Don't Sign That Listing Contract!

The contract that an owner signs to put their home on the market is much simpler than the scads of paperwork that come around later when there is an offer on your home.

Here in the Seattle Area, you want to pay close attention to one tiny little portion of the contract before you sign it. It’s very simple to clarify for you, your agent, the buyer and the buyer’s agent, exactly what the commission arrangement is.

Here’s how VERY easy it is. On the main agreement, one page, there is a line of about one inch in length. Let’s say you are agreeing to pay your listing agent 2% and offer 3% in the mls to the Buyer’s Agent. Instead of writing in 5% on that line, just write in what it actually is “2% + 3% to the buyer’s agent”. Pretty simple. Takes about 20 seconds.

That extra 20 seconds will make it clear to you, your agent, the buyer and the buyer’s agent, that the listing agent is NOT to get that +3% in the event there is no buyer’s agent. If the listing agent is agreeing to charge 2% to represent the seller, then there’s no reason why that amount should increase to 5% if at the end of the day they only represent the seller.

There’s plenty of time when the buyer is actually “at the door “to decide who will get that +3% if the buyer has no agent. Maybe the agent should get some of it…maybe the buyer should get all of it…maybe the seller and the buyer will split it 50/50, maybe the buyer and the seller and the agent will split it into three pieces. Lots of options depending on the circumstances at hand at time of offer and acceptance.

But DO NOT write the commission % in as a TOTAL of both your agent’s fee and the unknown, absent buyer agent’s fee. Just write in 2% to XYX listing company and 3% to the company who is REPRESENTING the buyer. This way, if no one is representing the buyer, the extra 3% doesn’t become a windfall profit, without your say so.

Buyer Agency – Don't pay someone to "open a door"!!!

Don  t pay for door openersYesteday I received an emailed flyer with this subject line:


While that was a 26% price reduction, looks like someone had bought it for the higher price but that sale was cancelled and the property is back on market at 26% less. What can you say besides thank God that sale didn’t go through?

The day before yesterday, on Saturday, I was showing 6 properties. Virtually all of the properties I chose to show were overpriced by $100,000 to $150,000. 4 of 6 were also $100,000 or more higher than my buyer client’s price range. But I showed them because I am pretty sure most if not all of them will sell for less than my buyer client’s cap price.

Just 7 or so houses from the first property we looked at there is a house priced at twice as much that has been reduced by $350,000 since the first of the year, and another nearby just reduced by $150,000.

Technically speaking there are 75 properties on market in my client’s price range in the area where he wants to live. Only 6 properties were worth showing, and 4 of those were priced over the price range, but believed by me to be in his price range as to what it will sell for and what it is consequently “worth” vs. what the sellers are asking. Two were for sure…too were iffy.

Client’s often ask if what a Buyer’s Agent does is “negotiate”. NO! It does you no good to get $100,000 off of a property that is going to sell at $400,000 less. In that same price range from my Saturday and Sunday experiences, all homes sold in the last six months sold at 98.9% of ASKING price. Relying on a buyer’s agent is NOT about getting a house at 98.9% of asking price, or even at 90% of asking price. It’s about knowing that 73 of the 75 properties on market are overpriced and by how much.

Do NOT pay anyone 3% of the sales price to open the door. If all you need is someone to open the door, hire an agent with a license and a keybox and duct tape on their mouth and pay them by the hour, and do not listen to their advices as to “how to negotiate a great deal”.

If an agent can’t tell you what the house is worth, but instead promises to be “a great negotiator”…run away as fast as you can.