Do I *really* need a realtor?

Question

I have located a condo that I am interested in buying and plan to make an offer early next week. I have done some research on recent comps and have found the price to be very reasonable. The unit is being sold by a real estate broker who bought it as an investment property ~5 yrs ago. I'm trying to determine if I need a realtor. I was in the title/mortgage industry for 6 years, but this is my first home purchase. I am familiar with the process and have taken coursework in real estate law & was a licensed title agent. I plan to purchase a home inspection and know what contingencies I plan to ask for. Do I need a realtor at this point? I am familiar with purchase contracts; would it be odd for me to ask the owner to have his office draft a contract for my review? What if I had an attorney review it as well? Any thoughts? I want to close by mid-August and already have a mortgage approval (pending appraisal & title, of course). Thanks!

Answer 1

if something goes wrong with the place or you find out that you got screwed, your not going to be happy.  A realtor handles all the legal stuff like house inspection, etc.  if you find that there is a problem after you have bought the house, who are you going to turn to if you did not use a realtor???  your stuck in a home that your not going to be happy with.

Answer 2

Being that the property is broker owned, you could probably negotiate a better price if you don't use your own Realtor.  Actually, if you find a GOOD mortgage loan officer, they can give you about as good advice as any Realtor would regarding the legalities of the transaction.  However, having your own Realtor involved as the Selling Agent, will provide you peace of mind that you have somebody in your corner, fighting for your benefit, not the sellers ( the selling broker isn't going to be a tough negotiator on your behalf)  I recommend to hire your own agent to work on your behalf, the seller will be paying their fee anyway.

Answer 3

The reason you hire and pay a realtor is, among other things, to make sure that all of the paperwork is in order, offer is made and accepted properly, et al.  If you have experience in all of those areas, and don't mind doing the legwork, then it is not necessary to have a realtor.  Standard commissions are 5%, so I would expect your offer to be 2.5% less to account for the lack of commision being paid on your side.

I would recommend having an attorney review any contract for real property, even if I had a realtor.  Most firms have standard "paper" that they use with boilerplate language.  If you use their paperwork and redline it, you may get resistance - better for you to make your offer and use your own paper (contract language) which is favorable to you.  Since you're dealing with a real estate agent, they may reject your offer because of the terms and conditions that you have included.

I would be wary on recent comps - the market is so volatile in many regions of the country that a 60 day comp may no longer be valid.  Also ensure that you get an appraiser who will give a fair value, not necessarily the purchase price, and include clauses to cancel the contract if the property doesn't appraise or you fail to find financing at standard fixed rate terms (this is different than boilerplate contracts, which just say you need to get financing - so a 5/1 ARM that you qualify for wouldn't allow you to renege legally).

Another option might be to hire a realtor to do your paperwork at a flat fee.  You don't mention how much you're paying for the property ($100k is much different than $700K when it comes to a % commission) - but if you want someone to do all of the running around, make sure all paperwork is in order at closing, et al, you can most likely hire an agent for a flat fee - just estimate the # of hours times $100 / hour (less in Midwestern states) and offer it up.  

I did FSBO on my first home purchase - it went through smoothly except that the sellers didn't know they had to pay me rent for 90 days occupancy and turned over the keys at closing.  It can be done if you know what to do, but right now, given litigation and the market environment, I would hire professionals to protect my interest.

Answer 4

Why in the world would you pay an attorney hundreds of dollars instead of calling a realtor (buyers agent) who will represent you for free?  Am I missing something here?

Answer 5

The seller pays so why avoid one. And don't forget the seller is a professional who knows all the tricks and you don't. Do you want to put yourself in his hands?

Answer 6

If this property is being listed on the MLS then the broker is paying any realtor that were representing you (typically 3%, but the fee can vary).  If you say you are representing yourself, they will simply keep the fee they would've paid your realtor.  IE They are asking 100K for the house and have listed it with a 3% co-op fee.  If you get a realtor and go to them they will pay your realtor $3000, but this costs you nothing.  If you go to them directly they will say you have no realtor and keep the $3000 themselves.  Thus, why not get a realtor.  The realtor will represent you and help you in all sorts of ways but they cost you nothing (note that since the seller is paying $3000 less out you could simply write a contract for $3000 below the ask price but they may balk anyhow or try to get you to split the $$$).

Beyond this, I would absolutely not have them write a contact for your review.  You should write a contract for their review as there are all sorts of details they could put in there to cost you, and with your limited experience you may not know what is standard and what is not.

So, you could do this yourself and maybe it would work out fine but with limited experience I really think it would be nice if you had an experience realtor representing you.  Also it may cost you nothing (since the seller pays the realtors commissions) may help you alot and since you've already identified the property maybe you could even talk the realtor down a bit on their fee.  So, go it alone if you feel confident but having a realtor would be nice.