purchasing home, have a question on do i need a realtor?

Question

first a little background- So we found a house we like through a family friend. Are intent is to buy the house, live in it and fix it up over 2yrs then either sell it or rent it out. Either way it will generate more profit for our home in the future, since there is nothing in our market we want now and we are at a point in our current home where anymore work we do we wont see the return so it makes since to us to sell.

So the seller has a contract with a realtor so they have to go through him.(2k he gets regardless of sale price, so a flat fee) We offered them a price that they accepted, verbally, and when we were talking to him he said that his realtor told him to have us come in a put a purchase offer in on paper so its official.

I have a few questions id like to ask on what order we do things, or what thing we have to do for that matter.

Should we be using our own lawyer or realtor to handle anything, on the buying side? And if we go in and have his realtor give us papers to sign and what not will we own his realtor anything or does the contract they have with him include the paper work for buyer? If we have to pay him for his services then we might be better off getting our own realtor im assuming?

And we plan on selling our house, but our plan is to get approved for the mortgage (it will be our second primary house mortgage with the hope our house sells in 1-2 months months so we have time to do the things we want to do before we move in (update electric to 200amp, and put in new kitchen)

So we will be taking on 2 mortgages for a few months, we have the money available to cover them both for a while if need be, or we could take less for our home if it came down to it and still come out ahead.

Wondering what steps to take, I don't see why we would not get approved since the house is only 25k we are buying and we have more than that in equity in our current home. And we have the money to cover the repairs we want untill we sell our house and get the money back and we both have steady jobs with great credit.

So what order do we do things? Get a preapproval from a lender, then call lawyer or realtor or use there's? Then list our house once we know all is good and we can get this one? Am I missing something here?

Thanks ahead of time for any responses!

We plan to getting a 20 yr mortgage on the place and want to put as little down as possible that way we have more to put into it and can still get another rental unit this summer, so we might even go the 30yr route but I think that's only a difference of around $35-40 a month so the 20yr makes since.

Bryan L. · Answer

Account Closed - Do you need a Realtor? Based on your questions, yes.

And here's the cool part. With this house being listed on the MLS, the listing broker is probably offering cooperating compensation to the selling broker (this would be your Realtor). So, go get yourself a good buyer's agent (Realtor) to represent you. He/she will answer all of those questions that you have listed out above, guide you through the transaction, likely save you some money along the way, help you to cover your butt, will coordinate the closing with you and your attorney, will review the closing docs for you to make sure that they are correct and to make sure that you are not being over-charged - and they will do all of this FOR NO COST TO YOU. Forget that stuff about "saving half the commission" cause it usually doesn't happen. If you don't have your own representation, the listing agent will just keep both halves.

Account Closed · Answer

thanks for all the info everybody, I appreciate it!

Ok we will contact a realtor later today or Monday and go from there to get this moving forward.

And that makes since, I would rather have the steak too if I were in there shoes!!!

Do we need a pre approval before moving forward or would it make sense to get a pre approval?

Account Closed · Answer

@brian l, I will talk to my wife and see what realty place we want to use, since we will use the same one when selling our home also. Id like to get a good relationship with one for future buys/sells also. Especially if its no cost to me then yeah that makes sense. Hope we can get stuff moving so we can start work within a month or so

Account Closed · Answer

ok, that makes since. So then we will prolly just use the listing agent then since we already agreed on a price the agent should not have any conflict of interest. We are gonna accept the house as is so I don't think we will get it inspected unless the lender wants us to, which I assume they will so I guess ok :-) Yeah if we cant get a mortgage on it then it will be a no go, so I hope since its a cheap mortgage on a livable house that a bank will let us. And maybe I should state that in our area typical homes sell for 65-100k I would say, so its not like average homes are on par with country around 150-200k so its not as bad as it sounds. We plan on 25k purchase price, 15-20k into it then when work is done it will be worth 60-70k, but thinking worst situation so 60k. We want to walk away in 2yr up 10k minimum, as we will be doing the work our selves. That's not counting the $350ish a month we will save on a mortgage payment from our current home to this home.

