Why Do I Need A Real Estate Agent?

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Why Do I Need A Real Estate Agent?

Stephen Witkowski
Rental Property Investor · Rockville, MD · Member since 2018 · 23 posts · 17 votes

Hi everyone!

I’m a new real estate investor. I’ve started to learn more, browse the forums, listen to podcasts, and attend meetups. I keep seeing people seek out and utilize real estate agents, but I’m not sure why.

Simply put, why do I need a real estate agent?

Sorry for the ignorant question, and I don’t mean to offend any agents out there, but I don’t fully understand the role of a real estate agent.

Why should I find a real estate agent when looking to buy an investment property? When should I involve an agent? Do you generally have one agent you work with, or does each property have its own agent?

Thanks for the help!

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David Zheng
Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
7y

So I'm going to go against the grain here. I used to use agents, but now I don't. I'll work with a selling agent if there is one but taking one middleman out always helps in terms of communication. I think agents are good if 1. you are a noob homebuyer/investor who doesn't have time or doesn't know anything about the buying process. 2. you are a seller who doesn't have time or know the process. 3. trying to invest out of state/or your area of expertise.

Once you familiarize yourself with the process, you can do what an agent does and sometimes better. No more scheduling through them, cutting out costs, miscommunications, etc.

personally, my last 6 deals have been without buying agents. I'll take my 2 page office depot sales contract to the seller, have them sign it, and let the title company do most of my legal legwork. I have my appraiser/inspectors/contractors run through the place and give their reports to my bank and bam. 2 week close.

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  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    7y

    A good agent should be your eyes and ears and be verification to deals you find if they don't present something first.  The agent should be able to go look at a property before you do or give a second opinion as to why it's not worth it.

    Then...once you submit an offer a good agent should know the other agent or why the owner(s) are selling. Then the two of you construct a valuable offer that might not be the highest price but is best to the seller.  These offers should be targeted and your agent should have a reputation that their clients can close with no hasles ....

    Then the inspections and appraisal comes..your agent is there to ensure things are documented and captured as needed... But at same time they should understand what's acceptable/not. No need to derail a closing over a non-issue etc...

    The short version is your agents value is in their Network and technical knowledge.  They are not there to soley find you properties, rather to help you evaluate properties you find (if you are the type to constantly check mls) or they have in inventory.

    15Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    This thread is a good example of why having a good agent helps protect your liability. The guy who lost this $25k was an agent himself, but had very little experience.  There are 1,000 ways a deal can go south, this is just one example.

    https://www.biggerpockets.com/forums/51/topics/579129-25-000-in-emd-wire-fraud

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  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    7y

    For us, an agent needs to be the familiar face that takes over a signed contract and an earnest-money check and tells the seller, whom he has typically known for decades, "I know this guy. This signature means he will not back out of this sale."

    I live in a part of the USA where there are still many people of character who simply will not do business with those of questionable character for any amount of money. It's the finest thing about this part of this country, and it has moved me to tears on occasion.

    4Reply
  • Sharon Rosendahl
    Investor · Quilcene, WA · Member since 2017 · 235 posts · 169 votes
    7y

    A good agent is valuable, a bad or mediocre one is rather useless. Some times it is nice to have someone else dealing with pushing when that is necessary. Since I buy out of my home area it is nice to have a local in the know for contractors, inspectors and other professionals.

    5Reply
  • Cory CarlsonBusiness Member
    Real Estate Broker · OR · Member since 2018 · 311 posts · 226 votes
    7y

    Blatant familiarity with the processes. Also, seller pays commissions so why wouldn't you? The forms that put you under contract are understood by your broker and how they protect you the buyer. Its for your own protection 

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  • David Zheng
    Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    7y

    So I'm going to go against the grain here. I used to use agents, but now I don't. I'll work with a selling agent if there is one but taking one middleman out always helps in terms of communication. I think agents are good if 1. you are a noob homebuyer/investor who doesn't have time or doesn't know anything about the buying process. 2. you are a seller who doesn't have time or know the process. 3. trying to invest out of state/or your area of expertise.

