If you are seller that previously had your home listed with an agent that has now expired or you are trying to sell your home on your own, you need to read this! I don't list homes for sale, so I don't call expired listings or for sale by owner homes for the purpose of securing a listing. I understand that the real estate business is very competitive and each agent is always looking for an edge. It really doesn't matter to me what an agent chooses to do to try to add to their tally of listings, as long as it is ethical and honest. If an agent calls/writes you and tells you any of the following, be sure that you are smart about things before you sign any type of agreement.
1) If an agent tells you that they are working with buyers that are looking for a home just like yours, be prepared to ask a lot of questions before you sign anything. In Wisconsin, we must have a signed listing contract, spelling out the duration and commission, among many other things. Perhaps this agent will ask if you would be willing to do a "One Party Listing", even offering you a reduced commission. This still must be in writing, have a duration, state the commission terms and state the potential purchaser's name. This needs to be done prior to there being any type of showing of your home. Don't be afraid to ask the agent questions about this purchaser before you agree to anything. Some things that you might want to ask are:
a) Can the agent supply you with a preapproval letter for this buyer prior to you agreeing to a showing?
b) How long have they been working with this buyer?
c) What are some of the other homes this buyer has previously looked at with the agent?
d) What type of paperwork would you need to sign?
e) What commission is the agent asking you to pay?
f) How long would you be in any type of contract with the agent?
If the agent can't, won't or simply chooses not to share any of the above information with you, then this may not be a good arrangement for you, the seller.
2) If an agent calls you and tells you they are willing to list your home for x% commission (an amount that seems to be significantly less than you have ever heard of before) for 30 or 45 days, you need to be cautious. In Wisconsin, listing brokers and their agents are required to put directly into the listing contract the commission rate potentially owed to them, as well as any variables in that commission. The listing broker/agent is also required to state in the listing contract how much commission they will be offering to other offices that may bring a buyer to your home. This is called a cobroke- when one office lists the home for sale and another office brings a buyer through. You, the seller, have the right to tell the listing office exactly how you want that commission shared. If you want your listing agent to get x% and the agent that works with the buyer to get y%, then tell them that and get it in the listing contract. Here are some things to be consider when someone offers to significantly discount their commission:
a) Does this discount only apply to a situation where the listing agent also has the buyer?
b) What is the commission amount that will be offered to other offices/agents? A good way to handle this is to tell the listing agent what % you want to pay the listing office and what % you want to offer to the agent that brings a buyer through your home. Have them put this in the listing contract and then there are not any questions.
A recent situation I was told about was an agent that called a listing that had expired and stated they had a buyer looking for a home just like theirs. The agent said that there wasn't anything else on the market within the price range they were previously listed for, so could the agent bring a buyer through the house. The sellers agreed. That buyer, shockingly, wasn't interested in the house, but the agent would be willing to list their home for half of what the agent normally charges for 30 days. The sellers agreed. Interesting, right? The multiple listing service does not show that house as being a reduced commission, nor does it show that there is a variable commission if the agent sells the home. Both the amount of commission being offered to a selling or buyer's agent, as well as whether the commssion is variable, are required to be stated in our multiple listing service here in Central Wisconsin. The concern becomes whether this agent is being deceptive to the seller, other agents, or both. Deceptive business practices are unethical and if you are going to be listing your home for sale with an agent, I would certainly believe that you want the most ethical agent possible representing you and giving you advice. Please be very cautious and remember that sometimes, if something seems too good to be true, it probably is!