Found off market deal with working with realtor. How to proceed?

[Taylor Robertson]

I've been working with an agent for a couple months now in hopes of finding my second deal. He was previously my teacher in high school, so I've had a relationship with him and I've signed a buyer's agreement with him. About a month ago a family member of mine let him know that he was going to sell his dad's house. He just wants to sell the house and use to $ to help his father with health issues, so he's willing to sell for under market value. It's worth about 175k, and he's willing to take 140k for it. The thing is he wants to sell it directly to me (FSBO) without the use of an agent to save on commissions. I'd told my agent this a few weeks ago, and my agent told me technically he is owed a 3% commission but he won't hold that against me since it's a family member and I'm starting out. I want to move forward with the purchase because it is a great deal on paper but I don't want to do my agent dirty either. I'd thought about offering 145k and allowing my agent to take a 3% comission ($4,200), use the $800 on any inspection/closing costs, and the seller walks away with 140k. That would mean the extra 5k would technically come out of my pocket, right?

Does this sound reasonable? I would be financing the property via a bank. Any thoughts would be appreciated! Thanks!

[Jonathan Greene]

Quote from @Taylor Robertson:

I've been working with an agent for a couple months now in hopes of finding my second deal. He was previously my teacher in high school, so I've had a relationship with him and I've signed a buyer's agreement with him. About a month ago a family member of mine let him know that he was going to sell his dad's house. He just wants to sell the house and use to $ to help his father with health issues, so he's willing to sell for under market value. It's worth about 175k, and he's willing to take 140k for it. The thing is he wants to sell it directly to me (FSBO) without the use of an agent to save on commissions. I'd told my agent this a few weeks ago, and my agent told me technically he is owed a 3% commission but he won't hold that against me since it's a family member and I'm starting out. I want to move forward with the purchase because it is a great deal on paper but I don't want to do my agent dirty either. I'd thought about offering 145k and allowing my agent to take a 3% comission ($4,200), use the $800 on any inspection/closing costs, and the seller walks away with 140k. That would mean the extra 5k would technically come out of my pocket, right?

Does this sound reasonable? I would be financing the property via a bank. Any thoughts would be appreciated! Thanks!

Since the agent connected you to the deal, they are entitled to a buyer side commission even if you buy direct. So, to stick to your agreement you should pay them 3 percent of the sales price at closing. If they had not found the deal or participated at all, you would not owe them anything since it was off-market and they didn't play a role.

[Rick Albert]

For starters I think what you are doing is just good business. If you burn your agent now, who knows how the relationship will be later on.

I like the idea of raising the price so all of your closing costs are paid and so is your agent. Then your agent can still work for you on seeing this to the finish line. 

In real estate, it is really about your cash on cash return, so the least amount of money you put into the deal, the better.

What would come out of pocket at that point would be the difference in down payment, which in this price range tends to be limited.

[Taylor Robertson]

Quote from @Jonathan Greene:

Quote from @Taylor Robertson:

I've been working with an agent for a couple months now in hopes of finding my second deal. He was previously my teacher in high school, so I've had a relationship with him and I've signed a buyer's agreement with him. About a month ago a family member of mine let him know that he was going to sell his dad's house. He just wants to sell the house and use to $ to help his father with health issues, so he's willing to sell for under market value. It's worth about 175k, and he's willing to take 140k for it. The thing is he wants to sell it directly to me (FSBO) without the use of an agent to save on commissions. I'd told my agent this a few weeks ago, and my agent told me technically he is owed a 3% commission but he won't hold that against me since it's a family member and I'm starting out. I want to move forward with the purchase because it is a great deal on paper but I don't want to do my agent dirty either. I'd thought about offering 145k and allowing my agent to take a 3% comission ($4,200), use the $800 on any inspection/closing costs, and the seller walks away with 140k. That would mean the extra 5k would technically come out of my pocket, right?

