Deals involving agents and/or FSBO

Ok I would like to know if dealing with FSBO’s is a good idea. I have many FSBO’s wanting out ASAP and willing to put in a contract however here is my concern. If they are marketing as a FSBO while I have a contract with them and they get an offer for what they originally asked for - where do I stand? How does this affect my contract? OBviously they will want to take the higher offer. Is FSBO’s a good idea to use?

Second, deals with agents. If I get a contract with an owner because they can’t seem to sell with an agent - and I get a buyer - does a commission have to go to the agent as well? I was told it does and it doesn’t make sense to me just because they didn’t do their job in the first place. I found the buyer and they are profiting off it plus they want more money than I do and the seller’s get upset. I hear people dealing with these scenarios all the time, just not sure it is a good idea for either.

Here is a perfect example. I have a client that has their house on the market for 3 months now. It is a turnkey property and investors would grab it for the right price. The agent hasn’t done her job needless to say with the property being on the market for 3 months now and not one offer. Now they would like me to wholesale it but I am not sure how to handle it when the property is still on MLS, the agent isn’t doing her job by selling it. I want to help them because they are in a desperate situation at this point but again there is an agent involved. HELP! Any feedback would be greatly appreciated.

If you have a signed contract with the seller, they really cannot accept another offer. If they break your contract, then you can pursue legal action if you want.

If a house is listed with an agent, they will get the commission - even if you bring the buyer to the seller. The reason is that the seller’s have signed a contract with the agent. If they don’t like the job the agent is doing, they can fire the agent. However, they need to check their contract to see if there is a ‘seasoning’ clause where commission is still due after the contract is up. Many times this clause is put in there to protect the agent from the sellers contacting a buyer that was brought during the listing period and working a deal with them to wait until the listing expires to avoid the commission.

I understand - that’s what I thought. So what is the typical seasoning for a Agent. 90 days or so? I have a lot of investors that ask that we cancel the MLS before they will buy the contract but the Agent won’t cancel - but it is up to the buyer, correct? The buyer can decide to fire the agent, listing would be cancelled and if we get a buyer in before the agent seasoning clause expires, we just add them to the contract for their commission, correct? It seems so complicated to me for two reasons, the buyer doesn’t like everyone getting all these commissions and two the seller doesn’t either because they are losing out on more of their equity. Anyone else have these issues.
I get a lot of calls from people not happy with their agent, they want to sell quickly and they are willing to accept a low offer so they can move on - so even so it seems worth it. Opinions please :slight_smile:

I just wanted to clarify a couple of things. Just because an agent has a contract with a seller, that does not mean that they are automatically due a commission when a property sells without their assistance. It depends upon the type of contract the seller has with the agent. Some contracts allow for the seller to find their own buyer and/or for open agency (whoever finds the buyer gets the commission). Of course most agents do not agree to those type of contracts. Therefore, the scenario you described is more typical.

In addition, you are not party to the contract between the seller and the agent. Therefore, the seller is responsible for the commission not you.

The time an agent has to sell a property before a contract will expire will vary. The seller and agent could have agreed to 30 days, 60 days, or 1,000 days (just kidding). My point is that you need to know the terms of that particular contract. There isn’t necessarily a standard answer.

If you plan to wholesale the property and the seller does not plan to cancel their contract with agent, why don’t you see if it is possible to partner with the seller’s agent. Agents are able to legally pay other real estate agents a co-op fee. In some states, agents can also provide non-agents referral fees. In my state the maximum allowable referral fee to a non-agent is $1,000 (I think). It may be smaller or larger in your area. If your wholesale fee is larger than this may not be advantageous to you.

Instead of thinking of it as an adverserial relationship, there may be the possibility of a win-win situation.

Thank you zeekerette. That explains a lot.
I’m not against working with agents, just not sure how it works if they were in the deal before myself. In my area, the agents aren’t so receptive to us Wholesalers. Though the Agents I work with are great. It’s the ones that already have been working with the Sellers before I that seem to be more of a problem.

I think I understand how to better work this out. Though if the seller is responsible to pay the agent - do i need to speak with them before I bring a buyer and include their fee in my price?

PS - working with Agents can be a win win situation. I hope I wasn’t coming across as not willing to work with them. :slight_smile:


I am the wholesaler

Try turning off the capslock next time you post. :rolleyes

Always remember that the listing agreement is a contract between the listing agent and the owner. In many cases - I do this a lot - I let the owner continue to sell the house fsbo. If they get a buyer before I do then they don’t owe me a commission. Although they’ll frequently have me handle the transaction for a reduced commission.

Because they are willing to talk to you without sending you to the realtor you could ask them about the nature of their contract. When approaching fsbo’s I always ask them if there is a realtor involved before I pursue an offer.

I don’t wholesale, so I will respond the best I can. First of all, you need to know if there will be a fee. If there will be a fee, then you and the owner should discuss who will be responsible. From the little that I know about wholesaling, you guys work with the owners to sell a property for them at their bottom line. When you and seller perform the calculations, just treated like any other expense.

Great - this helps a lot.
I have another question. Is it “OK” to go around the agent and put in an offer with the seller? How should this be handled? Are the seller’s normally open about this? Not sure how to approach these.

Also being that the properties are on MLS - the investors normally want the transaction cancelled before they will sign the contract - at least here it’s a problem. Any suggestions on this would be appreciated as well.

1st: Try to find out the reason why it’s a FSBO. I called a FSBO that actually ended up being a short sale.

2nd: I know this is redundant, but the Seller needs to terminate the contract with their RE Agent. I did a Short Sale, but B-4 doing it, I made sure the Seller terminated the contract.

There isn’t much you can do. The seller must either terminate the contract or wait for it to expire.