Buying Without An Agent....Pros And Cons?
Hi,
I am currently looking at purchasing property and would like to act as my own buyer's agent. What points or problems areas should I be aware of when doing this? This would be my first time doing this although I've bought two other properties and am familiar with the contract.
Any tips or books on this subject? It would seem the pitfalls of acting as your own agent are much fewer that when selling.
Scott
I agree, perhaps it's a PA thing. I think the agent really comes into play when there are problems and they are your go-between. In the past few months I've purchased 4 properties - 1 was listed & the other 3 were private deals.
For an experienced buyer; one who has bought a couple of properties before, the need for a buyer agent is overrated. I am not crazy about the whole buyer agent concept that has hit the real estate business in recent years. Think about it. Follow the money trail. A buyer agent usually gets paid from the proceeds going to the seller. If the buyer agent blows the deal the buyer agent does not earn a commission. Is the buyer agent really on your side? Hire impartial people to help you out; an inspector to check out the property, a lawyer to look over the paperwork, an independent appraiser to verify price. As a real estate broker, this is my opinion. I am sure other brokers will loudly disagree.
I am in agreeance when you say that having a buyer's agent on your side. I think an agent just makes one feel better in the case that things don't go exactly as planned... This is ok for the first couple purchases, however, the more experienced you get purchasing houses the less dependent you are on an agent... Just have an attorney on your side... My personal opinion...
Good Luck!
[addsig]
I think buyers agents are good for those who rarely do a RE transaction or those who may get preyed upon (elderly, less mentally able, etc).
You MUST recognise that buyers agents have biases. I was talking to an agent who wanted to help me first sell a property and later buy a property. According to him the market was first a great time to sell, and then a great time to buy (within a matter of 2 months). They tend to tell you what you want to hear and tell you things that increases your percieved dependance upon them.
Most agents are mediocre. Some are really good. Find a good one and it's in your best interest. Find a bad one and you should go in without one and try to get a 3% discount off of the price.
I know my agent well. I roofed his house. He has helped us in buying two personal homes, and in the sale of the first one.
He knows the market, and saved us his commission on our current home by getting us a counteroffer that was less than we would have initially offered if left to ourselves.
You have to be keenly aware of your strengths and weaknesses. I can crunch numbers and determine if I want a deal or not, but I realize I am not a patient negotiator. My agent knows it his job to keep us in the game, and maintain discourse with the other party,
He does his job well enough. Works for me.
_________________
Mike J
I believe in adding value with quality.[ Edited by mikejaquish on Date 01/08/2005 ]
I am a listing agent. Here is my problem with some buyer agents that has happened to me. I will get a call from a propect, show and sell them the house and at the last minute the buyer tells me he signed a 6 month or 1 year contract with a buyer agent who automatically gets 3% or whatever for doing nothing. I will find that in some cases they never called the buyer about one property. I once had a buyer for a house I owned. He liked the house and said he would stop by my office in a week to sign papers. He then disappeared for 2-3 weeks. Then I got a call from his angry buyer agent with all kinds of unreasonable demands. I was to guarantee that the city would allow a business at this residential location, guarantee that the basement would never ever take in water, etc. End result...no sale. Now the house has easily tripled in value; glad I still own it. The point is...before you sign up with a buyer agent, check them out.
A buyers agent puts you at a disadvantage when negotiating. Right off the bat the sellers agent has to split the commission with someone else... that's leverage you could have if you deal only with the listing agent.
As a buyer you already have an agent. It's the sellers agent. This agent is the go between, someone who will communicate on your behalf to the seller. If the deal starts going south, the sellers agent is quite motivated to make sure the deal goes forward and will do plenty to help the buyer.
Other than giving you first crack at their newest listings, I don't see much value in a buyers agent. And if you think a buyers agent is needed to help you through the steps, think again. If you are a newbie, the sellers agent will help you with the contract and all the little details (just make sure you have a lawyer review the contract before submitting). And if you are financing like most folks, the bank will make sure all everything is done properly from inspections to appraisals etc. After all, they are putting up the lions share of the money so it's in their best interest to make sure everything is done correctly.
Outside of representing/negotiating on your behalf, the buyers agent doesnt do a lot, am I wrong? I suppose they manage the process as well.
In order to do this my primary concerns are:
-getting a title company on board to begin their process (which includes title search and title insurance)
- getting an inspection to make sure property has no serious deficencies
- getting a mortgage broker to set up the financing which will include property appraisal (market value)
Did I miss anything? Any pitfalls in the process to be aware of?
Scott
Buyers agents are probably o.k. for the truly clueless... those who don't even know where to begin looking, how to look, don't have time, too lazy etc. etc. The buyers agent also gets their clients all jacked up and excited about particular properties with phrases like "you better move on this sweetheart of a deal cause it wont be on the market long". The agent is a pro, they must know this is a great deal... let's put in an offer now honey!
For everyone else who willing to look for properties on their own, get the lender on board first. They will handle a hughe portion of the process including getting a title company lined up. The sellers agent will handle the rest of the details and hold your hand where necessary once the property is under contract. After all, for them to get paid, you have to perform.
The main things you need to do to make sure your interests are covered are.
