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Ethics of dealing with For Sale by Owner sellers when a buyer has a REALTOR


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#1 trex

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Posted 13 February 2012 - 04:23 PM

I am wondering about the ethics of dealing with FSBO's (for sale by owner) as a buyer.

Lets assume we(my wife and I) have committed to a realtor as a buyers agent.
We go on multiple MLS listed viewings with our chosen realtor/agent.
Nothing seems appropriate.
And so we search the non-MLS for sale by owner listings on the internet.
And we find several potentially interesting listings.
And we farm those listings out to our realtor to arrange the showings because it seems the ethical thing to do.

Lets assume FSBO listing #1 for whatever reason refuses to talk to our realtor/agent.
And then amends his internet listing to read " absolutely no realtors" before his listing address and home phone number.
How is this dealt with?
If we then contact the seller to view and possibly purchase what do we then "owe" our buyers agent?

Case #2: The FSBO happily deals with our realtor for a showing.
During the showing the seller pulls us aside out of our realtors earshot and states: Your realtors commissions are your problem and our selling price simply reflects our price to you with no commissions involved.
How does this then work?

I would be interested in hearing form both the public as well as real estate professionals on this one.

Trex

#2 spanky123

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Posted 13 February 2012 - 04:46 PM

In a true buyer agent relationship you are contractually obligated to compensate your realtor for the work they perform. Is this is what you are talking about or do you mean that you have simply approached a realtor without such agreement?

#3 Bernard

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Posted 13 February 2012 - 05:04 PM

If you have signed an agreement with a Realtor, you are bound by that agreement for any purchase you make.

#4 trex

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Posted 13 February 2012 - 06:09 PM

If you have signed an agreement with a Realtor, you are bound by that agreement for any purchase you make.


It seems i have posted a confusing thread.
My apologies.

There is no signed contract between my wife and I and our realtor.
I don't sign contacts with realtor/buyers agents.
I simply am trying to be ethical in my property searches.
If it is a MLS listing then my realtor/buyers agent gets his commission without question.
In other words, since I have used the services of a realtor for some property searches am I then commited to that realtor for all future properties?
Even if I find them myself and then view them?


Thus if I find a FSBO listing, view it and then cut a deal on it, do I have an obligation to a realtor who is showing us the prior MLS listings?

I guess the question is: what is the buyers obligations to a the buyers agent realtor?

Marko, help me out here please?
I realize its an ethics thing, but how should it be dealt with?

Trex

#5 spanky123

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Posted 13 February 2012 - 07:20 PM

In neither case do you have a legal obligation to the realtor. Whether you have a moral obligation is up to you and what you believe is fair.

I don't know of too many realtors who who show a FSBO home without some sort of agreement with the seller, even if it is only a short term listing agreement. If they didn't and you decided to buy the house that your realtor help you find then that may weigh more heavily in his/her favour.

I have said many times before on this board that I never use realtors for purchasers but I often kick them back on deals where they added value. What goes around comes around.

#6 LJ

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Posted 13 February 2012 - 08:06 PM

If you had an agent looking for a particular used car for you and then you found one on your own would you pay the agent anything?

I wouldn't.

If on the other hand you told your agent that you saw a car down the block from your house that might be "the one" and asked him to check it out or help you complete the paper work then you would owe him.
Life's a journey......so roll down the window and enjoy the breeze.

#7 MarkoJ

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Posted 13 February 2012 - 10:42 PM

I am wondering about the ethics of dealing with FSBO's (for sale by owner) as a buyer.

Lets assume we(my wife and I) have committed to a realtor as a buyers agent.
We go on multiple MLS listed viewings with our chosen realtor/agent.
Nothing seems appropriate.
And so we search the non-MLS for sale by owner listings on the internet.
And we find several potentially interesting listings.
And we farm those listings out to our realtor to arrange the showings because it seems the ethical thing to do.

Lets assume FSBO listing #1 for whatever reason refuses to talk to our realtor/agent.
And then amends his internet listing to read " absolutely no realtors" before his listing address and home phone number.
How is this dealt with?
If we then contact the seller to view and possibly purchase what do we then "owe" our buyers agent?

Case #2: The FSBO happily deals with our realtor for a showing.
During the showing the seller pulls us aside out of our realtors earshot and states: Your realtors commissions are your problem and our selling price simply reflects our price to you with no commissions involved.
How does this then work?

I would be interested in hearing form both the public as well as real estate professionals on this one.

Trex


Case #1 - If you have no signed contract with the REALTOR® you are not obligated to pay him or her. However, from a morale perspective that is up to you to decide. Commissions aside, this type of situation has red flags all over it and I would be very careful with a seller like this.

Case #2 - Your REALTOR® can present an offer to the seller with a fee agreement (signed by you as well) asking for compensation. The seller can counter both the offer and the fee agreement. If the seller refused the fee agreement you need to work out how much you as the buyer will pay the REALTOR®. If you have an exclusive buyer's contract this amount will already be specified.

Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

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#8 MarkoJ

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Posted 13 February 2012 - 11:01 PM

I've never had problems with FSBOs. FSBOs typically have very low buyer traffic to their listings; therefore, I've never had any problems setting up appointments for my buyers as FSBOs are keen to show (if they are truly motivated to sell).

I also go to a lot of FSBO open houses (marketing my flat fee listing package to them) and typically they are excited to see me and to have me give them my opinion of their home; however, FSBOs typically don't like replying to REALTOR® emails. You really have to call or visit them in person it makes a massive difference.

As far as commission I haven't had a problem either. Instead of asking for $10,500 (3.0%100k + 1.5%balance) on a $600,000 home I would ask for $3,500 commission and I've never had a FSBO object. I've put together a few successful deals with FSBOs and my buyers.

