Real Estate the Ramsey Way - Do You Really Need A Real Estate Agent To Buy A House?

Episode Date: October 7, 2024

Your home should be a blessing, not a burden—but unfortunately, some people learn that the hard way. Get the answers you need with Real Estate The Ramsey Way, and learn what to avoid and how to do real estate the right way.   Next steps: 🏠Have questions about how real estate can help you reach your financial goals? Check out our Real Estate Home Base for free tools and resources to guide your next steps.   🏠And if you’re ready to buy or sell your home, connect with a RamseyTrusted® real estate agent. They’re experts who’ll help you confidently navigate homeownership the way we teach.     Listen to more from Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership 💸 The Ramsey Show Highlights   Learn more about your ad choices.  https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Dave Ramsey here and welcome to another episode of Real Estate, the Ramsey Way, where you'll learn how to make smart home decisions, avoid costly mistakes, and navigate homeownership with confidence. Tom is in Chicago. Hey, Tom, how are you? Dave and George, it is an honor to speak with you both. You too. What's up?

I've been renting townhome for many, many years. and the homeowners through their property manager have informed me that they now want to sell and have asked me if I'd like to purchase it before they list it. I don't know how to handle it in that situation without it being listed. Of course, if it were just a house that I was looking after, going after in a normal situation, I know I'd get a realtor. do I get a realtor in this situation? Since it's not being listed, I don't know if I'm allowed to do that.

You're allowed to do anything. It's just a matter of who's going to pay for it and whether you actually need it or not. So you need a mortgage, right? And you need someone to guide you through the contracting process and the mortgage process and the appraisal process and all of that. Are they given you a price on the property? Yes. Okay.

They've given me a price of 330. based on some comps that the property manager pulled up, who is a realtor. Mm-hmm. I didn't like the cops. I didn't agree with those comps. They were in an area not very close to me. And when I looked at them, the homes were much nicer than this home.

So I don't know how to, you know, combat that. So they have a real estate agent. It's called a property manager. It's a licensed real estate agent. Yes. And they're probably going to list it with this person. Eventually, but they're asking me before they list it. Yeah, but what's the benefit to you?

There's no benefit to you before they list. There's no bargain. I guess the benefit is that no one else would be able to make an offer on it. Oh, yeah, okay. I mean, if you had a transaction you were comfortable with and you can go through and get your mortgage and everything, you can go to a title company, get a contract drawn up, and do this. I think this transaction is so far from happening that you probably do need a pro in your corner

to help you navigate the negotiation and then help you navigate the closing, help you navigate the appraisal, help you navigate the getting of the mortgage and all the different things, all of things you don't know how to do. But if you had all those things already lined up, you could. You don't have to have a real estate agent, but you can, in this case, I think you benefit from one and just say, you know, if they list it typically what happens is the listing agent, in this case the property manager, they're going to put a 6% commission on it or something about like that.

And then the agent that represents the buyer is going to split that with the selling agent, typically. That's a normal transaction. And so, you know, if you get a real estate agent to represent you and they work with the selling agent before it actually goes on the market, but a commission is still paid. It didn't cost you anything. It cost them something. And let me tell you, if you just buy it right now, I think this agent is going to get both of the commissions. They're probably going to charge that seller a full commission.

So yes, the answer is I'd go get a real estate agent. Yes. In your situation, I would. Yes. I mean, it's kind of borderline, but I think there's a lot of, A, there's another real estate agent already involved, okay? B, you don't like the comps, so you got some negotiating to do. C, you got to have somebody walk you through the closing process and the mortgage getting process and the appraisal process. So all of those things tell me, yeah, I put a real estate agent in your corner. It's just worth it for the stress factor at this point. Well, and the expertise to guide you through a journey that you've never been on. And I might negotiate and save you $30,000 to where it was, all right, it was worth it.

Ramsey Solutions.com slash agent will help you find a Ramsey trusted agent in your area to help you do that. Katie's in Pensacola. Hi, Katie. What's up? Hi, Dave and Jay. Thank you for taking my call. Sure. How can I help?

So I just want to ask, what type of savings account should we keep the $110,000 that we have for a down payment on a home in the future? My husband is eligible to retire from the Air Force in three years, but we'll probably wait another two years, so five years total, to maybe buy a home. Yeah. Wow, nice. Well, if you're going to play close to a five-year window, you can talk about putting some or all of it towards something like a standard and poor, an S&P 500 mutual fund, and you'll make some really good money on it. That's what I do, okay, but it could go down in value. You know, you could put 110 and it might be worth 100, but that would be a highly unusual five-year. 97% of the five-year periods in the stock market's history have made money.

So I'm very comfortable with the risk if you put it in and leave it alone five years. If you're going to leave it alone three years, probably not. I'm probably going to go high yield. If you want to do a blend, I'd do some in the, like half of it in a mutual fund and an S&P 500 fund and half of it in a high yield. but at least get some of this money working for you. Because we're talking about, you know, we're talking about the difference of about $10,000 a year in what you would earn on the money.

So we're talking about $50,000 bucks of high yield versus a mutual fund over a five-year period of time. I also like the idea of investing it or doing the blend because once you put it, you know, you put it in an index funder, you put it where you put it, you're less likely to touch it. You're less likely to have something pop up like, your friend's, you know, wedding in the Caribbean that you think would be a good idea to spend some of that money on, right? Whereas if it's in a high yield, it's easy to grab some of it,

you invest it. It's kind of locked away. Yeah. High yields are a little too accessible. Yeah. I like trying to keep it out of my own reach. I like to trick myself into becoming wealthy. Yeah. That's good. You know, and trick myself into actually accomplishing my goals. And yeah, that's a good point. You know? It's a very good point. It's always a wedding in the Caribbean. I don't know. What is it with you in the wedding? I don't know. That comes up a lot. Is this a scar in your life? It might be.

It might be a friend out there somewhere that's... But you know how it is. Now, suddenly you need a new car. Oh, yeah. Well, you know, for rednecks, it's we need a bass boat. Oh. Need a bass boat. I need a side-by-side to go deer hunting in.

Oh, gosh. You know. And they're only 20 grand. I mean, you got that sitting in the high yield. You know, it's all. Yeah. Got that money sitting over there. Why would we pay a bank interest for the side-by-side?

Your brain starts fogging up and it stops, stops working. You can't see through the windshield anymore. Yeah, you're exactly right. That's a very good point. So I personally, I'm comfortable knowledge-wise with the history of the stock market. So I'm plunking all of it if it's me into an S&P 500, if you got a four- or five-year window. If you're a little less comfortable, do some there and some otherwise. If you're completely, that freaks you out.

Just put it in a high yield, but you've got the downside of it. It's too accessible. You know, it becomes a bass boat funder. I need to redecorate the kitchen fund or whatever the crap comes up.