1. Know how to draw up and submit a good contract. One that has an expiration date so the seller cant sit on it and the appropriate "subject to inspection" weasel clauses.
2. Find a good inspector and really go through the place with a fine tooth comb so that you know what you are getting into. Don't use inspectors recommended by the sellers agent because it's very easy for them to be in cahoots and they may not be willing to uncover things that may cause you to back out of the deal.
3. Have a good RE attorney available. You may not always need one but when you do, they are invaluable.
If you are new to this, I would suggest having an attorney help you draw up your first contract. You'll pay them a few hundered bucks and it will be well worth it. If the deal doesn't go through, you now have a great template for drawing up future offers on your own.
hello all
I have been a buyers agent for the past 5 years and there is a need for the buyer agent, mabye not for the savy investor but definetly for the first time buyer who dont know the in and outs of a real estate transaction. It was etablish to seperate the listing agent from the actual buyer and to give that buyer a better leverage because they did not know the key fundemetals of the average real esate transaction and some buyers were being taken advantage of by selling agents. I think its better to have a line drawn between the two parties.
I just wanted to bring forth one point that no one has mentioned, it isn't written in stone that one has to sign with a buyer's agent. We have an agent that acts as a buyer's agent for us but we have no written committment. Although, we do continue to use the same agent we were very upfront about not signing a disclosure that tied us to our agent.
In turn our agent does a lot of leg work for us that we don't have the time to do, pulling comps, scheduling appraisals and inspections (with our appraiser and inspector), paperwork, etc.
I do feel that we have learned a lot about the RE process and we will be looking to do more deals without the aid of an agent in the future, but for now it is working.
Scott
Are you licensed as a realestate agent and want to represent yourself, or are you talking about FSBO's?
JohnNH
Well I must say I Respect all of your Comments in Reference to a Buyers Agent. There are both Pros and cons. A Buyers agent will undoubtably help not only a Newbie/First Time Home buyer but also a Savvy Investor. I Personally purchase on average of 3-4 Properties per month, and that all adds up to a hefty amount of Paperowrk, appts, Inspections, Faxes, E mails, Phonecalls, Negotiations,Research, Driving, filing and Lining up Potential Tenants. Now as much as I like to beleive I am SUPERMAN, my buyers agent whom I have been working with for the past year Effectivley helps me with all these obligations on all of my Multiple Contracts. His Services are Invaliable to me and my Time, and he definately earns every dollar of his Commission.
So ..to your Post - I would suggest Finding a buyers agent that is Trustable, but is willing to work his ass off for you whenever you need him. Many of you joining this site are Part Time investors, and I will be the First to tell you, Purchasing Property for Investments can repeatadly feel like a full time Job, why not Hire an assistant (Buyers Agent) Whose services to you are obviously Free.
P.s, Sorry for any Mispelling.
[ Edited by sergioarreguin on Date 01/27/2005 ][ Edited by sergioarreguin on Date 01/27/2005 ]
Why would you need an agent at all if the property is not listed but a FSBO?
[addsig]
there is something else everyone forgot to mention. 85% of properties being sold are listed in the mls as well as expired listings. an agent will be a good resource for that.
Well said Nancy.
when i first started, i was under the impression that buyers paid there agents commision and not the sellers. boy was i in for a shock. it defeats common sense for the seller to not only pay all commissions but in some areas its expected that the seller pay the buyers closing costs on top of that. oh well good thing i only do deals were theres alot of room on my end. good day.
Isnt the question really how much work you are willing to do managing the escrow... I buy 15-20 properties a month and have better things to do than manage escrow. I list all of the properties with a Realtor for resale and pay them a per transaction fee to manage the buying side and a lower than normal commission on the listing side.. besides the legal aspect having a great relationship with a Very Good agent will streamline your closings.. remember the more times you can turn your dollar in a year the more money you will make.
movesmart - what are you one of those REIT guys with the green bucks, buying up houses without even looking at them.
i suspect most people are not in the same situation as you (buying 15 -20 properties a month) therefore managing the "escrow" isnt that big of an issue.
I think having an agent while buying is a good person to have working for you. On the other side of the coin selling your house by your self can save u alot of money. [ Edited by joel on Date 03/20/2005 ]
Zin Actually no I am not a Real Estate Investment Trust. Just a simple guy who believes it is just as easy to buy 15 houses as 1per month.. Most people in our business have difficulty with lead generation, I have made the commitment to spend 40000.00 per month in marketing and it pays off...
wow, 40k a month? are you nationwide or just one state. i would love to see the kind of operation your running. so in order to spend that much in marketing you must be taking in atleast twice that every month? if you dont mind my asking how are u funding all these deals, are you cashing them out or taking them sub2. are you using private investors money? just looking for some helpful insight. thanks
interesting. for me lead generation is probably the easiest part. the hard part for me is getting the deals funded, especially if any are rehabs or shortsales that need to be cashed out. i always look for ones that i can get in with a couple grand and then resell immediatly for profit or take sub2 and sell on lease option. you using private capital from various investors? or funding them yourself with your own built up capital? if i have a couple deals going that are somewhat cash intensive then i find it difficult to be able to fund more deals. thanks again. seems you are running a very nice operation.[ Edited by ZinOrganization on Date 03/18/2005 ]