Not using a realtor to buy REO -- good idea?

Question

Hello, I have never bought any REO property before, so I was wondering if it makes sense to use a realtor to do it? What I mean is, I have found a REO property myself (without realtor involved yet) and talked to the bank who is selling it. They told me that they don't use realtor and will not pay any commission if I was using one on my side (which means I will have to pay for that). My questions are

(1) If I don't want to use a realtor and were to make an offer myself, how do I do it?

(2) If I was using a realtor to represent me, wouldn't that realtor also represent the seller (since they said they don't have one)? I mean, this is how it works for FSBO, right? So why is it different in the case of REO?

Thanks.

Steven D. · Answer

If you have never bought anything like this before a realtor maybe of help to you, however you are not required to do so. The realtor would not be representing both sides, and that is not the case in FSBO. In FSBO the buying agent represents the buyers and the homeowners represent themselves. In this case you would represent yourself (the buyer) and the bank would represent itself (the seller) whether you used a realtor or not.

If you do want to make an offer there are often state standard purchasing agreements. I'm not sure about AR buying and selling, but I'm sure you can search around or use a previous sale of yours as a template. Additionally, you could hire a real estate attorney for a short time to draw up the required documents for you and would probably be cheaper than paying a full commission. Best of luck!

Cara Lonsdale · Answer

A Realtor represents their client.  If you, as the Buyer, hire the Realtor, then they represent your interests in the transaction only.  Not the Seller.  Even if the Seller was paying them, if your agency was set up for them to represent you alone, that is how it would be.

I highly doubt that the bank is selling the property without the use of a licensed real estate professional.  Unless they are listing it through auction, or some other type of liquidator, they are using an agent helping them with contracts, title and so forth.

In answer to your original question, you CAN make a purchase without being represented without a Realtor.  The question is whether you WANT to do that.  REOs often times come with addendums that the bank includes that cover a whole host of exclusions to the contract that take away some of your protections.  You will want to know that your best interests are protected.  In fact, they may be using a contract that their attorney created to protect them, and not the standard state contract.  So, plenty of things you need to be aware of, and be on the lookout for.  Having an agent to look over the contract and addenda and guide you through the transaction may just be worth every penny.

Pinaki M. · Answer

Thanks @Steven D. I will look into state standard purchasing agreements. However, I am still not clear about #2 - that is, in a deal if it is possible for only one party to be represented by his/her realtor and the other party to not use a realtor. Let me use another example. If I am buyer who does not have a realtor and the seller has one (listing agent), then the seller's realtor will represent both parties. In this case, do I the buyer have a choice of not using his service?

Yet another example is the case when the buyer is a wholesaler/investor and a realtor himself. If he approaches a seller and offers a below market price, I have heard that he has to tell the seller what the fair market price would be. In this case, it seems like he is also acting as the agent for the seller (otherwise what obligation does he have to protect the seller's interest by telling him the fair market price).

You might still be right, but I am trying to understand how the above cases add up then.

Not using a realtor to buy REO -- good idea?

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