Buying Without An Agent
Hi all.
I'm looking at some properties that are FSBO.
I'd like to move forward on them as they have very positive cash flows and the owner is willing to finance.
However, I've read in some REI books that it's nuts to buy without an agent.
Speaking from experience, I probably COULD do all the stuff that my agent did for me last time, but not easily.
I don't think this owner is willing to do commission for my agent, and of course I'd rather not.
What are your experiences with this?
Don't need an agent. I prefer to deal without them. If there is financing involved you need a lender. Other than that my attorney draws up the Docs and we're done.
Good Luck,
Shawn(OH)
I agree. Agents more often than not get in the way. I'm not good at selling properties so I personally will use an agent. Home buying is a very emotional thing and I'm too logical to deal with it easily.
In real estate you are forced to deal with stupid, ignorant, uneducated, people all the time. Why make yourself deal with one more person with those qualifications. I tell agents I want all my money back by at closing in the form of a carry back. If they laugh I tell them they are idiots and move on. Most don't even know what I am talking about. If you find a good one stick with em. They will do things like split commissions, carry notes on commission, and work with you as opposed to telling you what you are trying won't work.
[addsig]
Once you have financing in place the "title company" not an attorney does all the rest. Now you may or may not find an attorney to give you title insurance and close for you. Generally I have stuck with the title company once you have secured financing. The lender and the title company will do all the work.
An agent does nothing more than join a buyer with a seller and provide some hand holding. If you need hand holding then by all means use an agent.
I have bought almost every house through and agent and sold FSBO.
Having gone throught the real estate licensing course in my state I can tell you they don't handle title insurance, mortgage, inspections, anything of that nature. Hand holding and matching a buyer with a seller.
[addsig]
I prefer not to use an egent, but will --- if the property price still comes in 30-40% below comps.
Some will take a reasoanable reduction in their commission for discounted properties, or rebate some of it at the closing, or carry it as a lien on the property.
These realtors are rare - so if you find one, stick to him/her . AND if they are in San Diego, send me their name and contact number as a private message at this website - please!!
The other thing I've learned about agents is that some do and some don't invest in property themselves. If they do not invest, that is, if they do not walk their own talk as an investor, I stay away from them.
MarleneM
I don't know what it is, but for some reason, I have a hard time getting realtors to work with me, and I've had about 5 so far. It might be just the bunch I've had, but they seem to have just a general disdain for investors altogether. If I don't jump out and pay full retail for a rehab that needs 20k of work into it, they feel like I'm wasting their time and god forbid, I actually try to lowball a reasonable offer where my work get's some kind of compensation. For some reason realtors and sellers often quote repair cost, at just the material, I guess we are supposed to be doing the labor part for fun.
What I don't understand is, I would always be conscience of their time, and mine. I never called them out to open a house for me until I've already done the comps, looked in the windows and done my homework on it, So it's not like Im playing looky loo. Heck, most of them never showed me more than 2 houses.
I have full downpayment and excellent credit and am VERY hungry to buy.
But, after trying my best to find deals through them, I am, from this point on, going alone. I will find the houses myself and call the listing agent (if its listed) and tell them point blank. I'm representing myself as my own agent. yes, I've had a couple of agents working with me and I FIRED THEM ALL due to non performance. Do you have a problem splitting your full commision with me if I buy the house? What they say will depend on them selling that house to me or not. My point is, if your rehabbing, there's usually not enough money in a deal for 4 people to profit off a junk house. (owner, owners agent, buyer, buyers agent) I guess my question is, Is this legal, can they the listing agent basically give you a rebate to buy the house? I just want to know before, I ask them. I'm just sick of calling my agents for information and it takes 2 days to get back to me. In my market, a good deal is sold in 12 hours, sometimes less. I had one guy show me his listing the other day, and said I'll email you some more and we exchanged business cards, and I've not heard back from him at all and I've even emailed him. I think what shook him is when I told him, I look at a lot of houses. But will only bring him out to the ones I'm really serious about.. I think he missed the last part. I do think that there is a lot of investors that waste a lot of realtors time. But to be lumped into that category without cause burns me. So I say let em starve.
Sorry, didn't mean to hijack the thread..
G
[ Edited by GWmson on Date 01/14/2004 ]
Most agents are glorified tour guides.
In my opinion, you just need to have a good property lawyer in your stable. They keep the seller's agent honest when you're drawing up an offer and P&S.
FSBO to me means that the seller doesn't want a realtor involved. I'd consider a good lawyer to review/draw up your contract for you.
A good real estate agent is worth their weight in gold. A bad one is worth nothing.
