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Potential to save money on buying house sold by owner without real estate agent?

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  • Potential to save money on buying house sold by owner without real estate agent?

    Should I use a real-estate agent when buying a "for-sale by owner" house or can I leverage not using a real estate agent to get the house at a better price?

  • #2
    It depends.  How much knowledge do you have regarding the real estate market in your area?  Can you be sure you are paying the right price for the right house?  A buyers agent can help you with knowledge about the market, about the process of deposit, escrow, inspection, closing, financing, etc.  If you are savvy about your local market and have someone who can guide you through the other aspects of the home buying process, you may not need a buyer's broker.  Is this your first real estate purchase?  Is the For-sale-by-owner seller willing to cooperate with a buyer's broker?

    Comment


    • #3
      Yes you can get away with not using a real estate agent of your own.  But, in a for sale by owner situation, in my opinion, it would be best to have a realtor represent you unless you are very familiar with all the ins and outs of a real estate transaction.  It will make getting the paper work done so much easier and can make for a more comfortable negotiation.  It might be a little awkward walking into someone's home by yourself and sitting down to negotiate a purchase price in person or over the phone.  Plus, there are certain things the buyer is required to disclose that you would need to already be aware of so you know what questions to ask yourself.  For all the legal stuff, I think having at least one realtor would make life a lot easier and wouldn't cost you, the buyer, a dime.  Typically a realtor charges 5-7% to sell a home.  And the seller still has to pay some fees to get the home listed and on all of the home search engines.  So, it's not like you'd be able to negotiate some ridiculously great price just because there are no realtor fees.  A realtor representing you might actually be better at helping you negotiate than you could on your own.  Unless you're a savvy sales person with great negotiation skills, a realtor probably has more experience doing it than you.

      However, I will also mention another scenario...if you don't have a realtor and you find a home you like that has a realtor representing the seller, you could go ahead and make an offer without a realtor of your own.  That will make the seller's realtor very happy because he/she will get to keep ALL of the realtor fees (normally the seller's agent has to split the profits with the buyer's agent).  So, the seller's realtor might be more willing to nudge the seller into a lower offer knowing he/she will still be coming out ahead.

      Comment


      • #4




        Yes you can get away with not using a real estate agent of your own.  But, in a for sale by owner situation, in my opinion, it would be best to have a realtor represent you unless you are very familiar with all the ins and outs of a real estate transaction.  It will make getting the paper work done so much easier and can make for a more comfortable negotiation.  It might be a little awkward walking into someone’s home by yourself and sitting down to negotiate a purchase price in person or over the phone.  Plus, there are certain things the buyer is required to disclose that you would need to already be aware of so you know what questions to ask yourself.  For all the legal stuff, I think having at least one realtor would make life a lot easier and wouldn’t cost you, the buyer, a dime.  Typically a realtor charges 5-7% to sell a home.  And the seller still has to pay some fees to get the home listed and on all of the home search engines.  So, it’s not like you’d be able to negotiate some ridiculously great price just because there are no realtor fees.  A realtor representing you might actually be better at helping you negotiate than you could on your own.  Unless you’re a savvy sales person with great negotiation skills, a realtor probably has more experience doing it than you.

        However, I will also mention another scenario…if you don’t have a realtor and you find a home you like that has a realtor representing the seller, you could go ahead and make an offer without a realtor of your own.  That will make the seller’s realtor very happy because he/she will get to keep ALL of the realtor fees (normally the seller’s agent has to split the profits with the buyer’s agent).  So, the seller’s realtor might be more willing to nudge the seller into a lower offer knowing he/she will still be coming out ahead.
        Click to expand...


        Ive never had a realtor do any negotiating. Theres no point in negotiating at all, they push both sides to make and take the deal, 20-50k swings either way make almost zero difference in their commission. What makes a difference is number of closes, they are incentivized to close not negotiate. This means they are incentivized to convince you to pay more as a buyer and accept lower as the seller. Ive disregarded the realtors ideas almost every time on price on every place I've bought, never an issue. Know peoples incentives and you'll understand why they are doing what they are. They are not aligned with yours.

