Do buyers pay a commission to real estate agents who represent them?

In general, real estate agents are paid out of the seller’s proceeds whether they are the listing agent, the selling agent or a buyers agent so, their services are essentially free to buyers.

Some agents may write buyer agency contracts with a minimum commission stipulated. If this is the case and a listing offers a commission lower than what was stipulated then any shortfall is paid for by the buyer. Some other agents write in a service fee which is paid for by the buyer. Either of these extra charges can be written into an offer requesting the seller to pay these fees, but this reduces the likelihood of the offer being accepted.

I have made it my rule to not have any money come out of the buyers’ pockets and into mine.

Is there any recourse for selling agents that refuse to respond to an offer?

I think what the questioner is referring to here is the listing agent, so I will premise my answer on that.

The listing agent is obligated to present all offers to the sellers. Since the agent is (usually) not the seller of the property, he or she cannot make a decision for the sellers and by withholding an offer from the sellers he or she is essentially making that decision. If you think that the listing agent is doing this, you can direct the agent who wrote the offer for you to present it to the sellers directly. It usually doesn’t go that far, but it can.

If you suspect that your offer has not been presented to the sellers, you can request that the rejected offer be returned to you. On the last lines of the Wisconsin offer to purchase, there is a spot where the sellers can initial to signify they are rejecting the offer. This is your proof that the offer has been presented.

If you make this request and it is still not fulfilled, then your recourse is to either call the listing agent’s company or direct your agent to make that call to request their manager to direct the listing agent to provide this. Further recourse would require an attorney.

How long is the inspection period exactly – and does it include weekend days?

Second part of the answer first: There is no such thing as a “business day” in a real estate transaction. So, if your inspection timeframe is 10 days and your offer is accepted on the 15th of the month, then the contingency runs out on the 25th, even if it is December. This can be changed via amendment if both sides agree.

Now the first part: The inspection period is set within the offer to purchase and any succeeding counter-offers and/or amendments. This timeframe is generally between 10 and 14 days and is 100% negotiable within the transaction. You may request 14 days, but the seller wants it done in 10. You go back and forth from there until you both come to an agreement.

The most common mistake buyers make with regards to the home inspection contingency is getting the inspector in too late. As that section of the offer reads, you have “X” days to get the inspector in, then any follow up inspections (foundation, for instance) and to negotiate with the seller the remedies for any defects found. If the final day comes and goes without any action by the buyer, the contingency is considered satisfied. The sellers or their agent has no obligation to remind you that the contingency is about to end.

The process would usually go like this (assuming the seller does not have right to cure defects*):

• The offer is accepted
• Buyer contacts home inspector and gets him or her in as soon as possible
• If the home inspection discloses defects the buyer may want the seller to fix, then buyer submits an amendment to the seller outlining what needs to be done in order for the buyer to move forward with the purchase.
• The sellers may want to get quotes on the work that needs to be done.
• The sellers may want to negotiate the request of the buyer.
• If an agreement has not been made in writing between the buyer and seller on the last day of the contingency period, then the buyers need to decide what to do next: move forward with the home as is or walk away.
• If the buyer decides to walk away, they need to submit to the seller a Notice of Defects by midnight of the last day of the contingency period.

There is a little more to it than that, but this should serve to give a good idea of the process.

At any time during the contingency time period the buyers and sellers may agree, in writing, to extend the time period to accommodate additional inspections or for the seller to gather quotes for work that may need to be done.

*If the seller does have the right to cure, then they have another 10 days after the buyers hand them the Notice of Defects. If they have the right to cure, then the Notice should be delivered earlier than the last day of the contingency if possible.

How long should it take for the seller to counter your first offer?

Again, this is something stipulated in the offer to purchase. It is called “Binding Acceptance” and during that period, if the seller accepts the offer then the buyers making the offer are bound by the contract to move forward. Usually, sellers will want to respond within this timeframe to keep the buyers “in the deal” but, if they are going to counter the buyers’ offer then they could do that at any time.

If you are in a situation where you have submitted an offer and have not yet heard back from the sellers then once that binding acceptance date passes, you are free to make offers on other properties. You can also continue to press the seller for a counter offer or even re-write your offer if the house is that nice.