On a purchase in FL last Dec, my agent was a dream, the seller's agent was:
1. unavailable
2. uninformed
3. flakey
4. unavailable (ah, that made it on here twice, she had a cell phone only, was never in the office and her cell didn't work at her home. DOH, what the heck?)
I had a hard time finding an agent here in MI to work with too. No one would return calls, one guy royally b*tched me out on the phone for asking a question he misunderstood, etc. Finally, I called the listing company of a bank owned house and VIOLA!! got a very driven agent who is easy to work with and knowledgable. I ended up buying a house for 13k (rehab in a solid neighborhood) and will continue to work with him. I find the MLS & expired listings benefit a nice perk.
Good Luck!
becki
[ Edited by lorien on Date 01/17/2004 ]
Title companies usually prepare the closing docs, but they don't check them for you. I would use an attorney to draft up the offer, etc and to check the docs for you when purchasing a FSBO. It's a lot less than a broker, and cheap insurance.
I do my own docs and closing when dealing with the seller and seller financing. I still use a title company for the title search but do not buy insurance unless I am putting down a whole lot of cash which is rare. I use Realtors too if they heve the property listed. I pay the full fee and in cash and they bring me more deals. My phone is ringing with deals. I need help doing all of them.
Good LUCK and Thank You
Hope this helps some
Ted Jr
As a licensed real estate agent, I must tell you that I agree....you don't need an agent if you have found a property. But if you find a good agent, they will bring you good deals every now and then when you least expect it. Sometimes they get calls from preforeclosure people asking how fast that particular agent can sell the house to get them out of hot water. But I know good agents are few and far between and if they get that call, they might just jump on the deal themselves.
When I first started in RE, my goal was to call on 25 properties every day. It took a few weeks and a lot of un-returned phone calls by agents to find the agent I use most of the time now. He is a top performer in my area (top 5% in sales) and has no interest in buying real estate for himself (God only knows why). He makes $500k a year and just loves what he does. Even so, there are 3 or 4 other agents I use time to time. They know that if they find a deal, I will run it through them, so they are always on the lookout and will call me even before a property is put on the MLS if it might be a good fit for me. If I find a property myself, I will run it through my broker and make commission on my own purchase. I am not a full-time agent myself (I have a career in a completely different field) but I can tell you that some agents (BUT DEFINITELY NOT ALL) are above everything else, salesmen and birddogs. Some really just love what they do and are more than worth what they are paid in commissions.
Bottom line: If you have an FSBO with owner financing, all you need is a title company or attorney.
[addsig]
Thanks for the replies all.
As far as offer contracts, aren't there standard forms that can be used as opposed to going through an attorney?
It seems like when my agent submits an offer for me, he just uses a xeroxed contract and fills in some blanks.
I could save a lot on attorney fees with that form!
Any other forms I need?
spurge0n,
Yes, you could actually use the same contracts that real estate agents use, if you want. If you have any kind of a business relationship at all with an agent, just ask for them. However, frequently, they will have terms/conditions that you'll want to change or edit, some to the point where the contract may look messy. It's your call.
As far as the attorney goes, you're going to need one. NC, for better or worse, is an attorney state, which means that lawyers do the closings for real estate deals, so you might as well start shopping around for one.
As far as using an agent goes, I agree with the rest of the crowd in that you don't need one. The only real benefit of using agent over buying directly is that it gives a "buffer" between buyer and seller. The agent's main job in a RE deal is to protect the buyer and seller from fraud. IF you had any suspicions that this seller might try a "investor stole my house" routine, after the sale, then using an agent might be a good idea.
Roger
I've purchased one FSBO. Just beware that they value the property with the emotion and heart. Many homes are filled with memories they think add value to the asset. They see it as a home.
Work smart, don't mix emotions and you should avoid conflict which what the child did to the room, if you knwo what i mean.
Good luck.
Time is money. I am a new agent, and I have my mentor passing me buyers because she doesn't have time to take them all to look at houses. Investors can be a pain to agents because of many reasons, the properties they buy are low priced(before rehab), you have to take them inside several houses, and offers are made low usually and there are many counter-offers made back and forth(yet more time), to get a rehab property for 60k. Then you are asked to share commission and take your commission on contract(yes, would you like to take your paycheck and let me pay it to you over 12 months?). Everyone preaches that a dollar today is worth more than a dollar in 12 months... so why would an agent do that? Sorry it just upsets me sometimes when agents are looked down upon for certain things, that when you look at it from their point of view don't seem so "stupid". Though there are some valid points... I do hear a lot of agents not returning calls, emails, etc. But you have to realize it's not as easy as it seems to find rehab properties even with the MLS. A low-res picture of the propertys front side is hardly enough to tell. That involves going and looking at all of the properties, doing comps(which aren't very quick either), etc. Just letting you know from an agents point of view.
