyer broker’s commission). Although some listing brokers claim that unrepresented buyers require more work, we find that to be untrue. Many claim that they have to spend time showing unrepresented buyers the house and possibly writing the offer. Isn’t that their job? We believe listing agents should be present at every showing to help sell the house and protect the seller’s property. Request the buyer to hire an attorney to write the offer.
First, negotiate two commissions, not one bundled fee. One commission is payable to your broker and another commission is typically offered to brokers who procure a ready, willing and able buyer who purchases your house. There is a widespread practice throughout the united states of concealing this information from both buyers and sellers. Your listing broker will be offering compensation to your adversary’s agent and you have a right to be the controlling party in setting that amount and how it is paid. That means determining how much is paid to your broker and determining how much will be offered to cooperating brokers representing the buyer. It also means that you have a right not to offer compensation to the buyer’s broker or make that compensation payable directly to buyers who can use that money to pay their brokers directly or represent themselves and use the money to be applied towards the purchase price or closing costs.
Second, ask your broker to see the full MLS listing of your house and verify that your broker is offering fair compensation to other co-operating brokers. Some brokers offer substandard cooperative commissions reducing the demand on your home and at the same time increasing the probability that their firm will collect a double commission. This fee is a key element of your contract and should have been offered up for negotiation to you prior to you signing the listing contract. Failing to do so may be grounds to void the contract (check with your attorney).
Next, once you determine that your broker is offering an agreed amount to cooperating brokers, demand that your broker offer and widely publicize this same amount to “do it yourself” buyers. If your broker refuses, you should try and find one who will agree to this. Most large and medium sized brokers will refuse to do this, however, for smaller firms that rarely engage in dual agency, this could be a fabulous market niche.
When “Do It Yourself” homebuyers find your home, they will see that the 3% normally offered to buyer brokers is also available to them*.
Caveat – Make sure that buyer reports this seller’s contribution directly to their lender as soon as possible to avoid violating any lender requirements that could delay your closing.
* There are a handful of states (click here to see the 11 states that have price fixed commissions) where it is illegal for listing brokers to share their commissions directly with buyers. In this case, offer to reduce the purchase price by that same amount if they are unrepresented.