Buying a condo without a Realtor

[Neil4Speed]

Looking into getting into my first place end of this year, and had a few questions for some people who have been in my spot before.

1. Saving down payments in a RRSP. I hear people saying this but, don't get the benefit.

2. People often talk about how beneficial a realtor is, but for someone who is looking in one of a few buildings in a relatively small area of town (inner city). Seems like I will be paying around 2.5% for not allot of work. I understand that they are able to show you places, but I figure that after 8-9 months of shopping around I should be able to have a good gauge of whats available.

I suppose one definite advantage is that some realtors may be privy to properties before they go on MLS - which is definitely good thing, is it worth going to a realtor who specializes in the kinds of places I am looking for?

I suppose on a side note, I suppose I don't really understand some of the dynamics of the Realtor profession (no insult at all, please don't misinterpreate that). Isn't it always in the Realtor best interest to sell a condo as quickly as possible to get commission?

Any general advice you guys could give to someone buying their first place?

[tch7]

1. RRSPs allow your savings to grow tax free until your downpayment has grown large enough. You can then take out $25k (only when it's your first house) in what is essentially a zero-interest loan from yourself that you have to pay back over 15 years. You'll also get tax refunds from your RRSP contributions, which will help boost what you have available for your downpayment.
TFSA also provides a tax-free haven and provides much more flexibility than RRSP, but TFSA is funded with after-tax income.

2. That 2.5% your realtor would make is built into the seller's asking price, and the seller is not going to automatically drop the price 2.5% just because you show up alone. If you get a good realtor that's a good negotiator, they may save you more than 2.5% that you wouldn't be able to negotiate on your own.

I bought my place without a realtor, but that's because it was a new build where I worked directly with the developer. For MLS listings, I'd use a realtor, especially as a first timer. The key is finding a good realtor that wants your repeat business.

[Kloubek]

Yeah, you don't pay for your realtor when buying - the seller does that as part of the fee. I did buy a place once using the seller's Realtor, but I'm not sure if he ended up taking the full cut or not. I didn't care because I put in a one-time lowball offer and got the place, so I walked away happy.

If you're not paying for your agent, then you might as well use one; they do have more information than you and might be better negotiators too.

[XylathaneGTR]

Originally posted by Neil4Speed

I suppose one definite advantage is that some realtors may be privy to properties before they go on MLS - which is definitely good thing, is it worth going to a realtor who specializes in the kinds of places I am looking for?

I suppose on a side note, I suppose I don't really understand some of the dynamics of the Realtor profession (no insult at all, please don't misinterpreate that). Isn't it always in the Realtor best interest to sell a condo as quickly as possible to get commission?

Any general advice you guys could give to someone buying their first place?

Neil,

When I was looking for a place, I solicited a family member of a family friend, who had a bit of experience in what I was looking for. We met up on a saturday and he showed me a few places, and he also showed me something that he had heard about that was not on MLS yet. It was gone within a few days, so if I was looking on my own, I probably would have missed it.

I think you're right, from a financial point of view the realtor has an interest in moving things quickly so that they can take on more clients, but I think they also realize that if their client is not happy with the experience or the place they ended up with, they will never see them again. I think if the realtor is unwilling to get to know what their client wants and actually spend some time with them finding that, they know that they won't be very successful.

[Pacman]

If it's a condo you are looking at buying, and you know the area and even a few of the buildings you are interested in then a realtor is probably not going to provide a tremendous amount of value. Having said that, as a buyer, the pros of having one probably outweigh the cons. They may offer some good advice on unit location and layout vs others in the same building.

I would think it's equally or perhaps more important to have someone who knows how to interpret the condo meeting documents regarding potential issues, special assessments etc.

[Unknown303]

If you just contact the selling realtor you may be able to swing a deal where you can come in lower since he'll be getting a great commission being both the buyers and sellers realtor. If you know the area and the buildings you want just contact the sellers realtor for a viewing.

