Should I Pay A Realtor?
“Co-op” fees – or cooperation fees – are paid to Realtors as a finder’s fee when they bring a qualified buyer that goes through with the purchase of a property. While FSBO sellers generally try to avoid real estate fees by doing their own listing, marketing, and selling, many make an exception when it comes to finder’s fees, because Realtors are the best source of property buyers in the world.
Whether you work with Realtors or not is a decision you should make prior to listing your property, because it is not a choice to be taken lightly and you don’t want to have to make a snap judgement under financial pressure or when faced with contract deadlines. The key to figuring out whether or not co-op fees are justified is to weigh the pros and cons of the issue while taking into account the nature of the professional real estate co-op relationship.
Real estate brokers set their commission fees independently, but in most markets and under most circumstances you can expect to pay a finder’s fee of about three percent of the sales price. Three percent represents half of what most brokers ask for a full fee, and if you use this figure to make your calculations, you will be within the ballpark of the co-op fee. So if you are selling a home for $200,000, you can anticipate finder’s fees or co-op fees of about $6,000 – which is three percent of $200,000. For a $100,000 property you’re looking at $3,000; for a $500,000 you can expect to pay $15,000, and so on. Just multiply your sales price by three percent to arrive at a figure, and then decide whether the fee is worth it to you for to have a qualified buyer brought to your doorstep.
Before rushing to judgement, consider these three primary
benefits of accepting an offer to cooperate for a fee:
#1 You don’t pay the fee unless and until the buyer agrees to buy your home and secures financing. The fee will be paid not out of your pocket up front, but from the funds that change hands during the closing.
Closings typically happen at a lawyer’s office or the office of a title insurance company. After the documents are all signed you surrender your house keys and are handed a cashier’s check for the balance owed to you after the balance owned on your mortgage and other incidental fees are paid. If you co-op with a Realtor, one of these costs deducted from the sales price will be the “finder’s fee”.
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Before you’re given your check the fee is subtracted from the funds, so you never have to actually come up with the money from your own savings.
#2 If you work with a Realtor, the Realtor has an obligation to take responsibility for the buyer understanding the transaction, and it is also the Realtor’s job to negotiate on behalf of the buyer.While this may not seem like an important function, it is one of the most valuable roles that a real estate professional plays.
The reason it can benefit you as a FSBO seller is that it puts a knowledgeable professional between you and the buyer. Rather than dealing directly with a buyer – who may be unprofessional, argumentative, confused, emotional, or hard to get in touch with to discuss important phases of the transaction – you will instead deal only with the Realtor. Realtors are trained to micromanage the details of a sale with finesse, and they can also attend to errands such as scheduling appointments with inspectors or contractors who are reporting to the buyer.
#3 If you have a bird in the hand, it is worth two in the bush. When a Realtor contacts you to say that they have a ready and willing buyer, you have a serious chance to sell your home immediately. You have to pay a fee for the convenience, but you might lose more by procrastinating and hoping for another buyer to come along. Add to that the personal cost of having to be your own real estate agent. The longer your house is on the market, the more you have to schedule time to take phone calls from browsers, show it to buyers, and pay for any advertising you might be doing.
Sell it and that whole process ends. So try to figure out if that option is worth the cost of the finder’s fee, and it will make it much easier for you to decide if you want to co-op with Realtors.Another reason it is important to make this “to co-op or not” decision before you put the sign in your yard is that if you are going to invite co-op Realtors, you should let them know. The easiest way is to include the phrase “Realtors Welcome” on your yard sign and any advertising materials you use.
Real estate pros understand what that means, they have special contracts to use for this kind of one-time-only cooperative relationship, and they have access to lots and lots of buyers. Before signing a co-op or finder’s fee agreement, first get it approved by your attorney to ensure you understand the arrangement and the costs involved. Then sit back and celebrate a successful FSBO sale with minimal effort.
DownloadCopyright 2007 THSK.
Mark Deaton |