Does this sound reasonable? I would be financing the property via a bank. Any thoughts would be appreciated! Thanks!

Since the agent connected you to the deal, they are entitled to a buyer side commission even if you buy direct. So, to stick to your agreement you should pay them 3 percent of the sales price at closing. If they had not found the deal or participated at all, you would not owe them anything since it was off-market and they didn't play a role.

 My apologies, I think I mistyped. My agent DID NOT connect me to this deal. A family member contacted me directly, so my agent hasn't been involved at all with this deal so far.

[Jonathan Greene]

Quote from @Taylor Robertson:

Quote from @Jonathan Greene:

Quote from @Taylor Robertson:

I've been working with an agent for a couple months now in hopes of finding my second deal. He was previously my teacher in high school, so I've had a relationship with him and I've signed a buyer's agreement with him. About a month ago a family member of mine let him know that he was going to sell his dad's house. He just wants to sell the house and use to $ to help his father with health issues, so he's willing to sell for under market value. It's worth about 175k, and he's willing to take 140k for it. The thing is he wants to sell it directly to me (FSBO) without the use of an agent to save on commissions. I'd told my agent this a few weeks ago, and my agent told me technically he is owed a 3% commission but he won't hold that against me since it's a family member and I'm starting out. I want to move forward with the purchase because it is a great deal on paper but I don't want to do my agent dirty either. I'd thought about offering 145k and allowing my agent to take a 3% comission ($4,200), use the $800 on any inspection/closing costs, and the seller walks away with 140k. That would mean the extra 5k would technically come out of my pocket, right?

Does this sound reasonable? I would be financing the property via a bank. Any thoughts would be appreciated! Thanks!

Since the agent connected you to the deal, they are entitled to a buyer side commission even if you buy direct. So, to stick to your agreement you should pay them 3 percent of the sales price at closing. If they had not found the deal or participated at all, you would not owe them anything since it was off-market and they didn't play a role.

 My apologies, I think I mistyped. My agent DID NOT connect me to this deal. A family member contacted me directly, so my agent hasn't been involved at all with this deal so far.

In that case, the only reason that you would pay him the 3 percent is you wanted the assistance with the whole process from negotiation, home inspection, negotiating any repairs, mortgage and closing and title referrals. So, he could still be of value, especially if you are new, but based on the deal coming outside of him, the agreement is not enforceable.

[Naveen Desai]

Quote from @Taylor Robertson:

I've been working with an agent for a couple months now in hopes of finding my second deal. He was previously my teacher in high school, so I've had a relationship with him and I've signed a buyer's agreement with him. About a month ago a family member of mine let him know that he was going to sell his dad's house. He just wants to sell the house and use to $ to help his father with health issues, so he's willing to sell for under market value. It's worth about 175k, and he's willing to take 140k for it. The thing is he wants to sell it directly to me (FSBO) without the use of an agent to save on commissions. I'd told my agent this a few weeks ago, and my agent told me technically he is owed a 3% commission but he won't hold that against me since it's a family member and I'm starting out. I want to move forward with the purchase because it is a great deal on paper but I don't want to do my agent dirty either. I'd thought about offering 145k and allowing my agent to take a 3% comission ($4,200), use the $800 on any inspection/closing costs, and the seller walks away with 140k. That would mean the extra 5k would technically come out of my pocket, right?

Does this sound reasonable? I would be financing the property via a bank. Any thoughts would be appreciated! Thanks!

 Hello Taylor,  

         I have been in a situation and done deals where a friend is a realtor and although I found the deal, had to go through my friend as I already worked out an arrangement. 

This is how I handled. Given 3% at time of close is paying interest to bank on that commission money. Instead spoke to my friend that I will pay commission to my realtor-friend, on 16 installments and no interest on it. That way I atleast saved interest payment on commission to be paid for which minimal service was offered. That way I did right by my realtor-friend and also did not pay interest at mortgage rate.  I think it is fair.. Think about it. Thanks.