Hi Folks,
I’ve come across a duplex that is FSBO and I’ve never bought a piece of real estate before.
There would be some $ savings without getting another party involved, (a real estate agent representing myself, the buyer).
Was wondering what vital functions a real estate agent plays when representing the buyer…so that I can decide if I should go this alone…or bring in an agent to act on my behalf.
Any thoughts?
Thank you,
-Mike
If you’re comfortable with reading and understanding real estate contracts and your comfortable making decisions on a property’s worth given the prevailing market and you are comfortable negotiating with a seller directly then an agent may not provide you with any tangible benefit.
I have my own bias of course, but I haven’t seen a need for an agent so far.
I agree with DFWHoldings but if this is your first real estate deal, I would spend $500 to run all the paperwork past a real estate attorney. Just ask him if this is normal stuff and explain what each of them is.
If you locate an agent that works mostly with investors, then you may want to bring them in on your purchase. Yes, there is some cost invovled, but there are also benefits. First, you will have someone that is licensed by the state that is required to look out for your best interest. If they are familiar with investors, they will take your long term goals to heart and help you make decisions based on that. Also, that agent can run comps for you and help you locate other properties in the future. I understand that investing is a numbers game, but having an agent on your side can help make things more profitable in the long run. I also understand the flip side of having an agent that is only out for themselves. It is agents like that which motivated me to get my own license in the first place. I am a licensed agent, but I am also a licensed home inspector. Though I can’t be both in the same transaction, in the interests of looking out for my client’s best interest, I would look at the house with an inspector’s eye even when I am the buyer’s agent. I can usually see things that are an issue that many buyers wouldn’t. Just my two cents.
Lee Warren
In some areas, you can find a “Transaction Broker”. It is their role to close a single transaction like this…
Keith
I just love these kinds of posts!
Seller’s pay Agent’s commissions!..what have you got to lose ???
-Info
The bottom line is that although the seller pays the agents out of their proceeds, the price is inflated when agents are involved. This means that the borrower is paying a higher price for the property than if no agents were involved. If you can negotiate your own deals you can save yourself a good deal of money not using an agent. Agents say it all the time that the seller pays the commission but the fact is the seller’s bottom line is affected by the commissions an thus so is their “acceptable minimum offer” for the property.
too many chefs…spoil the soup.
while this is still my first purchase…I’ve been interacting with realtors on some previous offers and can’t really see the point here.
Thanks for the feedback.
-Mike
It shows on the sellers side of the HUD but the BUYER pays the Realtor fees… With out the buyers LOAN there would be NO SALE.
I can’t belive this Infowell has been gone for awhile now and his first day back we are already starting this… Notice Infowell I did not start it this time.
The man just said there would be money to save if there was no REALTOR involved. Follow along.
Pure…100 proof…nonsense!
DFW’s viewpoint is easy to demolish;
He’s saying (we’ll give him the benefit of the doubt here) that most FSBO’s are priced lower than than homes listed with the assistance of an Agent.
Quite simply…that’s not true. DFW would have us believe that FSBO’s discount their asking prices to reflect the fact they’re not paying the Agents commission…BALONEY!
While FSBO’s may discount their asking prices slightly…they certainly don’t discount their price by the amount they would have paid an Agent. FSBO’s are driven by the same two things that motivate investors…fear & greed.
So who wins here? The FSBO?..maybe…maybe not. The Buyer?..DEFINATELY NOT!!!
It’s been said many times & many ways…purchasing a home is the biggest investment most of us will ever make. Does it pay for a novice to go it alone?..perhaps, but we live in the most litigious society in history, and one false step could result in a law suit that will cost the seller many times over the price of an Agents commission.
What about the buyer! Do they get a home for less? Probably not, and they’ve no professional representation to boot!
I think an interesting footnote is the fact that better than 90% of FSBO’s eventually sell with the assistance of an Agent…that’s why so many Agents pursue FSBO’s as a niche market.
-Info
Here is a fun exercise you can do at home.
Call up 10 FSBO’s and ask them the PRICE then ask if they are willing to pay a Realtor there 2.8%. If they say YES ask them if they would discount that 2.8% out of the price.
If they say yes to that it would prove that the BUYER could save that money if they did not use a Realtor.
I am following along Robb & the reason I continue to debate this issue is because it’s so easy.
Our posts are already beginning to overlap…so I’ll check back later (besides…I’ve work to do).
However, I will say…if you care to debate this issue with me keep it civil.
-Info
There is nothing to Debate. You add to the forums and have a wealth of knowledge. We both have be successful in the same industry we simply do not agree on anything except that there is money to be made in Real Estate.
Am I saying that your way of doing this does not work? NO
Are you saying that my ways do not work? NO
I am saying that we just don’t agree.
I will stay as civil as we can. On the other hand we just do not do things the same way. That is what makes these Forums fun the fact that people can see two totally different ways of doing things just by reading our posts.
