Buying a home without a real estate agent

[Rick Kirchner]

My wife and I have been trying to find a new place, and going through the usual heartache of getting outbid, and often, due to our remote location, never even getting to see a home before it goes off-market.

So last week we looked at a home that has been on and off the market for six years. We've looked at a lot of places over the last six months, and I'd say this one looks better than any of the others - literally move in ready, high quality construction, no visible warts, nice neighborhood. Great house, great lot, great location, and a 40x70 shop. And within our budget. In other words - too good to be true.

Sellers are former real estate agents/flippers. Built this place as a second home in 2006. They will not work with any other agents, insisting on "for sale by owner". Although our in-laws are real estate people and give some advice, we still feel like we are swimming with the sharks.

The seller keeps at least three lambos there, which may explain their difficulties in previous attempts to sell through agents - they are unwilling to just let people traipse through the joint. Another house they had in this town got ransacked, which raised their paranoia level even higher.

That said, the sellers attitude gets my spidey-senses going.

So the question here is - has anyone bought property without an agent, and if so, what did you do to protect yourself during the process and after?

[BeerBudgetRacing]

My son is a broker. I work in law.

Common in other states - but not so much in Cali, we have seen an uptick in buyers and sellers hiring an attorney to represent them during the process. The downside to attorneys is they frequently want to re-write the CAR standard forms!

Basically the sellers do not want to pay fees. You might be able to higher an agent for a fix fee - that you pay.

[SteveG]

...

That said, the sellers attitude gets my spidey-senses going.

So the question here is - has anyone bought property without an agent, and if so, what did you do to protect yourself during the process and after?

I bought a commercial building from a "for sale by owner" and I hired my own real estate agent that I paid out of my pocket by the hour, cost me less than 0.5% of the purchase price.
Worked out great for me. The seller was quite pissed in the end because he was trying to hide something, my agent found it and seller had to fix it before the close or give me back my deposit times 2. Best thing my agent did was review and "enhance" the sales contract.

So...
Hire you own agent, pay 'em a percentage or pay by the hour.

Steve

[Lotus7]

Can see the seller not wanting an agent for any number of reasons, but if the seller is against you hiring a "buyers agent" and paying out of your pocket, then I think your spidey-senses might be on to something.

And, if the house has been for sale for 6 years (in this market?!?), possibly another flag.
You said yourself, too good to be true?

[DanW]

My wife and I have been trying to find a new place, and going through the usual heartache of getting outbid, and often, due to our remote location, never even getting to see a home before it goes off-market.

So last week we looked at a home that has been on and off the market for six years. We've looked at a lot of places over the last six months, and I'd say this one looks better than any of the others - literally move in ready, high quality construction, no visible warts, nice neighborhood. Great house, great lot, great location, and a 40x70 shop. And within our budget. In other words - too good to be true.

Sellers are former real estate agents/flippers. Built this place as a second home in 2006. They will not work with any other agents, insisting on "for sale by owner". Although our in-laws are real estate people and give some advice, we still feel like we are swimming with the sharks.

The seller keeps at least three lambos there, which may explain their difficulties in previous attempts to sell through agents - they are unwilling to just let people traipse through the joint. Another house they had in this town got ransacked, which raised their paranoia level even higher.

That said, the sellers attitude gets my spidey-senses going.

So the question here is - has anyone bought property without an agent, and if so, what did you do to protect yourself during the process and after?

Agree about hiring a buyer's agent. Also insist on a home inspection (usually required by your lender and the state), but make sure you source and hire your own. By law the seller must disclose all known defects. They must provide this info going into escrow. Spidey sense is a good thing. Having bought and sold 5 homes in two states I learned that real estate agents have a significant percentage of flakes and scammers. Doing research to find a buyer's agent and checking the brokers license with the DRE for red flags is appropriate.

Best of luck, Rick.

[Mark_Silverberg]

I do not see an issue with their request as long as they allow a home inspection (purchase agreement contingent on inspection) and allow you to have an attorney review any purchase agreement they propose. (They really can not prevent you from having the agreement reviewed anyway).

While a real estate agent may tell you that they can run comps and advise on the price to offer with a unique house with a large garage it may be difficult to understand what the pricing should be unless there are very similar houses in the immediate area. In fact the seller may have had bad experiences with agents not recognizing the value of the accessory building.

Ultimately, however, they can not prevent you from hiring an agent to advise you and review documents - as long as the agent does not communicate to the seller directly or accompany you on viewing the home it does not impact the seller.

