How do you buy Real Estate without an Agent?

Question

I would like to buy real estate without an agent. I'm looking at properties around $1,500,000. With the standard 2.5% commission that is a savings of $37,500.

1. How do I make the buyer aware of the savings they would realize if go with my offer versus a standard real estate agent?

2. Are there standard forms I can utilize for my initial offer and the contract?

3. What is the best way to notify a listing agent that you do not plan to use an agent? Whenever I contact a listing agent they try to act as a double agent and get double commission. How do I make it clear that I am not interested in utilizing them as my agent? Thank you in advance.

Charlie MacPherson · Answer

@Michael Lettieri The fact that you don't know how to buy without an agent is a pretty good indication that you need an agent.

You're looking at 7-figure deals.  That doesn't seem like a good place to forego expertise.  MAYBE take that chance if you were buying a $20,000 tear-down - but even then, there are pitfalls that you might be better off avoiding.

A good analogy would be asking how to rebuild the engine on your 2019 Audi.  Can you do it yourself - and without the expertise?  Sure.  But it's not going to be pretty.

If you would depend on the expertise  of a trained Audi mechanic for a $50,000 car, why not do the same for a million dollar real estate transaction?

Jim Pellerin · Answer

You don't pay for the agent. The seller does. Why do you care? Yes a listing agent will double end it but the seller pays your buyer agent. Let the agents do their job.

Justin V. · Answer

@Michael Lettieri

I you want that 2.5% commission on a property with a listing agreement to go to you and not a buyers or sellers agent, sounds like you better go get your real estate license.

Even then you’d have to pay your brokerage.

That might not be realistic, but what you’re attempting to accomplish doesn’t seem to be either.

Good luck and to your success!

Jonathan Greene · Answer

@Michael Lettieri I would suggest taking the $1,500,000 and just tossing it in a dumpster. The seller pays the listing fees. You can not do an on-market deal where they will forego the buyer's commission. Of course the listing agent wants to double end the deal. You aren't saving any money by not having an agent. The seller has contracted with the brokerage for a listing commission which includes the buyer's side of the deal. Whatever reason you are asking for isn't going to help you close a deal. If I was a listing agent and a buyer said he wanted to do a deal without an agent, I would just never respond. NJ is also an attorney state and both the agent and the attorney are there for your protection and again, the seller pays the commission.

Mark Hove · Answer

@Michael Lettieri

I can’t speak for every state but in NC when the seller signs a listing agreement, they agree to pay the listing firm a percentage, in your example it might be 5%. The agreement says IF a buyer agent from another firm brings the buyer, the listing firm will pay that buyer agents firm 2.5%. So if you have an agent, the agent gets paid. If you are unrepresented, the listing agent gets the whole 5%. There’s not an easy way to get around that.

If you want the savings on commissions for deals listed on the MLS, get your license and represent yourself. You could also hustle and contact sellers directly and get an off market deal ;)

As people have said, a good agent is worth every bit of their commission. To negotiate the terms, protect your interests, and preform proper due diligence on the property. Good luck!

Mike McCarthy · Answer

@Michael Lettieri I’m not an agent, never plan on becoming one, nor play one on TV.

If you’re going for on-market deals, the seller has already contracted with an agent, so they are paying the fees regardless. Might as well use an agent who can I think help through the process and help when there are issues.

If you’re working on off-market deals, you don’t need an agent, and most wont really work with you anyway. That said, when I’ve done offers on off-market properties, I still involve my agent, with a handshake deal that he’ll be compensated. I’ve only done a dozen or so deals in my life... he does a dozen every month or two.

In my mind, an agent doesn’t earn their money from the easy ones, they earn on the complicated ones. When the mortgage doesn’t come through or the title is a mess. They work with the seller and me to take the workload off me. They do the coordination, calls, negotiations, etc so I don’t have to worry about it. And when that oddity comes up, it’s not just me making that decision. He’s a trusted partner in all this.

Charlie MacPherson · Answer

@Michael Lettieri  No offense taken.

The fact that good agents make it look easy doesn't mean that it really is.

And yes, there are some awful agents out there.  The barriers to entry in this field are FAR too low.  But that doesn't mean that there aren't good agents too.

One easy way to screen is to look for agents that are full time with no other source of income.  If you can survive like that in this business, you must have your head screwed on straight.

In addition, if the property is listed on MLS with an Exclusive Right to Sell contract (99.9999% of the time), the full commission amount is agreed to in advance of the listing.  Even if you approach the seller directly and make a deal, the full commission is still due to the seller's agent.

One more point - the seller's agent is a fiduciary to the seller.  Many buyers incorrectly assume that the seller's agent will work to get them the best possible deal.  That's exactly backwards.  That agent's role is to get the highest possible price, minimum possible contingencies and terms that are most favorable to the seller.

Our risk tolerance levels are very different.  I wouldn't venture unguided into waters that deep, but to each his own.

Good luck - I hope it works out for you!

Wayne Brooks · Answer

You’ll have to make deal with the listing agent for perhaps a reduction on the buy side commission. Note:the owner has no say so in this as they have already signed the listing agreement and the listing agent has no obligation to reduce the buy side commission for you......approach accordingly and with the right attitude if you want a reduction.

Nicholas LaGatta · Answer

@Michael Lettieri like you, I bought and sold before I got my license without an agent.  However, I realized real estate is somewhat of a closed system to outsiders (being careful of my language).

Most agents won't take you seriously and you'll waste a lot of everyone's time.  Fair or not, that's the reality of the economics of time and money in the industry.  If you're dead set on doing it, I'm happy to provide you some general coaching and guidance, but I'm not licensed in your state.  I'm happy to give you some other options, too.

Michael Lettieri · Answer

@Charlie MacPherson sorry if I offend agents in this forum. I have used them in the past and do not believe they provide the value that they cost.

I’d prefer to keep the 2.5% and take my chances that I don’t make a mistake worth more than that. The only way to learn is by doing.

How do you buy Real Estate without an Agent?

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