How to close off market deals without realtor

Question

Hi BP - I'm starting a direct mail campaign and want to know what are the exact next steps once a seller agrees to sell? Should I get a contract drafted by an attorney? Should I work directly with a title company? I would like to have provisions/contingency with the seller that allows me to pull out of the deal or renegotiate price if an inspection goes wrong or if I have issues getting financing. I will be buying 1-4 family homes using hard money lenders, these will be buy and hold BRRRRs.

Thank you very much!

Scott E. · Answer

Any time I buy a deal without a real estate agent I just use a standard purchase contract and work with my local preferred title company to help us navigate the deal and all of the paperwork. I've done this many times and admittedly am still a bit nervous when a realtor is not involved, but you have to have confidence in the title company ensuring that ownership changes hands appropriately and that everybody is adhering to the terms of the contract. Our purchase contracts out here in AZ give you an out during your 10 day inspection window (although I generally shorten that window to ~5 days). The financing contingency is on a separate line, but that also offers protection if needed.

Matt M. · Answer

I bought two off market in 2019. Drew up the 3/4 page contract myself from forms I found using a google search. Mine was as-is properties. We both signed and I handed it off to the title/abstract company and they did the rest. Super easy!

Natalie Schanne · Answer

@Ekrem Bermek - seller hasn’t agreed to sell until they sign your purchase and sale agreement. Then you submit your earnest money and agreement to a title company and they make sure the seller has the right to sell, get the lien payoffs, and you bring the funding at closing to buy the house. If you change your mind during inspections, you notify both the seller and the title company and dissolve the contract. The seller signs a earnest money release and you get your money back. My non realtor agreement is only 2-3 pages. Simple is good. If they want top dollar, I would offer a higher price but make sure the agreement says they’re paying their own closing costs. Versus some guru courses say to advertise that you’ll pay all their closing costs, etc. But then you have to offer lower to get the same net price. In New Jersey, they pay about a 2% realty transfer tax when selling. Additionally, if someone is out of state or the property is held by an LLC, an escrow holdback towards taxes owed is held (and some people don’t like that because they want all their money, even if they do owe it to the irs/ state dept of taxation).

Sam Yin · Answer

@Matt M.Ditto. I've done the same. I am guessing it may depend on what state you are from since it appears that every state is a little different when it comes to real estate transactions. I think there are plenty of templates out there. I've done this four times, once I 2018 as a buyer and three in Jan 2022 as a seller. I do it on one page, kept it simple, dropped it off at the local title company and opened escrow. 30 days later, the transactions closed.Hope that helps... or at least give you confidence that it can be done successfully.

Jaron Walling · Answer

@Scott E. How many pages are in your contract? I'm in the process of beefing up my purchase agreement. I paid a real estate lawyer provide one for me but it was over 14 pages long and included numerous sections for commercial, land, and environmental reporting. I've since the contract down to 10 pages and saved my a version to focus on SFH deals. Did your contract evolve over time or do you use the same one for each purchase? I've bought two off market deals thus far but we paid an agent (basically retired) $400 to push paperwork at the closing. These were cash deals. I'd want to use my contract and increase my skills.

Patrick Drury · Answer

@Ekrem BermekI feel like based on your question you should just use an agent or get your license.

Brian Monga · Answer

I am just curious, why not just use a realtor in this case? I see you are in NJ, the seller typically pays the fees. Just my personal opinion, but it is helpful to have a realtor that is a local expert to make sure you are not making any mistakes.As the other posters stated-- have a title company and attorney ready to work with you before you start the campaign. Have your team ready to go so you can close deals quickly.

Joe Norman · Answer

This may be an unpopular opinion, but I think you're putting the cart before the horse. Why waste money and time (both your time and the sellers' time) on a direct mail campaign/lead follow up if you don't know what your next steps are after someone "agrees to sell"? It sounds like you need more tools/systems/knowledge before you put yourself out there as a cash buyer. Here are some suggestions:-Get a purchase contract template, either from another investor, a Realtor, or a lawyer-Figure out your state's title/escrow process and determine which Title Company (or whatever their called in your state) you will use once you have a signed contract-Know who your contractor(s) are going to be so you can call them in for estimates right away-Make sure you know how to comp real estate to determine As-Is market value, After Repair Value, and rent ratesGood luck!

Basit Siddiqi · Answer

States either require a title company or an attorney to transfer real estate from one party to another.Find out what your state is and network with said professional.You don't need an agent to buy / sell real estate. However, hiring one may be helpful, especially if you are new.

Corby Goade · Answer

This isn't the most popular opinion on BP, but there's no reason NOT to use a realtor. Full disclosure, I am licensed and I do these types of deals all of the time with many of my clients. I protect my clients interest in each deal and contract, make sure it's legal and the process goes smoothly and the way they expect. I comp all of their deals on the front end and help strategize exit strategies for them. Sometimes I make good money on a deal, sometimes I don't make anything, every deal is different and I work with my clients as their partner, not their employee. In real estate, everyone you work with is your partner, you should plan on winning together or sharing in the challenges together. Don't be afraid to find and work with people who have experience and skills that you don't have. I've found that working as a realtor with clients who are doing exactly what you describe has created real win/wins for everyone involved.