[Rick Kirchner]

By law the seller must disclose all known defects. They must provide this info going into escrow.

What our in-law tells us is that if the seller is not a real estate agent they do not have to disclose. Checked the state website, license lapsed in 2020.

[BeerBudgetRacing]

What our in-law tells us is that if the seller is not a real estate agent they do not have to disclose. Checked the state website, license lapsed in 2020.

I don't think that is correct. All sellers must disclose what they know.

https://www.dre.ca.gov/files/pdf/re6.pdf

Item 2.

[Rick Kirchner]

thank you for that - real handy!

[Nardi]

Sellers may be required to submit a disclosure, but what keeps them from lying? Lying is particularly popular anymore.

[Rick Kirchner]

Well it used to be a good old poke in the nose. I suppose now its the only remedy left to civilization - lawyers. I'd think the difficulty would be in proving that they knew - which would most likely come form a 3rd party that did some work on the issue.

[Mark_Silverberg]

Well it used to be a good old poke in the nose. I suppose now its the only remedy left to civilization - lawyers. I'd think the difficulty would be in proving that they knew - which would most likely come form a 3rd party that did some work on the issue.

If you have a concern that the sellers may be hiding material facts regarding the condition of the house then the only remedy is a thorough home inspection or to just walk away from the property. The sellers disclosure really only makes the seller disclose things that an inspector could find or would be a matter of public record.

[chrisw52]

....In other words - too good to be true.


The seller keeps at least three lambos there, which may explain their difficulties in previous attempts to sell through agents - they are unwilling to just let people traipse through the joint. Another house they had in this town got ransacked, which raised their paranoia level even higher.

That said, the sellers attitude gets my spidey-senses going.

run away... I got burned in the housing crisis 10 years ago purchasing a place that was too good to be true

[reidhazelton]

My 2 cents - get a good house inspection, or two, and an atty to do the paperwork and clear title checks. It's all standard boilerplate these days anyway. From what little I know, the real estate agent doesn't do much anymore - they are more a general contractor who manages the inspector, bank, and title service. 8% is a little steep for a general contractor who just takes crappy pictures and throws in on MLS and Zillow.

If the title is clear, unencumbered, and the multiple inspections turn up clean it could be the sellers are just odd people.

[Offcamber1]

Rick,

I am sure you know this, but check if there is a neighborhood homeowners' association covenant and any deed restrictions.

(also real helpful if the subdivision has a roundabout that can be used as a skidpad!)

Kip

[BeerBudgetRacing]

My 2 cents - get a good house inspection, or two, and an atty to do the paperwork and clear title checks. It's all standard boilerplate these days anyway. From what little I know, the real estate agent doesn't do much anymore - they are more a general contractor who manages the inspector, bank, and title service. 8% is a little steep for a general contractor who just takes crappy pictures and throws in on MLS and Zillow.

8% in the cheese state? It's 6% in Cali (3 each side) and that is frequently reduced.

In Cali Title companies clear the title and issue Title Policies.

Not sure what you mean by "doesn't do much anymore". Hasn't really changed. Actually more paperwork and liability.

My son works with a lot of 1st time buyers. Really tough in this market. Not much to buy and houses are going for big $$ over asking. Just this week he helped a couple put in an offer on a home in Lompoc. Asking price $699k. He advised them to offer $150k over asking. They weren't comfortable with that so they ended up offering $100k over. Selling agent called him and suggested they might want to put in another offer. So they went back and offered the $150k over.
Didn't get it. from what we gather it went for more than $200k over asking. So that's a $900k home in Lompoc CA which some call the crack of the county. He's still working to find something. He's probably worked 80+ hours with them. And they could simply give up in this market.

Like a lawyer or accountant, you are paying for experience and knowledge. A lawyer or CPA can't do anything for you that you can't do for yourself. But you are recommending Rick talk to an attorney - aka an advisor.

[reidhazelton]

.

Not sure what you mean by "doesn't do much anymore". Hasn't really changed. Actually more paperwork and liability.

I meant the internet has made the job much easier. No more open houses, no more calling leads and matching buyers with sellers. Everyone buying a house today does all the leg work themselves on zillow.

[Rick Kirchner]

That's certainly the case for us. I have active Zillow searches in Fallbrook, Valley Center, Ramona, Vista, Oak Hills, Tehachapi, Prescott and Prescott Valley, Flagstaff and about six others we eventually ruled out.

