Commission For Sale by Owner QCA Real Estate QCFSBO Real Estate Agent Tips and Ideas

Commissions when selling FSBO

Negotiated Commission. Commission is a strictly negotiable item. A real estate agent cannot legally say that the commission is fixed.



Commission Questions

One of the most common questions we get is whether the seller has to pay a commission to the real estate agent who wants to bring a buyer. The short answer is no, you don’t have to. But it’s not all that simple. It actually pretty much depends on your end goal. Is your end goal to do this entirely without an agent involved? Or maybe there is no wiggle room for even a small commission. These are actually questions you should have the answer to before you even put your house on the market, but not be afraid to re-evaluate if a good opportunity presents itself.

 The real estate agent obviously wants commission, after all, that is their job and their livelihood. They may start by asking you to sign a One Day Listing Contract. In that contract the agent should have the following written in:

  • The name of the buyers they will show the house to*
  • The % commission they want you to pay
  • The number of days for which this contract is valid


*Sometimes real estate agents will try to leave this blank. While that may not be an issue per se, you might find yourself surprised later that you know those buyers (and happen to have their phone number) from a previous private showing.

 What this document basically does is lock you into a contract which stipulates that, should you end up selling your property to the people whose names are in the document any point within that specified time (usually no less than 120 days), you agree to pay the real estate agent the negotiated upon commission. Other parts may include a stipulation to put one of their signs in their yard and remove your FSBO signs, and your agreement to put your house as their listing on the MLS (for comp purposes evidently, although it also helps with their ‘Agent sold stats’).

Negotiated Commission. Commission is a strictly negotiable item. A real estate agent cannot legally say that the commission is fixed. A real estate agent can say that they personally won’t work below a certain amount. That is  completely legal. Their company can strongly discourage their contract employees (real estate agents) from going below a certain level, but that is about it. They cannot fix it or mandate it.

The most commonly asked for commission in this area is 7%. Of course the highest priced homes may be lucky and negotiate a lower listing commission, but chances are that if you are reading this, some agent wants to list your property at 7%. There are companies that will list your property at as discounted rate, but bear in mind that other agents will see what commission split they will end up with in the MLS.

If you were to list your property with a real estate agent from Company A, and an agent from B brings the buyer, the commission is usually split 60% – 40%. That means the listing realtor gets 60% . If you do end up listing with a real estate agent insist on all the information regarding the splits between the various main real estate companies in the area, as they are not uniform. They should be happy to give you this information in writing for your reference. It is important to understand the dynamics of this industry since selling your home is no minor event.


Now what does that mean for you? That means that if you were listed with a company other than that of the agent approaching you with a buyer, that agent would, at the most get 40% of that 7% commission, or 2.8% of the sale price of the property.  However we routinely hear that agents tell FSBO sellers they want 3.5 – 4.5%. Remember, Commission is a negotiable item. Negotiate your way to a commission you feel is fair and you and the agent can agree on. You may be told that it is in your best interest, that it benefits you that you now have an agent involved in the proceedings. The truth is that the real estate agent is legally required to act only in their clients best interests. You, the FSBO Seller are not their client.

 What we’ve seen our customers do successfully:

a) Tell the agent that if they want to get paid a commission, to get it from the buyer
b) To pay only 2%
c) To pay 2.8%
d) To pay 3%
e) To pay 3.5 %
f)  Tell the agent they want a minimum dollar amount of x from the sale of their property and whatever they can get above and beyond that is theirs.

So, as you see, there are various approaches to this and it simply depends on what you and the real estate agent can come to terms with.

If you, the Seller, are approached by a Buyer saying they want to bring a real estate agent, tell them the truth. If you have to pay their real estate agent who will legally only represent them, it may reduce your ability/ and or willingness to negotiate with them. 

Can I offer a Finder’s Fee to the Buyer’s agent rather than a commission
You can… but chances are they won’t accept those terms and quite understandably so. A real estate agent may have been working with their clients for possibly several weeks, sometimes even a few months before they end up buying a property.  That is hours spent walking with them through properties, helping them find properties that might interest them, etc.

The commission an agent earns is usually split between them and their brokerage depending on a negotiated agreement, and additionally to that there are fees and dues the agent will have to pay after the closing. The agent does not walk off with the entire commission all to themselves. When it’s all said and done a finder’s fee generally won’t even amount to gas money.

If you at some point decide to list with a real estate agent and you had some strong leads you don’t want to lose, you can tell them you will list with the understanding that you would like to add an exclusion clause. Use that if you have a name or two who are strong possibilities to buy your house. If the agent accepts those exclusions, they will most likely put a time cap on it.

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