Real estate agents often tell buyers that their services are free, since it's the seller who pays the buyer's agent's commission.  That's not quite true. 

If you're willing to do some searching and legwork yourself, you can often get a large commission rebate or credit from a buyer's agent.  So letting a full-service real estate agent find listings for you and chauffeur you to different homes could end up costing you thousands of dollars. 

Getting commission rebates can be tricky, though, especially if you're buying a house listed by a traditional real estate brokerage or a new home from a builder.  A simple mistake (like signing a guestbook at an open house) can cost you lots of money.  I've developed another website,, to explain how to get commission rebates on new models or traditionally listed homes. 

This part of the website, though, is for buyers who are considering "for sale by owner" (FSBO, pronounced "fizz-boh") properties.  As I'll explain, it's much easier to capture the commission if you buy a FSBO home than a traditionally listed home.  Indeed, that's why experienced buyers often seek out FSBOs.

Why FSBO homes are easier to buy

Let's say you've found your dream home and you want to buy it without using a buyer's agent.  You've visited it during an open house and you're prepared to make an offer.  You've asked your brother, a lawyer, to prepare the offer and help you with the paperwork.  Since you're sparing the seller the expense of paying a commission to a buyer's agent, you're hoping the seller will accept a lower offer. 

Unfortunately, your plan may not work if the home is listed with a traditional brokerage.  The seller may still have to pay the full commission, and if you submit it yourself or through your brother, the listing agent may have the right to pocket all of it.  In order to capture any of the buyer's agent's commission you must submit your offer through a licensed agent. 

One way to do this would be to ask a discount brokerage to submit your offer, but the fact that you visited the home during an open house may complicate things.  The listing agent (who likely hosted the open house) may claim that he's the one who first showed you the house and that he's therefore entitled to most of the buyer's agent's commission, or at least a big referral fee. 

This could happen even if the listing agent sat in the kitchen during the whole open house working on crossword puzzles. The principle of "procuring cause" means that an agent can get thousands of dollars just for being the one who unlocked the door for the buyer's first visit.    

If you're interested in buying a FSBO home, though, you're on much safer ground.  If you make an offer yourself, the seller usually won't have to pay a buyer's agent's commission.  FSBO sellers are often willing to let their buyers capture most or all of that savings.  And if you saw the property during an open house, it was likely the seller who hosted it, so you don't have to worry much about an agent elbowing in on the commission.

How to buy a FSBO home

This primer will show you how to take charge of the buying process yourself so that you--and the FSBO seller--can complete the transaction without spending a lot of money on middlemen.

If you're looking for a home, you're probably looking at both traditionally listed homes and FSBOs.  I recommend that you begin by going to my website to see the pros and cons of working with a traditional full-service buyer's agent. 

If you decide to go with a full-service agent while searching for traditionally listed homes, you may want to ask the agent NOT to show you FSBO homes.  As I'll explain later, you can save lots of money by finding these properties on your own and hiring a discount broker or lawyer to prepare your offer.

Next topic:  Financing your property

ŠLori Alden, 2008.  All rights reserved.