I have bought and sold without a broker more than once. The comments so far all have merit, so with that said my simple advice is READ and UNDERSTAND the Listing Agreement-all of it. But I have alot of experience with R.E. so that helped alot.
For example the land that Burger King is on in Plymouth near Walmart was land my father and I sold directly to BK in 2002 or so-their regional Waltham, MA franchisee.
For a nice residential property I owned a few years ago I hired a well known national brokerage shop (their franchisees are in every state including N.H.) to sell a house I owned out of state. I read the Agreement line by line after making a copy of it first, then went through it line by line with a yellow highlighter. Most of the competing Agency's Agreements were similar.
Here is what I found in various clauses they had hoped I would sign off on and please note these are things I had a problem with-you may not:
1) The listing automatically added a commission would be due if I rented the place; Don't agree to this if you can't sell or change your mind and then rent it out yourself; Considering I had rented it for the prior 4 years this was a distinct possibility;
2) If you rent it out first through a Broker and the tenant eventually buys the place they will try and collect again for the sale unless of course this is addressed; Do not expect a credit for the Rental commission you paid either against the sales commission if this happens;
3) There is no such thing as a "standard" commission; "Typical" or "common" commission figures yes; You and the Broker decide what the fee will be; They may invoke the "I have to check with the Home Office position;
4) The Listing Agreement had me paying a full commission if the Broker produced an Offer that met my terms-the fee was due even if I didn't accept the Offer; I can think of several reasons why I might not accept an Offer;
5) Commission is due if within 6 months after the Listing expired if sold through another Broker who charged less-this Broker wanted the difference from me;
6) Ask for a monthly list of all Buyers with names and addresses the house was shown to; They will likely balk but you can save yourself a lawsuit (you'll be the one getting sued) when they sue you claiming they showed the house on such and such date to John & Mary Doe; If you don't have this you are shall I say, at a distinct disadvantage; Besides you will want to see the traffic generated anyway and you won't know all of the potential Buyers unless they tell you who they are; Expect blow back on this but I didn't let it go and got the list monthly;
7) My property could have been a tear-down even though it was quite a valuable home and in outstanding shape on 3 acres in a dynamite town; Some developers looked at it, and, if I had sold the property to them as the Agreement was worded, the Broker wanted a fee from me based NOT on the selling/listing price of my house (6 figures), but the selling price AFTER a Developer bought it and built a multiple 7-figure McMansion on the land; I found this clause truly absurd;
8) The Broker wanted 100% reimbursement for all "expenses" incurred or a full commission (their call) if the house didn't sell for any reason and I either withdrew it for sale or listed it elsewhere after expiration; Yes they expected to get paid even though the house didn't sell during the term of the Listing Agreement;
9) The Broker expected to get 50% of any money forfeited by the Buyer if the Buyer had to get out of the deal and I kept say, their Deposit as damages;
10) Named Exceptions: A Named Exception is a list of people you have already shown the property to yourself, or, perhaps through another Broker; Add a list of Named Exceptions to the Agreement as an Addendum so you do not owe a fee to the Broker if one of these folks comes back later to buy the place-yes it really happens and unless this is taken into account you will owe the fee-possibly two fees (one to the new Broker, one to the old Broker);
11) Auto-Renew: Many Agreements are written to automatically renew unless steps are taken to prevent it; This may or may not be agreeable to you, I'm just pointing it out;
12) I added an Addendum myself that had these points in it:
- Broker gets paid at Closing like everyone else-no sooner, no later;
- Seller's Attorney will act as Escrow Agent not the Broker;
- Named Exceptions list added;
- Indemnification: I asked for and got the same indemnification from the Broker they expected from me;
While it may sound like I'm a hard-ass the fact is I had a real problem with the Agreement as originally proposed; The changes I made were sent to the Home Office for approval and I got everything I wanted.
Furthermore I knew and liked the Broker who was forced to use the Home Office's Listing Form of course-she had no part in writing it at all. My reference to Broker actually refers in this case to the parent company-the Home Office-not the person who I worked with.
Don't get me wrong-I want people to get paid. I never challenged the commission amount for several reasons. The Broker did a good job too. And this boilerplate language was just that-boilerplate-that experience tells me they get agreement on all the time as originally written because for whatever reason people don't try and modify it.
The problem is most people don't sell often enough to get good at this which is understandable. Brokers certainly have their place and with proper due diligence on your part the commission is likely money well spent.
I hope it helps.
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