Buying an house without a realtor

16 Replies

Hi,

I am trying to but house to live around Boston area and I'm not sure if I need a real estate agent for that. I don't have much experience but I did get a MA real estate licenses but I have never used that. I am trying to figure out how can I save the fee and do it myself. I'm not sure if this is bad idea but I have good amount of friends that told me that they wasted their time and money by using an agent when they bought an house while to sell one, you definitely need hire a professional. 

Seller pays commission generally so why wouldn't you hire a realtor?

because I can get the commission myself. I am using a realtor to sell another unit that I own but from the buyer side. I don't really see why to use a realtor.

@Tal P. you say you have a license? Do you work for a broker? If not then I don't believe you can get any commission. Not to mention if asking this question it might not be wise to represent yourself. In most transactions the seller pays commissions, so there is no fee you should worry about.

@Tal P. With no experience as an agent, you need someone who is an experienced negotiator to represent your best interests.

I have represented several people here on BP (both buyers and sellers) and have been able to negotiate terms, price, repairs and other items that an unrepresented buyer would probably not have been able to pull off.  

In fact, I'm representing a buyer right now (should have the P&S executed today), where the seller's attorney was exceptionally difficult.

I was actually able to get both the seller and the seller's agent on OUR side and got them to push pack on their own attorney.

That comes from experience - and that's why you need a buyer's agent.

I am just trying to figure out how I can get the commission myself because I am the one that is actually spending the time and doing most of the work. I am not working for broker (never did) but I just feel like there is got to be a solution that I will get most of the commission myself.  The last time I used broker I got "burned" and got a very bad deal.

@Charlie MacPherson I understand your point and maybe I'm wrong here but there are good amount of people that didn't feel like their broker did much for them. I did a mistake few years ago when I bought a unit and my broker told me that I need to pay the closing costs for both sides as the buyer. It was stupid mistake for me to trust that broker and later on I found out that my broker and the previous owners are good friends. 

As I have said before... People should not act like Realtors and real estate agents are the same thing.

It is also FALSE to say the seller pays the commission.  Look at the sells pitch agent give their listing clients.  They generally say they are worth the commission because of the higher price they will get from the buyer.

Unless the agents here explain to their listing clients they will get 6% less money by hiring an agent then I call BS.

@Tal P. That's exactly the kind of thing that happens when you're not represented by a good buyer's agent!

No matter who you use, you need someone with some experience who will step in and fight things like that. 

If it were me representing you, I'd negotiate that back to the seller paying some of yours, not the other way around.  

In fact, I have NEVER had my buyers pay one cent of a seller's closing costs.  I have, however, had many sellers contribute to my buyer's closing costs - and in one recent sale (3-plex), I got the seller to cover ALL of my buyer's closing costs - which due to some large pre-paid taxes and insurance, totaled $16,000.

@Michael Biggs the logical answer is "why would a buyers agent show to their buyer your house if they are not making a commission?" That, in itself, will hurt your sales price because demand will be significantly less. I've always used agents to buy and sell because those are skills that they have that I can leverage for my benefit.

Hi Tal,

From what I gather, your friends hired the wrong real estate agent to work with. An agent such as @Charlie MacPherson or myself negotiate on our clients’ behalf to maximize their dollar and we know the particulars in the process.

Many agents do not represent their clients well and therefore seem like a waste of money. However, working with the right real estate agent will provide you value and be worth paying them (or letting them get paid).

I hope that helps, best of luck in your housing search!

Jon

@Jason DiClemente   Thanks for agreeing with me that the buyer pays the commission because of a higher sales price.

Sellers will pay the costs - definitely use a realtor. Plus it saves you a ton of time as they can do the legwork for you if you tell them what you are looking for. Make sure to find an actual investment experienced realtor. Many will claim that they can help you find real estate investments but don't really understand the underlying principles.

A good way to gauge their expertise is to ask the realtor what they look for when finding you a good investment property. Make sure that they have examples with actual numbers and not just saying they'll look for a place with a good ROI - dig in and ask what kind of ROI would you expect from different areas, what average rents are in the areas, how much the area has appreciated etc.

@Account Closed As to who pays the commissions, it really depends on what you mean.

In one sense, all of the purchase cost is coming from the buyer, so in that sense, yes, the buyer pays.

However, if the property is listed on MLS, the listing contract stipulates the total amount of the commission, whether or not there is a buyer's agent. So in that sense, no, the buyer doesn't pay. The seller pays from whatever proceeds there are in the sale.

So an unlisted property could theoretically sell for a lower price and the seller could still net more if there were no agents involved. This is what attracts sellers to FSBO.

The flip side is that every study I've ever seen says that FSBO properties consistently sell for less than those marketed through agents, netting the seller less, even after paying commissions.

Heck, even the FOUNDER of ForSaleByOwner.com tried to FSBO his home and failed. He listed with an agent and received a far higher price. $150,000 more, according to the Time.com story!

http://business.time.com/2011/08/17/fsbo-com-founder-sells-condo-using-real-estate-agent/

Not that there aren't exceptions, but it's pretty reasonable to think that someone who works full time in the business is going to be a lot more effective than Joe Homeowner who sells one or two properties in his lifetime.  

Not to mention that Joe probably doesn't know what forms and disclosures to use to keep him out of legal trouble, how to instigate a bidding war, how to best handle multiple offers, how to push back on unreasonable buyer demands, how to negotiate the best terms, how to run an open house, how to document and handle escrow funds, etc.

A lot of people think agents just show a house, shake a few hands and collect big fat checks.  Like a skilled mechanic that can diagnose and repair a complicated issue quickly, a good real estate agent makes it look easy.  

Sometimes it is, but often it's not - and we're the ones who keep hard deals on track.

PS - commissions are always clearly disclosed in the listing agreement, so no BS.

The best way to save the fee is to sign on with a broker as you said you already had your license. Find a broker who collects a set transaction fee or takes a reduced split if it's for your personal homes. You'll have to pay the costs involved for MLS access, desk fees if applicable, etc. If that isn't in your plan, it will be harder, but find a listing agent who will reduce the commission if you don't use your own agent so you can offer a lower price. But most listing agents will simply state their commission agreement is with the seller, not the buyer, and they'll present your offer but won't reduce the commission.

@Lynn M. Thank you for your comment. This is what I am going to do.
@Charlie MacPherson I don't underestimate the real estate professionals and because I got burn once, right now I am working with a TOP broker in my area.  

@Tal P. You have to register with a Licensed Broker/Real Estate Company since you already have your lisence (you'll just have to pay them a percentage of your commission, for a new agent its a bit higher). Like that you'll be able to get the buyer's side of commission. Also I have never trusted the word of just the agent that I'm buying or selling a house. I understand they are professional in the  business but they also could make mistakes. Alway double check the numbers given to you or ask for proof to back those numbers. 

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