Profile picture for KatieMMM

Is there any reason my husband and I should not buy a fsbo from a person with a real estate license?

Hi, my husband and I decided to buy a house. We were going to get a real estate person to help us, but we went looking last weekend and found a house that is a for sale by owner house. The guy who owns it has his real estate license, he told us this, but he doesn't work as a real estate agent anymore since the economy is so bad. He has a different job. I want to buy this house and think it is a good deal, but my husband thinks its fishy for a real estate agent to use the fsbo website, when you go to it and it is kind of anti-realtor. Should we be worried? My husband wants to get an agent to help us but I feel like it will cost more money and we already have an agent involved. I am confused and could really use some advice.
  • August 06 2011 - US
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Answers (10)

Ok, lets go over this. Homes is FSBO, but seller is a real estate agent that is NO LONGER an agent, if this person does not have his license active with a broker then he is NOT an agent.  You are entitled to representation, if he does not want to pay a commission, you can a least take anything he writes up to a lawyer for review  or better yet have the contract drawn up by the title company.   It is OK to use the title company of his choice sice he has to pay for owners title for you anyway.

Good luck,,,,always have representation
  • August 08 2011
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If you are using this agent to represent you as your licensed representative, make sure their "errors and omissions" insurance is up to date. Should the agent make an error in the transaction, the insurance is designed to protect the client.

E and O insurance is not needed if a person is selling their own home. But if they're representing another party then it's a must.
  • August 07 2011
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Hi Katie,

First of all, your seller has an inactive or expired license so is not currently a real estate agent. Although he has experience, it might be dated and he is not bound by the ethics of currently active licensees.  So don't think you have an agent now: you don't. Also, this is the seller. Whose best interest is he going to look out for? Not yours, that is for sure.

People do buy from FSBO's and a percentage of those contracts do actually close. Since this guy likely knows the process, he can likely get it to close, but the risk you run is that without someone to look over the contract, you have no idea if your own best interests are being met or if key things are overlooked or left out.

If you love the house, and depending on where you live, I'd suggest you have an attorney look over the contract before signing, OR see if a local Realtor would be willing to represent you for a reasonable fee, for the negotiation and paperwork. You'll also benefit from someone other than the seller doing up a market analysis for you, to be sure you are not overpaying. Believe me, the few thousand dollars you would spend will seem like small potatoes if you wind up with some kind of problem after closing, one that could have been forestalled with some professional advice.

Remember this is probably the biggest purchase of your life. You won't regret getting professional help. Good luck.
  • August 07 2011
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Profile picture for Dunes....
No
  • August 07 2011
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If he had to get a job how good an agent was he?  It may be a tough market but experienced agents seem to manage to survive.  Just because he holds a license active or inactive does not mean he knows what he's doing.

Several things were previously said:
You can get a buyers agent to represent you who will be familiar with the fair market value of the home and help you negotiate.  Yes the seller pays them and it comes out of his proceeds.

How do you know the price he is asking is comparable with the current market conditions?

Have a real estate attorney review disclosure documents and draw up your sales agreement if you do not use an agent. Don't let him draw up the agreement of sale.

No matter what - have a home inspection by someone you select not the seller.

  • August 07 2011
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Profile picture for nwhome.us
Finding a home is made especially easy with the use of the internet today.  Finding an agent who is willing and able to be your advocate is much more difficult.
Finding a home that you want to make your own barely scratches the surface of the buying process. An agent should bring trust, experience and negotiating skill to the equation.
It sounds as though your current seller brings none of these benefits to the table.  You don't know him, so how can you trust him; he was pushed pout of the business: why?  The better agents are still in it (notice I didn't say more intelligent).  And there are NO incentives to negotiate on your behalf.
The last point gets to the primary issue.  A good agent should pay for themselves in negotiating a DEAL that is at least 3% lower than the price you will get without the trust, experience and negotiating skills to support you.
And by DEAL, I'm suggesting that the price is not the only issue.  How much time do you have for your inspection and special inspections?  How do you interpret the inspectors findings?  How many of these inspects do you see a month?  Is the home insurable?  He wants you to take possession 3 days after closing?  whose insurance covers the home during that time period when you don;t have possession? How do you interpret the commitment for Title?  The seller actually has a legal right to sell the home?  Has he missed any payments on the mortgage?  Whats do you do with the lien that the contractor has on the home?  Oh the seller promises he will pay it after the transaction closes.....What happens if he decides that he really wants the light fixture in the dining room?  It was there the day before closing, but not when you show up with your furniture.
I think that I can speak for most Realtors in telling you that deals have grown dramatically more complicated in the last 3 years. If you haven't done it before it is probably not worth the pain.  Spend some time getting to know your own advocate.

  • August 06 2011
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He wants to keep from paying out unnecessary commission. Sit down and talk to him.
His license could be inactive or just not practicing. In some cases he may have to pay the brokerage for listing his own house, imagine that. The FSBO site may have been the cheapest route and saves him $ and you $ also because he doesn't have to add expenses.
Get the property appraised , inspected and title insurace. All the steps of conventional buying , you should be ok. Consult an attorney if there is something you don not understand.
  • August 06 2011
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as long as there is full disclosure...
  • August 06 2011
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Profile picture for KatieMMM
Thanks for your quick response. Sounds like good advice to me!
  • August 06 2011
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Profile picture for Michael Helton
There is no reason you should not be able to handle this deal yourself if you are semi-intelligent people who are willing to spend a little time educating yourselves on the homebuying process.

1)  Yes, it will cost you more money in commissions.  Agents will try to tell you that you save money by having a buyers agent but this point is debateable.   In a FSBO process, where you already have a specific property it could cost you tens of thousands of dollars.

2)  Verify if the seller actually ever had a license by calling the state.  However, even if he did, do NOT assume he is going to be working in your best interests.

3)  If you do not get an agent I would highly recommend paying a Real Estate attorney to review all contracts.  It will be one of the best investments you ever make.

4)  No matter what, get an inspector.  Paying for an appraisal could also be money well spent (and if you are getting a loan your bank may require it).

5)  I do not think it is fishy at all.  If he already knows the process why would he pay 3% commission?

6)  Some agents are almost guaranteed to post here saying "buyers agents are FREE!!!!".  In this case, a buyer's agent commission is going to be paid by the seller to the agent.  This means the money will come out of the sellers pocket.  So, when you sit down to the negotiating table, you are instantly losing thousands of dollars in negotiating power...meaning you will probably end up paying more for the house.

At the end of the day, he will be most concerned with how much money he is going to walk away with on closing.
  • August 06 2011
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