How To Work With A Buyer’s Agent When You’re A FSBO Seller
Table Of Contents
- Working With Buyer’s Agents When Listing Your FSBO Property
- How To Prepare For Showing Your FSBO Home To Buyer’s Agents
- How To Follow-Up With Buyer’s Agents After Showing Your FSBO Home
- Best Ways For FSBO Sellers To Negotiate With Buyer’s Agents
- Who Pays The Buyer’s Agent In FSBO Transactions?
So, you’ve decided to sell your home on your own. While your decision may have been motivated by a desire to save money on a commission, being a For Sale By Owner (FSBO) seller doesn’t necessarily mean that you won’t have to pay a real estate agent before you hand over the keys.
According to the National Association of REALTORS®, 87% of buyers enlisted the help of a buyer’s agent when purchasing a new home in 2018. So even though you’re a FSBO seller, it’s more than likely that you’ll find yourself working with a buyer’s agent during the process of selling your home.
Before you put that For Sale sign in your front yard, it’s a good idea to read up on what to expect when working with a buyer’s agent. As the unrepresented party in the transaction, you’re going to want to be armed with all the information at your disposal. So here’s what you should know when navigating the world of buyer’s agents.
Working With Buyer’s Agents When Listing Your FSBO Property
As a FSBO seller, you need to consider how you’re going to advertise your property to ensure that it gets the attention of buyers in your area. When working with a real estate agent, sellers benefit from their agent’s access to a Multiple Listing Service (MLS). An MLS is a resource that agents use to list homes so that the properties are seen by all agents in the area.
Unfortunately, homes can only be listed on an MLS by real estate agents, so FSBO homes are precluded from these resources. There is one exception to this rule. If you want your home to be listed on an MLS, there are specialized real estate companies that will list your home for a flat fee.
The problem with this option is that after paying a real estate company a few hundred dollars, all you get in return is the listing. So if your reason for selling your home without an agent is to save money, it’s probably not worth the cost.
Don’t worry, there are other ways to get your listing in front of buyers. You can list your home on ForSaleByOwner.com. As the top sale-by-owner website, our listing service is visited by over 2 million people a month.
When listing with ForSaleByOwner.com, you can upload photos, write a description and highlight the interior and exterior features of your property. When using our site, FSBO sellers can also keep track of the number of times their listing is viewed by potential buyers.
Although there is a chance that you may be able to bypass agents entirely by listing with ForSaleByOwners.com, you may want to increase the exposure of your listing by marketing it through Realtor.com and third-party aggregators. These sites will help ensure that more real estate agents see and send your property to their customers.
Since agents perform a valuable service in recommending your listed property to prospective buyers, you also may want to consider researching buyer’s agents in your area and reaching out to them. Hosting an open house and inviting local agents to attend is always an effective way of ensuring that your property gets the attention it deserves.
How To Prepare For Showing Your FSBO Home To Buyer’s Agents
Cleaning your home and clearing your schedule are the basic requirements for any showing. But as a FSBO seller, you need to go a step further, especially when you know that a buyer’s agent will be present for the showing.
Don’t expect buyers to leave immediately after touring your home. Buyers like to ask questions, and buyer’s agents tend to ask even more nuanced ones. Ensuring that you have information about the structure, plumbing, electrical and HVAC systems of your home is crucial for preparing for a showing.
You also should have a list of any major construction or repairs that you’ve completed, and any work that still needs to be done on your home. In all likelihood, buyer’s agents will ask, and it’s your job to fully disclose this type of information.
“If the buyer’s agent doesn’t feel they have adequate information or if you, as a FSBO, provide incomplete information, the buyer’s agent may advise their client to take pause instead of writing you an offer,” says Benjamin Ross, licensed REALTOR® and investment specialist with Mission Real Estate Group.“During this pause, the odds of receiving an offer from them greatly diminish. A little preparation from the FSBO can prevent this from happening.”
Having some kind of showsheet ready to hand out to buyers and their agents is always advisable. These handouts will not only inform potential buyers about the specifics of your property but also give them something tangible to take home, ensuring that they’ll remember your listing long after they leave it.
“Highlight on paper why your home is special and show us how you came up with the price,” says Eve Henry, an accredited luxury home specialist and owner of Eve Henry Homes.
During the actual showing, Henry tells FSBO sellers, “Please allow us to walk around alone with our buyers. Our clients aren’t going to feel comfortable speaking truth around you.”
When buyers feel that they’re being watched, they tend to be too distracted to appreciate the property they’re seeing. So give buyers and agents their space. By doing so, you’ll have a better chance of getting positive feedback from their agents after the showing.
How To Follow-Up With Buyer’s Agents After Showing Your FSBO Home
After showing your property to potential buyers, make sure that you contact their agents to get insight into the buyer’s impressions of your home as well as more information about their circumstances. When asking agents questions, your goal is to determine how serious their clients are and what it would take to get them to make an offer.