        They are basically just intermediaries in the docusign marathon. They also have contacts for assessments/appraisals, etc...though that isnt difficult either. Theres no cost of listing anymore either. I would never call or speak with the other person to negotiate, thats too personal. Have a price (check via zillow/public record the price they paid, run the typical amortization to see where theyre coming from/wiggle room), give it to them in writing/email, rinse/repeat.

        Theres almost zero need for pricing, thats just not hard anymore. You should have access to MLS in your area already, in addition to Zillow/Redfin/etc...which you should be able to get last prices for houses sold in the neighborhood, make your own comps (literally takes 3 mins), etc...and even more granular. I've never had a realtor give me information I didnt already have at an even deeper, broader and granular level.

        Utility is simply in amassing and collating the mountain of paperwork.

        Comment


        • #5







          Yes you can get away with not using a real estate agent of your own.  But, in a for sale by owner situation, in my opinion, it would be best to have a realtor represent you unless you are very familiar with all the ins and outs of a real estate transaction.  It will make getting the paper work done so much easier and can make for a more comfortable negotiation.  It might be a little awkward walking into someone’s home by yourself and sitting down to negotiate a purchase price in person or over the phone.  Plus, there are certain things the buyer is required to disclose that you would need to already be aware of so you know what questions to ask yourself.  For all the legal stuff, I think having at least one realtor would make life a lot easier and wouldn’t cost you, the buyer, a dime.  Typically a realtor charges 5-7% to sell a home.  And the seller still has to pay some fees to get the home listed and on all of the home search engines.  So, it’s not like you’d be able to negotiate some ridiculously great price just because there are no realtor fees.  A realtor representing you might actually be better at helping you negotiate than you could on your own.  Unless you’re a savvy sales person with great negotiation skills, a realtor probably has more experience doing it than you.

          However, I will also mention another scenario…if you don’t have a realtor and you find a home you like that has a realtor representing the seller, you could go ahead and make an offer without a realtor of your own.  That will make the seller’s realtor very happy because he/she will get to keep ALL of the realtor fees (normally the seller’s agent has to split the profits with the buyer’s agent).  So, the seller’s realtor might be more willing to nudge the seller into a lower offer knowing he/she will still be coming out ahead.
          Click to expand…


          Ive never had a realtor do any negotiating. Theres no point in negotiating at all, they push both sides to make and take the deal, 20-50k swings either way make almost zero difference in their commission. What makes a difference is number of closes, they are incentivized to close not negotiate. This means they are incentivized to convince you to pay more as a buyer and accept lower as the seller. Ive disregarded the realtors ideas almost every time on price on every place I’ve bought, never an issue. Know peoples incentives and you’ll understand why they are doing what they are. They are not aligned with yours.

          They are basically just intermediaries in the docusign marathon. They also have contacts for assessments/appraisals, etc…though that isnt difficult either. Theres no cost of listing anymore either. I would never call or speak with the other person to negotiate, thats too personal. Have a price (check via zillow/public record the price they paid, run the typical amortization to see where theyre coming from/wiggle room), give it to them in writing/email, rinse/repeat.

          Theres almost zero need for pricing, thats just not hard anymore. You should have access to MLS in your area already, in addition to Zillow/Redfin/etc…which you should be able to get last prices for houses sold in the neighborhood, make your own comps (literally takes 3 mins), etc…and even more granular. I’ve never had a realtor give me information I didnt already have at an even deeper, broader and granular level.

          Utility is simply in amassing and collating the mountain of paperwork.
          Click to expand...


          I guess I agree with the negotiation point.  I do still think having one for the paperwork/legal stuff would be best for most people though.  But, I will say that trying to sell yourself can sometimes be made very difficult by not having an agent, because many realtors in the area will intentionally not show your home to their clients if they can avoid it.  This is because they are trying to protect their careers.  We tried to sell our condo by owner.  It was on the market for over 6 months with only a few showings (and we had it listed appropriately and took professional photos, staged it neatly, etc).  As soon as we decided to hire an agent, we had dozens of showings the first month and it sold within 6 weeks.  Clear indication to me that they were purposely avoiding a for sale by owner property.

          Comment


          • #6
            You don't need a realtor but you do need a good lawyer to help draw up the contract, do title research, etc. A lawyer will be MUCH cheaper than a realtor. Make sure that you get a good home inspector. As mentioned above, realtors aren't there to negotiate on your behalf, they're there to close as many houses as they can.

