Occasionally in my daily searches I will come across a listing where the Seller has contracted a Flat Fee Real Estate Firm to merely post their property on the Multiple Listing Service (MLS). When a Seller chooses this option the fee being paid to the co-operating Broker (the one who brings the buyer) can vary from $1 (yes this is the minimum) to a full 3% or more. This is actually a good thing for the marketplace as now it allows us Realtors to find out where these private sellers are hiding and adds more inventory to homes for sale.

The Seller chooses the amount (fee or compensation) they would like to offer a Buyers agent and since they are going it alone on the selling side which means they are handling all aspects of the potential sale from the pre-work involved (i.e. establishing market value via a list price and backing up that price, identifying and hopefully remedying deficiencies, prepping the home for sale, etc.) right through showings of the property and even negotiating an offer if it gets that far they become their own de-facto agent.

Sellers opting to go it alone are the rare minority of the homes that get listed for sale. Typically when you want to sell your Home you call in an unbiased professional (Realtor) who will guide you through the entire process and handle every thing required to ensure a smooth and stress free as possible sale. History has shown us that when it comes to making the biggest financial decision in our lives almost everyone feels more comfortable dealing with professionals who offer an unbiased relationship to the transaction. Even me as a licensed Realtor have always hired my own agent when selling my homes in part for this reason. When people are comfortable and feel that protective barriers are in place it is easier for them to commit to such a big decision as purchasing a home.

But what are some of things that will happen if during my search for a buyer I come across a Seller who is going it alone on the selling side? Well for starters if the private Seller is not offering a full fee or commission then the buyer would be responsible for paying my company for the services rendered. Now keep in mind when I set out working with a buyer a lot of prep work and educating goes into the process. As Realtors we only get paid upon the successful closing of a purchase or sale. I can be showing buyers homes over a 4 month period which requires great time and expense invested on my behalf. If we came across a private Seller who is only offering $1 in commission it’s just not going to cut it.

Now most Buyers in my experience when confronted with this scenario do not have a problem with it. Where the problem lies is do they have an additional 2.5%-3% of the purchase price in cash that needs to be available on closing? Since as a Buyer you cannot blend it with the mortgage as is the case when both Seller and Buyer have their own Realtors representing them this could pose a major problem for first time buyers (and it already has) in being able to proceed with an offer.

Another issue that comes up is confidentiality. How do you ensure that the details of the offer you place to the private Seller will be kept confidential? REBBA 2002 and other regulations only apply to licensed Realtors, not the general public. So confidentiality isn’t guaranteed and in my opinion not a good thing.

How about the deposit? Where does the deposit go? This is negotiable between the Buyer and Seller whereas typically it would stay in the trust account of the Listing Brokerage. Deposit insurance is mandatory and a Buyers deposit is only guaranteed when being held by a licensed Brokerage operating under the act. This is a potential landmine in my opinion especially if the Buyers offer has conditions attached and then rescinds their offer during the conditional period.

Showing availabilityis another problem. The private Seller needs to be gotten a hold of in the first place which in my experience has been a great challenge. Maybe this has something to do with the type of person who chooses this route but I can easily attest that its not easy making appointments. The trying to find and agreeable time for all parties is another challenge as the seller needs to be home to let us in.  It gets worse when the Seller insists on following you around and offering their biased opinions on their home.

Recently I had a Buyer ask me if we could leave mid-appointment because she felt the Seller was being over bearing and bordering on harassing with his personal questions for her. When I noted to the seller that we had seen enough he almost screamed at me “thanks for wasting my time!” I politely reminded him that a great deal of effort was made by all of us to get in and view the property. Luckily these scenarios are the rare exception and not the norm. Because if they were my fee would be raised to 5% and I would only be showing one house per day to a prospective Buyer client circa the 1950’s!