Jan. 31, 2007 - A Contract Negotiation Fee - Flat Fee

Even the nicest of people sometimes need someone to step in and hammer out a few details.  There is no way for a home buyer and a home seller to totally agree on everything every step of the way.

Every once in a while a consumer call s me to write a contract and be a go between for just a few days until both parties have agreed on all terms in writing.  In these cases, the buyer nad seller have usually met each other before contacting me.  The buyer doesn't want the seller to write the contract, they can't share an attorney and they don't want to hire two of them, They already agree on one thing.  The buyer want the house and the seller wants to sell it.

If the buyer has 20% or more for a downpayment and good credit, the buyer and seller can usually get to the end without any assistance, as long as someone steps in just for the "writing of the contract" phase and for negotiations back and forth until there is a final contract.

I have used a fee of $3,000 for this service this year.  Everyone was happy, it all worked out fine, the only complication was that even though the house was not listed for sale, someone happened by and noticed what was going on and submitted an offer of their own.  So we had two offers on the table for a house that was not for sale.  Since the other offer was from a builder who was going to tear the house down, it put some stress on the first buyer.  The first buyer did get the house, the seller was very happy with the price which was more than they expected.

Some will say maybe the seller could have gotten more money for the house.  As a consultant, that is not my call and that is not a service I was asked to perform.  Since the house was over a million dollars, and the total fee to both parties was only $3,000, the seller didn't want to take the chance that they might get more, because they would have to get over $60,000 more at full commissions, just to break even.

So the seller felt that  bird in the hand was worth more than two in the bush, and the buyer was very happy to beat the builders to a home in a prime location.  There was no second round to the negotiations, as the home inspection was done for the buyer's information only, and not as a contingency to the purchase.  Since the other offer was from someone who was going to tear it down, the buyer who was going to live in it couldn't expect the seller to make repairs as they could have gotten the same price from someone who wouldn't be asking for repairs.

There are many different uses of a "consultant flat fee" vs. a percentage commission.  This is just one way that I have utilized this method in recent history.