Off Market Duplex - to buy with an agent or without?

Question

Hi Everyone! Just wanted to hear your thoughts and advice for those who have bought off market properties both with and / or without a real estate agent. So we got in touch with the property owner (via mail) of duplex as we are looking for an owner occupied multifamily. She texted just after Christmas and asked us to get in touch her agent (sellers agent) to coordinate a showing. The sellers agent will show us the property. We got thinking if we should / must get a buyers agent for us to help with this transaction or is this optional?

If we don't have a buyers agent representation, wondering what are the things to look out for and make sure to ask the seller / let them do if we proceed with our due diligence / close on the property. This is in the State of Massachusetts if that matters.

Any input, opinions, or recommendations are welcome! Thank you guys! : )

Account Closed · Answer

Do not let the seller's agent represent you. It is often called "dual agency" and there is no way they can be impartial in the transaction. By law, they represent the seller.

And, If the seller has an agent, it isn't really "off market".

Off Market means there is no agent involved and it isn't on the MLS. Since the fee for both agents comes out of the seller's price, it is to your advantage to have an agent that gets paid out of the sale, not out of your pocket, to represent you, but it is optional. If the seller will reduce their sale price by 3%, the typical buyer agent fee, then you are on your own to negotiate. The paperwork is the same, escrow is the same and the transaction is the same. It's just that the seller's agent will take care of all of the details.

Make sure the purchase & sale agreement includes a clause that says "purchase contingent on inspection approval by buyer" and "purchase contingent on buyer getting satisfactory financing". That means if you do not approve of the inspection or can't get financing, you get your earnest money back and the deal is off.

Order an inspection and if everything checks out, buy the house.

Erick Sembrano · Answer

Thank you for the input Account Closed. What you said makes sense and it will be to my advantage and safety to have a buyers agent on my side. You made really good points and although seems obvious, I needed to hear it from someone else to tell me about those things. I appreciate your reply! Hope you are well and starting off to a good week!

Jonathan Small · Answer

@Erick Sembrano  Hello Erick.  Congratulations on finding a deal using mailings.  As a buyer I recommend you get an agent.  It does not cost you anything.  The fee that your agent gets is paid by the seller.  This allows you to get expert advice for free.  This also allows you to develop a relationship with an agent in your investing area.  Are you going to use a property manager to manage your investment?  If so, consider using a realtor that works with your property manager.  This has worked well for me since I am a long distance investor.  When I close on a property my agent and property manager have had multiple conversations.  They also coordinate getting the keys and existing leasing information from the seller.  PM me if you need any help.  Thank you

John Mocker · Answer

Erick

I would recommend getting an agent.  One with knowledge of the local area/market may be even more valuable.   They may be able to point out issues for that property (zoning issues on a rebuild, quality of local schools, encroaching commercial development, etc.) that impact the long term value.

I would also recommend running the property by an independent Insurance agent to see if there are any issues that will impact the insurability of the house (knob & tube wires, fuses, age of roof, in ground tank, tenant dog breed, pool, etc.).  That way you can avoid a problem or uses it as a negotiation point.

Joshua Janus · Answer

I would definitely advise going with an agent if this is one of your first few deals.

Douglas Snook · Answer

@Erick Sembrano

If you are using any lender, in MA they will have an attorney that will close the loan (just one of the MA quirks) That attorney will review the title and let both parties know if there are any issues, that attorney will conduct the closing, make sure everything is recorded, issue title etc.

YOUR attorney will primarily negotiate the P&S and advise you.

Can they be the same attorney, yes. If you had an attorney that you worked with in MA you can request that the conduct the closing. Meaning they would also represent the lander (subject to them meeting the lenders qualification such as having malpractice insurance and being a title agent) (just another quirk in MA)

In fact you do not necessarily need an agent. If you found the deal you can deal directly with the seller or the seller's agent or your attorney can. But since this is your first deal (or if you already got one) then just go with it. I am not saying not to work with agents (the agent may be able to list the apartment for you or have an inside edge on who is a good contractor or electrician etc) In the future, if you find an off market deal, go straight to your attorney.

Michael Noto · Answer

If you don't know if you should get an agent, you should probably get one.

Erick Sembrano · Answer

@Jonathan Greene That's a good point, yes they do have an agent and even though it's an expired listing, we were told they are planning to list it again this January. I guess we just got in early and got the first chance to see it and make an offer before anyone else. Thank you!

Jason Regan · Answer

@Erick Sembrano I agree that you should not let the seller agent represent you unless you are very confident that you know what you are doing.  They cannot advise you on anything if this happens.  The Seller agent could Dual agent as Account Closed said.  I am an agent 2nd, investor 1st.  I have done both sides of a transaction as an agent and told the buyer I represent the seller.  This means I need to get the best offer for the seller and my goal is to get that out of you.  With my investor hat on I don't mind letting the seller agent represent if it gets me a better deal.  That is only because I am confident in my ability to assess the home and negotiate.  I would not recommend that someone newer grab a buyer agent to protect yourself.  I am saying this as an investor with no sales pitch as I don't represent buyers in the Boston area.

Erick Sembrano · Answer

Thank you @Jonathan Small for the insights and I should keep it in mind. Good though about having the PM and Realtor having a relationship.