First time buyer of 4 plex, should I pay a buyers agent?

Question

Would like to make an offer on a 4 plex I plan to occupy.  The building is for sale by owner, and owner has stated he would not be willing to pay my buyers agent commission.  As a first time home buyer I'm not sure if I should  just represent myself on the transaction or should I pay my agent's commission out of pocket?  Any advice on this would be appreciated.

Roy N. · Answer

@John Chea

If you are completely green to evaluating and purchasing real estate, I would definitely find someone with knowledge and experience whom you trust to assist/coach you with evaluating and potentially negotiating this deal.

This person could be another, experienced investor, a contractor, a real estate agent, or a combination of different folks providing those skill sets.

An experienced investor will be able to assist you in analysing the numbers and determining if the property really is a deal worth pursuing  - separate the facts from the vendors rosy words and claims to sell the property.

If you bring in a contractor to walk the property, you should plan to remunerate them for their time (unless you have a long standing relationship and they know there will be work for them).

If you decide to use a buyers agent, ask other investors in the area for references and then see if this agent will assist you for a flat fee.  Another advantage of using an agent is there may be a canned the state/local real estate board Agreement of Purchase and Sale you can use rather than paying an attorney to draft one.  The transaction will also be covered by the agents operating insurance (to a degree) if there are errors or omissions which should have been caught.

I would also include both a financing clause and an inspection clause in any resulting offer and hire a building inspector to spend a day giving you a thorough examination of the property.

Unfortunately, I cannot be of specific assistance in your situation - never operated in Michigan.  You are across the state from @Jeff Rabinowitz, but he may know folks in your area and certainly could contribute particulars about purchasing real estate in Michigan.

George P. · Answer

i agree with roy. however, run the numbers 10 times and account for any crazy things that pop up. if that makes sense, run it by us and let's see what we think.

pay a contractor $200 to evaluate the property and tell you what HAS to be changed/updated. not "what you should change".

Middy Matthews · Answer

Oh boy.  As a Realtor I can tell you the contract in one thing, with contingencies so you're not locked into a bad sale.  Your INSPECTOR will cost about 350 and should tell you both, what has to change and what is in need of repair.  You'll want someone advocating on your behalf.  It's unfair to pay a realtor 3% and the seller is probably trying to make the most money possible (would have made more selling through a realtor) and won't pay for the work your realtor will have to do for both sides.  That being said, don't worry about the realtor here... see if you can get HALF of that money from the seller.  1.5% of that and then tell him you're using a Realtor as a "transaction coordinator" so all the paperwork and title work gets done correctly.  He might be willing to pitch in for that.  Sometimes they learn that Realtor is a bad word.  Work around it.  I know, I'm a realtor and there's a lot of work to be done to get the sale complete.  I also know there are a lot of terrible people in my business that I would rather not be working with either.

Dustin Beam · Answer

I'm currently new to this and am also trying to buy some FSBO multi family buildings. Fingers crossed, I hope to go under contract tomorrow (but there are still things in the way). Not to hijack, only as a background to show I'm in a similar situation as you only a little farther along.

I can say that the most stressful thing to try an iron out so far is all the paperwork. Who does what? What language is needed, etc, etc, etc.

OTOH, paying even 1% would seem out of hand IMO for $500k worth of real estate (I might feel differently if I miss out on the purchase because of paperwork though). Not sure what your purchase price is, but if you could get it done for a thousand or two, it might be worth it. Also, you might be able to get the seller to pay for it by paying that same amount more for the purchase. It shouldn't affect your monthly payment by much at all.

Josh Smith · Answer

If you are working with an agent then speak to them about it, more than likely out of pocket, maybe they will cut a deal, someone said up your price with their commission, not sure why that was said. If the seller is not paying it, then they would just get that money. I would have it inspected and just open escrow with a title company if you really want it. Real estate is very simple and just clouded in my opinion. Seller wants to sell, you want to buy, seller is not using realtor and letting you know they are not paying your realtor ( I don't know if you have a realtor not). If you want a realtor or have one then yes see what they will negotiate as you have to pay them not seller (because seller all ready told you so). If it is just you, get it under contract with an inspection period, open escrow and have it inspected and if all is good to you and seller go through with closing.

David Barr · Answer

I'm not sure why as a buyer, you'd pay the buyer's agent compensation.  That would typically be paid for by the seller.  If you think that your offer will somehow get accepted by putting more net into the seller's pocket, it may, but you do need someone to represent you and keep the contingency dates in line and enforceable.

Peter MacKercher · Answer

@John Chea I'll chime in to ape what everyone else has said: real estate laws and licenses exist for a reason. It's not a simple, straightforward thing to transact and there are a lot of ways things can get off the rails. Like you've already been advised, consult a real estate attorney to be sure everything is properly and transacted at the least.

Rob Joon · Answer

If you are working with an agent, and that agent is part of your team (and has done a lot of legwork for you), then for sure use the agent for his/her knowledge, contacts, advice, etc.  I can recommend a real estate attorney if you would rather go that direction.

Good luck!

Rob

Russell Brazil · Answer

You might not need the services of an agent in this transaction....however I might get a real estate attorney to coordinate the details of the transaction as best you can.

Steve Vaughan · Answer

Completely agree with @Roy N.  Pay for quality assistance of some type if you are new. Could be a few different folks with different skill sets.  The price of this will be much lower than the cost of mistakes!

First time buyer of 4 plex, should I pay a buyers agent?

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