            Comment


            • #7










              Yes you can get away with not using a real estate agent of your own.  But, in a for sale by owner situation, in my opinion, it would be best to have a realtor represent you unless you are very familiar with all the ins and outs of a real estate transaction.  It will make getting the paper work done so much easier and can make for a more comfortable negotiation.  It might be a little awkward walking into someone’s home by yourself and sitting down to negotiate a purchase price in person or over the phone.  Plus, there are certain things the buyer is required to disclose that you would need to already be aware of so you know what questions to ask yourself.  For all the legal stuff, I think having at least one realtor would make life a lot easier and wouldn’t cost you, the buyer, a dime.  Typically a realtor charges 5-7% to sell a home.  And the seller still has to pay some fees to get the home listed and on all of the home search engines.  So, it’s not like you’d be able to negotiate some ridiculously great price just because there are no realtor fees.  A realtor representing you might actually be better at helping you negotiate than you could on your own.  Unless you’re a savvy sales person with great negotiation skills, a realtor probably has more experience doing it than you.

              However, I will also mention another scenario…if you don’t have a realtor and you find a home you like that has a realtor representing the seller, you could go ahead and make an offer without a realtor of your own.  That will make the seller’s realtor very happy because he/she will get to keep ALL of the realtor fees (normally the seller’s agent has to split the profits with the buyer’s agent).  So, the seller’s realtor might be more willing to nudge the seller into a lower offer knowing he/she will still be coming out ahead.
              Click to expand…


              Ive never had a realtor do any negotiating. Theres no point in negotiating at all, they push both sides to make and take the deal, 20-50k swings either way make almost zero difference in their commission. What makes a difference is number of closes, they are incentivized to close not negotiate. This means they are incentivized to convince you to pay more as a buyer and accept lower as the seller. Ive disregarded the realtors ideas almost every time on price on every place I’ve bought, never an issue. Know peoples incentives and you’ll understand why they are doing what they are. They are not aligned with yours.

              They are basically just intermediaries in the docusign marathon. They also have contacts for assessments/appraisals, etc…though that isnt difficult either. Theres no cost of listing anymore either. I would never call or speak with the other person to negotiate, thats too personal. Have a price (check via zillow/public record the price they paid, run the typical amortization to see where theyre coming from/wiggle room), give it to them in writing/email, rinse/repeat.

              Theres almost zero need for pricing, thats just not hard anymore. You should have access to MLS in your area already, in addition to Zillow/Redfin/etc…which you should be able to get last prices for houses sold in the neighborhood, make your own comps (literally takes 3 mins), etc…and even more granular. I’ve never had a realtor give me information I didnt already have at an even deeper, broader and granular level.

              Utility is simply in amassing and collating the mountain of paperwork.
              Click to expand…


              I guess I agree with the negotiation point.  I do still think having one for the paperwork/legal stuff would be best for most people though.  But, I will say that trying to sell yourself can sometimes be made very difficult by not having an agent, because many realtors in the area will intentionally not show your home to their clients if they can avoid it.  This is because they are trying to protect their careers.  We tried to sell our condo by owner.  It was on the market for over 6 months with only a few showings (and we had it listed appropriately and took professional photos, staged it neatly, etc).  As soon as we decided to hire an agent, we had dozens of showings the first month and it sold within 6 weeks.  Clear indication to me that they were purposely avoiding a for sale by owner property.
              Click to expand...


              I would absolutely have someone for the paperwork aspect. When you consider that you're paying 10-50k for the realtor, you realize you can outsource that kind of thing to a lawyer, have them absolutely working for you, and get it much cheaper. I havent done it this way yet, but the merit is clear.

              Im sure there are a lot of issues with FSBO, and it will depend on your local market. Now you can even list with Redfin/Zillow directly for something cheap...BRB...well, I dont see the full service option with Zillow, but I see their signs of such in the neighborhood and Redfin offers 1% for full commission agents. I would probably do that in a heartbeat.

              This industry has not had the deflationary effect of the internet and has really done well despite it. Its ripe for actual disruption, I've thought many times over the years if I had no other obligations, etc...this would be an excellent field to disrupt. You have a lot of useless margin to put pressure on the industry and unlimited demand for it to be better. Alas, I dont know anything about it and am not in a position to do so. It seems to finally have started, and will just continue (albeit slowly) to go like high ER funds/active management.

