Do i need an agent or lawyer to draft an offer letter?

Question

I'm working with a seller that doesn't want to involve an agent, if I do then they will increase the house price by ~$8000 (which would be 3% agent fee). Owner uses https://www.homie.com/ to schedule tours and take offers. After viewing the house I sent them an offer and the website sent me the following reply:

"Thanks for your offer on ...(address).  Are you currently working with a real estate agent?  If not, please meet ....(name of an attorney), an outside attorney who can help you finish completing your offer.

Let us know and ...(name of an attorney) will reach out to you if you don't have an agent.  If you do, please work with your agent to finalize a REPC."

So do I want to have my agent fill out the offer letter and pay him $8000 or attorney that probably costs me ~$600 or can I draft one myself (and have a title company hold the earnest money deposit)?

P.S. The owner hasn't accepted my offer yet.

Skyler Smith · Answer

@Kristi HarmonThere's no requirement to work with a real estate agent when you're buying or selling in Utah, but I have some thoughts as I read through your comments:

1. Many RE brokerages in Utah carry "errors and omissions" insurance, and if there is a lawsuit you will want to make sure to have that kind of protection regarding mistakes in the contract. An attorney will accomplish the same goal in this regard. It's also not unheard of for some agents to charge a flat fee just to write up the paperwork for both buyer and seller and keep out of the rest of the negotiations. That said, plenty of great investors never use an agent, but from the looks of things you'll probably make a lot of simple mistakes early on if you don't have a professional holding your hand through the process. That brings me to my next thought.

2. I get your frustration at not feeling like you're the #1 priority of your agent, but think of how this looks if you made two offers with him today but you're going to leave him out of this deal *on the same day.* I'm not saying that this is the agent for you, but if you want to thrive in the real estate game long term it would be hugely beneficial to get an agent on your "board of advisors," and one that will have your best interest in mind. You're not going to be getting the awesome off-market deals in your first few interactions with an agent, and this should be a relationship that lasts years. Factor that relationship equity in to your financial statement on this house and decide how you want to run your real estate business. This could be your chance to win the confidence of your agent and have him work for you for years to come.

3. You will likely have stronger negotiating power than the seller if you're being represented by an agent. I've represented plenty of buyers and helped them buy homes "for sale by owner," where the seller wasn't represented by an agent and I can pretty much steamroll them in negotiations. I will commonly make a request for the buyer that the seller just agrees to, where if they had an agent there would definitely be push back. A good agent - the right agent for you - will pay him/herself off just in contract negotiations, wether that's before or after you settle on a contract price.

Steve Vaughan · Answer

In most states you definitely do not need to be licensed to do your own deal (as a principal to the transaction).  I usually offer first in a Letter of Intent, then fill in the blanks of a standard PSA after the broad terms are hammered out.  Why is your seller so stuck on homie I wonder?   I don't even rent to homies :)

@Kristi Harmon Just wanted to thank you for stating a very important fact.  Having a buyer's agent is NOT FREE.  "The seller will up the price 3% ($8000) if I get an agent. "  Doesn't sound free to me!

My sellers tend to reduce their price roughly 3% for my not having one.  A 6% swing.

I am not anti-agent, but hate it when it is said their services are free to the buyer.  TANSTAFL

@David Helm- your offer to help for a limited fee is cool and long-sighted.  With there were more out there like you!  Cheers!

David Helm · Answer

Kristi,

I am a Broker here in Utah (and Florida) would love to assist, for something like just doing the contract, I can do a small flat fee to compensate for my time.  If you are still looking for some assistance.  I would also love to assist you in finding more properties, if you want.

Peter Vekselman · Answer

@Kristi Harmon I would just get a basic contract that has basic terms of your deal in it.

inspection time

closing date

contingencies

basic info of the property

etc.....

If you PM I can email you the one I use to close over 2000 transactions.  it is just two pages.

In the end you can get an attorney involved to review it.

This would be the easiest and cheapest route for you.

