How does a newbie go about purchasing an off-market property?

Question

Hi All,

Newbie here looking for some direction and advice on potentially purchasing an off-market property.

About a year back I toured a SFR in the Los Angeles area and was close to making an offer but ended up purchasing a different property. The seller listed the property on and off multiple times, dropped the price a bit and eventually took it off the market. Since then, the the area has appreciated about 5%, and I'm thinking it might be a good opportunity to try and purchase the property off-market at the old listing price.

People don't use real estate agents in these situations, right? I figure the benefit of an off-market sale for the seller is that they wouldn't need to 1) pay commission to agents and 2) don't need to go through showing and listing the place. So I'm thinking for them, even though I'd be making an offer below market value, they would have a couple reasons to accept the offer as they'd be saving on commission, and time/effort. Is my thought process correct on this?

On previous purchases I've always used agents to purchase listed properties. They've walked buyer and seller through the whole purchase process, so although there is no reason to use an agent for finding a property in this case, it seems like they add value in holding both parties' hands. In an off-market with no realtor, what is the process I'd follow? How can I reassure the seller that the process will go smoothly without an agent guiding either of us?

Thanks!

Kurtis

Derek Carroll · Answer

if you've done a couple with an agent, then you've at least seen what needs to be done and might be able to work your way through it. its not that complicated if you know the checklist / order of operations and some of the pitfalls to watch out for.

seller pays agents if there is a commission agreement in place. in this case the seller has no listing agreement and is not offering to pay a commission so I was suggesting that you can hire a buyer to exclusively represent you and pay them yourself(versus on a listed deal and you have a buyers agent who in reality is a fiduciary of the seller). It could be a set fee $500 or whatever for helping you through the transaction. There are no set buyer or seller agent fees

You might also be able to convince the seller to pay and an agent to accept a half a normal commission since there is only one agent involved and the deal is already lined up.

Derek Carroll · Answer

Have you ever done a transaction before? If so, you know most of what needs to be done. In NY the attorneys and paralegals really guide the transactions after a contract is finalized. There are some steps along the way where it certainly helps to have an agent but if you've done a deal before then you can lean on your experience and your attorney/title company to get the deal to the finish line. Along the way agents help with inspections, appraisal, comps, making sure you're doing what you need for financing, and useful for sure. In reality after a contact is signed an agent plays more of an overseer to make sure things stay on track, rather than handle actual responsibilities.

If you've never done a transaction before, then you might have a hard time convincing a seller that you can make the process go smoothly. Without experience and not knowing what questions to ask and whom to ask them to, it would be worth your while to have someone help on your side, even if you pay the buyer broker fee.

Kurtis Foster · Answer

@Derek Carroll thanks for the reply. I have not done a transaction before. Just the couple I've done with an agent.

From what you're saying it sounds like I'd want an agent. The seller typically pays the agent fees though, right? Are you suggesting I could offer to pay the buyer agent fee? So the buyer and seller would both pay 2.5% instead of the seller paying 5%?

How does a newbie go about purchasing an off-market property?

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