              Realtors basically provide no value or at least no where near their cost, everyone knows it and wants a better way.

              Comment


              • #8
                Some states prohibit doing home purchases without a realtor involved.  Really freaking sucks.

                Comment


                • #9
                  Using a realtor is probably overkill IMO.  you just need someone to handle the closing. You can pay realtor for closing only, use a lawyer or we just used the title company (which all was paid for by the seller). who pays for what is often regional dependent.

                  Comment


                  • #10
                    Honestly, if you're asking, you'll need some assistance on the offer, negotiation, and closing processes.

                    1.  A title company and/or lawyer are absolutely necessary to get all the legal things done.

                    2.  The offer price --- have to know the value of that house, in that market, in that time.   Redfin and zillow can help with that on current valuation, local property tax searches can also help on historical.   Local newspapers on looking at all things local politics over the past 6 months of readings will give a good overview of what to expect.  Also planning boards minutes if you have an organized local planning commission helps get a feeling of what's happening in the community that will affect pricing.

                    3.  Negotiations -- up to you on the hardball.  This is where one may save $$$ if you're good at it.  Other times agents are worth their weight in 'stale properties' or special circumstance properties that maybe in distress.   This is where having in touch of local realtors known to have such properties or pocket listings make great finds and deals.

                    4.  Due diligence-- on the specific property -- a very good home inspector is essential if you want to know the 'bones' of the property so no surprises and making sure the property is worth the negotiated price.

                     

                    Comment


                    • #11
                      If you and the seller are on the same page with everything, it's just a matter of paperwork and finding a title company or attorney who can help you close the deal. My earliest deals were buying from for sale by owners as a real estate investor. As long as the seller trusts you and you trust the seller, it's all a matter of finding the people who can help you both transfer the title and do the paperwork. Good luck!

                      Comment


                      • #12
                        We sold our last home and bought our current home FSBO without realtors. Title company can help you out with all the necessary paperwork. A lawyer is probably a good idea, but we didn't involve any. It helps if you get a sense you can trust the people you're buying from or selling to. Of course, you could turn out to be wrong, but both times we were very happy with the way things turned out. We also felt good about meeting the people on the other side of the transaction.

                        I don't buy that the realtor costs nothing. I know our seller would have wanted more or been less willing to come down in price if he knew he was giving up 3% to a realtor we had brought into the transaction.

                        Comment


                        • #13
                          Doc

                          look for flat fee agent

                          http://www.nytimes.com/2005/09/17/business/the-6-percent-solution-skip-real-estate-agents.html

                           

                          Comment


                          • #14
                            I may be the outlier here.

                            We just bought a home and I really would be clueless without our realtor. He was recommended to us by physician friends and he was truly amazing.

                            I recognize my limitations and buying a home (this was our first one) was definitely out of our comfort zone. We are in a hot market and had to put 3 offers before we found our home and I believe it was due to his large connection web in the real estate world that we got this amazing house.

                            He did way more than negotiating any price, but he knew what to look for in the homes we went in other than the basics we did. He several times told us "no, this house sucks, let's go" - and in several occasions these were homes with a higher price tag but with things he noted such as a leaning column or signs of damage we wouldn't want to deal with (we were looking at early 1900s houses). He considered things we never did; he would go down to basement and crawl under electrical stuff to find out the material the piping was made of and things like that.

                            He also saved us so much time but knowing all the right people - from the sewer line inspector to roofing guy to house inspector etc etc etc. The list is endless.

                            If I had all the knowledge he does; sure i'd consider buying without an agent to save a few thousand. But by having him to most of this work for me, it allowed me to focus on medicine and make this already stressful process a relatively pain free one.

                            I know there are realtors and realtors but, just as sometimes it is worth having a financial advisor, the same is true for a good realtor. In my opinion, my realtor should've made more money from this transaction; he did a ton of work for us and we couldn't be happier. Priceless!

                            Comment


                            • #15
                              I sold my last house FSBO and bought my current house from another doc in my hospital FSBO. No issues with either transaction (a good title company/agent will be very helpful) and I saved at least $100k between the 2 transactions. Send me a PM for more info.

                              Comment

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