BUYER WANTS TO BUY.? SELLER WANTS TO SELL.?
No, the property isn't listed for sale.? No, the buyer isn't looking for an agent to find a home.? The buyer wants to buy the house they're renting because the seller plans to sell it at the end of the least term.? Generally, the owner has informed the tenant that they plan to sell and don't plan to renew the lease.?
There's nothing new in real estate (until the next regulation is published).? Over many years in the real estate world, I suspect that I've just about seen it all.? In many ways that's a good thing.? A wealth of practical experience is gained each and every year through each transaction.? Rarely do I encounter a transaction barrier for the first time.? As the old saying goes, "Been there, done that!"
This article is inspired by a series published by George Souto in his post about advising a prospective borrower to "get a Realtor".? See:? A Buyer Needs To Be Represented By A Realtor When Purchasing A Home #2
O.K.? The seller plans to sell the investment property now rented.
O.K.? The buyer wants to buy the home they're renting.
O.K.? The buyer has spoken with a lender and has been credit approved.?
What's missing?? Why can't they go forward??? Well, the buyer is on notice that they must prepare to move or buy the house they're renting.? What to do?? The loan officer has already suggested to them that they should "get a Realtor".?? After all, a transaction isn't going anywhere until there is a Contract of Sale between the tenant/buyer and the owner/seller.?
Who can prepare a contract of sale??? Many entities.? 
Local real estate attorneys
Local title companies
Local real estate agents/brokers
Consumers with a form from a local office supplier or on the Internet.
Sounds easy doesn't it????? So, why are the buyer and the seller paralyzed by inaction???? BECAUSE NEITHER THE BUYER NOR THE SELLER KNOW WHAT THEY'RE DOING.?? One thing is clear:? Real estate brokers and agents are PAID FOR WHAT WE KNOW, not what we do!!? Oh, we can prepare a contract, provide disclosures, arrange for inspections, settlements, etc.? However, first we must KNOW WHAT TO DO.
So, the prospective buyer goes to the Internet and calls an agent.? Perhaps they have been advised by a loan officer to "get a Realtor".? That's the easiest way to get help.? Over the years I've spoken with many consumers who "just want us to write the Contract of Sale".? They believe that if a real estate agent/broker is involved, everything will be taken care of and they can buy that house they're renting.?
"I JUST NEED A CONTRACT"? A conversation will go something like this:
Buyer:? "I'm renting a house in Leesburg, VA and my landlord says he's going to sell it when my lease is up.? I want to buy the house.? Can you help me?"
Agent:? "Sure, has the landlord given you a price?"
Buyer:? "Yes.? He plans to sell it for $350,000. "
Agent:? "Does he plan to prepare a Contract of Sale?"
Buyer:? "No.? He said I could do that."?
Agent:? "Have you spoken with a loan officer to make sure you're qualified for that price range?"
Buyer:? "Yes.? I spoke with my credit union and I'm qualified for up to $375,000.? They said I just need a contract."
Agent:?? "Good.? We can prepare a Contract of Sale for you.? First, we need to preview the property and research recent properties SOLD so you'll 
know the approximate value of the property.? Also, there are certain DISCLOSURES that the state requires as a part of any real estate contract of sale.?? We'll also contact a local title company to do the title examination to make sure the owner has clear title, make sure he's current on his mortgage and prepare the documents to close"
Buyer:? "I didn't know about all of that.? But, I guess it's O.K."?
Agent:? "Most folks who are buying a property they're renting don't usually realize that it's more complicated than they thought.? Of course, there is a real estate fee involved.? Have you spoken with your landlord about paying a real estate agent to handle the sale???
Buyer:? "Yes, but he doesn't want to pay any one.? He said I would have to take care of that."
(HINT:? If the landlord had any plans to pay a real estate
agent/broker to handle the sale, they would already have it listed.)
Agent:? "O.K.? Our fee to manage the transaction for you would be $7,000 or 2% of the sales price."
Buyer:? "Oh no.? I don't want to pay that much.? I didn't realize how complicated it is going to be."
Agent:? "Well, we can probably save you money by doing a "Limited Service" agreement and just charge for the services we provide."
Buyer:? "That sounds better.? I've already found the house.? How much would that be?"
Agent:? "Well, real estate fees are negotiable.? Do you have an amount that you believe you would pay us to handle the transaction for you?"
Buyer:? "Oh, maybe a $100 or so."
TIME TO END THE CONVERSATION.? At that point, I realize that neither the buyer nor the seller is willing to pay a real estate agent, Realtor or not, adequate compensation for the duties involved in managing a transaction or THE RISKS TO THE AGENT/BROKER.? Our fees are fully negotiable and to manage a translation such as the above would usually be considerably lower than the fee charged for a transaction where we assist the buyer in finding the home to buy, research financing alternatives, managing inspections, closing, etc.?
How are our fees determined??? Over the century or so that real estate brokers have managed millions real estate transactions, we have learned that each transaction is different.? One contract may require 10 hours from beginning to end and others may require 100 hours or more to reach settlement.? Now that Short Sales are a part of our inventory, the hours may easily be doubled. ?
Buying a FSDO or rented property.? If a home buyer has already found the house they wish to purchase and they just need someone to manage the Contract of Sale the agent will not be involved in long hours of property tours.? In that case, agents/brokers can offer a LIMITED SERVICE representation and charge by the services performed from a menu of services offered and agreed to between the buyer and broker/agent.? Since the buyer has selected the home they wish to buy, we would charge approximately the following.
EXAMPLE:
Preview property and prepare CMA - $500
Prepare Contract of Sale and present to seller - $500.
Provide state/county required DISCLOSURES for seller - $300
Refer Contract to Title company - $100
Manage home inspection and repair contingency - $600
Attend pre-settlement walk-through - $300
Attend settlement meeting - $400
The above fees add up to about $2,700.?
Or, we can charge by the hour with an agreed minimum hours.? Limited transaction is not contingent on settlement.? Therefore, with this type of representation, the fee is PAID IN ADVANCE.?
There's a reason real estate brokerage fees are what many believe are expensive.
THEY ARE CONTINGENT ON A SALE CLOSING!!? No closing, no real estate fee paid, by anyone, buyer or seller.?
In the end, it must be understood that real estate agents and brokers are paid for WHAT THEY KNOW, not what they do.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.? Serving home buyers in MD and Northern Virginia.
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