Not using a realtor for simple all cash deals

16 Replies

Hey Everyone.  What do you think about buying real estate without using a real estate agent?  Especially for simple properties, I don’t think this is all that complex. 

The trick is you need to get in to see the properties. You can ask the seller’s agent to show the property to you, but then would they ask for more than the 3 percent commission they usually get from the seller (since they did a big of extra work)?

I am planning to scale up buying properties to rent (using cash), and am not too keen on having an agent gobble up 3 percent when I haven’t found them to be hugely value-added (unlike the inspectors whom I swear by). I welcome your thoughts.

If you write the offer with the listing agent, expect them to want to collect both halves of the commission. Some might take, say, 5% instead of 6% if they represent both sides. Ask them about it...

If you want to completely avoid commissions, you want to buy direct from the owner.

It shouldn't cost you anything to have a Realtor represent you as a buyer if the house is already listed by another Realtor.  The commission is paid by the seller and split between the selling agent and buyer's agent (if there is one). 

Hi @Trey Co,

If you are comfortable with the process you are free to not use an agent. They are not required.

However (generally speaking) the seller offers an agent X% to sell a house (Let's say 6% for argument sake). They then offer 3% to an agent to bring a buyer. So the agreement is between the listing agent and the seller. Not the buyer and an agent.

Hope it helps and good luck!

Mike Cumbie, Real Estate Agent in NY (#10401285310)

Thanks to all who have responded so far.  Would it make this a lot less messy if I just studied for and got a real estate license?  Just a thought.

@Trey Co,

Takes 75 hours online here (So crack a beer and watch in the background) and about $400 so it's is certainly an option.

Mike Cumbie, Real Estate Agent in NY (#10401285310)

You do not get paid and need not to pay a realtor service fees. If you overpaid and got misled you assume the consequence.

You won’t save any money, as the seller realtor will get both commissions. That said, most seller realtors will try to give you the advantages if you buy directly with them.

It’s pretty cheap and easy to get a license. I know of a few who get license just to buy a couple of house for themselves and their relatives.

Originally posted by @Albert Ng :

It’s pretty cheap and easy to get a license. I know of a few who get license just to buy a couple of house for themselves and their relatives.

The costs associated with maintaining a license however are not that cheap. Id estimate it is about $5k per year in most places to maintain a license. $1,000 a year in MLS fees, $1,000 a year in board dues, $1,000 a year in e&o insurance, $500 a year in electronic lockbox access, $500 a year in general business liability insurance, increase auto insurance costs for commercial use, continuing education fees, licensing fees, brokerage fees etc.

Russell Brazil, Real Estate Agent in Maryland (#648402), Virginia (#0225219736), District of Columbia (#SP98375353), and Massachusetts (#9​0​5​2​3​4​6)
(301) 893-4635

If you are a buyer, having an agent represent you costs little to nothing (depending on the agency). Sure you are free to not use one but what do you stand to benefit from it? Sellers agents pay the commission so you aren't saving 3% off the top, the sellers agent would just get 6 (or whatever your local going rate is). Agents on buyer side are basically free help and if you find a good one that is willing to go the extra mile for you deal after deal then stick with them and build a long term business relationship. 

Thanks to all of you who have replied to this thread.  Helped a lot with perspective.

Originally posted by @Tom J. :

Thanks to all of you who have replied to this thread.  Helped a lot with perspective.

Tom,

I buy homes with cash as well. Here is how I handle it. If the property is an off-market deal or a FSBO then I go the lone wolf route with no agent.

If the property is listed in a way where the seller has an agent representing them then I will contact and go through my agent. 

Even if you get your RE license, a 3% commission savings is change compared to what you can save by finding off market properties with motivated sellers.

The deals arent on the MLS , if they are somebody beat you to it . The best deals are ones you find yourself , there is no need to involve a agent .

Thanks again, all!

Originally posted by @Russell Brazil :
Originally posted by @Albert Ng:

It’s pretty cheap and easy to get a license. I know of a few who get license just to buy a couple of house for themselves and their relatives.

The costs associated with maintaining a license however are not that cheap. Id estimate it is about $5k per year in most places to maintain a license. $1,000 a year in MLS fees, $1,000 a year in board dues, $1,000 a year in e&o insurance, $500 a year in electronic lockbox access, $500 a year in general business liability insurance, increase auto insurance costs for commercial use, continuing education fees, licensing fees, brokerage fees etc.

If you just get the sale license to purchase a few homes for yourself and relatives (i.e. no need for increase auto insurance, continuing education ... ), the fee is about 2+ K. In return, you save about 1.5% to 2% commission, which is about $10K per home. 

That said, in OP case, he should either go with a discount broker that provide 1% - 1.5% commission rebate, or go directly with the seller agent for the advantages in getting the deal? (i.e. seller agent knows exactly the price you should offer to get the property, so you don't over bid or under bid).

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