Navigating FSBOs and Mere Postings

26 September 2016

Since it's becoming a bit more common, this week we wanted to tackle how REALTORS® should navigate FSBOs and Mere Postings. Mere Listings are MLS Listings in which the Realtor has agreed not to provide services to the Seller other than submitting the listing to MLS, whereas FSBO stands for "For Sale By Owner."

Getting Started

One of the first things to consider when you get a new Buyer Client is creating two BRA (Buyer  Representation Agreement) contracts, one for MLS Listings and one for Mere Postings and FSBOs.  Each contract can state their own commission and this will actually create a dialogue with your buyer regarding various buying scenarios, agency relationships, buyer commission obligations and procedural and document handling. There are steps that you are going to have to follow when dealing with these types of transactions ,but first it starts with the Buyer showing interest. 

Different Scenario's

So your Buyer may be interested in pursuing a FSBO or Mere listing. If that's the case your first step is to contact the seller.  If the seller agrees to show their property to your Buyer, you will need the following forms filled out:

There are various scenarios which can occur from dealing with such types of properties.

Scenario 1:

The Seller is agreeable to cooperate on all terms. If that's the case you show the property and if the buyer is interested, you prepare the offer.

Scenario 2:

The Seller is agreeable however, they're not agreeable to pay the commission either in full or in-part. If that's the case first you have to explain to your Buyer that you can show them the property, but since the Seller is not paying the commission then the buyer will be responsible for the deficiency. At that point  the Buyer generally applies commission cost approach to value.

Scenario 3:

 When the Seller is not agreeable at all, in this case you just can't be involved. You will find that the Buyer may try and purchase the property privately but you may want to express to them that if they were to do that they may be responsible for your commission plus the  additional legal cost and contract advice.

Tips to Remember

  • In short you can have more than one BRA per Buyer Client. Even if it's just one, make sure your client fully understands the different types of scenarios they will be involved in during the course of a transaction. 
  • When you are dealing with a Customer you are not obligated to provide any form of advice, CMA's, negotiation,  any fiduciary duties whatsoever, you are there to facilitate the transaction.  Consumers do not need to follow the same procedures we do. Even though we are obligated to utilize such forms, if there is resistance the first step you should do is talk to your Broker before you even get into a contract of purchase and sale. 
  • For FSBO's financing down payments can be  roughly 65% and for both FSBO's and Mere Listings, a mortgage appraisal will be required upfront.  So, if your client is interested in viewing a property and you get to the point where you are actually going to show them the property, the first step should be to contact your Mortgage Broker and start discussing what needs to be done to start preparing your client for the eventual sale.
  • If you are going to have two contracts, one for an MLS Listing and one for Mere postings is why not charge a little bit more for Mere Postings and FSBOs just due to the amount of involvement you will have in that transaction.

The real estate landscape continuously changes, adaptation is key to success.