Peter

Becca Summers · Answer

I had an agent in my office attempt to buy a home off the Homie site they made it through offer, inspections and got the appraisal. The house came in 10k under contract price and it killed the whole thing. That home later was listed on the MLS for above the FHA appraisal price which FHA appraisal stay with the property for 6 months. Technically you don't need an agent or lawyer to write and offer for you on the Utah Real Estate Purchase Contract if you've bought multiple properties and know the system well many investors don't use agents. I also know many investors who don't have the time to negotiate or find deals so they pay others to do it for them.

Your right to find a deal in this crazy market you have to see it the day it comes on the market and get an offer in. What I do that you might suggest to your agent if you don't get this house is I search the MLS multiple times a day once I hone in on what my buyers are looking for and get them in within hours of it going on the market or sooner if it's a pocket listing from someone in my office. That way my client has the first right to say no.

Kristi Harmon · Answer

I decided to take this deal to my agent and make an offer with him (where he gets his 3%) or walk away from it. I figured it is just a house, no need to burn bridges--better deals are out there where my agent will be able to get paid as well.

Wayne Brooks · Answer

If you are not confident in all the contract clauses, what they mean and what they imply, you have a couple of options.  Contact your own attorney, or your own agent and pay them directly.  The agent won't charge you a full 3% at this stage....unless they've actively been showing you multiple properties anyway.  You'll still need to deal with the seller's attorney, so you might as well contact them now, and let them know how you'll handle it.

Kristi Harmon · Answer

You have valid comments and I would like to include him in everything, but i have few concerns. I am very eager and ready to buy something right now before fall. I'm new in all this, he is my first agent who was referred to me by my lender and i might be just overly eager. I know I just have to give him a chance. But I had agents who were sending me CMA's, when I told them that I was considering a different agent and they said that they would work out a better fee than 3% when working with sellers that I would bring to them. It took him a week after we 1st met to send me his website info and that was after I asked him to send it to me. He is either just so busy or has a slower pace or doesn't feel the urgency I feel.

With this particular deal I already offered $15,000 less than what they were asking, which I probably will not even get, because houses like this will go for their asking prices ($269,900 is what they listed in their ad: 4 beds/3 baths, unfinished basement 2,400sqft, in a nice neighbourhood). Paying ~$8000 more to the seller or to the agent, will make this deal less attractive and will eat up a good chunk of my cash.

I just don't know what is the ethical or proper way to do those deals. I hear people on podcasts as well, how some of the deals are brought in by their agents and others found in other ways. Do they bring all the deals still to their agents then? I'm not going to stop with doing just 1-2 deals right now--I'm hoping to buy several properties and If couple of them are not gone through an agent, will that put a black mark on me and make him lose his trust in me?! I almost feel like, maybe that will make him work harder in finding deals for me, so I don't have a need to start looking by myself.

Kristi Harmon · Answer

Thank you Becca and Wayne for your suggestions! It doesn't take a brain surgeon to fill in the blanks in the REPC, but I wasn't sure if I needed a licence to do it myself. Learning new things every day that will hopefully help me out when hunting those properties!

Kristi Harmon · Answer

Thank you, I will find an attorney as well just in case. My agent is not very aggressive about finding deals--maybe i'm impatient and the market in Utah is just crazy. I've had him for a month and we have looked at maximum 10 houses with him. All the good properties that are in a nice price range get taken so fast (they come online and next day they are under contract already)--I feel i'm so behind in this real estate game. So, i started looking for houses that are sold by owners as well. We sent 2 offer letters today to the properties that I found myself. One was at first sold by an owner, but then the owner decided to involve an agent, but good thing is that it hasn't been posted on MLS yet. The other one was under contract, but I found out that the buyer had financial difficulties and the house was going to be available again.

I actually asked my agent, if I would bring him a house that is sold by an owner, what his fee would be. He said 3%, but he was confident that the seller would pay it.

Do i need an agent or lawyer to draft an offer letter?

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