New to Real Estate · Sacramento, CA · Member since 2015 · 104 posts · 33 votes
It seems like most of the deals I read about are from direct marketing, and are purchased without an agent. I'm ready and willing to start marketing (have my letter written and everything), but how do the logistics of the sale come together? Does a title company put together that massive packet of documents? Is it the lender? How can I get more info about everything that happens after the seller and I agree upon a price (should I be so fortunate) and an inspector checks the place out for me?
Are most of the people sharing these deal stories about buying outside of the MLS (with or without a wholesaler) also agents themselves?
Also, yesterday an agent said that he wouldn't recommend us (even me *with* an agent!) pursuing FSBOs because those aren't protected by the same disclosure requirements, so I might end up with an undisclosed problem. Does this seem like a realistic concern to heed?
Carrie, I haven't read everyone else's answers yet and full-disclosure, I have not yet pursued my first investment property - still learning that piece. But wanted to answer some of your questions from the perspective of a Realtor from another state (I have no stake in whether you use a Realtor or not).
1. "How do the logistics of the sale come together?" Do you mean negotiating terms, making sure all contract docs are executed properly, not missing any deadlines, liaising with title, lending, inspectors, etc? Welp, you just described a Realtor.
2. "Does the title company put together the massive packet of documents?" There are documents galore throughout the whole process. If you mean closing documents, then yes, that's done at a title company in my state (TX) and California (where you live).
3. "(a) How can I get more info about everything that happens after the seller and I agree upon a price and (b) an inspector checks the place out for me?" (a) if you reach a verbal agreement, you want this in written form of a contract with all of the appropriate addenda, if required. (b) Speaking for my state, the first several days after a contract is signed by all parties, we enter into an 'option period'. This is when buyers will bring in inspectors and get quotes for any work needed. They can terminate for any reason and receive a full refund of earnest money before the end of this option period. There are a lot of moving parts throughout this process and unless you have a strong mentor walking you through step by step, you're going to want a Realtor.
4. "(Avoid) FSBOs because those aren't protected by the same disclosure requirements, so I might end up with an undisclosed problem. Does this seem like a realistic concern to heed?" Perhaps, but between your inspectors and contractors that you'll bring out during the option period and asking your insurance provider for a C.L.U.E. report (a "carfax" kind of report for real property) ... your risk is no higher than if you're trusting sellers to disclose honestly and accurately on a Seller's Disclosure. A good rule of thumb is always "trust but verify".
On Realtor fees and "agency". This varies somewhat state to state but in Texas, all Realtors represent the seller unless a representation agreement exists between a Realtor and buyer. So if a non-licensed person goes forward without a Realtor representing them, they don't have the same privileges to information as someone who is represented. Be sure to use a Realtor familiar with that specific neighborhood to get the full benefit of this rule. Secondly, Realtor fees are "paid by the seller" ... I say that in air quotes because this becomes a bit more grey in the "investor" realm.
Most investor "wolf packs" recommend working with a Realtor as part of your team. At the very least, get a good mentor to help you until you really know the ropes and good luck!
Okay, this is my first post and I just read that you can't ask for a mentor. When I recommend you find a mentor ... you may already have one or more people within your local investor meet ups. Meet people, make friends and remember there's no such thing as a free lunch so make it worth their while to invest their time with you!
Carrie, I haven't read everyone else's answers yet and full-disclosure, I have not yet pursued my first investment property - still learning that piece. But wanted to answer some of your questions from the perspective of a Realtor from another state (I have no stake in whether you use a Realtor or not).
1. "How do the logistics of the sale come together?" Do you mean negotiating terms, making sure all contract docs are executed properly, not missing any deadlines, liaising with title, lending, inspectors, etc? Welp, you just described a Realtor.
2. "Does the title company put together the massive packet of documents?" There are documents galore throughout the whole process. If you mean closing documents, then yes, that's done at a title company in my state (TX) and California (where you live).
