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How Much Should We Pay A Buyer’s Agent

Dear Glen ,

We have our house for sale by owner (FSBO) and got a call from an agent who apparently has a possible buyer for our house. She said she wants to come over and “preview” the house to make sure it’s right for her buyer. She also asked how much we were offering to buyer agents. I haven’t gotten back to her because I’m not sure what to do. 

I don’t want to miss out on a potential buyer, but I also don’t want to pay more than I have to in commissions? This is so stressful! Any advice?

Worried in Waco


Dear Worried, 

First off—I’d be seriously shocked if that agent actually has a living, breathing buyer lined up for your house. This is probably something she learned in a webinar on how to convert FSBO sellers into listings. There is an old playbook out there that teaches the bait and switch method of converting FSBO’s into bona fide listings.

“Working FSBO’s” like this is one of many deceptive practices Realtors continue to use to this day. 

If you’re a Realtor and have no clients, you have to start somewhere. Since you likely didn’t get much training you will need to get resourceful and FSBO sellers are a great place to start. 

I have no problem with Realtors recruiting FSBO Sellers. I DO have a problem with lying to get in the door.

The way the ploy works is you call up a FSBO seller, you tell them you have a buyer and you’d like to see the place because you don’t want to waste anyone’s time if this house isn’t right for them. In the meantime, they are also establishing whether or not the FSBO seller will be offering a commission. 

The result, if successful, is that you are now standing in a home that is for sale and you are face to face with the seller. In sales, this is what we call a “highly qualified lead.” The possible outcomes are numerous: 

  • If the seller is offering 3%, they are half way to 6% and a full service listing. 
  • If you can dazzle them with your listing presentation, you might get the listing
  • Chances are, depending on how long the FSBO has been trying, the seller may be getting tired of it and is ready to list. 
  • If the seller does not want to list, you now have a relationship and could go find a buyer and get paid. 
  • If you have no buyers, you could offer to do an open house for the seller with the understanding that if you find a buyer, they pay the 3%. The side benefit being that you get the chance to work with any other buyer that shows up and build your business. 

All in all, it’s not a bad thing for the agent to do, but the deception is what bothers me. Why not just say, “IF I have a buyer, would you…”. I may seem to be hardcore here, but why does she need to begin your new relationship with this charade? No Bueno. 

If an agent starts out lying to you, there’s a good chance they will continue to lie to you.

But wait…Glen, how do you KNOW the agent doesn’t have a buyer? I’m glad you asked. I KNOW with 100% certainty that she doesn’t have a buyer because if she did, the conversation would have gone like this—

“I have a buyer that wants to see your house, but before we set that up, I need to cover compensation. Are you offering a commission if I bring you a buyer and we bring you an offer you like and it actually closes?” 

You see—that’s how things work in the real world. Even if you say no, a good buyer’s agent will have already covered that with her buyer. She would explain that sometimes sellers are offering less than what she gets paid for her services. In that case, the buyer can pay her and they would work that out ahead of time. 

The fact that the agent said she didn’t want to waste anyone’s time is perhaps the biggest lie of the whole pack of lies.

Agents universally complain about not having enough time. Why would she waste HER time when she could just bring the buyer along. Because she’s NOT wasting her time—she’s going on a listing appointment and doesn’t want her fake “buyer” there to mess things up. 

OK—so that covers the first question—I think. 

On the “how much should we offer” question, I would say the short answer is 3%. This may seem to contradict my well-documented rants about how Realtors are overpaid and how the established commission structure needs to go away. And you’d be half right. 

I didn’t say you should pay 3%—I said you should offer 3%.

  • And I’d only offer that 3% for a specific set of conditions. Such as: 
    • Full price offer
    • Pre-approved buyer (with letter in hand)
    • “As Is” inspections so we don’t end up renegotiating later
    • No “home sale” contingency
    • 30 days possession after closing for the seller
    • One mint-condition copy of the Beatles While Album

That last condition is to make the agent think you’re just a little bit nuts. We need her to think that so she’s less likely to mess with you later. Besides, you gotta have a little fun along the way. 

The point is, you are offering maximum commission because commissions are supposed to motivate a salesperson. You need the agent to understand that if she brings you the perfect offer, she will get her precious 3% commission for her trouble. 

If she brings you an offer that is below your dream offer, she can expect a counteroffer that includes the clause “Agent commission to be 2% at closing” or whatever you decide is fair, but certainly not 3%. Why reward her for failing to follow your directions?

Now you’ve kept your word and brought the topic of her commission directly into the spotlight where it belongs.

You now have the agent in the awkward position of having to explain to her buyer that her commission is now standing between her buyer and their dream home. 

THAT is what we call negotiating, my friend. 

Why 3% to start? Like it or not, studies have shown pretty conclusively that sellers offering less than 3% get fewer showings and take longer to sell. It doesn’t affect your eventual selling price statistically speaking, but time is money and once you’ve decided to sell, most sellers want it done yesterday. Offer 3% and negotiate down from there. It’s the best of both worlds. 

So, in summary, you are going to tell her either that either she brings the buyer or you will not be letting her in the door, that is unless she wants to attend your open house. 

Second, you will offer your commission of 3% but make it clear that if she doesn’t give you a dream offer, you will be taking it out of her commission. 

The agent will either say “forget it” which means she never had a buyer in the first place; or she will bring her buyer and you’re off to the races. 

You might be worried that she will walk away, but remember, agents don’t get paid until they sell something and if she really does have a buyer, I promise you she is already tired of showing homes to that buyer. Also…

Agents would never knowingly risk having a buyer go around them and buy a FSBO without them. 

To sum up my summary, you are in good hands here. Use these methods of negotiating and instead of having one agent, invite them all. If you’re really savvy, you’ll spend a few dollars on a Flat Fee MLS listing and tell the entire Realtor community about your sweet deal of an offer. I promise you, if you’re priced right, that kind of exposure will get you loads of traffic.

Oh..but leave out that “White Album” thing…. Oh what the hell—leave it in there. If you’re following me, you probably ARE a little nuts so why not be up front about it! 

Best of luck and keep the questions coming!

Want more negotiating tips? Want to be prepared for the moment that agent does bring you a buyer? Of course you do! Sign up for my course waiting list and you will be the first to know when my all new FSBO Like A Pro course is released! Get access to an interactive course that takes you from deciding to sell your house, all the way to closing and handing over the keys. Join the waiting list now: https://www.byownercoach.com/programs/