For Sale by Owner News and Articles
Co-Broking Your Property
By Robert Irwin
"Co-broking" is a term that has special meaning for those selling "by owner".
First off, it is "co-broking," not co-brokering. As those in the field know, this refers to agents sharing a listing. For example, an office with a listing will "co-broke" with another office, which may have a buyer. If there's a sale, the agents will split the commission.
When it comes to selling "by owner", it is possible, even desirable, for you as the seller to co-broke your own property.
But, you may be wondering, how can I do this when I'm not an agent? The answer is that when you're selling "by owner", you're performing the functions of the listing agent (or, at least, you should be!). You've put a sign in front, you're advertising, you're taking phone calls, you're showing the property and on and on. Therefore, you can claim the equivalent of half the commission.
In a typical real estate sale where there's a 6 percent commission, the listing office gets half the commission (3%). The other half (the other 3%) goes to the selling office, the agency that produces the buyers. Your half is the same as the listing office's half, when you deal with an agent while selling "by owner". Here's how it works:
WHEN A BROKER HAS A BUYER
Often, an agent will call a FSBO seller and say that he or she has a potential buyer for your property. They will ask if you're willing to co-broke? What does the agent mean?
What the agent wants to know is whether or not you'll give them the selling office's share of the commission? In other words, if they bring in a buyer, will you pay them a half, or a 3 percent, commission? (As noted, since you're doing the work of the listing office, you'll be keeping the other 3 percent.)
If you're agreeable, they'll usually want you to sign a short term listing (typically a day or two), to protect themselves, and then they'll produce the buyer. If you sell, you'll owe them that 3 percent commission.
SHOULD YOU DO IT?
I would. Many "by owner" sellers are purists. They are determined to pay no commission at all. They hope to find a buyer on their own.
If you feel this way, more power to you. But, keep in mind the odds are stacked against you. The majority of purist by-owners, fail.
On the other hand, why not go with a bird-in-the-hand? A broker who has a buyer for your property could mean a quick sale. And you'll still only be paying half the usual commission. Just beware of a broker who might run a "pretend" buyer through your home hoping to trick you into signing a long-term listing. (This would be unethical conduct on the part of an agent.)
Don't expect the selling office to do your work for you for half a commission. They won't want to handle disclosures, run your end of the escrow, help you clear title or all of the other work that a listing office normally does. For that, they will want a full (5 or 6 percent) commission.
On the other hand, don't do this work yourself, and still end up paying a full commission!
Robert Irwin is the most prolific real estate writer in America having produced over 100 published books in the field. His TIPS & TRAPS McGraw-Hill series has sold well over a million copies and his FOR SALE BY OWNER KIT and FIND IT, BUY IT, FIX IT and other books have been strong sellers for Dearborn.
In addition Irwin writes a regular real estate column for The Wall Street Journal online and is introducing a new weekly column for Owners.com.
Irwin has sold his own property "by owner" and during over 30 years in the business has been a broker and consultant to lenders, agents, buyers and sellers.
He can be reached through his website RobertIrwin.com.