One reason sellers may withhold a counter-offer past the binding acceptance date is there are a number of showings coming up on the property and they want to see what happens with those before working with yours.

If I’m interested in a FSBO, does my buyers agent help me with this or am I on my own?

If you have a Buyer Representation contract with an agent, then that agent is due a commission should you purchase a home during the period covered by the contract – whether or not that agent writes the contract. When you signed the Agency contract, your agent should have explained this to you.

I usually include a contingency in my contracts saying that the buyers agree to allow me first contact with any FSBO they may identify. I would call the sellers, tell them a little about my buyers then ask if they would pay my commission. Most will say yes. When they do, everything proceeds as normal.

If they do not agree to pay my commission, then it falls to the buyers to pay it. This is a very rare situation.

Does Real Estate agent have to write up an offer for me or can I do that myself?

Technically, anyone can write an offer on a house. You can use anything from a cocktail napkin (VERY dumb idea) to the actual contract. Some buyers will hire an attorney to draft the offer for them.

Any buyer’s best bet is to have someone familiar with real estate contracts draft and present the offers. If you are under a Buyers Agency agreement with an agent, then you pretty much have to have the agent draft the offer unless that duty was removed via the Buyers Agency contract.

Is it customary for our real-estate agent to ask for our FICO scores?

Absolutely not! At least not here in Wisconsin. The only people who would need your credit scores are the ones who are giving you the loan. A pre-approval from a bank or other mortgage lender should suffice for any agent.

Is there a set amount required for earnest money?

The amount of the earnest money is determined within the offer to purchase and any succeeding counter-offers. Earnest money is not required for a real estate transaction, legally, but most sellers will insist on having a buyer “put their money where their mouth is”.

The amount of the earnest money can vary from as little as $1. I usually suggest about 1% rounded to the nearest $100.

Will MLS show any previous offers on the house that didn’t go through?

No, all offers are confidential between the buyers, sellers and their agents. The only offer that is made public is the one that was accepted and closed. This is not made public until after closing and even then, only the price and any monetary concessions would be known.

Is there a grace period after closing to back out of buying a home?

No. In many cases, it will take anywhere from 30-60 days (or more!) between the time your offer is accepted and the closing date. During this time you have had at least one home inspection and maybe even have done some testing – not to mention a whole lot of thinking. You have had plenty of time to back out without causing financial harm to the sellers. However, even during this time, if you back out for reasons not enumerated in the contract as being valid, you can expect the seller to at least keep your earnest money and at worst sue you to force you to purchase the house (this is called Specific Performance and is a whole post in itself).

You also have to remember that the seller of the house you just bought is probably moving into another home and so on. All those deals would have to be unwound as well.

If you make an offer on a house and the owner comes back with a counter offer and you agree to it can the owner still change his mind and sell to someone else?

What is critical to this question is delivery of the accepted counter offer.

One party in a transaction can withdraw an offer or counter-offer at any time prior to the accepted offer being delivered back to the originating party. So, if you get a counter offer from the seller and tell them verbally that you agree to it the deal is not done until the seller has a copy of the counter-offer with your signature on it. If there is a delay between your “telling” them yes and you actually delivering the document to them (as laid out in the offer to purchase) and during that time period the seller gets a better offer, the seller can withdraw the counter to you and accept the new offer.

Your best bet is to always move quickly in a real estate transaction.

Posted in: Home Buying
Tags: buyer agency, buyer's agent, general real estate, Home Buying, home inspection, minimum commission, offer to purchase, real estate agents

2945 N 81st St, Milwaukee

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4 bedrooms, 1.5 baths

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This fantastic four bedroom Cape Cod is move-in ready! There is nothing for the new owners to do except place their furniture and enjoy. This home features newer windows, roof, mechanicals, eat-in kitchen and a great fenced-in yard. The main floor boasts two bedrooms and recently refinished hardwood floors. Upstairs you will find two large bedrooms and a nice loft area. The lower level has been professionally finished to provide an extra several hundred square feet of cozy living space and features a convenient half-bath. Don’t let this one get away!

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Posted in: Home Buying, Sell Your Home
Tags: back yard, baths, bedrooms, cape cod, cozy living, hardwood floors, living room, living space, loft area, milwaukee, rec room