Found a Buyer on Your Own? Here’s Why You Still Need an Agent
Let’s say you’re selling your house. And before you even get a chance to snap listing photos and put it on the market, a buyer comes along. Perhaps the buyer makes you an offer you just can’t refuse. Congratulations, you just cut out many steps of the home-selling process—showings, open houses, and haggling over price.
With an offer in hand, you might be asking what commission an agent would receive if the agent were to get involved at this stage of the home-selling process. But keep in mind what may seem like a straightforward transaction between a seller and buyer once an offer is accepted is usually not all that simple. You still have a marathon to finish before getting to the closing table. We’ve broken down the home-selling process into steps to see what an agent could help you with.
Neither federal nor state laws govern commission rates, which means commissions are fully negotiable. And negotiating the commission is between you and your agent.
To crunch some general numbers, if a home sells for $250,000 at a 6% commission, the seller’s agent would get $15,000. However, keep in mind commission rates usually vary depending on the state you live in and among brokerages. Always talk with several agents about your particular home-selling needs. Find out if and how they would want to handle the sale to a buyer found by the seller.
In this scenario, a buyer made you an offer and you accepted. However, it’s time to take a step back: Keep in mind verbal offers are not legally binding in real estate transactions. Agents usually supply a variety of forms such as Residential Purchase Agreements to get offers in writing. These forms vary to conform to state and local laws, and eventually become a binding sales contract. The forms are also known as a purchase agreement, an earnest money agreement, or a deposit receipt. It’s also essential that an offer contains every element needed to serve as a blueprint for the final sale.
An agent can also handle a buyer’s earnest money—usually 1% to 2% of the home’s purchase price—by depositing it in an escrow account held by a third party such as a real estate closing company, an attorney, or a title company agent. Remember, escrow protects sellers. You get to keep that money if a buyer bails on a transaction that’s underway.
The terms of the sale and contingencies
While it may seem the hard part is over if a seller found a buyer on their own, many obstacles can occur during the contract period that will require an agent’s skill to keep the deal together. For instance, an agent will ask if you and your buyer agree on not just the sales price but also the terms of the sale. Terms within a purchase agreement include basic information such as the names of the parties involved, the legal description of the property to be transferred, and the agreed-upon price. But terms also list crucial details such as what personal property will be included in the sale (e.g., appliances or fixtures). Leaving any terms of sale out of the purchase agreement can come back to haunt the buyer, the seller, or both.
An agent will also ensure contingencies are added to your contract. Standard contingencies include a buyer securing financing, a home inspection, repairs, and an appraisal—which is crucial to the mortgage process.
Remember, you need multiple legal documents for the closing, including a clean title. This step is usually done by an attorney, who collects a fee at the closing. But a real estate agent usually handles getting to the actual closing table by setting a date, coordinating everyone’s schedule, and ensuring all the needed paperwork (which is usually a mound of documents) is ready and correctly signed.
The bottom line
If a real estate professional can assist you, their compensation is a matter of negotiation between you and the agent. Hiring an agent to write the offer and guide it toward the closing table is a smart move.