Why do I advertise For-Sale-by-Owner (FSBO) properties on my websites?

Two of my four real estate websites allow me to show FSBOs. And why not? They enhance my websites by giving visitors more properties to look at. I have nothing to lose (except a little time) since the properties aren't my listings anyway, and may never be. If I help a seller advertise a FSBO property, and that seller later wants some help selling the property, he or she may turn to me. They may list the property with me, or ask me to do the necessary paperwork if they have a buyer lined up. In that case the commission would be based on the level of service they require. It would be a win-win situation, so why should I not offer to help owners sell their property?

What happens to my earnest money deposit? Will I get it back?

Your earnest money is held for you by a real estate broker in his or her trust account at a bank. My trust account is at the Tripp Street branch of Wachovia Bank in Americus. Your earnest money is a deposit, not a down payment. It will come back to you as a credit when you close your purchase of the property you're buying. You'll see it on your copy of the HUD-1 settlement statement on the left side of the first page. It shows you're getting a credit toward the purchase price for the amount of your earnest money deposit.

You'll get your earnest money back if you are unable to get a mortgage loan. When you enter into a contract to buy real estate you will have a certain amount of time to obtain your mortgage loan. If you are turned down, you should get a "letter of denial" from your lender, and you'll get a refund for your earnest money from the broker holding it.

Can you lose your earnest money? Yes, you probably will lose your earnest money if you default on your contract to buy the property. In that case the broker may, at his or her discretion, give the earnest money to the seller. The purpose of earnest money is to protect the seller against a buyer's default. After all, the seller has taken his or her property off the market because you promised to buy it. The seller may have missed other chances to sell the property after it was taken off the market. Therefore, if you default on your contract, the seller gets your earnest money.

How much do you charge?

This question is about the sales commission or brokerage fee. Commissions vary and are negotiable between the seller of real estate and the broker. A typical commission for residential property in Americus, Ellaville and vicinity is 6 percent of the selling price. It's not a "standard" fee, it's just a typical one. Why 6 percent? It often happens that you list your property with one company, but a different company shows the property and procures the buyer. Therefore, the two companies must split the commission; in most cases, it's 50-50. Each company would get only 3 percent of the selling price. Agents can't afford to work for less than that. Here's why:

In most real estate companies the broker must deduct operating costs off the top of the commission. What's left is then divided between the real estate agent and the broker. The agent winds up with a fraction of that 6 percent commission.

In my own case, since I work alone, and from my home, I have minimal operating costs. I can give the seller a break on the commission when I am both the listing agent and the selling agent for the property. That means I don't have to split the commission with another company, and I can work for 4 percent of the selling price. I take care of both sides of the transaction for one-third less than the 6 percent you would pay otherwise. You and your buyer still get full service, and we walk away from the closing with more in the amount of our check.

Attitudes about real estate commissions intrigue me. Most of us think nothing of leaving a 15 or 20 percent tip on the table in a restaurant, even when the service may not have been all that great. Yet a REALTOR performs a valuable service in one of the most important transactions someone can make, buying or selling real estate, and the client may think a 6 percent "tip" is too much. In dollars it looks like a lot of money, but as a percentage of the selling price it's small.

Do you have any real estate related questions? Please call me at 229-924-3089 or email me at michael@michaeldixonrealty.com. You also can go to my website michaeldixonrealty.com and use the "Talk to Me" box on the left side of the page. No need to give your name or phone number. Sample questions: Should you always get a house inspected? Answer: Yes. Can you get a warranty on the house you buy? Answer: Yes, and I'll tell you how to get a one-year warranty for free. Should you always get pre-approved for a mortgage loan? Answer: Yes, and I'll tell you how being pre-approved is worth $400.00 to you.