Expert: Karyn Foley - 3/30/2008

Question
Hi Karyn!  We have decided to use a flat fee MLS listing company to get our
For Sale By Owner property MLS exposure.  As part of the deal, we intend to
offer any agent who brings in a buyer a market competitive commission.

I have read that realtors may avoid these type of listings for two reason:

1. In principle as it goes against use of the traditional "full-service" realtor.

2. In practicality as they would be dealing with a home-owner for showings,
negotiation, closing, etc. creating more hassle for them.

My question is... if we have decided to use this approach, what incentives do
you feel would be most luring to get realtors to overcome the above two
objections and bring in their buyers?

- commission slightly higher than the current market rate?

- a cash bonus to the selling agent?
(Is so, how much is appealing and how do we guarantee it goes to the agent,
not be shared by the agent's office?)

- the guarantee of being our buying agent for our new house?

Thanks for your thoughts!  We can't ask an agent in our area these questions
because I'm sure it offend them that we think we don't need a listing agent.

Lesley

Answer
Dear Lesley:  Good questions, and I am happy to be of help to you. I do have one question, however, and that is, why are you thinking of going with a flat fee agent?  If you are also prepared - and wisely so - of offering monetary incentives to the selling agent to overcome their avoiding your listing, don't you think that you will end up paying the same money that you would have paid with a full time agent and not needing to give additional incentives?  Also, you would have full marketing and advertising exposure, plus all of the help and support of disclosures and some one negotiating in your behalf.  If you do the negotiating yourself, you have to take into consideration that the buyers are already discounting another agent's commission, and that you are not as experienced as a licensed agent.  It is a buyer's market, and you will learn that adverting over a long haul can be very costly.  In a seller's market you might have clout, but it is not a seller's market.  You should strongly consider interviewing companies and agents, then sitting down and see if there are truly recognized savings.  Don't jump into anything without having facts and figures in front of you.  If you offer a cash bonus to the seller's agent, by law it would be shared with the office.  Agents have an agreement to share the entire commission with their office.  Unless, of course, the agent is with an office that is considered a one hundred percent office, paying only a set fee each and every month.  Also, when buyers become aware of a bonus, and all fee paid must be disclosed to all parties, they demand that money. So, that may not be a help after all.  You might consider one point higher than the going commission for the selling office.  It can be done that the listing office takes a lower commission than the selling office; but not always.  Don't guarantee who will be your buying agent.  If you do, then do not respect the work of your selling agent, you will feel compromised.  Stop thinking about money you might or might not save, and start thinking about making a good sale on your home with a professional.  This is not the market in which to be coy.  Buyers truly prefer having representation and it only creates problems when buyers and sellers muddle in trying to do the job themselves.  It sounds ideal, but is not a practical solution.  I congratulate you on the wisdom of selling before you buy another home.  Not all transactions end up being successful, and it is circumspect not to buy until you have the cash in hand from the sale of your home.  Then you become the hottest buyer in town.  Let me know what you decide to do, and if you have any questions along the way.  Good luck in your endeavor, however you decide to do it. Karyn Foley