Should we 'ditch' our realtor in favor of a private sale?

[jeromedawg]

Hey guys,

I have a realtor friend who has helped us look at places on and off in our area for the past 7-8 years or so. He was a friend before he became a realtor and has invested a lot of time in helping us look around, etc.

My parents and I co-own the place currently and my mom's teacher-friend told my parents that her cousin is looking to buy in our area and thought our place might be a great fit. My dad suggested just doing a private sale (since it's their teacher-friend who they trust) versus going the realtor route so we can cut out the middle man and avoid the realtor fees. The problem is that I feel slightly indebted to our friend for all the time and effort he has spent helping us out. On top of that, my parents would be looking to do a 1031, which is complicated since it involves an intermediary to hold the funds but also requires arranging selling the current property AND buying the replacement property within a specific period of time. If we were just selling the property, I might have been more open to it but this type of transaction is a little more complicated especially with the timing and I think having a realtor might be a 'no-brainer' anyway.

What do you guys think?
 

[Goldielocks]

If you were your realtor friend, what would you think was fair?   IMO, I would pay my friend $3k for advice during a "private sale".... even if not as a realtor per se.

[Papa bear]

If you were your realtor friend, what would you think was fair?   IMO, I would pay my friend $3k for advice during a "private sale".... even if not as a realtor per se.

Yeah, I would pay my friend a “bonus.”


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[jeromedawg]

If you were your realtor friend, what would you think was fair?   IMO, I would pay my friend $3k for advice during a "private sale".... even if not as a realtor per se.

Yeah, I would pay my friend a “bonus.”


Sent from my iPhone using Tapatalk

If you were your realtor friend, what would you think was fair?   IMO, I would pay my friend $3k for advice during a "private sale".... even if not as a realtor per se.

Thanks guys - I asked my dad and that's pretty much what he was saying. How did you figure "$3k" btw?

[Bernard]

That's a tough question. Even tougher is the answer. Realtor fees are usually around 6%, so $12K on a $200K home, $30K on a $500K home, and $64K on a $800K home.

Since you're living in Orange County, my guess is that we're talking about a $500K to $800K home. While a nice gesture, I don't think $3K to your friend will do the trick. You'll have to figure out what matters more to you, friendship or money.

[Papa bear]

That's a tough question. Even tougher is the answer. Realtor fees are usually around 6%, so $12K on a $200K home, $30K on a $500K home, and $64K on a $800K home.

Since you're living in Orange County, my guess is that we're talking about a $500K to $800K home. While a nice gesture, I don't think $3K to your friend will do the trick. You'll have to figure out what matters more to you, friendship or money.

It’s usually 6% for the total sale, both the listing agent and buyers agent.  So let’s use 3%.  And the brokerage will take a big cut too, let’s say another 50-60%.

So the actual take home on that?  Not nearly what you think it is. 

Plus as a friend realtor, they might be taking less percentage as a favor anyway.  So 3k might not be too far off here.


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[jeromedawg]

So I ended up contacting my realtor friend and asking him about his fees as related to a private sale. He was saying that likely the fees would go down to 2%. I'm assuming because they don't have to do this through MLS and likely aren't dealing with listing fees, advertisement, etc, the fee can be cut more. So while not necessarily a "bonus" type of approach, it's more of a "let's negotiate lower agent fees" type thing so that we can frame this in a better light.

[SwordGuy]

If a professional has done the work for me, and done a good job, I don't try to wiggle out of paying them.

Your realtor friend showed you a bunch of properties.  Did they do a good job of listening to your needs and you were just too picky or unwilling to pay what the market required?   Or did they show you dogs that didn't meet what you were asking to see?   Because if it's the former, they did the work.  If it's the latter, they did work but not what you asked them to do.

I invest in real estate.   I bring my realtor into deals even if I don't have to.   I want top notch working relationships with the folks my business needs in order to be successful.   I want them to treat me right so I make sure I treat them right.

I think friends deserve the same consideration.   

[Goldielocks]

If you were your realtor friend, what would you think was fair?   IMO, I would pay my friend $3k for advice during a "private sale".... even if not as a realtor per se.

Yeah, I would pay my friend a “bonus.”


Sent from my iPhone using Tapatalk

If you were your realtor friend, what would you think was fair?   IMO, I would pay my friend $3k for advice during a "private sale".... even if not as a realtor per se.

Thanks guys - I asked my dad and that's pretty much what he was saying. How did you figure "$3k" btw?

Well,  a) They did some work for me already, although some of that was hopefully enjoyable for a friend. b) I would be about to make them work more and actually use them for advice on the deal as it progresses ( I would get tangible value, not just the prior house tours value).  and c) I manage my own consulting business.  $3k for several meetings and a fair amount of background work would make me happy, but not be out of line (it would be less) than the going full professional rate.   e.g., $80/hr x 35+ hours..?  I work PT out of a home office, so my overhead is low.