Specialist · Chicago, IL · Member since 2016 · 77 posts · 202 votes
It is my contention that in most circumstances you should not use a real estate agent to buy a single family home, and only in limited circumstances should you use one to sell.
This strategy saved me approximately $15,000 in the purchase of my most recent home and I think most real estate savvy people in places like the BP forums could likely do the same.
"Dear seller, your home is listed at $445,000. If I assume you'll pay a 5% commission to sell the home, the net price to you if you receive a full list offer is $422,750. However, half of the commission (2.5%) of the house, will go to the buyer's agent. In my case, I am not using an agent, so that portion of the commission can be eliminated. Therefore, I'd like to offer you $430,000, which, after the 2.5% commission to your agent, nets to $419,250. Therefore, your net price with my offer is very close to the list price. I look forward to hearing from you."
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
5y
100% of the time I receive offers from buyers that are not represented, they pay more for the house than if they had an agent. They always convince themselves how smart they are, and I feed that ego to make and make sure to give them a good pat on the back.
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
5y
Yes, definitely an advantage. Be clear in your scope with the attorney, but to draft up YOUR PSA is just a few hundred. I wouldn't rely on seller's attorney at all.
Real Estate Agent · Oklahoma City, OK · Member since 2020 · 471 posts · 462 votes
5y
@Steve Vaughan
Ya honestly there are people out there like you who are knowledgeable and resourceful enough. So if you feel confident about the process then go for it! Most people don’t want the hassle of learning the process, especially non-investors. Agents are more or less consultants this day and age, but who knows if technology will continue to progress to a point of making agents obsolete, or at least changing their roles even more.
@Account Closed I he trouble for the listing agent is without a buyers agent, they are now stuck dealing with you to make sure you do everything on schedule to get to closing. In other words, they do twice the work for half the pay.
Most houses today are selling for over list price. Multiple offers are how they bid price up, so in that situation a seller wouldn't be smart to take your offer.
The challenge with FSBO in general is that everyone expects to gain financially. The seller wants to keep all the money that would be paid in commissions and they buyer expects a steep discount because there are no commissions. The less savvy party ends up losing. So I agree you can gain without a realtor, but there is equal opportunity to lose.
I would also add, that as a Realtor and a real estate investor who has represented myself on buying and selling many properties... if I am selling a property and I see an offer come in unrepresented, I would give the offer to a represented buyer. I actually selected to sell to a buyer represented by @Russell Brazil, because he gave me the service and piece of mind I needed that we would close the deal. Let me tell you, Russell's client was not the highest offer in my case. However, let me also tell you, that I had just started as a Realtor, and it was HIS expertise in coordinating with the appraiser that helped the appraisal value come back at a value where the deal closed. (Original appraisal was weakly researched and came back in really low). So, with a good agent, both a seller and a buyer win!!!
Investor · Phoenix, AZ · Member since 2018 · 420 posts · 388 votes
5y
@Phil McAlister you could also show up to court without a lawyer. The conversation would go something like this.
Dear Judge, I don’t know the law but have decided to represent myself. It should be at a discount in time to all parties involved because I have no legal knowledge to refute the position of my counterpart.
It’s one approach...and it may even work in a perfect transaction. What happens when it’s not a perfect transaction?
Real Estate Agent · Myrtle Beach, SC · Member since 2016 · 63 posts · 34 votes
5y
By all means, represent yourself. The more people heed your advice, the more horror stories will occur and be disseminated. This will, in turn, cause more people to come back and pay a premium to have a good agent work for them. That's how Mr. Market works. Similar to why I love hearing landlord horror stories - you usually dive in and discover they were very sloppy and made their own bed and by spreading those horror stories they make room in the market for the rest of us to make money. You just can't call them sloppy or the public will string you up in social media kangaroo court.
