The Smart Seller's Play When Rates Are High

Richard Montgomery on Nov 11, 2025

Dear Monty: I recently signed with an agent. An individual I know (not through the agent) is asking about a land contract. Would I have to pay the agent a commission?

Monty's Answer: Short answer: probably, but don't stop there. Once you sign a listing agreement, the broker owns it and many brokers will not reopen or renegotiate it for a private deal. Your energy should shift from negotiating the fee with the agent to structuring the sale to maximize your value.

Step One: Read the Contract, Fast -- Inspect the listing agreement immediately. Look for the duration, the commission clause and any buyer-exception language. If the contract already names "any buyer during the listing period," expect a fee if the sale closes while the listing is active. It's a legal obligation the broker enforces, not an optional courtesy.

Step Two: Change the Timing -- If you prefer a private land contract with your acquaintance, consider withdrawing the listing before closing a buyer produced by the broker. That's messy and could trigger cancellation fees or a broker claim if the broker has already produced a ready, willing and able buyer. Consult a real estate attorney before canceling; don't assume you can "walk away."

Step Three: Focus on Economics, Not the Fees -- Commissions are often fixed percentages that chip away at the payoff. But a land contract may create more financial upside than a traditional cash sale. In the current high-rate environment, offering seller financing at a competitive rate may help you sell faster and earn interest income over time. For buyers shut out by bank underwriting, a land contract may be the difference between buying and remaining where they live now. The land contract may be worth more to many buyers at a lower rate.

Step Four: Structure Terms That Reward Both Parties -- Negotiate a meaningful down payment (10%-20%), an interest rate higher than Treasuries but competitive versus bank loans, clear amortization and protective default remedies. Ask your tax preparer to advise on structuring the contract's terms. If the math works, proceed with ironclad paperwork. Consider balloon payments or a short term with refinance goals. Consider a loan servicing company to collect payments and maintain records.

Step Five: Protect Yourself Legally -- Treat the land contract as a finance transaction, not a handshake. Have a real estate attorney draft the documents and use title insurance where appropriate. Make sure the contract addresses insurance, taxes, maintenance and what happens in the event of default. Recording rules and taxes vary by state; in many states, the title stays with the seller until payoff. The IRS controls the federal taxes if any.

Step Six: Negotiate With the Broker, If You Must -- If the broker insists on a commission, negotiate for value: Ask the broker to reduce the fee proportionally for services not rendered, or to provide formal servicing, documentation assistance or a marketing credit applied to closing costs. But accept that many brokers will stand firm; you must be prepared financially.

Final Thoughts

Your agent may help you negotiate with the broker. Some agents may agree with your position and help support your situation. This suggestion assumes the broker wants to enforce the listing. Then decide whether a land contract's higher yield and marketability in a high-rate environment justify paying a commission.

Richard Montgomery is a syndicated columnist, published author, retired real estate executive, serial entrepreneur and the founder of DearMonty.com and PropBox, Inc. He provides consumers with options to real estate issues. Follow him on Twitter (X) @montgomRM or DearMonty.com.

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