Unless the land is completely flat (and little in these places is) it's really hard to judge terrain from the photos. Part of it is the perspective altering software used with wide angle lenses.

Years ago when the forever wars really got going a couple of my young employees were looking at using cell phone photography to produce floor plans of buildings and ships to assist in clearing operations. That stuff is available now - I just wish each zillow listing had a photographically generated floorplan with some dimensions.

That and a topo view would help a lot. I usually need to see the house to get those features that I can't get off the listing.

[BeerBudgetRacing]

I meant the internet has made the job much easier. No more open houses, no more calling leads and matching buyers with sellers. Everyone buying a house today does all the leg work themselves on zillow.

And for what it's worth, Zillow is about 25% accurate when it comes to unlisted properties and you can't get them to correct things. Their algorithms for value and comps only work for tracks which is not a market we live in.

It really hasn't changed. You used to get the Sunday paper with a RE section and see all the properties for sale.
Now its just online. Yes, you can reach more markets, but I'm wondering if that is just driving up prices.

When I was a mortgage broker in the early 90s everyone said the real estate business would be dead by 1995.
Sure. Today we have Rocket Mortgage and Quicken loans. They just skim the easy deals. Self employed, cash poor and property rich - they don't have a product to fit you.

You've gotta do what works for you, but the last 6 or 8 deals my son has done wouldn't have happened if the buyers did it on their own.

[Chris Livengood]

I bought without an agent. I wouldn't recommend it. We made out well and we bought the house under market value, but seller's agent played a lot of games with me along the way. It just seems like it would have been easier to let a professional take care of it.

[Rick Kirchner]

I think Zillow is definitely driving up prices, at least as much as "comps" drive down prices. The internet raises the prices of used goods by increasing the number of potential buyers. There are no more good deals on classic cars, old machine tools, and any number of other things. I was looking for a mini-bile the other day. Going price for an older one (not some cheap Chinese copy) - $1200! Just look at prices for anything that was a good idea but no longer manufactured - Honda S200s, Toyota FJs, the long wheelbase jeeps, Honda Trail 70's, Honda Cubs.......

The online mortgage companies and Zillow/Redfin were just the first shots across the bow. I think that if there's another financial crisis driven by real estate, you are going to see a Silicon-valley software and service driven disruption to this industry that will really open things up. Especially if the feds step in with something more than the bandaids they threw on after the last one.

Just look at title insurance - if the state/county are doing their jobs (and right now there's really no standard) then there's no need for it. you don't buy title insurance on your car, even if its more expensive than someone's house.

Home warranties - talk about an unregulated marketplace. Read the fine print - virtually nothing you think is covered is covered. What is covered won't break - everything that is covered that can break will likely cost less than the deductible and service call to fix. they don't make money by paying claims, right? Obviously there are some people - those without the time, or skills, where some level of coverage makes sense.

Even home inspections are becoming less reliable - just look at the exclusions. In a modern truss roofed house with high ceilings an inspector just can't see much. Maybe with some kind of robot.....

[Charlie Schmidt]

If there are covenants, read them very closely

If there's a HOA, I'd run------- way too many "tin god" horror stories

as for inspections, friends had a deal on a house a year ago, inspection came back good
preclosing walk thru, her folks said -that looks like water damage.....
turns out inspector missed major issues--apparently it was behind furniture and junk
also did not look in tornado shelter in garage, more wet
later found that he was there about 15 minutes total
they walked on the deal, got their money back
but I bet that jackass is still working

[TimH]

as for inspections, friends had a deal on a house a year ago, inspection came back good
preclosing walk thru, her folks said -that looks like water damage.....

Our experience has been that half the value of the inspection was watching over his shoulder the whole time. The times we didn't wind up with concessions greater than his fee we at least got a better idea how to budget for needed work.

[BeerBudgetRacing]

Our experience has been that half the value of the inspection was watching over his shoulder the whole time. The times we didn't wind up with concessions greater than his fee we at least got a better idea how to budget for needed work.

And if you have a decent agent, they do that. Many agents don't know the difference between and hammer and a screw driver.
I've taught my son enough to know when 'it' ain't right.

Look for an inspector who is an active contractor. They will look for things to fix like you've given them a blank check.
Inspectors/building inspectors are frequently failed contractors.

[Rick Kirchner]

Gentlemen, thank you for all your comments. You've been immensely helpful!