What is the responsibility of the real estate agent?
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Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
3yQuote from @Chris Loh:
Hi BP Forum Members,
I'm a first time home buyer. I found a loan officer I really like and he recommended a realtor. I haven't really had time to speak with the realtor but I was wondering what his responsibility is? To be more exact, can I tell the realtor I'm looking for a property that cashflows $500 if I house hack it and send him to work? Or do I just send him properties I want to look at? What should I expect from my realtor and where should i draw the line on what I can ask?
Thanks for the advice in advance!
Great question, actually! Even agents would give you different answers. Here is my take and an overview of our process step by step:
1.) Buyers consultation (often zoom): introduction, what you are looking for, talk about the process step-by-step, the market, fianancing, how to compete and any questions
2.) Setting up MLS access: based on your criteria, we set up a wide net. About 50% of our clients end up buying something different than they thought originally.
3.) Baseline showings: this is only educational, we look at properties that are kind of what we are looking for, so you get a baseline of what 400k will get you.
4.) Revisit goals and expectations, adjust MLS filters. Critique interesting listings together (often zoom)
5.) Actual showings: now you are ready. You focus on how it feels, we worry about the issues, defects and concerns. A good agent should be able to find and identify all major issues (making a home inspection the second line of defense)
6.) If you like it and the property checks out, we can strategize your first offer. Gather information, calculate fair market value, discuss offer terms, recommend a strategy and negotiate on your behalf. Your first offer is usually a "practice offer" - especially in a multiple offer situation. You may not get the house and that's okay.
7.) Rinse and repeat until - accepted offer! Now your agent (or the teams transaction coordinator in our case) reviews all deadlines, starts comunicating with all parties: lender, title, agents, inspectors, appraiser etc
8.) Working through contingencies: typically you have hime inpection, appraisal and financing. Identify issues, negotiate solutions for each on your behalf, especially repairs and appraisal issues. This should take about 30 days.
9.) Clear to close: review closing statements and explain whats next.
10.) Closing: you will sign a stack of paper, agent is only there to explain things if necessary
11.) Post closing: need a contractor? Where to buy materials? Not sure what the best option is to fix a few things. A good agent should have plenty of remodel experience.
We do generally not pick properties for our clients, simply because 90% of the time we don't pick what the clint wants. But we do help review all available listings, what to look for and identify interesting listings and then discuss pro's and con's - it is a collaborative process.
One of our main objectives is to provide perspective. A good agent closes at least 24 deals per year or more. This results in a ton of experience and that is the main value an agent brings.
All agents on my team have construction experience, some of them have house hacked. Milwaukee has a ton of duplxes and most properties are between 60 and 100 years old - knowing what it costs and how long it takes to fix typical issues is another major contribution an good agent should bring. First time home buyers are notorious for underestimating how much things cost "my buddy is handy, I can do this on the weekends etc"
22 Replies
To shine better light on my question I'll explain a bit on where I am in the home buying process.
I have the approval for around 400k. It needs to be in a specific location for my downpayment assistance program. My goal is to house hack and I don't mind paying the same or even a bit more than I'm paying for rent now. The size of the home doesn't matter as much as the numbers.
So, do I just give my agent the above details and they go from there? Is the above too vague? What exact information should i be providing?
FYI - I'm still in the process of choosing a realtor
- Member since 2023 · 1 post · 0 votes3y
A realtor primary responsibility is to assist you in finding and purchasing a property that meets your specific needs and preferences.
That would include: Property search & showings, Market analysis on the area you want to live in, Negotiation with the seller to lower the price over their market knowledge & sales skills, Transaction coordination & Due dillegence and finally assist you on closing since they know title companies & professionals doing closes (depends on your state) - 3yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
You should also find out if the realtor is used to working with investors. Do they have a good idea of what homes will rent for? You will have to do the work to determine cash flow. Make up a simple spreadsheet of monthly expenses to start with (mortgage, insurance, any utilities that you are paying-get the tenant to pay for as many as possible, maintenance and repairs, etc). Also think about closing dates to give you enough time to do any repairs you need to do, do showings and get it rented while minimizing vacancy.
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes3y
@Chris Loh Don’t expect a house hack to cash flow $500/mo….expect to Pay less than what your normal rent would be.