Real Estate Broker · Charleston, SC · Member since 2013 · 794 posts · 454 votes
5y
@Account Closed I don't think you always have to have one and I am a broker myself. That's my main gig. In this market, especially, you don't always need to have an agent. However, when things get hairy, it's really helpful to have an agent who knows the ins and outs of the contracts. When this gold rush of a market ends, which it eventually will, investors are going to have to rely on agents again. I would not recommend ostracizing agents while the pasture is green because there will be a drought eventually and everyone will need all the help we can get. We do a lot of off-market deals that most people aren't even made aware of. I'm definitely not sending those leads to someone who thinks me or any of my agents are expendable. We also offer a limited listing for $500 for 6 months to our sophisticated sellers, but that's largely just a way to try to help stimulate more inventory to market and hopefully a way to get the jump on properties for our buyer clients.
Investor · Chicago, IL · Member since 2018 · 352 posts · 176 votes
5y
@Phil McAlister
The real estate agent's primary purpose is to be a market expert. If you (buyer or seller) are not market savvy, and don't understand all that much about real estate, then you would do better to work with an agent. If instead you are truly a professional, fulltime investor and have already purchased countless buildings, then I'd say sure, skip the agent if you want to, sell or buy a home yourself.
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
5y
@Account Closed A point I hadn't read being made is that it is not an A-or-B option of agent or no agent, there are more forms of agency a person can utilize such as a facilitator agreement so that in the transaction it's a safeguard all legal contracts are being correctly utilized to effect a legal, known transaction vs some sneaky terms snuck in or more commonly, important legal measures left out that come back to bite a person in the end. So it's not that simple as A or B.
Now, I was an investor for nearly a decade before getting my license and becoming "The REI Realtor", I bought and sold with and without agents, and I learned through 1st hand experience NEVER sell without an agent because I ALWAYS got less, with more work, more headaches, more bs and antics every single time. In buying, I was a-ok BUT, I was an investor, and before that a contractor with a background in contract law and countless years experience in contracts, definently not the average bear.
As @Russell Brazil stated, I work with those hell bent on representing themselves time-2-time, and I even warn them they need representation because I am not their agent and what it means if they self represent, and 100% of the time they loose for the venture. Numbers don't lie, those with realtors get higher $, less issues, better buys, in court less, less title issues, by every metric self-representing is far more risk and only for perceived reward. Is their instances that are exceptions, like when I a professional investor with years upon years in the trades, home building, contract law background, was doing own buying, you betchya, although it's exactly that, an exception.
On buy side, the immediate value that crushes doing by self is off-market deals, a good realtor will have off market deals, ability to dig up, source off market deals. That 1 item alone makes a realtor worth their weight in gold.
My argument would be there is a whole lot more to the picture and equation than just "Realtor bad, Realtor Good", it's just not that simple.
Flipper/Rehabber · Tallahassee, FL · Member since 2014 · 462 posts · 237 votes
5y
@Phil McAlister I totally agree in the most part. Here’s where I disagree. Firstly you found the property which was listed on the mls. You only found it because of a realtor. Therefore you are in their space. Now you don’t want to pay them. Also, even if you’re not represented the sellers agent gets the other percentage. What you said is great but go find your own deals and deal directly with the seller. Then you and the sellers don’t have to pay anything to a realtor, you can save even more money plus your not using the mls realtor area at all.
Specialist · Member since 2021 · 266 posts · 113 votes
5y
I'm a wholesaler in Texas, I totally agree. If a person really wants to sale their property, Dump the realtor and/or agent. First, they are not needed to sale a property. Second, if the property is low cost or in need of repair, a realtor will not be diligent or anxious to sale because the commission is low. Third, if you're the seller you have to pay the realtor a commission. Lastly, no realtor is willing to work with me even though I can find a cash buyer quickly. In my business, the end buyer pays my commission at no cost to the seller. My clients are investors, who will do due diligence to agree upon the best price to offer the seller as well as run the numbers to ensure they are making a smart informed investment.
