Q. I am going to take your advice and interview some agents about selling my house. How likely is it that they will negotiate how much they will charge in commission? Are the rates set by law, or can I bargain?
A. In any given area, real estate commissions cluster around one particular rate. Those rates are not set by law, however. They are completely negotiable between the property owner and the agent -- legally, at least.
Yes, some sales -- a few -- do go through at lower-than-usual fees. That's probably most likely in unusual circumstances -- perhaps a home that's offered at a discount because a quick sale is important. On the other hand, some properties -- out-of-town tracts of land that are difficult to reach, for example -- may offer higher commissions. In most instances, though, all local brokers do end up charging about the same percentage of eventual sale price.
For starters, understand that in many cases -- probably most -- you will be listing your property with the company, not with the individual agent sitting in your living room. When your place is sold, you'll pay commission to the office, which will then share with your agent. If you did negotiate a lower rate, it would have to be OK'd by that agent's supervising broker, the person the state considers responsible for all the company's business.
If your agent's firm belongs to a multiple listing service, this will put almost all local brokers at your service. After the sale, commission will be shared, usually 50-50, between your listing firm and the selling brokerage. This exposes your property to the largest pool of buyers and is to your advantage because it is likely to produce the highest sale price. You'll want cooperating brokers picking out your place to show to their buyers, but the offer of lower commission might leave your home overlooked.
Sometimes, though, it's possible to execute a side agreement -- full commission if yours ends up as a cross sale (involving another brokerage), and a lower rate if your original agency has an in-house sale and won't have to share. Again, any change in the firm's usual policy would require approval by the supervising broker. This type of listing is more attractive to brokers when it's linked to an expensive property.
Discount brokers will offer you lower rates in return for fewer services. There's nothing wrong with that if you understand what's involved and which tasks -- showing the property, for instance -- you'll have to perform on your own.
In general, though, following local custom will bring you the best service and the most satisfactory outcome.
Q. How do I find a list of mortgage brokers in this area? When I Google, I get all companies. I would like to deal with an individual (sort of like an insurance agent who represents many companies). Are they licensed/certified? With a government agency?
A. In the old days, I would have told you to look in the Yellow Pages. But anyhow, I just Googled mortgage brokers here and found plenty of candidates. Yes, most of them are set up with company names, but I'll bet some are actually individuals. And, yes, they are state regulated.
Q. The elderly owner of the house we want to buy is offering to take back what he calls a "balloon mortgage." Do you have any idea why he would do that? Is it anything we should avoid?
A. It's possible the house wouldn't meet bank standards for a mortgage loan. Perhaps he'd prefer regular income to an immediate lump sum. Maybe you have unusual circumstances that won't let you qualify for a regular loan yet -- you're still in school, for instance. That would explain why he's offering to hold the mortgage.
As for the balloon part, here's how it works: You start paying him on, say, the usual schedule for a 30-year loan. That makes the monthly payments something you can handle, and it brings him income. But at a given point down the line -- let's say in 10 years -- the mortgage balloons, and the whole remaining debt becomes immediately due and payable. As your early payments were almost all toward interest on the loan, you still owe a large part of the purchase price. Evidently, he wants to cash out at that point and hopes you'd be qualified to refinance for a normal bank mortgage by then.
You know your circumstances. You'll have to decide.
• Contact Edith Lank on www.askedith.com, or 240 Hemingway Drive, Rochester NY 14620.
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