Bad idea to contact out of state owner directly?

Question

While looking at a property this morning, I spotted a for-sale sign on a nearby house small local realtor. House was "open" so I looked inside. Old house needs everything.

Checked tax records and found owner lives In LA, and this is a probate house.

Will I be burning a local bridge to contact the owner directly to discuss purchase? Is there a (legal in tx) way to pay the realtor for something if I purchase directly from owner?

Otherwise, I have no problem working with the realtor but this house can't sell for more than 10-15K as a flip, maybe 20-25 as a rentsl.

Thanks for your thoughts.

Bryan Silver · Answer

It all depends. Usually the realtor has signed agreement with the owner/seller to market the property for a certain period of time. However, if that property does not sell, and buyer chooses to take property off the market, you have every right to discuss this opportunity directly with owner. I agree with comment stated above, I would not circumvent the realtor, especially in a town in which this broker seems to be exclusive agent. In this business relationships are important. You never know...if you develop a tight relationship/repoire with this agent, not only will be a staunch advocate in pushing your rehabs, but he may also tune you in on great deals hitting the market in the future. My take is...go through the proper channels, and if you do not get the type of service you so rightly deserve, then take matters in your own hands.

Michael Lauther · Answer

Shane: my experience with realtors is that they have helped me negotiate a realistic price, honestly presented the property, have cut through red tape and completed most of the paperwork, taken current pictures of the property and neigborhood (i invest outside of my state) and have led me to other properties that have proven good investments. the right realtor is worth many times his commision. Good luck with your offer.

Michael R. · Answer

You really dont have anything to gain by cutting out the realtor. If this is your first deal maybe you can get an agent to represent you also being it wont directly cost you anything and you might learn some things. Only time I went around an agent was when I suspected he was not presenting my offers to the seller. Sure enough he was not giving her my offers so we cut him out. Deal did not close anyway due to title issues so I do not know what the legal repercussions would have been.

Shane Woods · Answer

Oh and BTW, they're not exclusive, just the most referred because they're not a chain. We have C21 and Remax all over the place here too.

Shane Woods · Answer

Everybody, thank you for your thoughts. The more I think about it, the more I'm thinking the realtor isn't the problem, its most likely the owner, grossly over estimating the value of his property. I will not be going around the agent, and once I get comps compiled for the 2 houses + extra lot, i'll make my ridiculously low offer and see what they say. Thanks again!

James H. · Answer

It would certainly not be illegal for YOU to TRY to deal with the owner directly. Depending on the agreement between the realtor and the owner, it might be illegal for the OWNER to work with you. Or rather, a breach of their contract. A lot of agents have a binding agreement that expires after a certain amount of time (usually about 6 months) unless renewed. Sometimes they will keep the listing up but not renew the agreement. In the second case, there is nothing to stop you from dealing with the owner. However, it is bad form to go around an agent in place if that agent is actively marketig the property. on 128K house, if you go sans buyers agent, then there would only be the seller agent fee and you'd save a little there. By the way, you may want to point that out to the seller since it is typical the seller pays the realator fees and prices accordingly. Discount the property by the buyer agent fee and then by whatever else you think is appropriate. Thats how I approach it.

Ibrahim Hughes · Answer

Jamie - I like Bryan's post. Not sure if it's actually illegal to go around the realtor and deal with the owner unless you're actually trying to cut the realtor out of the deal. I have dealt with several owners who (unknown to me) were in contractual arrangements with a realtor. Not a real issue so long as the realtor gets paid, despite his/her non-involvement in the deal.

Jamie Gaymon · Answer

Ibrahim, I may be 100% off on this, but here's my thinking: - Owner of house signs contract with realtor to list and sell their property. - SW attempts to circumvent that contracted relationship to buy said property. At best, isn't that interfering with a contracted relationship? Not that any realtor would really go after someone for it, but couldn't that be construed as interference?

Ibrahim Hughes · Answer

I wouldn't go around the Realtor. The owner hired the realtor for a reason - likely so they wouldn't have to field calls, offers and negotiations from potential buyers like you. Not sure if it's illegal but politically it looks like it is. Contact the realtor and handle things appropriately.

Jamie Gaymon · Answer

Check with an attorney in your area, but I believe that what you're considering doing is not only questionable, but I'm pretty sure that it's illegal. I'm not 100% sure what the legal definition is, I'll take a look myself, but by trying to backdoor a listing agent with a valid listing agreement in place, I've got to believe you're heading in a bad direction.