    Once you familiarize yourself with the process, you can do what an agent does and sometimes better. No more scheduling through them, cutting out costs, miscommunications, etc.

    personally, my last 6 deals have been without buying agents. I'll take my 2 page office depot sales contract to the seller, have them sign it, and let the title company do most of my legal legwork. I have my appraiser/inspectors/contractors run through the place and give their reports to my bank and bam. 2 week close.

    25Reply
  • Lien VuongBusiness Member
    Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
    7y

    An agent helps to assist you in the search of the property, analyzing the deal, negotiating the right price for it, and gets to the finish line! 

    If you're just starting to look at deal and trying to figure out your footage it will be a good idea to start interviewing agents to see which one is oriented towards the same market you like and know how to analyze the deals properly. 

    What connections do they have in the RE market? How strong is their network for vendors such as attorneys and tradesmen for example? How man investors are they currently working with? 

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  • Christine Kankowski
    Real Estate Broker · Temecula, CA · Member since 2014 · 994 posts · 782 votes
    7y

    They have all the proper forms to be used in the transactions.  They can counsel you on who pays for what during the transaction without having any emotions about it.   Title, termite, repairs, inspection, escrow, natural hazard report, etc. 

    They should be well versed in negotiation to get you the best price. They should also know about loans, appraisals and counsel you to get your deal closed on time. They should know the area and have MLS available to reserach comparable sales.

    Lots of deals fall through when buyers and sellers can't come to an agreement about something during the process, agents help finesse this along. 

    Sellers pay the agent fees, so as a buyer, agents are super helpful to you.   Lots of times, the listing paperwork states taht if the buyer doesn't have an agent, the listing agent gets the commission that would have been given to that agent, so it's not like you can get a better deal without an agent.

    3Reply
  • Becca Summers
    Real Estate Agent · Highland, UT · Member since 2015 · 407 posts · 272 votes
    7y

    @Stephen Witkowski I think you asking this question means you need an agent.  Once you've done a lot more you might not need one as @David Zheng said.

    A Realtor will help you through the whole process from where to start, financing, house hunting, rent amounts, insurance, title insurance, contracts, addendums, inspection, appraisals, closing, walk thoughts, utilities, repair costs, ARV, and answer all the questions that might come up.

    The hardest part is not all Realtor do work with investors or the work with them but have no idea what they are doing. You need to find one that invests themselves to help you.

    5Reply
  • Tchaka Owen
    Real Estate Agent · Merritt Island, FL · Member since 2017 · 986 posts · 1k+ votes
    7y

    @Stephen Witkowski - as an investor and licensed real estate agent, I could easily flip the question back to you. Why do you feel you don't need a solid real estate agent?

    There are reasons why you might not need one, for example, you're a wholesaler and you choose to find properties off-MLS only. Or you're so savvy you can do everything on your own and you know your local market like the back of your hand. Or perhaps you're so wealthy that if you screw up, eh...no biggie. If any of these apply to you, you don't need a real estate agent.

    Most good investors I've come across either have licenses or hire agents for some tasks. They don't call agents for every little thing, just when it makes business sense to do so. I have hired agents in the past (and as I mentioned earlier, I'm an agent) because it was worth it do so.

    Figure out what you want to do in real estate investing then see if an agent will facilitate your success. 

    7Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    7y

    When you no longer need to ask the question, at that point you probably don't need an agent. And I don't mean that in a snarky way, I work with lots of people who don't use agents, just last week an email chain was forwarded to me where an investor was educating the listing agent how to properly fill out a standard California Association of Realtors purchase contract. That guy clearly doesn't need an agent (& the seller probably isn't getting top dollar with that particular listing agent shhhh don't say anything until it closes). 

