Buying investment property off MLS w/o agent. Questions?

Question

As a new and aspiring investor I am curious about the prossess of buying an investment without an agent. First, is this possible? How do I go about drawing up a contract? Will I need anyone else on my team i.e. an attorney? How do I close the deal?

As you can tell I am extremely green. So any help is greatly appreciated. Basically I am just looking for guidance on the process so I can more efficiently facilitate future deals found off the mls.

Gary Lucido · Answer

Yeah, that's pretty ambitious and I think you underestimate just how much work would be involved finding a deal that way. A ton. I suggest that if go that route you put a value on an hour of your time and track how much time you spend working on this. You may find that all the money you save finding an off market deal nets you $10/hour. If you do find something you'll want to get an attornney to help you put the offer together and get the deal to closing.Or you could just get an agent.

Mike Cumbie · Answer

Hi @Kyle Dutson

If it is on the MLS there is an agent involved in some capacity. Some people believe that if they go in without one they will save on the buyers side commission. I would say in my area that never holds true. All that happens is (Numbers only for example as each brokerage chooses what they charge):

1) Seller lists house and offers 6% commission to listing agent for them representing their interest in the transaction.

2) Listing agent offers 3% of that to any agent that brings a buyer (This agent fights with the listing agent to get his client the bet deal)

3) New person comes in and goes right to listing agent thinking they will save 3% (Listing agent says sure I'll write it up)

4) Listing agent explains they work for the seller and new person agrees.

5) Listing agent smiles and makes the numbers work in the best interest of his client (The seller)

6) Listing agent walks away with 6% commissions and the better part of the transaction went to the seller. The buyer had no representation, told the agent way too much information (that all got passed on to the seller) and the only person hurt is the buyer.

I know this because before I was an agent I paid over asking price on a property that was on the market for over 9 months. Why you ask, because I went to the very personable sellers agent and he made it clear who he worked for. I figured it was fine and I got lead to the slaughter slow and easy. I never even realized what really happened until I got into real estate later. I still believed I got the best deal around. I painted the place before I owned it, removed a fuel oil tank, replaced railings on a deck and overpaid. If any of it fell through I would have been hosed on all that stuff. Plus I way overpaid.

If you really know the values of the stuff in your market and have bought enough to know the processes then I say sure go ahead forgo the agent. If you are new and just trying to save a dime, don't bother especially as the buyer.

Good Luck!

Nathan Gesner · Answer

@Kyle Dutson go find a REALTOR that is experienced with investment property. Offer to take them to lunch or pay them some money for their time. Explain your plan and see how they can help you.

Any REALTOR that works for you would be paid by the Seller, unless otherwise agreed to.

Kyle Dutson · Answer

@Tom Parris @Mike Cumbie @Gary Lucido @Shawn Clark

Thank you all for the replies. They are very helpful. But I am afraid I wasn't clear enough with my plan.

My plan is to scour my town looking for potential properties. At which point I shall knock on doors, search titles at courthouse, make phone calls all etc... to find potential sellers. These sellers may not know that they are sellers yet. Or maybe the have been thinking of retiring from landlording. Who knows. I hope to uncover some off the books deals in this manner.  Note, tjos os a college town and there are many investors.

Once I find said property, I will negotiate a deal that benefits both myself and the seller. The possibilities are endless here. To purchase this home I will have either negotiate a seller finance or a cash deal in which I have investors ready to loan. Or even a lease option is possible.  Point it is all very situation dependent.

Once all this is done. What are my next moves? I know this all seems very ambitious. Also, I am planning on becoming an agent and working for a broker for a while. Investment will be a side gig at first. I believe being an agent full time at first will give me some skin in the game initially and help to meet the players and really learn the business. Also, I will learn the ins and outs pf the game through the training of other realtors/investors.

Kyle Dutson · Answer

@Gary Lucido

@Mike Cumbie

@Tom Parris

Kyle Dutson · Answer

Thank you all for the replies. They are very helpful. But I am afraid I wasn't clear enough with my plan.

My plan is to scour my town looking for potential properties. At which point I shall knock on doors, search titles at courthouse, make phone calls all to find potential sellers. These sellers may not know that they are sellers yet. Or maybe the have been thinking of retiring from landlording. Who knows. I hope to uncover some off the books deals in this manner.  Note, tjos os a college town and there are many investors.

Once I find said property, I will negotiate a deal that benefits both myself and the seller. The possibilities are endless here. To purchase this home I will have either negotiate a seller finance or a cash deal in which I have investors ready to loan. Or even a lease option is possible.  Point is it is all very situation dependent.

Once all this is done. What are my next moves? I know this all seems very ambitious. Also, I am planning on becoming an agent and workong for a broker for a while. Investment will be a side gig at first. I believe being an agent full time at first will give me some skin in the game initially and help to meet the players. Also, I will learn the ins and outs pf the game through the training of other realtors/investors.

Gary Lucido · Answer

Let me understand your motivation for working without a realtor and then I can give you an opinion. If it's commission savings there are realtors out there that will share the commission with you.

Tom Parris · Answer

Hi @Kyle Dutson,

I think you should seek a Realtor to represent you in the transaction. Buyer's agents are free for you to use, as the Seller pays the commission for both sides. That agreement of commission is already agreed upon before the home even hits the market. So you could go to an attorney (which would cost you an hourly rate), or go to the listing agent, but they will get the entire commission the Seller agreed to, and won't put your best interests first.

Since you are green, why would you want to negotiate a real estate transaction when you've never done one before, might as well hire a pro to help you and not cost you any money.

Buying investment property off MLS w/o agent. Questions?

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