I appreciate everyone for their willingness to help. I have family members and close friends who are real estate agents and I know they add a lot of value for their clients. That said, I ended up purchasing a home without an agent and I'm not sure I'll ever use an agent again. If you are thinking about doing the same thing, feel free to send me a PM. The only downside to not using an agent is that we were unable to see how many of the recent closings in the neighborhood had included terms in which the seller covered some or all of the closing costs.
When we purchased our first home, our agent was not worth her fee. We looked at school ratings, we looked at appreciation values by zip code, we looked at crime, etc. and narrowed in exactly where we wanted to live. We closed on a house that was listed on Zillow, and I took over the negotiations because our realtor wasn't doing a great job. I used to run a small investment bank and have managed many M&A transactions over the years so I know how to negotiate. I found the home inspector and I selected the mortgage company. When we sold our house, we did so without a seller's agent and emerged with more money in the bank because the realtor fees in the transaction only amounted to 3% of the closing.
We've been living off of savings for the last two years and I wasn't sure if my start date with my new employer would be pushed back due to COVID. Consequently, I wanted to save money wherever possible. I downloaded the historical sales data from Zillow and wrote some code so that I could run a macro to assess the average appreciation across any time period and in any zip code in Georgia. I then looked at school ratings across the state and narrowed our search down to a few cities in Georgia. I then used Zillow, Realtor.com, and Georgia MLS to compile a list of 40 homes of interest. I drove down to Georgia and spent a week touring homes and getting a feel for the different neighborhoods. We narrowed our list down to three homes and I prepared for negotiations.
I compiled a number of comparable transaction sets that included every house on the street, every comparable house in the neighborhood, and every comparable house in the zip code. I felt that the housing prices in the area represented a seller's market, but that within a few weeks the market would turn and home prices would drop in response to reduced demand. I looked at the historical data for the area before and after the Great Recession and factored that into my offer. I then found out how many other homes the builder was working on to get a sense of the builder's cash flow situation. Once I gathered all of that information, I started negotiations.
I knew my initial offer would be too high if the seller accepted it, and my goal was to get a "no." I shared data on what happened before and after the Great Recession to justify my low offer. The builder, as I assumed, said no but we settled on a purchase price that was well below the asking price (which was helped, in part, by the fact that only 3% of the sale price would be allocated to realtor fees). I wasn't simply trying to lowball the seller. I truly believed that the market was about to crash (and still do). I also negotiated some of the closing costs (I've since discovered that it is not customary for sellers to cover closing costs in this neighborhood). Were I to do it over again, I would have gotten to know a few of the neighbors prior to negotiations and asked them about how their deals were structured. I found samples of contracts online and asked friends to send me their contracts and prepared an offer letter using those as a basis. I also did the same with the closing contract, and negotiated changes on several points that the seller's agent didn't think I'd notice. Again, past investment banking experience did come in handy here.
The buyer does, in fact, ALWAYS pay for it if they hire a buyer's agent because the seller requires a higher purchase price to cover all the realtor fees. Not using an agent means that the seller can accept a lower purchase price and still end up with the same amount in the bank. If you feel confident in your negotiating abilities AND you have the time to get to know the area and read/write the contracts, I don't think you need a real estate agent. It is not rocket science.
When we purchased our first home, our agent was not worth her fee. We looked at school ratings, we looked at appreciation values by zip code, we looked at crime, etc. and narrowed in exactly where we wanted to live. We closed on a house that was listed on Zillow, and I took over the negotiations because our realtor wasn't doing a great job. I used to run a small investment bank and have managed many M&A transactions over the years so I know how to negotiate. I found the home inspector and I selected the mortgage company. When we sold our house, we did so without a seller's agent and emerged with more money in the bank because the realtor fees in the transaction only amounted to 3% of the closing.
We've been living off of savings for the last two years and I wasn't sure if my start date with my new employer would be pushed back due to COVID. Consequently, I wanted to save money wherever possible. I downloaded the historical sales data from Zillow and wrote some code so that I could run a macro to assess the average appreciation across any time period and in any zip code in Georgia. I then looked at school ratings across the state and narrowed our search down to a few cities in Georgia. I then used Zillow, Realtor.com, and Georgia MLS to compile a list of 40 homes of interest. I drove down to Georgia and spent a week touring homes and getting a feel for the different neighborhoods. We narrowed our list down to three homes and I prepared for negotiations.
I compiled a number of comparable transaction sets that included every house on the street, every comparable house in the neighborhood, and every comparable house in the zip code. I felt that the housing prices in the area represented a seller's market, but that within a few weeks the market would turn and home prices would drop in response to reduced demand. I looked at the historical data for the area before and after the Great Recession and factored that into my offer. I then found out how many other homes the builder was working on to get a sense of the builder's cash flow situation. Once I gathered all of that information, I started negotiations.
I knew my initial offer would be too high if the seller accepted it, and my goal was to get a "no." I shared data on what happened before and after the Great Recession to justify my low offer. The builder, as I assumed, said no but we settled on a purchase price that was well below the asking price (which was helped, in part, by the fact that only 3% of the sale price would be allocated to realtor fees). I wasn't simply trying to lowball the seller. I truly believed that the market was about to crash (and still do). I also negotiated some of the closing costs (I've since discovered that it is not customary for sellers to cover closing costs in this neighborhood). Were I to do it over again, I would have gotten to know a few of the neighbors prior to negotiations and asked them about how their deals were structured. I found samples of contracts online and asked friends to send me their contracts and prepared an offer letter using those as a basis. I also did the same with the closing contract, and negotiated changes on several points that the seller's agent didn't think I'd notice. Again, past investment banking experience did come in handy here.
The buyer does, in fact, ALWAYS pay for it if they hire a buyer's agent because the seller requires a higher purchase price to cover all the realtor fees. Not using an agent means that the seller can accept a lower purchase price and still end up with the same amount in the bank. If you feel confident in your negotiating abilities AND you have the time to get to know the area and read/write the contracts, I don't think you need a real estate agent. It is not rocket science.