    I don't know your market, so I'll use mine. You don't know what you don't know. Typically the seller pays the state transfer tax, and the buyer/seller split the massive Berkeley or Oakland transfer tax 50/50. A FTHB without a local agent wouldn't know that, and wouldn't even realize that the listing agent making it 100% buyer paid just dinged them $6500 in closing costs relative to local market norms. What about the sewer lateral, who typically pays that? And so on.

    9Reply
  • Kahl McDevitt
    Wholesaler · Jacksonville, FL · Member since 2012 · 6 posts · 4 votes
    7y

    A valid question, Stephen!  I got my FL Realtor Agent's license in 2016 and allowed my license to expire on Sept 30th of 2018.  Jumping through "101 hoops" again to earn NO $$ while creating a seemingly endless list of folks who were all-too-eager to TAKE my money isn't anything I consider worth repeating.  I was made aware of the unbounded IGNORANCE of many licensed R-E Agents, however.  Expect excellent results from good ones; expect nothing from less-than-good ones!  [So far, I haven't learned how to spot the difference up-front.  For sure, not from their 'claims'.]

    3Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    7y
    Originally posted by @David Zheng:

    So I'm going to go against the grain here. I used to use agents, but now I don't. I'll work with a selling agent if there is one but taking one middleman out always helps in terms of communication. I think agents are good if 1. you are a noob homebuyer/investor who doesn't have time or doesn't know anything about the buying process. 2. you are a seller who doesn't have time or know the process. 3. trying to invest out of state/or your area of expertise.

    Once you familiarize yourself with the process, you can do what an agent does and sometimes better. No more scheduling through them, cutting out costs, miscommunications, etc.

    personally, my last 6 deals have been without buying agents. I'll take my 2 page office depot sales contract to the seller, have them sign it, and let the title company do most of my legal legwork. I have my appraiser/inspectors/contractors run through the place and give their reports to my bank and bam. 2 week close.

     Using a seller's agent is still using an agent...

    But, if you're local I see you point and a low-ball offer more likely to get accepted if another agent isn't get a split of the commission.  If you're not a full time investor or have something else you do using an agent can be extremely valuable in the sense of saved time..

    2Reply
  • Margie Pierce
    Rental Property Investor · Minneapolis, MN · Member since 2017 · 33 posts · 13 votes
    7y

    I’ve been an investor for two years. I’ve used a buyers agent and I’ve let the sellers agent get a dual agency. Anyone who tells you that you don’t have an advantage doing a dual agency is lying to you. Also, it’s soooo cumbersome getting hold of your buyers agent, having them get hold of the sellers agent, then they get hold of the seller. Yuck. If someone brings me a deal I’ll use them as a buyers agent. Otherwise I’ll hunt alone and beat competition because I’m faster and the agent can give me a percent or two. 

    2Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @Margie Pierce:

    I’ve been an investor for two years. I’ve used a buyers agent and I’ve let the sellers agent get a dual agency. Anyone who tells you that you don’t have an advantage doing a dual agency is lying to you. Also, it’s soooo cumbersome getting hold of your buyers agent, having them get hold of the sellers agent, then they get hold of the seller. Yuck. If someone brings me a deal I’ll use them as a buyers agent. Otherwise I’ll hunt alone and beat competition because I’m faster and the agent can give me a percent or two. 

     Yeah you have an advantage of being taken advantage of.  Every property where Im the listing agent, and a buyer comes straight to me....they 100% of the time pay more for that property than if they had an agent. Home inspection, no way. Non reunfable earnest money, absolutely.  I know with someone who doesnt have an agent, I can push them into some bad decision making and put my client the seller into an extremely optimal position.

    I love it though. I make more money, my sellers make more money, the unrepresented buyer pays more and convinces themselves how smart they were not to have an agent.

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  • Daniel Pierson
    Investor · San Francisco, CA · Member since 2015 · 75 posts · 25 votes
    7y

    @Russell Brazil point taken.

    Would your answer change if an investor brings you an off market deal they want to purchase and wants you to facilitate both ends of the transaction?

    2Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @Daniel Pierson:

    @Russell Brazil point taken.

