Signing a contract with a real estate agent

10 Replies

How common is it to sign a 6 month contract with a real estate agent? Would the seasoned real estate investor recommend a newbie to use this sort of arrangement to find investment properties?

My concern is by signing up with one real estate agent you limit your options/potential deals. And my second concern; would a non contract agent provide the necessary comps.

@Larry Russell

I have never signed a contract with an agent in advance of finding a property. Most agents I have worked with have the mindset that, if they work hard for me and hustle to show me the properties I need to see, I'll have no reason to work with another agent (which is true!). If you do sign, I would recommend that the contract has language that allows you to escape the agreement with written notice - you don't want to be stuck for 6 months if you soon learn that you and your realtor are not compatible.

Good question. I just got an email from a realtor a few days ago requesting that I sign a contract and I wasn't sure if it was good idea or not. I met this realtor at an open house and told her what I do and what I'm looking for, she sent me a few not so good leads and then this contract she wanted me to sign. I politely emailed her back and explained that I would sign a contract once I found a deal, I haven't heard from her since.

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@Larry Russell

An agent can program in your criteria and have MLS generate an email daily with those that fit the criteria. I don't know if I want to exclude me working with a listing broker.

The listing broker has direct contact with the owner and can offer the best intel. I want the listing broker to get full commission.

Is the agent willing to sign an agreement that you are their only client?

Paul

If you're looking for good MLS deals, you need to just go ahead and take the plunge and become a Realtor yourself. Do some searches on the forums here, there's plenty of discussion.

Originally posted by @Bryan L. :
If you're looking for good MLS deals, you need to just go ahead and take the plunge and become a Realtor yourself. Do some searches on the forums here, there's plenty of discussion.

Not to mention, if your a realtor your offers can be more competitive on MLS properties. Why? Because there is effectivly no buyers side agent, since you are your own agent, the listing agent will get both sides of the comission.

I really appreciate the feedback/responses from everyone. There's a lot to consider when trying to make the right decisions when it comes to real estate investing.

From an agent standpoint, the contract you would sign basically says the Realtor is going to get paid if you buy a house in the next 6 months.

If I'm going to work for you, find leads, houses, deals, I want to make sure I'm paid. I won't get paid until you close on a deal. If for some stupid reason you cut me out and go straight to the listing agent, I did a good deal of work for nothing. Or if i show you the house and you use your brother, who happens to be licensed, I don't want to get cut out. @Darren Sager said it better here.

Now, before everyone jumps on me for not using a buyer's agent let me explain. The listing agent has a legal obligation to get the seller the highest price, period. They have absolutely no reason and its illegal to pass along any info from the seller to potential buyer.

The buyer's agent has a legal obligation to the the buyer the lowest price. Of course you want to work with a buyer's agent. Doesn't cost you anything and you have someone who has to legally fight for you. (There is more than just price, but for simplicity sake...)

@Curtis C. As a licensed Realtor you could collect the commission. Why would the listing agent get both sides? You would be acting as the buyer's agent and therefore would be entitled to the commission.

Thanks,

Troy Weygandt

Troy said it. As a Realtor myself, I don’t want to put in that work for you and your cousins girlfriend is a Realtor and you go with them. I don’t do 6 months with investors, I do it deal to deal. Once we close on that deal we do new paperwork for the next so everyone has that warm and fuzzy.

@Larry Russell - depends on if the agent is good. If they are then you'll be fine with just them because you'll see all the deals you need to see. That said, you'll want to test drive the relationship with them prior signing any doc. Ultimately it's best not to sign anything but sometimes it makes sense to show loyalty.

Again, thanks for all the feedback/responses. These are very good comments. Things are going well with my real estate agent, but I feel I may be limiting my opportunities if I use only one agent. We decided to scale back the contract to 3 months as opposed to 6 months. This way I can re-evaluate after the 3 month test drive. This works well because I've established a goal of purchasing one property per quarter.