October 1st, 2018 at 12:51 pm

Question: We have a high-end property listed for sale. A buyer proposes to represent himself in purchasing the property. He is not a real estate licensee, but of course, he wants the 3% commission we have offered to a buyer’s broker. How do we handle this situation? 

Answer: A buyer is allowed to represent himself or herself in purchasing a property (just like a seller can sell For-Sale-By-Owner). However, you cannot pay the buyer a real estate commission, nor are you obligated to credit the buyer what you would have paid to a buyer’s broker. The general approach for handling this situation is to pre-screen the buyer to determine which of the 2 following groups of buyers he falls into:

  1. In-the-Know Buyer: On rare occasions, a buyer proposing to represent himself knows how to buy real property on his own. Present his offer to the seller for consideration. You and the seller may elect to give or not to give the buyer a 3% credit or price reduction, given that there will be no buyer’s broker. Issue a Seller Counter Offer requiring the buyer to sign a C.A.R. Buyer Non-Agency Agreement (BNA) to confirm that we will not act as the buyer’s broker or agent. Make sure to conduct yourself accordingly throughout the sales transaction.
  2. Most Buyers: Usually buyers seeking to represent themselves do not really know what they are doing. They don’t understand the home-buying process, they don’t have the forms they need, and they don’t know who to hire for inspections and other things. In this situation, and with your seller’s permission, offer to represent the buyer or refer the buyer to another agent. Otherwise, your seller may be reluctant to sell to this buyer, given that the buyer’s lack of knowledge may severely hinder our ability to close escrow.

-Thank you to Chuck Sackett (La Mesa/El Cajon Office) for suggesting this week’s legal tip.

Copyright© 2018 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of October 1, 2018. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.

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