I've also worked with a buyer (showed over 30 homes) only for her to go behind my back and buy privately. In my opinion, while this sucks, it is also the name of the game. Sometimes you sell a listing in one day with very little work involved.

So in conclusion, I have no problems with FSBOS; however, I would watch out for a few bad apples that do not want you (as the buyer) to bring a REALTOR®. To me this is a red flag.

Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

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#9 sebberry

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Posted 13 February 2012 - 11:29 PM

Not wanting someone who might know something undesirable about the home, neighbourhood, etc.. to get involved screams "run, don't walk..."

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#10 trex

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Posted 14 February 2012 - 01:11 PM

Thanks for the reponses and advice from forum members.

And thanks to Marko, your advice as a realtor is appreciated.
Here is the nub of my issue with this circumstance.

If a realtor is showing a buyer properties all over town going behind his (or her) back and cutting a private deal with a FSOB seems a bit low.

However if as Marko states: "As far as commission I haven't had a problem either. Instead of asking for $10,500 (3.0%100k + 1.5%balance) on a $600,000 home I would ask for $3,500 commission and I've never had a FSBO object. I've put together a few successful deals with FSBOs and my buyers".

Who then is the realtor really working for?
Marko says he has been paid by the seller in past FSBO deals.
However his loyalty is supposed to be to the buyer and not the seller.
Lets leave Marko out of this particular case at this point because, A) I am pretty sure Marko is a stand up guy and B) its hypothetical anyway.

So a buyer finds a FSOB and alerts his realtor.
The realtor then communicates with the seller about the property and commissions.
This then starts to look almost like a double ender (realtor acts as an agent for both the buyer and seller).
The seller is paying the realtor however the realtors loyalty and best interests are supposed to be wholly with the buyer.
I really dont know about this one?

As someone who was double ended by a supposedly upstanding and respected realtor I start to get a bit twitchy about loyalty when money issues crop up.

Marko your opinion would be appreciated.
Trex

#11 maniac78

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Posted 14 February 2012 - 02:21 PM

Who then is the realtor really working for?
Marko says he has been paid by the seller in past FSBO deals.
However his loyalty is supposed to be to the buyer and not the seller.
Lets leave Marko out of this particular case at this point because, A) I am pretty sure Marko is a stand up guy and B) its hypothetical anyway.


Who does a car salesman work for / what motivates them? The sale, the buyer's interests or their employer's interests? I would say it's probably 90% the sale and 10% employer interests. Proceed accordingly.

#12 MarkoJ

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Posted 14 February 2012 - 02:56 PM

Thanks for the reponses and advice from forum members.

And thanks to Marko, your advice as a realtor is appreciated.
Here is the nub of my issue with this circumstance.

If a realtor is showing a buyer properties all over town going behind his (or her) back and cutting a private deal with a FSOB seems a bit low.

However if as Marko states: "As far as commission I haven't had a problem either. Instead of asking for $10,500 (3.0%100k + 1.5%balance) on a $600,000 home I would ask for $3,500 commission and I've never had a FSBO object. I've put together a few successful deals with FSBOs and my buyers".

Who then is the realtor really working for?
Marko says he has been paid by the seller in past FSBO deals.
However his loyalty is supposed to be to the buyer and not the seller.
Lets leave Marko out of this particular case at this point because, A) I am pretty sure Marko is a stand up guy and B) its hypothetical anyway.

So a buyer finds a FSOB and alerts his realtor.
The realtor then communicates with the seller about the property and commissions.
This then starts to look almost like a double ender (realtor acts as an agent for both the buyer and seller).
The seller is paying the realtor however the realtors loyalty and best interests are supposed to be wholly with the buyer.
I really dont know about this one?

As someone who was double ended by a supposedly upstanding and respected realtor I start to get a bit twitchy about loyalty when money issues crop up.

Marko your opinion would be appreciated.
Trex


Trex,

If I have a listing I never (unless it is special circumstance) enter into Dual Agency and my personal belief is that Dual Agency should be eliminated. What I offer the buyer is something called "No Agency Relationship" and I continue to work for my seller under the Agency Relationship.

Under a No Agency Relationship a REALTOR® can still:

- Explain real estate terms and practices
- Provide and explain forms used
- Prepare offers or counter-offers at your directions
- Etc.

A REALTOR® who is not your agent cannot:

- Recommend or suggest a list price
- Disclose any confidential information about his/her principal unless otherwise authorized.
- Etc.

If I approach a FSBO with a fee agreement that doesn't mean I am approaching him or her with a Dual Agency form.

If I asked 100 buyers, "do you want me to approach the FSBO with a fee agreement or do you want to pay me out of your pocket?," I think 95 would say let's ask the seller. If the buyer wants to pay me I will gladly not ask the FSBO.

At the end of the day it is irrelevant because even if the FSBO pays me the buyer provides all the funds including my commission; however, psychological is not irrelevant.

Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#13 spanky123

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Posted 14 February 2012 - 03:00 PM

The realtor is representing whomever they have a contract with. In a traditional vednor/buyer relationship, even the purchaser's realtor is technically working for the seller. They have an obligation to treat all parties fairly but it is a mistake to think that they are representing you unless they are acting as a buyers agent and you are paying them for the service.

That is why I asked the question initially when you used the term buyers agent. That term usually implies a contract with a realtor to represent the buyer and the buyer is paying their fees.

#14 Jen Ewen

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Posted 18 May 2018 - 04:57 PM

I noticed that there are FSBO listings in the Surrey area for properties for sale by "owners".  But when I did a routine title search through the Land Title website, it was clear that the listing "owner" on at least two of these properties were not the owners listed on title.  Why is FSBO allowing non-owners to list on their website as owners?  I'd be wary of this site. 



 



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