Is Avoiding a Commission Really Just Avoiding a Sale?

J Philip Faranda October 10, 2010

Use a professionalThere is one rather immutable truth to real estate: if you write a commission check, you are at a closing table selling your property. 

Which, I believe, is the point. Closing. 

Often, when listing a For Sale By Owner (most end up listing), I am asked what happens if someone who expressed interest while the home was a FSBO buys after I list the home. My answer is that if they didn't buy then, but do buy now, then I have done my job. 

Getting them to buy is what the agent is paid for. If the seller could get them to buy, they wouldn't need me. Just because they saw it with the owner first it doesn't mean anything. We aren't paid for getting people first, we are paid for getting people to the closing table

In other words, outcome. Results. 

Upon occasion, I will grant a seller an exclusion on certain buyers- it can be a neighbor, it can be someone who is trying to sell their place so they can buy now, or any other sort of buyer. My exclusions are not an exemption from commission, and here's why: an offer is just a beginning. It is work and skill to affect a closing. If I gave my seller client a 0% commission for an excluded buyer, a complete exemption, then it is THEY who will have to be the agent, not me, because I can't hold that buyer's hand for 2-3 months for no compensation. 

If the seller client wants to handle pre-qualification, offer, negotiation, contracts, inspection, mortgage process title and closing alone on their own, they invite disaster. I never want to be in competition with a client, nor do I want to wait unpaid on the sidelines while they engage in a Do It Yourself project on the biggest transaction of their life to save a few points. A saved line item is often at a cost of a lower net, and that is not conjecture- it is a fact. I'm better than someone selling their own house. 

Exclusions make sense when a predetermined buyer comes in early in the process, saving the listing agent time and marketing resources and all parties can just do the work from offer forward to closing. There is no buyer agent to pay, and a reduction in fees can be negotiated. However, an elimination of fees altogether is penny wise and pound foolish- too much can go wrong. You want a professional working for you, and no professional can work for free. What good is "saving" the commission if it doesn't close?  


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