- 3yDoug SmithPro MemberLender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
I feel people believe real estate agents can somehow magically manufacture a high-cash-flowing property out of thin air. Right now, finding a turn-key cash-flowing property is very, very difficult. The real estate investment environment is dramaically different than it was just 24 months ago. I'm based in Florida where taxes and expecially insurance have skyrocketed. Rising interest rates, however, have caused the biggest difference. If you're reading a book, listening to a podcast, or reading a BP post from more that just a handful of months ago, the advice might change. Take, for example the difference between a 4% loan and today's 8%+ rates for investment property on a $300,000 loan. That rate difference would add $1000/month to the payment. That dramatically changes the cash flow on a rental. That however wasn't your question. I've always felt a good agent knows the process and paperwork and can truly help you navigate the pitfalls that are inherent in the process. They really aren't there to analyze your cash flow. They can assist, but you have to do the math to figure out if a deal works for you. Keep in mind that the very best agents are the ones with multiple investor clients who all are asking for what you are asking for. They are chasing only a handful of unicorns while every other super-savvy investor is all over the same pool of properties. Don't expect them to manufacture deals. It's a heck of a lot harder to do than one might think.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes3y
Quote from @Chris Loh:
Hi BP Forum Members,
I'm a first time home buyer. I found a loan officer I really like and he recommended a realtor. I haven't really had time to speak with the realtor but I was wondering what his responsibility is? To be more exact, can I tell the realtor I'm looking for a property that cashflows $500 if I house hack it and send him to work? Or do I just send him properties I want to look at? What should I expect from my realtor and where should i draw the line on what I can ask?
Thanks for the advice in advance!
Great question, actually! Even agents would give you different answers. Here is my take and an overview of our process step by step:
1.) Buyers consultation (often zoom): introduction, what you are looking for, talk about the process step-by-step, the market, fianancing, how to compete and any questions
2.) Setting up MLS access: based on your criteria, we set up a wide net. About 50% of our clients end up buying something different than they thought originally.
3.) Baseline showings: this is only educational, we look at properties that are kind of what we are looking for, so you get a baseline of what 400k will get you.
4.) Revisit goals and expectations, adjust MLS filters. Critique interesting listings together (often zoom)
5.) Actual showings: now you are ready. You focus on how it feels, we worry about the issues, defects and concerns. A good agent should be able to find and identify all major issues (making a home inspection the second line of defense)
6.) If you like it and the property checks out, we can strategize your first offer. Gather information, calculate fair market value, discuss offer terms, recommend a strategy and negotiate on your behalf. Your first offer is usually a "practice offer" - especially in a multiple offer situation. You may not get the house and that's okay.
7.) Rinse and repeat until - accepted offer! Now your agent (or the teams transaction coordinator in our case) reviews all deadlines, starts comunicating with all parties: lender, title, agents, inspectors, appraiser etc
8.) Working through contingencies: typically you have hime inpection, appraisal and financing. Identify issues, negotiate solutions for each on your behalf, especially repairs and appraisal issues. This should take about 30 days.
9.) Clear to close: review closing statements and explain whats next.
10.) Closing: you will sign a stack of paper, agent is only there to explain things if necessary
11.) Post closing: need a contractor? Where to buy materials? Not sure what the best option is to fix a few things. A good agent should have plenty of remodel experience.
We do generally not pick properties for our clients, simply because 90% of the time we don't pick what the clint wants. But we do help review all available listings, what to look for and identify interesting listings and then discuss pro's and con's - it is a collaborative process.
One of our main objectives is to provide perspective. A good agent closes at least 24 deals per year or more. This results in a ton of experience and that is the main value an agent brings.
All agents on my team have construction experience, some of them have house hacked. Milwaukee has a ton of duplxes and most properties are between 60 and 100 years old - knowing what it costs and how long it takes to fix typical issues is another major contribution an good agent should bring. First time home buyers are notorious for underestimating how much things cost "my buddy is handy, I can do this on the weekends etc"
- Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes3y
A lot of great counsel has been given here already. I strongly suggest that you tell your realtor what you are wanting to achieve - the whole story - so the realtor can advise you on whether that's realistic in the current market, help you fine tune your expectations and goals, as well as target specific properties. If you fail to give them the full story, you're wasting their time...and yours. And, yes, you should send the realtor properties that you are finding that might be of interest to you so they can be vetted. What looks good online, is just that - good online.
And, one more thing: you always hire people who know more than you do. Always. If your realtor has no experience in what you're attempting to do, you've got the wrong person. Best...
