Buying a home FSBO and real estate agent

[duckabell]

We are getting ready to buy our first home. We have talked to a lender, been prequalified, and are now in the preapproval process. We have not talked to a real estate agent yet. There are two homes on the market that we're interested in, both FSBO.

 

House #1: In neighborhood we're familiar with, older homes, less expensive and smaller. The owner has it listed above what it will most likely appraise for. 

 

House #2: In neighborhood close to a lot of things we love, within our price range but closer to the top, in great condition and much larger than other house. We could be in this house for years and years. Priced competitively. I think the owner used to be a real estate agent.

 

In our local real estate market houses that are priced well sell fast. So house #2 might not even be available next week. If we don't get either of these houses, something that will work for us will pop up in the next few months. We're not emotionally tied to them. My main question is since these are being sold FSBO is it wise to try to buy them without a real estate agent? We wouldn't want to pay the buyers agent commission if the sellers didn't pay it. 

 

From what I understand, once you agree to go with an agent you're committed, even if the seller doesn't want to pay their commission on a home you want. The reason we're thinking of going without an agent is to just have a strong offer and potentially get these homes. However, we don't want to be burned by not knowing the ins and outs either, which is a something that a real estate agent could provide. And since house #1 is likely too expensive, I don't know if they've factored in a buyer's agent commission into what it will appraise for.

 

Any helpful hints on the best way to go about this would be great. We're not opposed to getting an agent, but we just want ideas on what to do for these FSBO homes.

[Scarlett]

I have purchased two homes without an agent and sold two with no agent.

 

Personally I don't think you need one. Especially when getting a loan because the bank will make sure things are done properly in order to protect themselves and their investment.

 

When you know what you want in a home and the area you want to live in......I think you can do without a RE.

[MyLittleBears]

I think you're right. Once you commit to agent you have to go with them as you just signed an agreement. Also you really can't buy a FSBO because the agent does not get a commission on it unless the buyer agrees. The good thing about getting a loan however, is that even if you bid on a FSBO, the bank will do an appraisal and won't give you a loan if the asking price is higher than the appraisal price. At that point the seller would have to lower their price or loose you as a buyer. They would probably run in to the same problem with another buyer going through a loan process. They could stick to their price, but they would have to wait and hope for a cash offer. I'm not sure if this varies state to state or not. You would have to check with your bank. We had an offer on a house that wanted but were not crazy about but was in a prime location. Then, a FSBO that was exactly what we wanted in the same location came up for sale. Because we had an agent we were not technically supposed to be able to buy it. Thankfully we told our agent and she called the seller. It turned out she knew him and he agree to pay her a commission. We were SO thankful but it was one of those one in million chances! 

[Scarlett]

I think you're right. Once you commit to agent you have to go with them as you just signed an agreement. Also you really can't buy a FSBO because the agent does not get a commission on it unless the buyer agrees. The good thing about getting a loan however, is that even if you bid on a FSBO, the bank will do an appraisal and won't give you a loan if the asking price is higher than the appraisal price. At that point the seller would have to lower their price or loose you as a buyer. They would probably run in to the same problem with another buyer going through a loan process. They could stick to their price, but they would have to wait and hope for a cash offer. I'm not sure if this varies state to state or not. You would have to check with your bank. We had an offer on a house that wanted but were not crazy about but was in a prime location. Then, a FSBO that was exactly what we wanted in the same location came up for sale. Because we had an agent we were not technically supposed to be able to buy it. Thankfully we told our agent and she called the seller. It turned out she knew him and he agree to pay her a commission. We were SO thankful but it was one of those one in million chances!

I sold one house FSBO and an agent brought me a buyer.....and I agreed to pay that agent 3%...half of what is standard in our area

[wapiti]

I recommend having a real estate attorney handle the transaction.  (When we bought and sold FSBO several years ago, this was like $500.)  He or she can provide you with a contract to use for your bid.

[MyLittleBears]

I second the real estate attorney idea. Just FYI the seller does is privy to the bank appraisal figure.  If it were to come back lower than asking price you would have to renegotiate but you don't need to give them the figure. Your are not required  to disclose.

[duckabell]

Thanks for the replies! We're walking through both of these houses tonight. If we want to make an offer, we will pay an attorney to look it over.

