should I use a real estate agent to buy an off market property?

Question

I am looking to buy a unique property. It is not on market right now. Sellers father has passed and the seller wants to sell the property the father has left. It's unique in the sense that it is in what the city zones as "medium density" residential but the property does not have a house on the property. Just a large garage sits on the lot. I believe I can fill it with cars to store over the winter season which should cover the note, insurance, taxes, etc. And if eventually I could build a multifamily home on the lot then that may make a great opportunity to enter the multifamily world.

A few questions I have are:

1). If the seller doesn't have an agent should I bother using an agent? Or should I just have an attorney write up a contract? And if so do I start with a letter of intent?

2). We are quite far apart on what we value the property at. I am wondering if I should purpose a seller financed deal structure? I doubt the seller needs the money in full right now so maybe it could be the right option for me to pay what I feel is fair and the seller will realize more of the money if we can help avoid the capital gains? How would be a good way to explain how seller financing works? Maybe a short and to the point print out to send the seller home with to review?

3). I also wonder about getting the property appraised to try to get a better idea of what a unique property like that is really worth. Appraisal × .8 = my idea of a reasonably safe offer.

Of course I have many more questions but these are the for-most on my mind.  Basically what is the wisest way to approach this deal.

Any help would be much appreciated. Thanks for reading.

Ben Leybovich · Answer

To answer your questions:

1. No - why do you need an agent? Negotiate your own deal, specifically since you have direct access to seller.

2. What does price have to do with financing, seller or not. The price has to make sense. Seller financing can make a good deal better, but it cannot turn a bad deal into a good one.

3. Why would you think that appraised value has anything to do with what is a good offer? It may, or may not. A good offer is a function of utility, scarcity, business plan, and other things. But, appraised value...?

James Richter · Answer

I contacted three agents I have in my contacts.

#1 is on it and verified if it was just a lot with a garage so I know he's actually looking into it somewhat.

#2 immediately asked if it was for sale. I explained that I was offered the chance to buy it. The next question was if it was on mls. I informed them it was not. The reply I got was "I will have to see it then.  I  get the feeling this person is not interested in putting much effort into my request.

#3 returned a call from the voice mail I left and we are currently playing phone tag. I'm sure we will get in touch soon.

So far I only have one person that may produce some information. This is why I wonder about paying a professional to assess the value of the property.

Just keeping everyone posted in case anyone is keeping tabs on this thread.

Thanks everyone that posted.

Elvis Methoxha · Answer

Hey James,

I'd like to offer my professional opinion, on what I would do in your unique situation.

1) First, I would find myself a good real estate attorney, to help me write up a buyer's contract. Regardless if this deal goes through or not, it is important to have a contract ready for the many more deals that might pop up in the future.

2) I would send a letter of intent, out of courtesy, expressing my interests in a professional manner. In some cases, I may already have a line of connection and in that case, a phone call is just as good as a letter, if not better.

3) Being an agent myself, I would always recommend to use an agent when it comes to listed properties. I always want someone watching out for my best interests. On the other hand, when it comes to private deals, my attorney is my best friend! Real estate agents, especially the good ones, can be very helpful when it comes to running "comps", an analysis of what other houses in the area are selling for, similar in nature. They can come up with a report, most of the time, for free. With this analysis, along with your attorney's help, to write up a strong offer. That's all that I can do, present my best offer and see what they say.

If the seller is interested in a long-term payment plan, I would counsel the seller that they have the right to choose whomever they want as an attorney, although, most of the time, it is a cleaner transaction when one attorney handles the transactions of both parties. This saves time, confusion, and possibly even money. Though, I am not a big fan of these types of plans, something goes wrong and I am unable to make a payment, they can foreclose on my property and take everything. I don't like owing anyone money, but that's just my personal opinion.

Most important lesson I've learned is, to be transparent, direct, and clear the first time. I make sure not to mislead anyone into thinking this is something that its not. From the beginning, I always open a new line of conversation with, "Hello, my name is Elvis. I have a license in real estate, though I am not here to try and list this property. I am here for the sole intent to purchase this property for investment purposes." This prepares them, lets them know that I am here as an investor. Even though investors may offer below market value, I tend to highlight the benefits towards the end (fast sale, cash deal, as-is, no inspections, etc..).

Lastly, there is no need for an appraiser. A real estate agent will help analyze the current market value of whatever property is listed, and possibly, even properties that are not listed. Better to be safe, than..... (I never finish that sentence!) So, what I would do, in this case, is call 3 to 4 agents, in the local area, who wouldn't mind helping me analyze the price of a property. They know that if they help me, maybe they won't get paid when I buy the property (since it is not listed on the MLS), but they will build that connection so when it comes time for me to sell the property, I would call them to list it on the MLS.  Agents build relationships for the long run.

I hope you have a better understanding of your unique situation. Best of luck to you, Sir.

-Elvis

Lori Lincoln · Answer

Yes, you should use a real estate agent, not just any real estate agent, but one who can help you get a great deal and also be truthful enough to tell you to walk away if the numbers aren't in line with what you had in mind.  A Realtor who represents you can refer you to the best home inspectors, appraisers, attorney's and more. Use someone who knows how to find the history of the house, and be sure the agent you work with is in it for the relationship and not the money. If you need a referral for your region, please let me know.

James Richter · Answer

ben nice interview on get rich. Always a good listen like the others I've heard. Thanks for your advice.

James Richter · Answer

I understand that. What I am trying to establish is a starting point since it's an odd property with zoning and all. I figure an apraisal of the property's value would be one more piece of information for me to use while trying to understand what I value the property at. But that being said with the business plan I have in mind I already have a pretty good idea of what I would like to pay for the deal. An apraisal value will help me understand my level of interest let's say.

Lori Lincoln · Answer

If you do call a real estate agent to comp out the property, find one with integrity. and  be sure it's someone with experience. There are some, like in all professions,  that "wing it" and tell you what you want to hear so they can get a listing later on. The top producing  agents won't mind helping you, just be sure to give them ample time to complete.

should I use a real estate agent to buy an off market property?

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