Great Advice! Really appreciate it!!!
I'm going to call another agent I spoke to a few months ago and talk to her. I feel like we would work well together but I want to see how she can help first (like mentioned above).
How much should I be speaking with my agent and what is too much? As a new investor, I have a lot of questions and feel like I could be overdoing it. Is it they should answer my calls? I understand they're busy too.
Here's another question I though about.
I'm looking in the city of Los Angeles. My price range for the area is low making the pool of houses low. So, checking websites to see if there's any new listings is fast and easy. This is what originally got me thinking, what is my real estate agent doing?
With that said, in my situation, wouldn't it be more beneficial to work with multiple agents and the one who shows me the property I buy gets the commission?
I know it doesn't work like that but I'm just curious.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes3y
I would definitely expect a realtor to bring you properties that meet your criteria and not just take you to look at ones you find.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes3y
Quote from @Chris Loh:
Here's another question I though about.
I'm looking in the city of Los Angeles. My price range for the area is low making the pool of houses low. So, checking websites to see if there's any new listings is fast and easy. This is what originally got me thinking, what is my real estate agent doing?
With that said, in my situation, wouldn't it be more beneficial to work with multiple agents and the one who shows me the property I buy gets the commission?
I know it doesn't work like that but I'm just curious.
If youre looking at low priced properties....its going to be hard enough to find 1 agent that wants to work with you. And to be honest, they likely wont be very good.
District Invest Group545 Reviews - 3yGreg PowersPro MemberReal Estate Agent · Manchester, NH · Member since 2013 · 120 posts · 159 votes
@Chris Loh, if you pay all of them by the hour, sure—work with as many as you want. But agents only get paid when you close on a property, so your model means you’ll end up working with zero agents. Generally speaking, the best agents only work with people who commit to working with them through some kind of Buyer Agency agreement, so that they are guaranteed to be paid for all the time and energy they’ve invested with you IF they are successful in helping you close on a deal. I work with some investors who don’t want to hire me, but I know they are ready, willing, and able to close on a deal because they’ve got a track record of doing so.
I would find one great agent and stick with them, as long as they prove themselves worthwhile. If they don’t, fire them and find the next one. But don’t try dating a bunch of them at once.
- 3yAdam BartomeoBusiness MemberReal Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
I have never been shy about telling the truth. Most agents are complete boobs, who don't understand real estate, real estate investing, or sales. That is the truth. To expect an agent to understand how to calculate "cash flow" and find a property that cash flows $500+ a month is going to be almost impossible. Maybe 1% - 2% of licensed agent will get the math right. There are very few agents that truly understand investing. I became a broker for this reason. You are MUCH BETTER OFF sending them properties that you have already underwritten, that's what I did before I became licensed. I wouldn't accept a referral unless I interviewed the agent to understand what their experience is and what they know.
Bartomeo Property Management4.7150 Reviews - Real Estate Consultant · Bahamas · Member since 2009 · 37 posts · 7 votes3y
Differs i imagine depending on the jurisdiction however @Marcus Auerbach did a good job of outlining the key points.
From a general standpoint i'd give a rough summary based on both sides.
For Agents and Brokers Representing Sellers:- Property Valuation: They assess the market value of the property, using comparative market analyses, to recommend a competitive listing price.
- Listing the Property: They manage the process of listing the property on multiple listing services (MLS) and other platforms, ensuring visibility to potential buyers.
- Marketing: This includes photographing the property, arranging virtual or physical tours, creating property descriptions, and advertising through various mediums such as online platforms, newspapers, and magazines.
- Negotiating Offers: Agents help sellers evaluate offers, provide guidance on terms, and negotiate prices and conditions.
- Paperwork and Transactions: They ensure all paperwork, including contracts, disclosures, and other essential documents, are completed correctly and in a timely manner.
- Closing Assistance: Agents guide sellers through the closing process, ensuring all requirements are met and the sale is finalized smoothly.
For Agents and Brokers Representing Buyers:
- Understanding Buyer Needs: Agents work to understand the specific needs, preferences, and budget of buyers to help find suitable properties.
- Property Search: They use various tools, including MLS, to search for properties that match the buyer's criteria.
- Arranging Property Viewings: Agents schedule and accompany buyers on property tours, be it virtual or physical.
- Making Offers: Based on market analysis and the buyer's position, agents assist in making competitive offers on properties.
