We just moved to Austin and purchasing a property was one of things we were interested in. I really wanted 2, 3, or 4-plex so we could live rent-free and pay it off. However, as life would have it, it didn’t go down exactly like that. Here is the story of how we bought a house (actually still happening) and some options for you to consider.
How to search
The easy way to find properties is on Zillow, Redfin, and Trulia. They provide the listings on MLS and are pretty comprehensive. You can set alerts when properties matching you criteria become available. However, when looking for multi-family options there is also Loopnet and Craigslist.
If you want to get a good deal you will have to look for things that aren’t as easy to find. This could mean driving neighborhoods looking for signs. This is how we stumbled upon ours. Another idea would be to find properties that were delisted. You could write them a letter to see if they are still interested in selling. This could work out well because you wouldn’t have competitors in buying and you could probably sort out a way to reduce or eliminate the 6% commission agents take.
Another method, and the beaten path, is to use an agent. They have software to create reports for you such as the other recent sales. It is slightly better than Zillow, but some agents are in the know about pocket listings, those not listed on MLS. They will also be able to show you things much more easily than trying to arrange things yourself. Rather than waiting for an open house or calling the selling agent, they will make sure you get to see the property.
Costs of an agent
Having an agent sure is convenient as they will do a lot of the searching work and assist you through the process. However, they only get paid if you buy something, so their incentives don’t necessarily align with yours. They may push you to get something because that is what gets them paid. There are plenty of bad agents out there, so try to get someone you can trust.
We went to an open house and the person showing it wasn’t the listing agent, but a real estate agent that shows homes in order to get leads. He said he would love to be our agent and insisted that his services are free to the buyer. This is where I disagree. Although I am not writing a check to him, money is coming from the sale of the property, and therefore I am paying indirectly. If I could cut him out, theoretically I could save his commission. Since agents do have some value and experience I don’t think I could collect the entire 3%, but you get the idea.
Alternatives to an agent
We wanted to save money and decided not to commit to an agent. Instead, we browsed online and drove around looking for properties. If we found something we liked we would negotiate with the selling agent. What ended up happening was we bought new from a builder. The builder was unwilling to give a discount if we skipped the agent, so instead we found an agent that would give us a rebate. Since he had very little work to do, he was willing to give us 2% of the price, 2/3 of the commission. A quick search found REX in my area who offers 1.5% of the price back and I believe Redfin offers a 0.5% and I just found one that offers 2.5%! They exist and I’m sure normal agents don’t like being undercut, but do what is the best for you. I loved my agent and would prefer 2% with him to 2.5% with the other.
Conclusion
So you might be able to tell that I’m not a huge fan of paying fees and therefore agents. I may not have had access to very single house on the market, but then you’ll never be able to find a perfect house at the price you want where you want it. If you are looking best of luck.
Next up, I’ll go over making an offer.