Is that Fair with you Mike?
It’s also been said…your home is your best investment.
I think both of these lines are a bunch of bull.
The last thing I want to do is just stop after my first property. I would never be content with just this single investment.
-Mike
“There is nothing to Debate.”
I’ll debate that in a moment, but first let me respond to Mike’s latest comments.
[i][b]“It’s also been said…your home is your best investment.”
“I think both of these lines are a bunch of bull.”
“The last thing I want to do is just stop after my first property. I would never be content with just this single investment.”
-Mike[/b][/i]
It’s not “a bunch of bull” when you put both those comments into perspective.
I stated, “…the biggest investment MOST of us will ever make.”
A true and accurate comment. Additionally, people do not, and will never own more than one home simultaneously.
[i][b]“Here is a fun exercise you can do at home.”
“Call up 10 FSBO’s and ask them the PRICE then ask if they are willing to pay a Realtor there 2.8%. If they say YES ask them if they would discount that 2.8% out of the price.”
“If they say yes to that it would prove that the BUYER could save that money if they did not use a Realtor.”[/b][/i]
A simplistic & inaccurate analogy if you ask me.
Moreover, I think most people will find that a 2.8% commission for full service is not the norm…the commission’s typically higher, therefore, the exercise would be flawed from the beginning.
We also need to know whether a FSBO is willing to reduce their asking price by the Agent’s commission, or if they’d tack on the Agents commission above their current asking price (an extremely important question to have answered).
Regardless…my continuing to debate this issue seems like a terrible waste of my time. Most buyer’s will continue to utilize the services of Real Estate Agents, and most sellers will sell their homes through Real Estate Agents. A knowledeable Agents experience and expertise could save both Buyers & Sellers a thousand unforseeable headaches & a fortune in potential legal bills.
See…there’s always plenty to debate here.
-Info
Moreover, I think most people will find that a 2.8% commission for full service is not the norm…the commission’s typically higher, therefore, the exercise would be flawed from the beginning.
See goes to show how often I use a Realtor. If I need keys I can call a locksmith for $100.00.
Maybe I should become a Realtor sit around and fill in the blanks on a contract and become a locksmith with key codes.
BUYER PAYS THE FEE’S SO GET OVER IT!
alla,
what state is the property in? why is the seller selling the property? are you going to negotiate an inspection contingency? Will you be asking for any other contingencies? What are the tenants rights? what is the FMV of the property? Will you need an owners title policy from the seller? How will ownership be conveyed to you? How are you going to negotiate property tax prorations? Will you be mortgaging the property?
And this just gets you started.
Some states allow for buyer agencies to be created whereby, the buyer can pay the Realtor’s commish. This is more common in commercial deals, but can be a valuable tool if the seller is firm on price. Most Realtors envolved in this type of transaction will write the offer with dual agency. This means that they are representing the interests of both buyer and seller. Can this deal get done without the help of a Realtor? Absolutely. However, given the extent of your experience you may benefit from their expertise. The cost of the learning curve. Maybe your next deal you do on your own. Be careful, the guy selling may be a Realtor or worse an unscrupulous investor. If I’m buying, I love negotiating real estate transaction with unrepresented sellers. Don’t forget the old saying, “buyers beware.” One additional comment, a good mortgage consultant may be able to steer you and the seller to the closing table.
-h
what state is the property in?..the South
why is the seller selling the property?..he had some type of song and dance about somehow being desperate and needing to sell…but as I did some phone calls after talking to him…it’s seems more to me that he’s trying to just maximize his returns on a shortly held flip…still trying to feel him out.
are you going to negotiate an inspection contingency?..most definately…(15 day option period).
Will you be asking for any other contingencies?..also a pest inspection…and whatever else I can think of in the 15 day period.
What are the tenants rights?..I’ve worked on an Addendum to cover myself there…so as not to be bound to anything, (for review by lawyer).
what is the FMV of the property?..spend a lot of phone time on this…after talking with him…was able to get the 77 year old man who sold it to him in the first place…and the usual county lookup on things and comps.
Will you need an owners title policy from the seller?..definately.
How will ownership be conveyed to you? Title Insurance company…my lawyer is affiliated with them. Good question.
How are you going to negotiate property tax prorations? Another good one…yes, negotiate thru the broker I’d use.
Will you be mortgaging the property?..yes…leveraging…wouldn’t want to use (all) cash.
Thanks for your advise on the good mortgage consultant…I was lucky enough to talk to one a few days ago…and he was addressing some of the above issues your mentioned here.
There’s still no deal yet…but each offer I put in…I learn that much more.
-Mike
nice job Mike, sounds like you’ve got it handled. get it closed.
-h
I thought we killed the “Who pays the Realtor?” debate before…if you follow all the way back to hte logical conclusion, the US Bureau of Printing and Engraving pays the Realtor because they “make the money”…
Keith