- Negotiation: Agents negotiate terms, price, and contingencies on behalf of the buyer.
- Paperwork and Transactions: They handle or facilitate all necessary paperwork and documentation, ensuring all elements of the purchase agreement are clear and in the buyer's best interest.
- Closing Assistance: They guide buyers through the closing process, from securing financing to finalizing the purchase.
For Both Buyers and Sellers:
- Legal and Regulatory Guidance: Agents help clients understand legal and regulatory requirements related to property transactions. However, they do not offer legal advice (that's the domain of attorneys).
- Networking: They often have networks of other professionals, such as inspectors, attorneys, and lenders, which they can recommend to their clients.
- Market Knowledge: Agents provide insights into local market trends, neighborhood specifics, and other pertinent information.
- Problem-solving: Unexpected issues often arise in real estate transactions. Agents use their experience and resources to address these problems.
- Member since 2021 · 217 posts · 190 votes3y
Realtors don't exist to find viable real estate deals for investors. They exist to hunt commisions.
Realtors may disagree. Ask some investors instead. If you find one who actually has a realtor that brings them lucrative, year 1 deals, ask to use that realtor. Tell me their name while you are at it.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Chris Loh:
Hi BP Forum Members,
I'm a first time home buyer. I found a loan officer I really like and he recommended a realtor. I haven't really had time to speak with the realtor but I was wondering what his responsibility is? To be more exact, can I tell the realtor I'm looking for a property that cashflows $500 if I house hack it and send him to work? Or do I just send him properties I want to look at? What should I expect from my realtor and where should i draw the line on what I can ask?
Thanks for the advice in advance!
Honestly this would not work. You can NOT and SHALL not outsource your investment request / goal to the realtor without pre-educating yourself, they are not designed to do that. But they can give rough number. For example, if you know your mortgage would be $3000/mo and there're 2 rooms only and 1 room can be rented for $900/mo only, you know there is $2100 gap in there. You have to solve this problem first, make your number right. So now lets move to scenario where your mortgage is $2,500 ; you rent two rooms for $1100 each, that translates to $300 mortgage in your end, but still -$800 gap from your number.
Make sure you run conservative number. Once you have brainstormed this number in your logical thinking, than you could find SF that has minimum 3BR setting within your pre-range.If you are methodological and logical and also rationale, they would help you. But if out of nowhere you just requesting $1,000 cashflow from 2 BR SF in Class A property, they may run away LOL
Realtor is good when they do DD on the inspection, neighbor analysis and price negotiation. Beyond that you have to educate yourself.
- Real Estate Consultant · Bahamas · Member since 2009 · 37 posts · 7 votes3y
Quote from @Account Closed:
Realtors don't exist to find viable real estate deals for investors. They exist to hunt commisions.
Realtors may disagree. Ask some investors instead. If you find one who actually has a realtor that brings them lucrative, year 1 deals, ask to use that realtor. Tell me their name while you are at it.
I think its because many are not trained to do so. A lot of what real estate agents can and should do goes misconstrued quite often. The fault being laid from the expectations placed by the agents themselves as well as the general public
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes3y
Quote from @Hartman Longley II:
Quote from @Account Closed:
Realtors don't exist to find viable real estate deals for investors. They exist to hunt commisions.
Realtors may disagree. Ask some investors instead. If you find one who actually has a realtor that brings them lucrative, year 1 deals, ask to use that realtor. Tell me their name while you are at it.
I think its because many are not trained to do so. A lot of what real estate agents can and should do goes misconstrued quite often. The fault being laid from the expectations placed by the agents themselves as well as the general public
When I got licensed in 2015 I had been investing for 8 years, had just quit my corporate job and was living more than comfortably on passive income. So, I thought this is great, I am one of the few agents in Milwaukee who can actually analyze the best deals and I'll have a lot of investor clients...
That turned out to be a little naive. Like all new agents, I had a lot to learn.So every time I found a great deal and brought it to clients, they looked at it and where kind of: Meh. Looks okay. Do you have one with a little more cash flow?
And the more I did this, the more they relied on me and the higher the expectations became on what a great deal was. And this was the time before Milwaukee started appreciating and had a lot of really great deals! It worked sometimes and we closed a few deals and we had a few issues with a tenant not wanting to move out or not accepting the new lease with the new owner - guess who's fault that became?
