A lot of people now a days are more resourceful when it comes to generating their means of daily income. And some one of the best choice of a lot is getting or managing their own business, regardless which industry as long as they know how to manage it. Defining the term “business” it is a process where in goods and services are exchanged for one another or for money. And for someone to have an output of exchanging of the said goods or services there should be a selling process that is happening between two people.
This process is the act where in YOU as the seller should be able to meet the needs of your customers and provide the worth of the money that they will be paying to you, regardless which industry you want to do business with.
Now in real estate, there are several ways of selling a property but I would like to focus on two types of selling and these are:
a. For sale by Owner- the owner of the property is the one doing the direct selling of his or her house and does not use or need a third party or what we call real estate agents to look for potential buyers. Once the property is sold, automatically the earnings would payed by their customer 100% and with no deductions at all.
b. Agency Selling- a specific property owner would be hiring a person to act as the third party in selling on the behalf of the owner. Most of these agents are coming from different real estate agencies in the state or country where you are located. As agents, they are the ones studying the property listings, deals face to face with clients when buying or selling a property, accompany and assisting their clients to property site, discuss conditions of sale, and draw real estate contracts.
Now, if there would be a sale then these agents are being paid by commission. It is a fee charged by an agent for his or her service facilitating a transaction (buying or selling a property). The rate or percentage of commission do depend on the state or country that you are located. Here in Chicago, it ranges from 4-8 percent.
I have received several questions from For Sale by Owner’s one of them being: If you have a found a buyer for your property without using an agent and you are selling the home on your own but need help in processing your transaction would it be possible that you pay less of a commission to him or her?
There are a lot of answers with this kind of question and again it actually depends on the state or country that you are located. But I will be writing down some helpful tips that will serve as your guide especially here in Chicago and suburbs.
As realtors, we will be providing our client with a contract that we call LISTING AGREEMENT. This document will be the basis of the understanding between the owner and the agent and everything they have agreed upon with the terms and conditions during the whole period of selling the property.
Tip 1: The most typical agreement is the “Exclusive-Right- To- Sell”, in this agreement it grants the broker the EXCLUSIVE right to list the seller’s property and provides the broker will be compensated in accordance with the terms specified in the LISTING AGREEMENT, REGARDLESS OF WHO WAS THE PROCURING CAUSE to get that BUYER.
In short, even though you as the owner got the buyer for your property that is on sale; you still need to give the commission to your realtor as his or her compensation.
Tip 2: But, there is another listing agreement that grants the BROKER the EXCLUSIVE right to list the SELLER’s property and provides that the SELLER owes the listing broker compensation. However, if it is the SELLER (FSBO) who PROCURES A BUYER then there is no need to pay any commissions. The EXCLUSIVE AGENCY AGREEMENT provides this kind of privilege to any FSBO and as long that it stated clearly that “NO COMMISSION is OWED” . With this kind of documentation, YOU don’t need to worry about the commission of the agent and you can still hire him or her to help you out. 😉