[StaceyinLA]

I wouldn't bring an agent to a FSBO deal. I have had people do that when we have sold our houses and it's very frustrating. I did FSBO so I could be competitive with my pricing, and have room for negotiating without having to worry about paying a large commission to an agent. Buyers do not pay agents. The seller doesn't have to agree to pay the agent either if they haven't listed with an agent.

 

The title office (which will be your real estate attorney) where you would choose to close your loan (and the buyer gets to choose) could look over a purchase agreement for you if it would make you more comfortable. If you are going to close there, they may do it for no, or a very small, fee.

 

You can also put a clause in that you won't pay more than appraised value, so that if the house doesn't appraise for the asking (or agreed upon) price, you will be able to back out of the deal.

 

As long as you are sure to get any and all items you have negotiated written into your purchase agreement, you should be fine. We have sold several houses without agents. It's just not really that difficult.

Edited June 28, 2016 by StaceyinLA

[Suzanne in ABQ]

We sold one house FSBO.  No agents were involved.  We went through a real estate attorney who specialized in FSBO.  You might find that your sellers already have their attorney in place.  The attorney will write up the contract, and you'll go through a title company for the sale.  You might want to have your own attorney look over the contract before you close.

[TranquilMind]

Make that offer now on house 2, unless you know you won't be approved. You don't need an agent. Find a form they use, fill it out and make your offer. Then find a real estate attorney to help you. Or if you are in a Title company state, set up a closing there and then figure out what forms you need. It's not rocket science. But wording is extremely important so make sure you run it by your attorney.

[duckabell]

Thanks for all the replies! We toured both houses last night. I don't know that we'll make an offer on either house. The first home had some layout issues and other things I didn't realize. The second home had a strong cigarette smell, and with lots of wallpaper, wood paneling, and carpet, I don't know that it's worth it for us to invest time or money into it. 

[catz]

We offered our agent a flat fee to do fsbo paperwork.

[Garga]

We sold the last house and then bought this house with an attorney. He charged a few hundred. It was only a few hours of his time all told. When we went to closing, there were a few mistakes in the contract and he asked them to fix them. And they did the fix wrong, so he told them to do it again.

 

My dh and I would have been intimidated by the whole thing, but he handled it for us. I wouldn't buy/sell without any help. The attorney was a good choice for us. Not crazy-expensive, but he made sure the paperwork was 100% correct.

[slackermom]

Dh is a real estate attorney and a licensed real estate broker.

 

His advice would be to have an experienced attorney review your offer before submitting it. Lots of people only approach him after they have an accepted offer, wanting him to handle the purchase and sales agreement, but the terms of the offer affect the whole process. Those contingency clauses are very important, but agents will often advise clients to waive them in order to have a "strong offer," and then when things fall apart, the attorney has to try to rescue the client.

[TravelingChris]

Cigarette smoke is very hard to get out of a house.

[catz]

We sold the last house and then bought this house with an attorney. He charged a few hundred. It was only a few hours of his time all told. When we went to closing, there were a few mistakes in the contract and he asked them to fix them. And they did the fix wrong, so he told them to do it again.

 

My dh and I would have been intimidated by the whole thing, but he handled it for us. I wouldn't buy/sell without any help. The attorney was a good choice for us. Not crazy-expensive, but he made sure the paperwork was 100% correct.

 

:iagree: We used a broker similarly who knew the ins and outs and laws.  It was well worth it to have an extra set of eyes.  I know brokers locally who advertise to work with FSBO and have flat fee packages.  I think a real estate attorney is a good option too. 

[Garga]

Dh is a real estate attorney and a licensed real estate broker.

 

His advice would be to have an experienced attorney review your offer before submitting it. Lots of people only approach him after they have an accepted offer, wanting him to handle the purchase and sales agreement, but the terms of the offer affect the whole process. Those contingency clauses are very important, but agents will often advise clients to waive them in order to have a "strong offer," and then when things fall apart, the attorney has to try to rescue the client.

 

This is what we did--had the attorney right at the beginning. The offer that was made seemed ok to us, but he started pointing out things and saying, "Do you really want to X? Because you don't have to agree to that just because they've asked for it." We didn't know we had the option to make changes to the offer they made us. He saved us money and hassle.