It May Look Like It Is But What If It’s Not?
This past Saturday my buyers told me they were going on Sunday to see a property at an open house which was a “For Sale By Owner”, or FSBO”. I took a look at the flyer they had picked up for it. Guess what? Even though it looked like a FSBO and was written like a FSBO it was most definitely NOT a FSBO. The flyer actually had an MLS number on it. But there was no agent name, no brokerage company identified, nothing else that would indicate that this seller was represented by a real estate agency.
I recognized the address from seeing the property hit the MLS as a new listing just a few days ago. That means that the sellers had, in fact, entered into a formal contract with the listing agency to pay them a 5% commission in exchange for selling their home. Furthermore, the agency, by putting the property on the MLS, had contractually agreed to give half of that 5% commission to any agent who brings a buyer for this home.
I decided to accompany my buyers to the open house. Outside the property was a very home-made looking “For Sale” sign with no identification of the brokerage or listing agent. It looked very much like what you’d see on a FSBO. Inside were the husband and wife with a bunch of cookies on the table and more of the same flyer. They were showing people around and answering questions. No listing agent in sight.
So why does all this matter?
- If you are a buyer and think you are buying directly from the seller with no agent involved, wouldn’t you consider that in the price you offer and what the sellers should be willing to accept? After all, the seller, you would think, if selling without an agent is not handing over 5% or so to a broker.
- If you are a buyer who had been working with an agent but think this is a FSBO might you not choose to go there alone? Without your agent? FSBOs are not always willing to compensate agents who bring the buyer. Some will specifically state on their materials “3% paid to buyer’s agents” but not all. Usually the seller is hoping to save the 2.5% on the sell side AND the 2.5% on the buy side (or whatever the percentage may be). So even buyers who look at MLS-listed properties with an agent often go to the FSBO on their own, especially if it looks like their buyer’s agent isn’t going to be paid anything
The biggest mystery to me though, is why would a seller ever be willing to pay 5 or 6% to list a property with a purportedly “full-service” brokerage and then prepare his or her own marketing materials, signage, and host their own open house? That is one very un-savvy seller. If you’re paying tens of thousands of dollars for service from a brokerage you should get it! These sellers must be clueless.
This all seems to me to be very deceptive and possibly unethical. Is it an attempt by the broker to trick buyers into thinking there is no agent involved and the sale is being handled directly by the owners? Will this broker, who gets the sellers to do all the work, swoop in and pocket both sides of the commission?
Does this sound kosher to you?