So should we see if we are pre approved for a mortgage on the house before signing a purchase agreement? Or have a clause in purchase agreement that says subject to getting a mortgage on the property? Or is the purchase agreement not binding and just says we have the intent to buy and is not set in stone?

We want to get things done sooner than later so we can get in and start repairs and be done with the major things downstairs before winter comes again! Which in upstate ny leaves us with about 5 good months....lol gotta love it

So should we see if we are pre approved for a mortgage on the house before signing a purchase agreement? Or have a clause in purchase agreement that says subject to getting a mortgage on the property? Or is the purchase agreement not binding and just says we have the intent to buy and is not set in stone?

We want to get things done sooner than later so we can get in and start repairs and be done with the major things downstairs before winter comes again! Which in upstate ny leaves us with about 5 good months....lol gotta love it

Account Closed · Answer

thanks that's good to know!!

Also the house is appraised at 42k so will be under the 80% mark so we will not need PMI which is nice.

As for asking for the 3%, would we have our lawyer add that into our purchase offer? Or do we use his realtor to sign purchase offer than talk to him?

So we go in to his realtor to sign a purchase agreement then get our lawyer to draw up contract with clauses, like you spoke of?

Or do we get a lawyer then have him drawn up the purchase offer and include the clauses in with purchase offer?

Account Closed · Answer

If I was a seller and you did not have a pre approval letter from a bank that could be verified I would say NEXT.

Joe Gore

Wayne Brooks · Answer

Yes, most agents will keep their sellers from signing a purchase agreement without one.

Rafael Floresta · Answer

I somehow missed the 25k property tag. Oops.

Joel Owens · Answer

Ryan,

From the questions you have presented you at least might want an attorney doing your paperwork for you. The pre-printed legal forms that can be picked up cheap are not state specific in many cases and has so many holes in them it's not even funny.

Asking for 3% back on a 25,000 sale from the listing broker is pretty funny........... : ) ( Edit: I saw where its a flat fee of 2k so the broker/agent will likely not negotiate at all).

They are already making peanuts and that will make you go to the bottom of the list for future purchases. Never step over dollars to try and make pennies.

If an broker/agent was hungry everyday and food was their reward then look at it this way.

4 people spread out on the street each with a plate. One has bread crumbs on it, one has soup, one has a cheeseburger, one has a juicy steak. Each day the broker/agent has something of value to bring to the 4 people in exchange for food. The broker/agent will want every time to try to get the juicy steak first.

The point is that the brokers/agents return and give constant deals to the clients that treat them right and not the ones trying to feed them crumbs while they eat the steak. A one off transaction you might get away with asking for commission off but a long term investor will get blacklisted for doing such things over time.

The 25,000 is nothing to a bank. You need to find a local bank that keeps the paper in house and makes money off of servicing the loan. There are minimum fees to be made in originating and 25,000 purchase isn't even close. Here in GA there are certain fees where a mortgage broker maybe squeaks out a few hundred bucks at 70k purchase price. Anything under 50k to 60k you won't even get a return call.

25,000 is a lot of work on the loan for a very small amount of money.

Wayne Brooks · Answer

It doesn't appear you'd need to pay an agent, if you used your own. The seller is paying a $2k (8%) which is typical on a low priced property, and would be split with any selling agent. You may not find an agent to represent you for half of the fee ($1000), or you may. You'll be hard pressed to find a lender that will finance a $25k house. If you do, the loan and PMI requirements will be based on your purchase price, Not the appraisal. You're probably better off using the listing agent, as he'll have legal obligations to you, as well as the seller. You'll be using the standard state Realtor purchase agreement, since it's listed, which is the best one for you to use anyway. The listing agent may have a lender who will finance this small of a deal, If it's in financable condition. I wouldn't expect any commission rebate. It never hurts to have a conversation with an attorney, but you'd have to have him review the purchase agreement Before you sign it.

purchasing home, have a question on do i need a realtor?

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