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Buying without an agent
@Maurice Daniels If it is an MLS listed property, there really is no benefit to buying without an agent. The percentage of the sale the homeowner is paying is not going to change whether you have an agent or not, so you might as well just use an agent.
thank you
#2 Contractors Contributor
- Severna Park, MD
Originally posted by @Maurice Daniels:
What terms can I negotiate for my benefit when buying property without an agent?
And if its a by owner , the terms are what ever the 2 parties agree to
Let me first say I believe there are many situations where an agent can add a lot of value. Some of my best friends are agents... lol
That being said, you can sometimes get a better deal by not working with a buyer's agent. Some listing agents are greedy and don't always operate in the best interest of the clients. Simply put, they would rather accept your lowball offer than split the commission with another agent since that usually means more money in their pocket. I know this from personal experience.
When I first started looking for investment property in 2009, I spent the first six months working with an agent. I was in the market for multi-family foreclosures and it was a very competitive situation, with multiple offers on every deal. I literally submitted offers on dozens of properties, all of them which were rejected. It just so happened my agent had a scheduled vacation about six months into the process and told me to continue looking on my own. So I did. I found a property I liked, contacted the listing agent on my own, and BAM, offer accepted. This was not a multiple offer situation so I chalked it up to coincidence at the time. I found another property, contacted the listing agent directly and submitted a lowball offer that was again accepted. That property had multiple offers, and mine was the lowest at $207k (all cash), the next highest was $225k (all cash), and there were several others (with financing contingencies) up to $250k. I make a point to write a really nice letter to the seller when I submit a offer so its possible that was a factor, but I suspect it had more to do with the listing agent not wanting to split the commission. I purchased another multi-family house six months later... same approach, same result. The agent who sold me the last house was the buyer's agent for one the rejected offers. He threatened to file a complaint against the listing agent since my offer was $30k lower than his client's offer. I told him he was a hypocrite and that was the last of it.
The moral of the story is that the agent's commission matters. If you are not already working with a agent it might make sense to contact the listing agent directly. I see only upside, and do downside to this approach. This is just my perspective from my limited experience. Agents feel free to chime-in.
One of the pros is that you actually get to talk and deal with the seller and you get the whole story. I prefer not to work with an agent bc they can advise them not to take an offer even though the seller would take your offer and plus right off of the bat you can tell them if you are going to list it let me know and I will reduce the 6 percent you are going to pay to an agent
As a seller my last house I sold I had an agent and it got tied up with a buyer for over 3 months and then later I learned that another investor wanted to put a back up offer on it and she would not take the back up offer.
I just like dealing with people face to face.
my brother in law sold his lakehouse without an agent to a buyer without an agent. She thought she was so smart because they saved 12 grand in commissions. The problem was, my brother in law is in sales and is a good negotiator. Without an agent, she paid top dollar. She didn't realize he had accepted an offer for 15 grand less a few weeks earlier, but the deal feel through. So it was penny wise and dollar stupid.
When buying without an agent, you can write an addendum to the contract stating that the listing agent agrees to only accept half the commission (basically what they would get if the buyer had an agent). This will increase the amount the seller keeps and make your offer look stronger. I did this before getting my real estate license and didn't have any issues. The agent is required to show all offers to the seller, so if you feel something fishy is going on make sure to ask the listing agent to have the seller sign the contract whether they accept or reject the offer. This way you are assured that the seller saw your offer. If the listing agent refuses to have seller sign, you can report him/her to your local real estate board.
I know this question could be old, but still: in 2014 i bought 7 properties, and ALL of them without buy side agent. Main point when you do that: the seller's agent will get all the commission if he/she sells the property to you and not to a guy with the agent. Now, here is my EXPERIENCE.
- In three of the cases there were multiple bids, but i got the properties because the agents wanted me to get the properties. They did not allow for the properties to go to the second rounds and make sure the sellers went with me. I knew what to bid and topped the second bidders by just nominal amounts. Conclusion: good deal for me.
- in two properties where there were no multiple bids i got credits from the agents that were less than 3% that they would have given to the buyer's agent, but more than nothing. We are talking about close to 1%. They were not obligated to do that, but I negotiated.
- In two other properties i took my time closing the deal while the agents pacified the sellers. We are talking they keeping properties off the market for months. Again: good for me.
I am not passing judgment on the whole profession, just letting you know that the compensation structure is bad for the seller, so you as a buyer can take an advantage.
My advice: If you are serious about investing and buying real estate you should do it without buying agent. You have to know the market, location and property anyway. Agent will not help you. you have to learn now to negotiate. You have to do your homework. Ditch the agent. As a matter of fact i was so outraged by the conflict of interest on part of the listing agent, that i started service to help people to sell without an agent. FSBO on steroids: i am trying to create a marketplace where people would find independent vendors who would help them sell properties. One day i will be looking toward selling my properties, and i do not want to be screwed by listing agents in a way agents i worked with screwed my sellers.
My husband and I are new investor, we had properties bought through an agent. It is useful because they can look it up the comps but it is disturbing if you can feel the intimidation from them, so they only want you to closed the sales without helping for your best interest. So I am planning to buy our next property without an agent. Any tip for negotiation? Thank you.
In terms of the price, you can expect that the listing agent is paying at least 2.5% to a buyers agent from the agreed set commission in the listing agreement. If you are not working with a buyers broker, you could reduce your offer by this 2.5% that they will be saving, or whatever you can negotiate with the listing agent.