“Understanding the potential buyer’s timeframe is one of the more important elements of beginning to understand the potential for a transaction,” says James Scott, operations manager for Red Rock Housebuyers in Oklahoma City. “Ask the realtor about the buyer’s situation. Are they moving from another town? Have they already sold their current home? All of these details will give you a better idea regarding the buyer’s motivation. It will allow you to better gauge the potential that they will purchase your home.”
In order to gauge potential buyers’ likelihood of purchasing your home, you must find out if they’ll have access to the necessary finances. You don’t just want potential buyers to be prequalified for a loan; you want them to be preapproved. The reason that this distinction matters is that being prequalified for a loan doesn’t necessarily mean that the buyer will ultimately be able to obtain the loan. The prequalification process merely estimates buyers’ financial strength while the preapproval process actually verifies it.
You also want to ask agents if there are any contingencies that could preclude the sale should they decide to make an offer. If you’re choosing between offers, you’ll want to try to avoid mortgage or home sale contingencies if at all possible because these conditions tend to be common reasons that deals fall through.
Best Ways For FSBO Sellers To Negotiate With Buyer’s Agents
When negotiating with buyer’s agents, remember that they have more experience negotiating deals than you do. While you want to try to gain as much information about buyers before you begin to negotiate, you must be careful about how much you reveal about your own circumstances.
“The FSBO seller has to remember that the agent is working for the buyers, not for the sellers, and that it is the agent’s job to get the best deal possible for his or her clients ,i.e., the buyers,” says Myriam Benhamou, licensed associate real estate broker for Compass. “The sellers should be careful about volunteering information that might hurt them later on during the negotiation process. For example, that they are eager to sell, or that they already bought another home, which might indicate that because they need to sell, they may have to be more flexible on the price.”
Stay tight-lipped as you enter negotiations, but also do your best to keep a lid on your emotions. It can be hard selling the home where you’ve shared so many memories, and even harder if offers are coming in lower than you had expected. Instead of letting your feelings get the best of you, focus on the facts. Use the comparable sales in your area and the appraisal of your home to help you argue for a fair price. Before you accept an offer that feels too low, take into account how much interest you’ve had in your property.
“Rely on your open house traffic and inquiry volume,” says James McGrath, licensed real estate broker and co-founder of Yoreevo. “If an agent comes in with an offer lower than you’re expecting, but 10 buyers are checking it out every week, you’re probably reasonably priced and shouldn’t cave. However, if you get a disappointing offer and nobody is checking out the property, you’re probably overpriced and should consider it.”
Who Pays The Buyer’s Agent In FSBO Transactions?
As a FSBO seller, it may seem as though you shouldn’t have to worry about agents’ commissions. After all, you’re not benefiting from representation. However, commissions still tend to be paid out in the traditional fashion regardless of whether it’s a FSBO transaction.
So, how does a buyer’s agent get paid? Unfortunately, even though you may have chosen to sell your own home to save on agents’ commissions, it’s still generally up to the seller to pay the buyer’s agent out of the purchasing price.
Although the buyer’s agent typically will receive 2-3% of the purchasing price, it’s not unheard of for FSBO sellers to decline to pay the commission for buyer’s agents. When this occurs, buyers generally ask for a credit to be applied to the purchasing price, which means that the agents’ fee still comes out of the money you walk away with at closing.
Since FSBO sellers still end up paying the commission one way or another, it’s recommended that you actually address the agent’s fee in your listing description. “Make it very clear in the first line of the description that you will pay a commission to the buyer’s agent. Literally, ‘X% commission will be paid to buyer agents’ as the first line,” says McGrath.
Agents will be more likely to show your property if they know that they’ll be paid at the end of the transaction. And you want to ensure that the agents who come across your listing actually send it to their clients. McGrath explains that discussing the commission accomplishes two things.
“First, it makes it very clear to buyer agents that they will get paid and how much,” he says. “Secondly, buyers will also see it, and a lot of buyers don’t know how their agent is paid and especially how much. If they see their agent is going to make, say, 3% on the transaction, some portion of those buyers will decide they’d rather keep that for themselves and contact you directly.”
By addressing the commission upfront, you have a better chance of more potential buyers coming to see your home. The more buyers who see your property, the more quickly it will sell – and often for a higher price.
Remember, one of the downsides to being a FSBO seller is that you’ll most likely be the only party without representation. Therefore, it’s highly recommended that you enlist some help, just in case you find yourself unsure of how to proceed. At ForSaleByOwner.com, we offer FSBO sellers the tools they need to sell their properties independently.
Our free, Independent package will provide you with the ability to list your home on our website and gain live support whenever you have questions. However, we also offer FSBO sellers a Partner package that will provide you with even more resources, including a personal Home Listing Coordinator, who will guide through every step from pricing and listing your property to closing the deal.
As a FSBO seller, it’s essential that you have someone who you can trust. If you would like to speak to someone over the phone, call 1-888-FOR-SALE (367-7253). We are always happy to help!