I am thinking of buying a home directly from the seller. He says I have to pay him a commission. That’s right?


The Big Move’ is a MarketWatch column that looks at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage. Do you have a question about buying or selling a home? Do you want to know where your next step should be? Email Jacob Passy at TheBigMove@marketwatch.com.

I hope to be a first time home buyer soon. I have worked with a real estate agent for a few months, who has shown me some nice places, but it still hasn’t seemed like the “right” place. A potential place appeared for sale recently, but is “for sale by owner.” The real estate agent told me that would mean that the commission would be included in the sales price that I would pay, rather than the homeowner paying that bill. I wonder how this works and if there is any way to reduce the fees from me. I know that buying real estate is a long and arduous process, and it‘s not always exactly fair, but is there a way to make this arrangement work for me and the owner? Houses are expensive enough! Thanks for your time. Sincerely, New and Totally Confused Dear New: This seller may raise the price to account for the buyer’s agent, but will not necessarily give a “discount” because there is no listing agent. Either way, that’s not your problem. That is the seller’s problem. Negotiate and pay whatever price you think is fair, just like you would a home purchase, and let seller’s commissions drop where possible. How much is this house worth to you? And what are you willing to pay, if the time comes, so as not to lose it? If there were two brokers here instead of one, you wouldn’t worry about the seller’s commission; the seller pays it with the final sale price. The same is true here. Just because the seller has his own broker does not mean that commission for his broker is his problem. Is not. Buying a home that was listed for sale by its current owner, without the involvement of a seller or listing agent, can also have some benefits. Because you are not dealing with a seller’s agent, communication can be faster. Also, the seller is saving money on the real estate commission that they would pay to a listing agent, so remember if the seller brings up the commission again. Pitfalls When Buying Directly From A Seller There are some pitfalls to consider when buying a home directly from the seller, without the involvement of a listing agent. And you’ve come across one of them. It is not uncommon for the buyer to bear the cost of their own real estate agent when purchasing a property “for sale by owner” or, for that matter, to be asked to cover those costs. That choice is yours and you don’t have to accept it. You, as the buyer, have options to negotiate the cost of hiring a buyer’s agent. If you found this home on your own, you may just want to pay the buyer’s agent to handle the negotiations and review the purchase agreement for any red flags. In that case, the seller could negotiate a lower commission since your agent probably didn’t do all the work that they normally would. Consider higher-than-expected costs during the home buying process. Most Americans, unless you live in a city like New York, are in the middle of a vendor’s market. Because there are so few homes for sale nationwide and historically low mortgage rates, there is perhaps more competition than ever to buy a home. Keep your own buyer’s agent to protect yourself. I highly recommend that you hire a buyer’s agent to ensure your interests. They are protected. He is an unbiased and hopefully highly qualified professional who has been through this many, many times before. They also withdraw emotionally from the situation. Prepare to be a tough negotiator. A buyer’s agent will be in a good position to know if the listing or agreed price for this home is too inflated, said Bill Gassett, a real estate associate at RE / MAX Executive Realty in Hopkinton, Massachusetts. Besides finding him the house. of your dreams that you may not find yourself (two pairs of eyes are better than one) and helping you with the paperwork to be accepted by the bank, finding a good lawyer, insurance broker, they also look out for your interests, and They can advise you on the market value of comparable homes in the area, as well as spot things you might miss (odd paint jobs, cracks in the walls, quality of workmanship in general). Alternatively, the lender may ask you to make a larger down payment to fill the gap between what the home appraised and what the seller thinks it is worth. If this happens, you may be able to negotiate with the seller, although in today’s competitive market that could be challenging. Be careful if the owner is selling the house ‘as is’. One last red flag to watch out for: seller stating that he is selling the property “as is”, which means that he will not pay for any updates, repairs or improvements that you think are necessary. Some buyers may take this as a sign that they should forego the home inspection, but that is not advisable. People who are selling their own homes may not be aware of all the disclosures they need to make in the purchase agreement to get started, and in some states, it is actually up to buyers to make sure those disclosures are made. What if there is a problem with the foundation or some kind of dry rot? You don’t want to keep those expenses and / or an expensive legal case against the former owner. Ultimately, it is a competitive market, so it is understandable to feel some pressure to comply with a seller’s demands, especially in a circumstance like this. But this might be the single most important purchase you make in your entire life, so it may be better to walk away than be sorry for the home you buy. Your money, your home purchase, your choice. The seller can accept those terms or not. Whichever path you choose, I wish you the best of luck! And remember, the salesperson may decide to quit a broker and do it all himself, but that doesn’t mean you have to give him the lead.