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Do I proceed with my realtor?

Do I proceed with my realtor?

MustyBread420

You can pay your Realtor directly. There’s no law that says they have to be paid by the seller, your buyers agency contract just gives them the ability to do so. You can also write a higher offer to compensate for the commission. Ask your agent if they can handle both sides of the deal or if they’re willing to represent you with an agent-less FSBO seller. Legality of this will depend on your state. Explain to the seller that you have an agent that deals with all your paperwork and will help the deal go smoothly since you’re purchasing with a loan. Consider writing an offer 2.5% or more higher to make up for the $ the seller might have to give up to your agent.


cordeliaolin

Personally I wouldn't purchase a property from any friend or family without having a realtor involved. They spot things I don't even know I'm missing and make the entire process worry free . The guy stuck with you so maybe pay him out of pocket just for the world of experience that you don't have. Plus, he will be grateful for the work and down the road you have an ally for future purchases you can trust.


Boat_of_Charon

I agree, especially if it’s your first purchase. I think you should let the realtor know the situation and then approach the seller. I’d suggest offering to eat the 3% for your realtors fee as part of the initial conversation so that the seller doesn’t worry about him barring the cost. That is the closest you can get to a win win in my book.


cordeliaolin

"First purchase" absolutely nailed it


creditwizard

I would use a realtor. Pay the realtor directly. You can her can have a written agreement, whereby she handles the transaction, and you pay her commission upon closing. The seller should not have an issue with it - he's not paying. If he does, walk, because there may be other issues with property.


Ellz5986

The issue is, after losing the grant I’m not sure I have it pay her. Maybe I can pay in installments, even though that’s probably not gonna fly. Someone suggested I tack on her commission to the sale price like I’m doing with sellers assist. I might have to go that rout. I dnt see a reason why he would go for that right?


creditwizard

He should go for it if he's reasonable. Just be very clear that this portion is for commission, and make a note of what your offer is (money for him) outside of that commission. He seems interested in doing the deal, so I doubt should be a problem. Make sure the contract is very clear of course.


Ellz5986

Thank you!


Thatway1998

I purchased our family home this summer. Somehow of the same scenario as yours. 23yo and my first home purchase so i was scared and wanted to involve a realtor in a private sell. The seller was very sketched out at first but when i made it clear that i will be covering all realtor expenses and that they would not lose anything in me involving a realtor they were cool with it. Hope that helps, good luck!!


T-Bills

Taking a step or two back... why didn't one of the seller accept your loan? Do you have a pre-approval for a conventional? I'm with the other poster... how much cash reserve do you have? If you NEED $7k in mortgage cash back and the $10k grant then I wonder if you need to rethink your financial positioning before you proceed.


Ellz5986

So that particular loan was an FHA 203k loan. He didn’t want to use the FHA because once it appraised at a certain amount that appraisal is attached to that home for 6 months for FHA loans, or so I’m told. The house needed a lot of work but the area is one of the top up and coming areas in Philly. So he charged up in this market, knowing even though he’s asking for more than the house is worth he’ll get it sold anyway because of the area. As far as cash goes, right now I have 10k and adding 500 every 2 weeks, so still growing. The home is worth anywhere between 190k - 230k. It’s a wide range I know but I haven’t had a pro come out to appraise it yet and it needs at least a new roof. So the plan was/is to pay 3.5% down which would be around 8k if the home goes for 230k and use sellers assist/the grant that ran out, to pay for closing leaving me with roughly 2k cash left. And since I’m a first time buyer the lender I’ve been working with has grants they offer up to like 3-4k. Also *edit* I’ll of course be saving a lot of the money I receive in rent to go to capital expenditures and repairs as needed. So that 2k will grow quickly with my second job dedicated to just saving for the home and the rent.


T-Bills

Yeah I tried to go through a renovation loan and it was just extra PITA every single step of the way, and some contractors don't want to deal with the extra paperwork and a tighter payment schedule. I asked about the cash situation is because once you start looking at a house in detail you'll realize many things will need to be repaired and you'll need to throw in a lot more money in preventative stuff. I'm renovating a property that looks decent since I don't know about a lot of stuff, but once you get into bigger stuff like electrical and plumbing you could find out things weren't done quite right and you do want to get it all fixed up. Even properties that look like they are turnkey will have a few things that will need to be addressed, so I'd keep that in mind. And if you're counting on the rental income also keep in mind that's not guaranteed either - tenants can stop paying and it could take you months to recover, or if you have a big repair then you're completely wiped out and underwater. And if you're counting on some kind of cash-out refinance that could depend on appreciation and that's never certain. So in a nutshell, honestly I think you have a super thin margin of error, even assuming the property is 100% fixed up and you immediately find a high quality tenant. In reality, those aren't really realistic assumptions. It'd help a lot if your mom can help with the down payment or the mortgage, or have a good amount of savings that you can tap into if things go sideways.


creamyturtle

did you sign a buyer's agreement with your realtor? you are probably locked in for a year or so and any house you buy she will have rights to commission on, I think


Ellz5986

I did, but the agreement wasn’t for a year. It has expired. And I only signed that because we were about to close on a property before the seller screwed me and backed out last minute...


creamyturtle

in that case you could negotiate a flat fee for her to help you make the deal easy or you could just ditch her. there might be some moral/ethical issues involved since she did help you browse properties prior. you really don't owe her anything but it's good to build relationships in real estate, they might help you later on


Ellz5986

Yea, I definitely don’t want to ditch her. A little bit of morality and a little bit because I think she’s good at her job and would want to work with her in the future. That flat fee might be a good idea too


stevegonzales1975

As long as you cover all expense for the seller. Do consider, it's pretty expensive. Maybe you can rain check her contribution & use her for your 2nd house.


Ellz5986

Yea, I mean closing is already like 12k if not more. And it’s typically 6% commission right? All these expenses might turn what was a good deal (possibly) into a bad one.


Lugubriousmanatee

Finders fee to the realtor, 1%


bpt3

If you need seller's assistance to close, you aren't ready to buy investment property. One option would be to discuss seller financing with the current owner and see how they respond.


Ellz5986

This is a duplex I plan on house hacking. Why do you think I’m not ready if I need sellers assist? And why would seller financing be beneficial in this situation?


bpt3

> Why do you think I’m not ready if I need sellers assist? Generally, it means you don't have much cash on hand. What happens if the furnace blows up, there's a serious plumbing issue, or some other major expense comes up in a month or so? > Why do you think I’m not ready if I need sellers assist? And why would seller financing be beneficial in this situation? It could allow you to keep more cash on hand for reserves in case you need it.


Ellz5986

I see. Excellent points. I’ll run that buy him and see what he says.