A realtor friend, gave me a lead on a property that is not listed on the mls. Another realtor, friend of the property owner, sent my realtor friend an email about this property. I am interested in purchasing it for 2K, however my realtor friend presented me her contract and I am used to using my 1 page, straightforward contract that contains a couple of escape clauses. I am leery of signing a 5 legal page contract, even if it has my terms. I understand that by using the realtor's contract that the agents will earn a commission. Is there anything else that I should be aware of/skeptical of in this deal. Thanks.
The "realtor contract" has nothing to do with them getting a commission, that's a separate document. The contract does however cover all the bases that need to be covered, unlike your one page agreement. There shouldn't be anything in there that's unfair to either party. Are you trying to buyit, or wholesale it?
Wayne, I looked at the contract the realtor gave me and there is a commission section on it with $750 written in the blank. Since the house is not listed on the mls, but the two realtors are corresponding and bringing offers, I'm assuming using this contract entitles them to a commission. Whereas, my contract would be between the seller and I, and no commissions would be due. I am planning to wholesale the property.
Also, in their contract there is an earnest money deposit.
Well, realtor contracts generally are assignable but they are geared toward people who actually want to buy, not wholesale. Your original post said you wanted to purchase the property.
The Realtor brought you the deal, so you can offer them a bird dog fee but if the Realtor is presenting the offer to the seller then ethically they deserve commission. You definitely don't want to burn any bridged especially since the Realtor is giving you pocket listings.
I normally use the standard state contract with my term written in as an addendum because sellers are more comfortable with it, and it provides you the option for the 15 day inspection period unless otherwise noted.
All the contracts we use both for real estate transactions and property management transactions are produced by the Realtor's Association. The advantage of this is that we know they are fully compliant with both State and Federal Law. If you have specific clauses they can be added as addendums. The commission amount can be $0 on these forms if that is what is agreed on although I guess the question over commission is a different issue. Hope you get it sorted.
So 2 Realtors worked together and put this deal together. Your plan is to now buy it without either Realtor being paid........good luck with that.
It looks like someone want to screw the realtor who brought the deal to them. It is a shame everyone is looking forward to getting something for free.
Cindy, welcome, I see you're new.
You probably won't like my suggestions.
Trash you one page contract.
Get away from guru strategies and get a good knowledge of the basics of RE.
Read here and study, start over.
Avoid this deal, you have Realtors with "pocket listings" that are unethical and probably illegal, you don't have the ability to buy, probably don't have a buyer in hand, you want to avoid commissions basically cutting out the Realtors and basically, you are competing with two Realtors to find a buyer, posing as a buyer will just lead to problems. The Realtor may have an authorization to show and a commission agreement.
Again, read the wholesaling threads. :)
I disagree pocket listings are not unethical or illegal that is guru talk.
@Wayne Brooks sorry for the terminology, I plan to get the house under contract and then assign the contract to another investor who will rehab the property
@Marcus Maloney thanks Marcus, I don't have a problem with the realtors making a commission. On this deal the house has $1500 owed in back taxes and it seems that another $1500 in realtor commissions will leave the seller $1K in the red on the deal. I do have the inspection period and a couple of other items written in as an addendum. Thanks.
@Ruth Jones thanks for your info. I just asked the question because I've never got a property under contract using a realtor's contract. It will work out if the number are right. Thanks.
@James Wise @Joe Gore I have NO problem with paying a commission to a realtor or a finders fee to a bird dog. I resent the implication. You don't know me. These realtors obviously did not want to list this property and were looking for someone to help the owner by finding a buyer for it, so my realtor friend asked if I was interested. I'm in it to solve a problem and make a little cash for me….the realtors get a commission and possibly more deals in the future…everyone wins. My question was about the difference in contracts.
@Bill Gulley I've had an account for a while but have only been lurking and finally decided to post. I can understand some people only look and don't get involved. By virtue of my asking a question, I was accused of being unethical, a cheapskate, etc. It was not appreciated and I will likely not post again. I have been investing for several years, buying tax liens, own 5 rentals including a subject to and have done a dozen or so wholesale deals.
My mentor here in Central MS, is a local investor with 30+ years of experience and I use the one page contract that he uses. I don't know the legalities of pocket listing as this is a first for me but I do have the money to purchase the property. My plan was to get it under contract and assign my contract to someone who rehabs that can turn the house around and put a tenant in it.
Thank those of you who were positive and helpful.
Mr Bill Gulley. This has nothing to do with what forms to use or not. As a real estate novice but an old hand at networking and making verbal mistakes please don't allow the negative feedback you have received to kill your 'spirit'. Often times people, myself included, have all sorts of reasons their thoughts are not clearly expressed and may actually be received unprofessionally or confrontational. We can simply step back and maintain our professionalism while dealing with this sort of confusion and take the extra time to explain what was meant in our communication so as to clear up the problems created. Most often these problems are created by the 'filters' that individuals utilize to both speak and listen.
I would enjoy continuing this conversation if you think I have anything to benefit you, and I fully understand what happens when what you mean and what they hear don't match up.
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