Chase
I just sold two properties FSBO and did not want a realtor involved strictly because I was unwilling to pay their commission. I spent less than 400.00 on a lawyer and both deals went through without much of a problem. I saved myself over 25K in commission fees. The moral is never pay someone else what you can do yourself!!
I like that last posting Moral: never pay anyone for anything you can do yourself.
Now thats the first positive slogan I have ever heard in favor of Self Abuse.
Lets see, here I am your friendly Real Estate Broker. I gather together a sorry looking bunch of people, incapable of telling a single family dwelling from a garage. Have no idea of the basics of land measurement. Cannot read a legal document. Cannot tell if the foundation is in collapse or just tired. They all hate each other but they belong to this club and they want to do a Minny Mall, cause they all got friends who run funny little service business and want to be in this new location on the edge of shanty town.
Well I assemble the packages, and in the process create something about 50% under market. I attend one of the meetings and after listening to them. I suggest that they abandon the idea of buying and building a Minny Mall. I just do not feel that they are equiped for this type of multi tasks occasion. My plan, just sell the assemble and pick up the profit. Besides, there is an Ethnic Stirring in the area. One ethnic group is being pushed out by a much more aggessive group. And this one is properly orientated into the middle class and have been grouping their capital and Starting Their Own Banks!
Any how the long and the short. They put up all the money and I bought the land, packaged all the little parcels together. Got the City to approve a small change in zoning. Yeah small matter. Then I ran through about 10 contractors all of whom were obviously members of the Mafia in good standing, and finaly got a young engineer, newly licensed as a contractor to bid the job and after adjustments build it out.
The assumption I made was that these sterling investors would now contact their interested friends who are shop keepers etc. and that would be the end of it.
Wrong, I ended up renting them all out. Did floors on all the leases and then went percentage as the future unfolded. I ended up running and doing and the whole show for a 10% of ownership interest on which I did not make a return until I went CoGeneration Power installation and could break the high power costs and pick that up as subsidary income.
In about 24 months a return was finaly realized. It was then they had their meeting and suggested that I be bought out as my need was now past, it was now just a little management and pick up the checks. I took the buy out, wished them well and left.
Oh yes, I watched the change in the area the amoeba of change, was shifting to an in fill in the area which was becoming a Korean majority. So I bought the declining property across the street and sold it to a group of Koreans who recognized the changes. They of course were the end users of the property and theirs prospered. My original group did not. They were slightly out of touch and raised the percentages at lease end. This caused major vacancies. They had problems renting to Koreans who were all represented by their own brokers who demanded full commissions. The investors seemed unable to adopt. They did not take easily to Bulkoki and KimChee and the delicate odor of Garlic
was absent from the area of the Minny Mall. That of course was kiss of death.
Several years afterwards I had the honor and pleasure of arranging the sale of their Minny Mall and its incorporation into the larger properties held by the Koreans.Who were responding to the pull and tug of the Amoeba of change.
The Point: Sometimes it pays to utilize a broker who is aware of how areas are impacted by change. Who can tell you when to play your cards and most important when to fold them. I believe you call it Exit Strategy, I call it by its true name The End Game.
Check Mate and you too Captain.
Lucius
<IMG SRC="images/forum/smilies/icon_cool.gif"> <IMG SRC="images/forum/smilies/icon_cool.gif"> [ Edited by Lufos on Date 01/19/2004 ]
Problem is, MOST agents are totally clueless and wouldn't recognize the prevailing winds of economic change from passed gas.
The agents I've met are far more interested in teaching about real estate, than actually showing me something I'm interested in buying. What is it about these guys that compell them to treat you like you know nothing, and if you have a strong opinon about what you want and what you need to make money on a deal and your firm on that, they feel threatened.
And these very same people wouldn't know a shortsale from a subto. Except maybe to say, "Oh that crap never works.."
I had a sellers "agent" just 3 days ago inform me that my full price offer was being rejected by the seller because he advised the seller to go back to the bank and try to do a shortsale when he saw the sale wouldnt cover the taxes, back payments, etc.. When I asked who was doing the "short" he said the homeowner. I said he can't do that, well he can, but he's wasting his time. He did not know that a homeowner cannot fiscally benefit from a short sale, yet he's advising this guy to do just that.
[ Edited by GWmson on Date 01/19/2004 ]
I'm sure the owner isn't doing it themselves. I'm guessing either the agent is doing it and didn't want to tell you, or the owner didn't tell the agent. Basically the agent just told the owner to take away his commission. It's the nice thing to do, but I'm sure theres something else going on.