So, I had to change my strategy from bringing clients great deals, to helping them with how to analyze a deal and that worked much better. And that's why we (my team) only "bring" deals to clients who are already proficient, typically have already done deals with us. - Real Estate Consultant · Bahamas · Member since 2009 · 37 posts · 7 votes3y
Quote from @Marcus Auerbach:
Quote from @Hartman Longley II:
Quote from @Account Closed:
Realtors don't exist to find viable real estate deals for investors. They exist to hunt commisions.
Realtors may disagree. Ask some investors instead. If you find one who actually has a realtor that brings them lucrative, year 1 deals, ask to use that realtor. Tell me their name while you are at it.
I think its because many are not trained to do so. A lot of what real estate agents can and should do goes misconstrued quite often. The fault being laid from the expectations placed by the agents themselves as well as the general public
When I got licensed in 2015 I had been investing for 8 years, had just quit my corporate job and was living more than comfortably on passive income. So, I thought this is great, I am one of the few agents in Milwaukee who can actually analyze the best deals and I'll have a lot of investor clients...
That turned out to be a little naive. Like all new agents, I had a lot to learn.So every time I found a great deal and brought it to clients, they looked at it and where kind of: Meh. Looks okay. Do you have one with a little more cash flow?
And the more I did this, the more they relied on me and the higher the expectations became on what a great deal was. And this was the time before Milwaukee started appreciating and had a lot of really great deals! It worked sometimes and we closed a few deals and we had a few issues with a tenant not wanting to move out or not accepting the new lease with the new owner - guess who's fault that became?
So, I had to change my strategy from bringing clients great deals, to helping them with how to analyze a deal and that worked much better. And that's why we (my team) only "bring" deals to clients who are already proficient, typically have already done deals with us.Sounds like you have built yourself a nice niche. You came into the field with some first hand experience and thats great and im sure made effforts along the way to learn more. I find most agents havent even purchased a property or made any type of meaningful investments and try to purport themselves as investment experts( misleading title)
- Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes3yAloha,
I am surprised only one poster touched on this subject, but it is of utmost importance: WHO is the Agent actually representing? You need to understand the law of "Agency" for your state, and be clear about who the Agent's fiduciary duty is owed, and what exactly that means. You likely have the option of signing a Buyer's Exclusive Agency Agreement with an Agent of your choice, indicating that Agent IS working for you. A listing Agent showing you their Client's property, however, is working for the Seller. Depending on local law and the office policy of that Agent, they may be able to act in the capacity of a Dual Agent; or allow you to be "unrepresented"; or treat you as a "customer", which usually means they will help you "fill in the blanks" on a purchase offer for their Client's property, but they cannot advise you what to fill most of those blanks with.
In theory, all Agents must be fair and honest in their dealings with Buyers AND Sellers, BUT, they are limited by law in what they can reveal about their actual Client to other parties involved.
Another point I would like to make is regarding comments about Agents not understanding the numbers. While certainly true, I can tell you from my experience, a very large percentage of so-called investor Owners are just as clueless. Sure, the Big Guys have it down to a science, but the average Mom & Pop, and most small time RESIDENTIAL investors only look at two things...how much do they REALLY need to spend today? And the monthly NET they receive. On the other hand, the Commercial guys, they typically have a very sharp pencil. Hi Everyone,
Like always, I appreciate the time you're all taking to comment.
I spoke with an agent I reached out to a few months back. I told her what I was looking for and she said it was going to be hard to find something but she was willing to help. Then I asked her thoughts on working with more then one realtor and she said she completely understands considering the circumstances. She set me up on her search platform so I can look at properties.
Overall, I understand it's up to me to run the numbers to make sure I was getting a good deal. I also realize finding a cash flowing property is tough. It's hard enough even finding one to get into.
I'm going to talk to my loan officer to see if pre-foreclosures are an option and see if it's an option I can explore with a realtor.
Have a good night!
- Real Estate Broker · Milwaukee, WI · Member since 2015 · 299 posts · 90 votes3y
I got into real estate by accident. I'm still a landlord for over 30 years (before bp), worked as a lending mgr for 10 years then when the bank cut our jobs (merry christmas ) Then i got my license then my broker's license. I said to myself if i ever became an agent i would 1st ANSWER MY PHONE! There are quite a few lazy agents and others claim to be too busy as an excuse. My no1 priority is great customer service and treat each transaction as if i were buying the property myself!
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