[masoncgy]

If you're buying, use a realtor. Free service. Get a good one on a referral who knows their stuff and proceed with the hunt.

I happen to know a good one in Calgary... he lurks around this board...

[Sugarphreak]

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[masoncgy]

^ Why? I don't pay them anything if I look at 100 houses and then decide I don't want to buy.

Technically a seller doesn't have to pay a realtor anything if they sell on their own, but good luck with that. Almost every transaction involves a realtor to sell a house. Seller pays.

No buyer ever sits there and thinks... "oh, this $350,000 purchase is actually $335,000 plus commission." Buyers pay (well, smart buyers anyway) what they perceive is fair market value, not fair market value + 5% or whatever it may be.

[Unknown303]

Originally posted by masoncgy
^ Why? I don't pay them anything if I look at 100 houses and then decide I don't want to buy.

Technically a seller doesn't have to pay a realtor anything if they sell on their own, but good luck with that. Almost every transaction involves a realtor to sell a house. Seller pays.

No buyer ever sits there and thinks... "oh, this $350,000 purchase is actually $335,000 plus commission." Buyers pay (well, smart buyers anyway) what they perceive is fair market value, not fair market value + 5% or whatever it may be.

Smart buyers would actually take the commission into account. And the buyer does may the commission in a way and it's reflected in sale price. If you can contact the sellers realtor there's a change you can come in with a lower offer since there isn't a second party to pay out commission to.

And he's not wanting to look at hundreds of houses, he has a specific area in mind, it wouldn't be hard to just contact a few selling realtors and setup times to view a couple homes you're interested in.

[msommers]

Sugarphreak, when did you put down your deposit and end up selling (dates)?

[masoncgy]

^ Why? Wouldn't the smart buyer simply work to get the best price on the house possible because that's what the buyer perceives as the best value for it? I've purchased three houses now and not once have I ever factored commission into the deal... I've simply negotiated for the best price possible and walked away if I couldn't get what I felt was fair market value.

If a buyer of your example was like, "okay, I am only willing to pay $335,000 for this $350,000 house because $15K of the price is the commission" and puts up an offer as such, the seller could accept a deal at $335K and still has to pay out the commission and net $320K on the sale instead.

Seller always pays.

[ercchry]

call up Jordan, there is a reason everyone on here uses him. you want a realtor while buying. its free and can end up saving you a ton. he has probably saved me ~$50k in the past year

[Sugarphreak]

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[barmanjay]

If you are specifically looking at condos,...

An agent with experience in condos is an asset.

Knowing a thing or two with condo docs can potentially save you thousands in the future

[Stevo89]

I don't think you guys are getting what masoncgy is saying. You both bring up valid points and I think are aiming for the same end outcome but with different approaches.

Point of view #1
Seller has already factored in realtor costs into listing price and therefore buyer ends up paying the realtors. If buyer doesn't use a realtor, he should be able to negotiate a better deal.

Point of view #2
Buyer already has a fair price in mind irrespective of sellers listing price and or realtor fees. Buyer feels that this price is fair in relation to market value and the realtor fees will just chew away at sellers profit if he made any profit haha.

Just my opinion although I have never bought any real estate yet

[Sugarphreak]

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[ercchry]

a realtor that knows the condo market well can also save you from buying into a shit building, one with a garbage board and management company... decrease the risks of getting a special assessment, all that stuff.

there is also a lot of shitty people and even worse realtors. if i had to personally deal with either the sellers or their listing agent personally during my last acquisition... i probably would have lost my mind

[ExtraSlow]

With any condo, you need a professional to look over the condo documents. Doesn't have to be a realtor. I haven't looked at condos in years, but back in the day I used CondoCheck and they identified some big red flags that stopped me from finalizing a sale that I had pending. Saved my bacon.

There may be other people these days, I got into single family homes instead.

[Neil4Speed]

Thanks for all the advice everyone, I am pretty sure that when the time comes I will be using our resident Realtor, those reviews are hard to pass by.