Purchasing WITHOUT an AGENT?!

[Kristen Shook]

I am interested in a property that is on the market for 56k. I know the seller personally and she is selling 'for sale by owner' as well as 'as is'. I have spoke to her and she is willing to go down to 53k-54k since she knows me and has already moved into her next home, she doesn't want to continue to pay two mortgages. **Will be my first deal**

Since she is selling 'as is' and there is no room for negotiation (as we already spoke about how low she would be willing to go for someone she personally knows) is a real estate agent really necessary at this point? Would it just be costing us money? I know that I could go to a title company and have a title to fill out then have it approved by my mortgage loaners. She also has a friend who would be willing to help us through this.

Should I contact my agent and see how much they would charge?

What are your thoughts and/or opinions? 

Property is in a good spot of town, 5 minute drive from the local college. 2br with a basement that has room for either 2 additional bedrooms or 1 bedroom and a kitchenette space. It does need a little work (cosmetic) but it is already priced below county value on a 0.19 acre lot.  

Advice?!

Thanks!!

Kristen Shook

[Charlie MacPherson]

@Kristen Shook No, you don't NEED an agent.  There are countless stories here on BP about buyers who went without one and everything worked out just fine.  However, there are also stories where the outcome wasn't as happy.

If you were buying your 10th property and were already comfortable with:

• Knowing the ins and outs of the neighborhood
• Assessing the condition and repair costs
  
• Coming up with accurate comps (much harder than it looks)
• Understanding the necessary disclosures
  
• Negotiating price, contingencies and terms
• Writing the contract

I'd say go for it.

But the problem is not just what you don't know.  It's also what you don't know that you don't know.

You could be getting a great deal.  You could also be over paying by $20,000.  Even a real estate attorney is probably not competent to run comps for you - and whatever you do, please don't rely on Zillow, Realtor, Redfin or any other online site.  They cannot take critical details into consideration - like location (backs up to railroad tracks or a freeway) or interior condition (fully renovated vs untouched since 1975).

Are you planning on doing a home inspection?  Do you have a contingency in place for that?  What if your home inspector finds serious foundation issues?  Failing septic?  Major termite damage?  Knob & tube wiring?  Without a contingency in the contract, you're still obligated to buy or lose your deposit. 

BTW, if you don't have a deposit, you most likely don't have a binding contract.  Something of value has to change hands to bind a contract.

Do you have a fully executed P&S in place before spending $400 on an inspection and $500 on an appraisal? I hope so, because if someone comes in and offers that seller another $10,000 and you're not under contract, *poof* - she'll sell it out from under you.

So yes, as a first time buyer I think you need someone to guide you.  A Realtor, an experienced and trusted advisor, a real estate attorney - just someone who knows how to navigate real estate sales.

On paying for a Realtor, we commonly say that the seller pays commissions.  That's because the commission is clearly spelled out in the listing agreement, in advance of the listing.  It's already agreed to. 

However, with a FSBO, there's no such agreement in place. That means that you can expect to pay the Realtor out of your pocket - but since there's no seller's Realtor, you should expect to pay only 1/2 of the going rate.

It's like going for a 30 day hike across northern Alaska.  Can you do it on your own?  Maybe.  But I bet things will go a lot better with an experienced guide.

Good luck!