How to Make an Offer On a SFH Without An Agent

Question

Hi all,

I'm trying to buy my second property without an agent because I want the seller to pay closing costs in lieu of the buyer agent's commission. I intend to secure a RE attorney to draw up the paperwork once I'm under contract, but I don't know how to do the first step. Can anyone tell or show me examples of offers for a SFH? I've found contracts to buy and purchase & sales agreements --- is this what you use initially or after the seller accepts? How complex are these initial offers?

James Carlson · Answer

@Julie Bellville

All state-approved contracts used by Colorado real estate agents are available to the public here at the Colorado Real Estate Commission's site. (The "Contract to Buy and Sell, Residential" is the typical offer used by us.)

That said, I would gently push back on your premise. Would the listing agent give you the "buyer's agent" portion? They're not under any contractual obligation to do so, but you can ask. Even if they give a little, it's likely to be a small portion. I've worked across from an unrepresented buyer a few times in Denver. And it's more work for me. Why? Because inevitably the unrepresented buyer is going to ask that listing agent for help understanding the process just like you're doing here in this forum.

Also, I'm sure you as an attorney would not recommend clients go pro se in court proceedings. (Or worse, that they use Legal Zoom to making filings.) Same for real estate. You obviously know how to read a contract as an attorney, but that's not the same as knowing all the tools available to seasoned agents in Denver during the initial price negotiations or during the inspection process.

In the end, you're likely to get only a little bit of the commission credited back to you, if any at all, and then the question is is that small savings worth not having an expert by your side.

Whatever you decide, I wish you luck with the process. It's always exciting to buy a new property. Cheers!

Julie Bellville · Answer

I'm enrolled in the classes as we speak. I'm an attorney, so I only have to do 12 education hours before sitting for the exam. :)

Nicole Heasley Beitenman · Answer

Your best bet is to stay away from the MLS. The seller will already have a contract with an agent, so you coming in without an agent doesn't save them any money. It just gives the full commission to the seller's agent.

Jacob Lapp · Answer

@Julie Bellville

Get your RE license. Even if you only do one deal a year it is worth the cost!

Lynne Burke · Answer

Hi Julie,

The commission is actually 100% the listing agents' commission and they only agree to split it with another agent who brings his or her buyer for their listed property (otherwise, it would be a very bad system). If you found the property via marketing in one form or another, the listing agent did their job and earned 100% of the commission. There is no separate commission that is paid to the buyer's agent; it's simply a cooperative effort between agents at times. But their is no dedicated buyer's agent commission.

One thing you could do to save the sellers some commission and save yourself some money is to do what realtors do - start calling properties that don't have listing agreements attached and save them the 5% that way.

Zachary Inman · Answer

It depends whether you're finding a house listed on the MLS (which is around 90% of all listings) or finding an off-market deal. The off-market deal is much simpler, you just go to your attorney (or an agent) and have them do the paperwork for a flat fee. If it's listed on the MLS, then it's going to be more of an uphill battle.

The listing agent doesn't have to give you the other side of the commission. They've already signed a listing contract. The seller could theoretically lower the purchase price and commission to reflect you "not using an agent" and cover closing costs, but that would be quite the hard sell.From an ex-agent with currently no skin currently in the broker side, buyers who put in offers like this are often seen by listing agents as being way more work than they're worth. The listing agent is going to end up doing a lot of the transactional work anyway, and they would typically steer the seller towards an offer that is seen as "less risky" to close. Maybe you'd have a shot in a buyers market, but in today's seller's market, they have a lot of other attractive offers to choose from.

Bruce Lynn · Answer

Very nice thought, but the trick is...it aint that easy.   The commission is typically set when the agent signs the listing paperwork with the seller.

So the commission and cost to the seller is likely the same if you have your own agent or choose to go unrepresented.

I've never had a listing agreement where it says, if the buyer comes unrepresented, the commission is less.  It just means we're getting the full commission for working both sides....and believe me there is more work and risk when a buyer comes unrepresented and wants to try things like this.

I don't work in the Denver market, but my thought would be go get a great buyer's agent.   Most markets are extremely competitive now.  I'll venture to say that most real estate attorneys are not writing offers for buyers every day and probably just don't know what makes a competitive offer in this market.  So my thought is if you want to try something like this, you will be at a significant disadvantage to other buyers who are competition for the same property.  For example in my market....DFW I probably haven't seen an offer in 3-5 years that had the seller paying for buyer closing costs.  If anything it is the other way around now to be competitive....many of the items that were pretty standard for seller's to pay for in the past are now picked up by the buyer.  Things like title insurance, surveys, property taxes, lease backs, home warranties, and any other expense.

Another issue is timing....my guess is in Denver homes move pretty fast....that means they go on the market Wed/Thur and deadline for offers is Sunday night/Monday morning.   So good luck finding a really good board certified real estate attorney who is going to write you an offer on a Saturday afternoon.   Also how much does that cost for them to write an offer?   If you're waiting for the to draft on Monday and review with you Tuesday, often you will be too late....and you may have to write 10 offers to get one house in a hot Denver market...so if they're charging you $500 per offer, that might be $5000 in legal fees before you get one to stick.   Don't use just any attorney, especially a cheap one.  They'll probably cause you more trouble than you save.  Do your best to use a board certified real estate attorney if you want to try this.  They're more likely to be familiar with the contracts, and if you get luck the market and may more often see contracts.   Be sure to ask them how many residential contracts they have written in the last year.   I would argue you want someone who does this a LOT, not just here and there, 2-3 a year.

A great buyers agent will help guide you on what you need to do to be competitive with your offers.   I can tell you that since I really know nothing about Denver, if I were moving there, I would get myself a great buyer's agent.   Often it is not a cost, but a benefit to you.  They may save you way more money than you could ever do by yourself.   For example I work with the best lenders.....a buyer I'm working with today will probably save $25,000  over 4 years if he uses my lender vs the one he came to me with.

Andrew Lewis · Answer

@Julie Bellville

This is the best move for you! I leverage my commission on every property I purchase :-)

Michael Dumler · Answer

@Julie Bellville, correct me if I'm wrong, but your steps are backward. You need an RE attorney to draw up the purchase and sale agreement to submit an offer, hence, many buyers use a real estate agent to issue state-certified PSA forms, otherwise, you're paying out-of-pocket attorney fees for an offer that may not even be accepted. Furthermore, the listing agent is going to want to see an offer presented on a state-certified form to protect the seller and ensure transparency. This is difficult to go around when it comes to on-market properties. Hope this makes sense!

Caleb Brown · Answer

Are you a licensed agent(so no buyer agent involved) and that's how you are forfeiting the commission?

How to Make an Offer On a SFH Without An Agent

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