Buying a FSBO House With Buyer Agent Representation - YouTube

Hey there, Emily Farber with Lepic-Kroeger, Realtors in Iowa City, Iowa. Thanks

for joining me. Today's topic is a hot-button. Can you

buy a house that's for sale by owner when you have an agent? Hey, stay tuned. I

got you. We're gonna talk about it!

Here is the scenario: You've been working with an agent for quite some time,

you've been out looking at houses on and off, slowly working towards figuring out

what exactly it is that you want in your future home, and you finally found it. Yay!

You just love your agent. He or she is so knowledgeable, full of market knowledge,

they know all about the community, they're full of resources, and they've

really been helping you walk through this journey of home buying. This is the

sticker, though. That house that you've found that you think is super duper? It's

a for sale by owner. What are you gonna do? How is it gonna work? Can you buy a

for sale by owner having an agent represent you as the buyer? So, while the

lion's share of properties out there on the market are represented through a

brokerage and the seller is represented by an agent, there are always some

properties available that are for sale by owner, or otherwise known as FSBO. If

the house that you found that you're really in love with is a FSBO don't

despair. Talk to your agent about it and ask your agent to see if they can set up

a showing with the seller. At that point your agent will contact the seller and

inquire if they're open to working with a buyer's agent. Many sellers are okay

with this because they realize that the vast majority of real estate is sold by

agents. In fact, the 2018 National Association of Realtors®

statistics show that 87% of buyers come through working with an agent. Many

sellers opt to try a FSBO route first because they're concerned about the

bottom line, they're looking after their dollars.

And you really can't blame them. They just want to see if it could possibly

work for them to sell the house on their own.

Their logic might be if they only have to pay the buyer side commission they're

looking at potentially saving about 50% of what they would have paid if they had

listed with a brokerage. Of course, they're not going to receive any of the

services, advice, or knowledge of being represented, but that is not your problem.

I've personally found that many times most sellers are open to the idea of

working with a buyer's agent and they are willing to pay the buyer's agent

commission fee. Sometimes, however, that seller may say, "Well... I'll pay you but I'm

not going to pay you your regular rate. I'm only gonna give you half."

Okay, just from my agent perspective, I can tell you that that's really annoying.

The reason is that most of the time when I'm working a transaction with a FSBO

seller the amount of work that I'm doing in that transaction is almost doubled

because the vast majority of the time that FSBO seller does not know what

they are doing. In order for me to protect the interests of my buyer client

I end up doing a lot of extra work in order to keep that transaction on track

and moving forward. If that's the case with your agent it would be very

up-and-up on your part to offer to make up the difference between what the

seller is willing to pay and what the agent normally makes to work a

transaction. After all, when you're working at your job do you normally do

it for half off? If the seller flat out refuses to pay any buyers commission

there are a couple of options that you can explore.

Before we get into that though, I want to make it perfectly clear the way most

agents feel. We do not work for free. The expectation that we would work for free

is crappy. Our knowledge, our expertise, and our jobs do not come to us for free.

Did you know that many real estate agents pay significant fees in order to

work at their brokerage? In our line of work we have to "pay to play." Our time is

not free. Our knowledge, skill, and advice is not free.

Also, I assume liability for transactions in which I am involved, therefore it is a

poor business practice for me to offer advice on a transaction for which I am

not a party. In real estate most agents do not make a dime until a transaction

closes, so we have to put a lot of time and lot of work upfront before we are

ever compensated for it.

Okay, so what are your options if the seller refuses to pay the agents buyer

commission fee? Number one: You pay the agent. You could either agree to pay that

agent a percentage commission or you could negotiate a flat fee with your

agent. If you choose not to move forward with your agent I highly, highly

recommend that you procure the services of a real estate attorney. That attorney

is likely not going to do any negotiations for you, nor is he or she

going to determine what fair market value is for the house, or help you with

recommendations for services that you might need... They'e pretty much only going

to be handling the paperwork. Option number two: You can try to basically

finance your agent's commission on top of what you are going to pay for the house.

Now, this can be a little bit tricky when it comes to appraisal, but if you feel

like there's room between what you're paying for the house and what it's worth,

you may be able to up the purchase price enough in order to compensate the agent.

Of course, the seller is going to have to agree to this and it will need to be

written into the purchase agreement. If neither of these options work you're

just going to have to decide if you wish to move forward with the purchase of

that property or not. For most people the purchase of their home is one of the

largest investments in their life. So ask yourself: Is this a do-it-yourself job or

is this something worthy of hiring a professional to help me avoid pitfalls?

As you are making up your mind about how to proceed with that FSBO house that

you like, you may be asking, "What exactly is it that my agent is going to do for

me besides get me into houses?" We sell houses all day, every day.

The average Joe out there on the street buys or sells a house a few times in a

lifetime. We do it so frequently that we are experts on helping people avoid

common mistakes and common missteps. We're also able to help you accurately

determine what fair market value for the house is. Newsflash! It's not the "Zestimate."

Check out my video here about why "Zestimates" are not the real deal.

We're able to help you get the most of what you need and what you want in your

future house. Your endgame is our endgame. We're seasoned negotiators. We are used

to dealing with transactions where people don't necessarily agree and

helping the parties come together in a way where everybody finds it to be

mutually acceptable and they feel fairly treated. We are non-emotionally connected

to the transaction as a third party representative. And why is this important?

Well, I'll tell you. Because money, plus emotions, with people...(boom!)

We handle the paperwork. You may not realize how much paperwork

is involved with a real estate transaction, but I can assure you it's a

boatload and a lot of it is legal mumbo-jumbo that is not easy to

understand if you aren't familiar with it. We offer valuable advice on

inspections and remedies. If you were to ask a roomful of agents what the hardest

part of a transaction is, a lot of them would probably say working their way

through the remedies. Those suckers can really throw a transaction off track.

We're counselors. We talk a lot of highly emotional people down off the ledges to

where they can make rational decisions and move forward. We keep your

transaction on track so that you don't end up in a pickle, and by a pickle I'm

not talking the dill kind, I am talking you losing the house, you losing your

earnest money, and possibly you getting sued. You are entering a legal and

binding contract with serious ramifications so you definitely need

to stay on top of it.

Hey, thanks for joining me. I'm so glad you were able to watch. If you haven't already, please hit that subscribe button down below and ring the

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