3. "(a) How can I get more info about everything that happens after the seller and I agree upon a price and (b) an inspector checks the place out for me?" (a) if you reach a verbal agreement, you want this in written form of a contract with all of the appropriate addenda, if required. (b) Speaking for my state, the first several days after a contract is signed by all parties, we enter into an 'option period'. This is when buyers will bring in inspectors and get quotes for any work needed. They can terminate for any reason and receive a full refund of earnest money before the end of this option period. There are a lot of moving parts throughout this process and unless you have a strong mentor walking you through step by step, you're going to want a Realtor.
4. "(Avoid) FSBOs because those aren't protected by the same disclosure requirements, so I might end up with an undisclosed problem. Does this seem like a realistic concern to heed?" Perhaps, but between your inspectors and contractors that you'll bring out during the option period and asking your insurance provider for a C.L.U.E. report (a "carfax" kind of report for real property) ... your risk is no higher than if you're trusting sellers to disclose honestly and accurately on a Seller's Disclosure. A good rule of thumb is always "trust but verify".
On Realtor fees and "agency". This varies somewhat state to state but in Texas, all Realtors represent the seller unless a representation agreement exists between a Realtor and buyer. So if a non-licensed person goes forward without a Realtor representing them, they don't have the same privileges to information as someone who is represented. Be sure to use a Realtor familiar with that specific neighborhood to get the full benefit of this rule. Secondly, Realtor fees are "paid by the seller" ... I say that in air quotes because this becomes a bit more grey in the "investor" realm.
Most investor "wolf packs" recommend working with a Realtor as part of your team. At the very least, get a good mentor to help you until you really know the ropes and good luck!
Okay, this is my first post and I just read that you can't ask for a mentor. When I recommend you find a mentor ... you may already have one or more people within your local investor meet ups. Meet people, make friends and remember there's no such thing as a free lunch so make it worth their while to invest their time with you!
New to Real Estate · Sacramento, CA · Member since 2015 · 104 posts · 33 votes
7y
Thank you, John and Traci! I'll check out that website, John. Traci, thank you for the detailed answers.
I had some technical difficulties when posting and accidentally ended up posting this twice, so for anyone reading this with the same question, you may also want to read the answers here. As I said over there:
"It sounds like I was making it a bit more complicated than I needed to. I've been through a few personal house purchases, so I have that experience (and the standard CAR form) to draw on for the purchase and sales agreement, working with the mortgage broker, and inspections. And then it sounds like the title company and bank would put together that 500-page set of papers I signed at closing. I'd consult a lawyer as well." And Traci, thanks for the tip about the CLUE report. I appreciate your points about the value of hiring a realtor, as well.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
Why do you even need a realtor ? It isn’t that difficult to write up a sellers agreement give a offer cut a earnest check and get the ball moving . Heck I’ve done it in the hood of a junk car in the sellers front yard before .in My experience a realtor offers very little value when it comes to investing . That being said some states are very specific on how this is orchestrated and if you must use a closing attorney and so fourth
Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
7y
@Carrie K.
These are great questions to ask your attorney. Plus, you can ask your attorney to write you up a contract. If your lawyer is smart and practices Real Estate law then you’re better protected. They will make sure then proper disclosures are in place or at least make you aware of them.
From experience, always get an inspection. Especially if it’s an off market property. It’s my biggest lesson I’ve learned so far.
These are great questions to ask your attorney. Plus, you can ask your attorney to write you up a contract. If your lawyer is smart and practices Real Estate law then you’re better protected. They will make sure then proper disclosures are in place or at least make you aware of them.
From experience, always get an inspection. Especially if it’s an off market property. It’s my biggest lesson I’ve learned so far.
Good point on just asking the lawyer! And yes, I can't see myself ever skipping an inspection. I like to get all the inspections: pest and building, and also a roof inspection, a sewer line inspection, and an HVAC inspection. I'm happy to pay a hundred bucks now to know what might cost tens of thousands later. Thanks!