(00:01):
Hi, Mitch Argon here, with CalNeva Realty. Hey, I get asked from my agents quite often, how they should approach a for sale by owner, or FSBO, when they’re working with a buyer? And I thought I’d share with you a few tips to help you in your business.
(00:22):
Okay, so you have a buyer client, they see a for sale by owner, and they want to pursue that property. What should you do?
(00:28):
Well, the first thing you should do is you should ask your buyer client to notify you that they do want to see it, and hopefully give you the information or you can take it off the sign. You want to call that for sale by owner, and there’s two key questions you want to ask.
(00:40):
One, is the property still available and perhaps some general information about the property. Number two, you’d want to ask that for sale by owner seller if they are cooperating with a broker who brings a buyer for the home.
Mitch Argon (00:54):
You want to make sure that you understand that they’re going to cooperate and pay commission on the buy side only before you go any further, especially with your client.
(01:02):
Probably 98%, 99% of for sale by owners will pay a brokerage commission to an agent who procures and represents a buyer. They’re really trying to avoid paying a listing agent. So, you want to make sure that you call and ask that question. It is really important that you ask that question first. Before you show the home to your buyer, or before you proceed to write an offer, you want to negotiate your commission, and I’ll talk about that in just a moment, first, before you bring the buyer to the property and get that ball rolling forward.
(01:33):
Once the for sale by owner seller says they will cooperate with you as a agent bringing a buyer, you’re going to want to have a couple of things in place. The first and it’s most important is to get a commission agreement signed and I’ll go over a basic commission agreement with you here in a moment.
(01:47):
Once the commission agreement is signed, the seller is committing to paying commissions, they would sign this form and you can go forward representing the buyer and pursue that property. If the buyer does buy it, that commission agreement that we’re talking about would eventually get to escrow, and that would serve as the basis for commissions being paid to your brokerage.
(02:06):
Okay, so what would a sample commission agreement look like? Every brokerage should have something like this. It basically just spells out, as you can see on your screen, that the seller is going to agree to pay a percentage of the gross sale price to your company or your broker for procuring a buyer at a specific address and it’s going to go through you as an agent with your name and your license information.
(02:29):
You’ll notice there’s some language in here that’s important. It does spell out that you’re not representing the seller. You’ll be representing the buyer exclusively with such an agreement. You don’t need to represent both parties on these transactions.
(02:42):
You would want to get this over to, after you discuss this with the seller and you agree on a percentage, you want to get this over to the seller to sign and get back to you before you go forward, showing the property or doing any further action with the buyer.
(02:55):
Now, if your buyer likes the property and they do want to write an offer, it’s really important to make sure that your contracts and your paperwork are done properly, so just a little broker tip here. You would want to make sure that the duties owed is done properly. That’s probably the most important part of this. As you can see here in the yellow highlight, each unrepresented party to the real estate transaction, if any, needs assign the duties owed.
(03:18):
So even though you’re representing the buyer exclusively, and you would complete the information on the top of this duties owed with the buyer’s information, you also need to have the seller, the FSBO seller sign the duties owed as an unrepresented party.
(03:34):
And the way you would do that looks something like this. At the bottom of your form, you would have the seller. In addition to the buyer signatures, you would have the seller sign the duties owed as Jane Seller or Joe Seller, what have you.
(03:47):
I suggest that you put in a comment after the name and put the words in “unrepresented party”. That makes it very clear to all parties that they’re not represented by you, they’re not represented by anybody, but they still need to sign the duties owed.
(04:03):
Okay, I hope this has been helpful for you. If you come across the situation, if you follow these steps, your chances of having a greater outcome are much, much better.
(04:11):
Have a great day. Thanks for watching.
