Do you have to utilize a Real Estate Agent?

Question

I’ve seen postings of people doing deals ‘solo’. Does this mean that they are buying properties without real estate agents? Is this legal in New Jersey where I live? Thank you for your help.

Brad Bellstedt · Answer

Is it legal to buy and sell without an agent? Yes, absolutely. Should you? Probably not. You wouldn't represent yourself in court, right? (See "The Tiger King" for a perfect example of why you wouldn't.) The same is true about your real estate transactions. If you have an intimate knowledge of the market, the process, the contracts, negotiations, and potential pitfalls, then by all means, have at it (and get your real estate license to make some extra money) but if you don't, it could cost you far more than the commission you did/didn't save. (I say didn't save because buyer's agent are free/extremely low cost in comparison to what an agent charges to list a property for sale.) If you're buying a property and the use of the agent costs you literally NOTHING (or very close to nothing) why wouldn't you use an agent? Sure, you can offer your commission to the listing agent to try to get an "in" but you're also subjecting yourself to working directly with the seller's agent and if you aren't extremely familiar with the process, you're likely to be taken advantage of.

Nathan Gesner · Answer

You can buy and sell your own property without a real estate agent. Some people do this and get lucky because the market is strong and they find an honest buyer. If you do it at the wrong time or with the wrong party, it can eat your lunch. It's also a known fact that selling with a real estate agent will (generally) result in a higher sales price and more money in your pocket.

Is it worth selling on your own to save the commissions? That depends. Knowing the power of a good agent, I think it's too risky.

Steven McCutcheon · Answer

@Michael Lettieri

No you aren’t bound to any realtor unless you sign a document stating you’re working with them. I don’t know if any realtors from my company that do it. Not really how you start off a relationship imo.

Steve Morris · Answer

Background, am a CRE broker who specializes in apartments.

Yes, you can do a deal without a broker.  However, caveats:

1) If you have signed a buyer broker (as noted) or listing agreement with a broker prior, realize it is enforceable and binding.

2) If you don't use a broker, I would strongly recommend an atty to handle paperwork and deeds.

3) If there is any money involved (there are bargain and sale deeds), use title.  They are a neutral party to handle funds and protect both sides.

4) If its a pretty clear-cut deal (i.e. buyer/seller collegial and numbers.condition/pricing not an issue), I'd be comfortable going broker-less.

So, barring an agreement, why use a broker?  Couple of reasons.

1) Market info - We are usually the most up-to-date on market info.  This gives a better answer, when you ask, is this a good deal or not?  This applies before and after you buy a property

2) How do I distill the important numbers to determine if this is a good ROI?

3) What are comps sales to justify whether I'm paying a "fair" price or not.  If you're borrowing, odds are you will get a MAI-certified appraiser and they are the standard on prop values.  However, most brokers can give a pretty close BOV.

4) We do this and understand what works/doesn't in terms of realistic things you can do to increase your NOI and return.

Hope this helps.

Mike McCarthy · Answer

As stated, a realtor isn’t required in any state. As others have said, usually recommended - as most of us don’t have the time, expertise, or MLS access to buy/sell our properties. But like most things, if you want to learn, you can do it in your own.

Brad Bellstedt · Answer

No. You would need to sign what we call in Nevada a "Buyer's Brokerage Agreement." If you haven't signed anything, you are not bound to them BUT if you are to see a house with one agent and write the offer with another, the agent who showed the property may have a claim to that commission. You should only see properties with agents you plan to write offers with if you can help it.

Michael Lettieri · Answer

Thank you for all of the advice. In New Jersey you need a real estate agent present to view a property. Once an agent shows you a property are you bound to them and must use them to close?

Do you have to utilize a Real Estate Agent?

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