We have a valuable piece of property that we have put "on the back shelf" during the recent economy bust - things are improving now ~ and we have been contacted by several agencies who supposedly have buyers for it.
We have never listed it nor have we ever offered it for sale so what is the standard here? Know a lot about real estate but not about real estate agents or realtors. Seems to me that if the Buyers iniate an agency's search - there are three of them sending us letters - then the buyers should pay the commission.
Until I learn more, hopefully from some of the smart people on this board, I'm simply filing their letters and not returning their calls...
Good question. I did something similar a few years ago for a buyer client. They wanted a certain area in a neighborhood. Nothing was listed. I went back to all the sales transactions and contacted the owners to see if any wanted to sell. I found someone who needed to sell and we worked out a price that included my half of the commission we did a one time showing agreement even though it was a lot.
So, although the commission was paid through the transaction the buyer paid a slightly higher price.
Basically this would be a show and sell commission. You sign an agreement with agent for a reduced commission amount and the agent shows it their buyer at the price you agree upon. Set the price to include the commission. This agreement would typically apply to the agent and a specific buyer. Really not that uncommon- did it hundreds of times in the 30 yrs I was an agent.
Posts: 3054 | Location: Michigan and sw Florida | Registered: May 16, 2007
Is the property residential/commercial/vacant land with a specific zoning? In our area about 80% of the time residential and v/l zoned residential the commission is paid by the seller. But, with commercial properties the buyers tend to pay their agent and sellers their agent. Even if you don't think you need an agent check around find out what is the trend for your area and be certain to get a true market value.
Concentrating on finding value now would be my thought process. Contact three agents for comps. Then decide, no promises to agents and you are going to think about it. You may decide to wait more time for market return. Not one of my investors are selling yet. Any potential of leasing land, ie. signage Billboard, fruit stands..etc. Wenkend swap meets, car shows, in the interim.. to help offset taxes and expenses? Just a thought.This message has been edited. Last edited by: real estate lady,
Thanks, Charming, Mamaspoon and Lakelark for your comments so far ~ any one else feel free to chime in.
Lakelark, there are actually two different properties that we have been receiving letters about but the one I was referring to in this post is a 20 acre parcel currently zoned agricultural which is now surrounded by new subdivisions built 2002-2005 (we were the only hold-out) and then the real estate market collapsed @ 2008 ~ now it is slowly coming back and we are starting to receive these letters once again.
The zoning isn't really a problem ~ easy to get a change to match the rest of the "new" area ~ the subdivisions are fairly upscale with houses from $500K to $850K (boom time prices - now probably half that) and I think the current ones looking to buy are investors waiting for a resurgence in building....
The other property is commercial - single office space in a desirable area. We've never listed either property for sale either by ourselves or through a real estate agency. Just seems to me that people looking to buy a particular piece of property who are using a real estate agent should pay the commission themselves. I know we can simply increase the purchase price to compensate but, with tighter banking regulations, adding the commission to the FMV might exceed the requirements re the appraisal amounts.
That's particularly a concern with the existing commercial property ~ the farm/development property seems to operate in a "zone" of its own! In any event, we are in no hurry to sell either property but I just wondered why agencies spend their time tracking down our properties, sending us letters and then want us to pay their commission?
PS. Mamaspoon, I posted my recipe you requested for Cashew Scampi on the March dinner thread in case you were interested.
Thanks, REL, just saw your post after I just posted. Totally agree, we are in no hurry and are willing to wait out the market return even though, of course, there are costs associated with that strategy ~ not really a problem although no one likes spending money on taxes and such ~ but, no, we can afford it without resorting to having to create some cash flow- good idea, though!
Guess my frustration that lead me to post this thread is WHY these agencies are tracking us down, sending us letters and then playing cute with the implication of "we have the names of potential buyers and, if you agree to pay our commission, we'll tell you who they are" ~ do they think we are stupid or what???
Thanks, REL! I really appreciate the many suggestions and ideas which is why I posted this thread.
And, I agree, that determining value is key. Done that ~ I know the value for the commercial property ~ and I guess that is why I was so insulted that agencies would track us down, send us letters and then offer a 30% discounted offer of the FMV in order to get a "buy" for their buyers and then ask US to pay their commission as well ~ not happening...
The farm/development property is another story ~ only "investors" buying right now ~ totally understand, the ones wanting to buy are the ones waiting to sell to builders when the market picks up once again. Wish them all well but they won't be playing with our property ~ think we will decide whether or not to sell on our own terms.
And, no, it won't be with anyone or any agency that thinks soliciting sellers and then asking sellers to pay the commission is the way to go...
Well, remember those Realtors may be representing the buyers, and in cases... the buyer are willing pay their agents' commission. Remember if you do ever list it is the sellers agent job to get "highest and best price"...(if the market so bears).
Very good points, REL ~ perhaps I should call back some of the agencies soliciting the sale. Might be that their buyers are willing to pay the commission but, have to say, think we are going to hold fast for the time being.
Real estate prices here are inching up ~ very slowly but still going up! Looking forward to a resurgence in the market for everyone.
IR - Don't forget your carrying costs to hold onto the land as it inches up in value. I don't know what your property taxes are like and how much insurance you are carrying but too many sellers forget to factor the costs in when they decide to hold out for a better price.
Right now in my area it is difficult to get financing for property, if you are going to sell it to a developer then they would have financing in place. They will also probably have an arrangement with their agent to cover the commission. If it is a sale to an individual with traditional financing, it would not be out of the ordinary to bump the price up to include commission.