Realtors, MLS, Foreclosures

Foreclosures
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Realtors, MLS, Foreclosures

Ryan Stumbo
Rental Property Investor · Member since 2021 · 63 posts · 27 votes

So I'm currently reading tons of info including investment books, BiggerPockets books including BRRRR book, asking questions to experienced friends, etc. One thing I have become curious on.

I started realizing through some friends that foreclosures were usually where you can get good deals. In order to see pre-foreclosures you need to have access to MLS. In order to do this, you need a realtor correct? If so, if my plan is BRRRR and all cash buys, how does a realtor come into play? I assume they aren't going to just look through the MLS for you without any benefit to them. So how do most of you get access to the MLS without a realtor or do most of you use a realtor for purchases?

Also, what if someone has a property listed by realtor and I don’t have a realtor but I really want the property? I assume since they’ve already listed with said realtor they can’t just back out of the deal with the realtor and accept my cash as-is offer. And from my experience you never even talk to the seller directly, all your communication is always through the realtor. So are realtor listed properties avoided or do you guys just bite the bullet and pay the realtor fees?

Thanks guys

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Minna Reid
Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 633 votes
5y

The fact is 99.9%of all foreclosed homes end up on MLS. Lenders make and service loans. They are not in the business of selling real estate and will hire a Realtor to pre-list and list their foreclosed homes. You can reach out to that listing agent, but their duty is to get the seller the most money, and working on your behalf doesn't change that. Also, contrary to popular belief, many realtors are not looking to work both sides of a deal. I know I don't, as you can never really represent two opposing parties in any transaction 100% fairly. The best you can really do is advise both parties less (a disservice to both), and just manage the transaction to close. I know many other agents feel the same way and will avoid dual agency. I know we Realtors sound like broken records to all you investors, but honestly - your best bet in finding REO homes is with a buyers agent that represents your best interests (and your best interest alone), has a high sense of urgency and understands the REO process completely.

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  • Griffin SchermerPro Member
    Investor · Bloomington, IN · Member since 2019 · 76 posts · 55 votes
    5y

    I would highly recommend the book "Bidding to Buy" it's a book that outlines the foreclosure process step-by-step (I'd say it will answer almost all your questions above). It also talks about the risks behind foreclosures and will answer your questions about finding deals (There's lots of good ways). You do not need a realtor to close on a property. If you work with a realtor then there's lots of ways to structure deals with realtors. We've paid on percentage (2-7%) and finders fees that have ranged from ($500-$2,500). I've only ever purchased property with a realtor, but I've heard of others who have found success without one. If you're looking for foreclosure you can find websites/companies that have lists of foreclosures you can buy. You can also get lists of foreclosures from the courthouse. Good luck! 

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  • Minna Reid
    Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 633 votes
    5y

    The fact is 99.9%of all foreclosed homes end up on MLS. Lenders make and service loans. They are not in the business of selling real estate and will hire a Realtor to pre-list and list their foreclosed homes. You can reach out to that listing agent, but their duty is to get the seller the most money, and working on your behalf doesn't change that. Also, contrary to popular belief, many realtors are not looking to work both sides of a deal. I know I don't, as you can never really represent two opposing parties in any transaction 100% fairly. The best you can really do is advise both parties less (a disservice to both), and just manage the transaction to close. I know many other agents feel the same way and will avoid dual agency. I know we Realtors sound like broken records to all you investors, but honestly - your best bet in finding REO homes is with a buyers agent that represents your best interests (and your best interest alone), has a high sense of urgency and understands the REO process completely.

    1Reply
  • Lisa Miller
    Real Estate Agent · Augusta, GA · Member since 2017 · 71 posts · 22 votes
    5y

    Advice, if the house is listed with a realtor, NEVER try to cut the agent out with a cash deal. One day you may need that realtor!!! 

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  • Karen Rivera
    Real Estate Agent · Member since 2019 · 16 posts · 14 votes
    5y

    @Ryan Stumbo

    I agree with @Minna Reid

    I can’t say this enough, find a real estate agent that specializes in short sales and foreclosures in your state and market and just have a conversation with them. Let them tell you how they can be benefit. Talk with them about their commission and who pays for it in these situations.

    You might see it’s worth them doing this work for you so you can focus on finding your next deal.

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  • Ryan Stumbo
    OP
    Rental Property Investor · Member since 2021 · 63 posts · 27 votes
    5y

    @Lisa Miller I wasn’t saying to cut the agent out. I’m simply gathering knowledge on how the process works.

    Example, I’m buying my homes cash. When I do this, there will be no inspection, appraisal, etc.. but in order to get access to see the home, I’m assuming it will have to be the realtor over the listing showing me the house. Don’t most realtors get their cut on the closing costs? If so, if I pay cash, there are no closing costs correct? If I’m completely wrong on this feel free to correct me.

    I plan to pay cash so I just wasn’t sure how or when a realtor comes into play or at all. I would gladly pay my realtor cash some type of percentage just for finding me the property since clearly they’re not going to work for free, but wasn’t sure how I was legally allowed to pay them when I’m buying the homes outside of lenders and inspections. Thank you for your response and look forward to hearing your answer to this

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  • Ryan Stumbo
    OP
    Rental Property Investor · Member since 2021 · 63 posts · 27 votes
    5y

    @Karen Rivera there is a very well known realtor in my area who I am looking to get in touch with. She does so well she even has a team working under her. My plan was to ask her to represent me or someone under her (since the books I’m reading say the best realtors are only hiring top talent to work under them).

    If she says foreclosures aren’t her specialty, I’m hoping at this point she could refer me to a good foreclosure agent.

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  • Karen Rivera
    Real Estate Agent · Member since 2019 · 16 posts · 14 votes
    5y

    @Ryan Stumbo

    Sounds like a great plan!

    1Reply
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