Do you use a realtor when you buy an off MLS deal? Let's say I get a motivated seller via drive-for-dollars, do I use a realtor to actually arrange the purchase? Is there a name for that process I can use when speaking to realtors? I'm heading to AZ next week to drive-for-dollars and find my first BRRRR property. Thanks in advance!
@Erik Nordgaard , while it isn't required there are probably some reasons to use an agent.
First is cost. You need a sales contract vetted for the state you're buying in. You can hire a lawyer, who might draw one up but it might be pricey compared to using an agent for a low priced property. Second is that if you use an agent, you have a fair chance of getting the seller to cover their fee which for a deal like that is probably only half what a normal listing fee might be (perhaps 3% of the sale price).
Other benefits include someone who can help you through the whole buying process and recommend providers such as home inspectors, title companies, contractors, etc. If something unexpected comes up during the purchase a good agent could give you some valuable guidance.
In addition, if you plan to invest in this area more having a relationship with an agent can only help you. By working with them right off the bat and getting them paid for a transaction, you build loyalty from them because they know you are serious and not a time waster.
If you don’t know how to write your own contract and negotiate the purchase then I guess a realtor could be of a service. Personally I have never used a realtor for an off market purchase As of the date of this post. If a realtor brought me an off market property then that is a totally different arrangement. A realtor may be willing to help you with the purchase agreement contract for less than 3%. If you found the home on your own and all they were doing is helping you write the contract there are a lot of realtors that probably would be willing to help you with that. If they helped you negotiate better deal then it’s up to you and the realtor what their fee would be. Some realtors are good with negotiations so their fee might be worth every penny if they get you a better deal.
@Kevin Sobilo Awesome thank you, would an agent work both sides of the deal then? What costs should scale to the price of the purchase vice remain fixed?
@Erik Nordgaard , if I was the agent I would treat it as if my buyer asked for assistance purchasing a FSBO (for sale by owner). So, I would tell the buyer my fee is 3% and then I would approach the seller asking if they would pay my fee if my buyer (YOU) bought the property. If not you would be on the hook for it, but most times they agree. If it was a low priced property (under $50k), then I would charge a minimum flat rate commission of maybe $1500 or $2k.
In a situation like this I would ONLY be the buyers agent and I would make that clear to the seller. If the seller wanted an agent, they could get one of their own but I wouldn't offer to represent them. You can also make it clear to your agent that you don't want them to be a dual agent in this transaction that you only want them to represent you.
If it is your first deal, I would highly recommend working with an agent so the seller doesn't do one over on you!
As mentioned, use a Realtor if you have little to no idea what you are doing in a real estate transaction. That being said, try to find a Realtor who actually knows what they are doing..
BUT.... It can also depend on your State. For example, in NY a lawyer is required because they draft the contracts. The NY real estate agents, to my knowledge, can't "do a contract." On the other hand, in NJ our pre-licensure is longer to allow us to "draft" contracts -- yeah, we just use the State Realtor vetted forms since the State has standardized the forms. So, my point is in NY, I'd skip the Realtor and lean harder on the attorney for help on getting through the transaction. In NJ, honestly, its sort of weird that the "northern half" we customarily use attorneys. Apparently, south Jersey customarily doesn't use attorney and just relies on the Title company for everyhting.
As a licensed agent, of course, I'd say to use my services since I want a commission. But, in all honestly, it really depends on what sort of assistance you need to PROPERLY close the transaction. I emphasize properly since its "easy" actually to close a deal, but it doesn't mean it was done right. There are plenty of after-the-fact horror stories. I've even got a few of my own (well, not so "horror" but smaller issues).
Clear as mud?? Hope that helps. Good luck.
@Erik Nordgaard if the main thing you're worried about is the contract just get legalshield. It's only $25 a month and they can help with all the documents and contracts.
I di not. Why pay them money for your work? You should hire an attorney and they can help. If you have previously purchased property, the process is the same.