Seller Pays the commission. If you're buying a FSBO, it can go either way.

 

If your the buyer, the buying agent get 3% automaically. When I was the seller, we came to an agreement of 4.5% for both buyer/seller. So that 3% for the buyer and 1.5% for the seller.

When I got the new house, it was a FSBO.
*Warning*
Be careful when dealing w/ FSBO's. They dont tend to care what the market is doing and are more concerned w/ what they have in their house and increasing their return at settlement. Hence, the reason why her house was on the market for a longer period of time,but in the end (after a pimp slap or too)...she gave in to most of our demands.

FSBO's pay an upfront cost of about $1500 to list their house and put signs and host 'welcome home' invites/parties whereas you would normally pay 1.5 - 3% for a selling agent to list your house, etc. and then an additional 3% for the buying agent. So thats 6% for everything...which is alot of $$$.

Example.
If you bought your house for 340k and later put it on the market for 420k and decide to use a realtor (buyer/seller). Right out the gate....you are going to lose $25,200.00 which will leave you w/ $54,800.00 and thats before any other taxes like county/state stamps, etc. So you will roughly end up w/ around 52k when you are done.

If you went FSBO
They pay $1500 up front and if they find a buyer without an agent...their is little to no cost to close the deal and they would probably walk away w/ roughly between 70-75k at closing

If the buyer does have an agent. Then 3% goes right off the top as well as $1500. So the seller willwalk away w/ roughly between 62-65k after closing and taxes.

Sorry for the long post.

 

haha my roommates thread turned into a real estate thread!

im kidding, all good!

 

Hey KlokDeezal
Good Post. Some good info!
In regards to the buyers' agent getting 3% automatically, that's neg. Currently in the MLS, the commissions can range from 2% to 4% to the buyers agent. Many factors are taken into consideration when dealing with commissions. (Market conditions, Condition of the house, Sale-ability of the house, Location of the house, etc).
In regards to FSBO's, you're right. They generally don't care or know what's going on with the comps/market. They usually stay on the market longer due to lack of marketing and being over-priced or don't want to compensate brokers. If they don't want to compensate brokers, I generally ask my clients if they're willing to pay the brokers fee. If neither party is willing to pay the fee, it's my choice to continue with the transaction or void the buyer/broker agreement.
Tip: If you're buying a FSBO and you don't have an agent. Ask the FSBO to split the commssion savings. Tell them to minus 3% from the Market value of the house. This way, both parties save 3%. Don't let the FSBO pocket the entire 6% savings.
Hope this helps
Sanj
Century 21

 

Hey thanks for the good tip...I didnt know they could lower the house 3%...in your profession...does this usually happen or are they still greedy w/ the $$$?

 

It really depends on the market. If it's a Seller market, they're less likely to split the 6%. If it's a Buyers' market, depending on the traffic, they'll split. You'll see FSBO's pop up whenever a Realtor lists a home in the neighborhood. (Free advertising for the FSBO).
Some FSBO's just want to see if they can take cash in. For ex, I'm trying to buy this FSBO now. The avg price for 7 homes that have sold in they neigborhood since Sept, is $511k. He/She have the house priced @ $580k. Now you tell me if that's a good deal. The house is in similar condition as the rest.
This FSBO doesn't realize what the comps are. I told him that his price is too high. He said a similar house sold for $630k in Sept 05. "Current Market" conditions set the price. I should of fired back, "You paid $300k 10 yrs ago, sell it for $300k".

 

LOL...A similiar thing happened to me when we bought this house...it was also a FSBO. Every house in the neighborhood are about the same size...the only thing that is different is some have one or two car garages. One house had just sold for like 60k (2 car garage) under what wanted and me and my realtor spoke w/ her and we were like her price is too high and her response was that she had HW floor, and had a professional painter come in, dimmer switches, and a 7k sq ft lot, etc and we were like WTF?.

That does not increase your house 60k...Eventually after all the tugging..we talked her down to within 10k of the previous house sold, but we had to use her settlement company because she said that she had already paid for it and she only gave 11k and not the 13k for closing...and I was like FINE.

The B!tch still walked away w/ over 120k @ closing and I'm like...you couldnt have given me the extra 2k!!!...WTF!!!!

FSBO's are a good route if you have an expenisve house, but just dont get greedy and overprice your house too much.

 

bump