    Would your answer change if an investor brings you an off market deal they want to purchase and wants you to facilitate both ends of the transaction?

     I represent my client to the best of my abilities in the manner that they want.  Typically in a situation like you are alluding to...the person coming to me knows I have someone in my database that is a buyer for their property. In those instances, Im operating more as a market maker as opposed to trying to get the best deal for my client.

    What I mentioned in the previous post was more geared towards the people who think by going straight through the listing agent, that they are going to get the property....that may in fact be true, but they simply dont realize that due to their naivety that they are screwing themselves over.   

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  • Debora L Griffin
    Flipper/Rehabber · Lake Charles, LA · Member since 2016 · 15 posts · 9 votes
    7y

    @Russell Brazil THIS is one reason I don’t like duel agency...I’m an investor and duel agency sometimes occurs. But I always feel like my agent negotiates better when they aren’t negotiating against themselves.

    4Reply
  • Tchaka Owen
    Real Estate Agent · Merritt Island, FL · Member since 2017 · 986 posts · 1k+ votes
    7y

    @Russell Brazil - what you described is not true dual agency, it's seller's agent and non-representative for the buyer. And yes, the buyer will pay more. 

    4Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @Tchaka Owen:

    @Russell Brazil - what you described is not true dual agency, it's seller's agent and non-representative for the buyer. And yes, the buyer will pay more. 

    Yeah I dont do dual agency. (its not legal in Maryland) and even while legal in DC/VA, I find no reason to do it. I have a relationship with my client who Im going to do multiple deals with, and have zero relationship with some stranger off the street who came to me without an agent

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  • Benjamin Haberman
    Real Estate Broker · Ocean View, NJ · Member since 2014 · 188 posts · 82 votes
    7y

    @David Zheng what kind of product is bank giving you ? Are these buy and holds or flips?

    1Reply
  • Matthew Olszak
    Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
    7y
    Originally posted by @Russell Brazil:
    Originally posted by @Margie Pierce:

    I’ve been an investor for two years. I’ve used a buyers agent and I’ve let the sellers agent get a dual agency. Anyone who tells you that you don’t have an advantage doing a dual agency is lying to you. Also, it’s soooo cumbersome getting hold of your buyers agent, having them get hold of the sellers agent, then they get hold of the seller. Yuck. If someone brings me a deal I’ll use them as a buyers agent. Otherwise I’ll hunt alone and beat competition because I’m faster and the agent can give me a percent or two. 

     Yeah you have an advantage of being taken advantage of.  Every property where Im the listing agent, and a buyer comes straight to me....they 100% of the time pay more for that property than if they had an agent. Home inspection, no way. Non reunfable earnest money, absolutely.  I know with someone who doesnt have an agent, I can push them into some bad decision making and put my client the seller into an extremely optimal position.

    I love it though. I make more money, my sellers make more money, the unrepresented buyer pays more and convinces themselves how smart they were not to have an agent.

    100% true. I see it time and time again. Newbie buyer thinks they are getting the "inside scoop" on a hot deal, list agent (having no obligation to the buyer) tells them what they want to hear, and they get hung out to dry without even knowing it. Market comps take into account paying both sides of the commission, so if you're getting a "discount" by not using a buyers agent you're 99% of the time getting a "discount" off an inflated amount and poor terms. 

    I see this a lot with sub-$1MM multifamily listed in costar but not in the MLS. Buyer thinks they are getting something off-market, when in reality it was "on the market" on costar for over a year and I just didn't bring it to their attention because there was no deal to be had. But the list agent tells them what they want to hear, rainbows and unicorns, and bam, they overpay and close in 2 weeks waiving all contingencies. List agent still gets both sides of the commission (or something very close). Folks, if you're getting an off-market deal from a heavy-hitter and you don't have an established purchase history with them, question why YOU are getting presented this deal over someone else who they've worked with over 10+ deals.

    These days, with all the info on the internet, our job isn't so much about providing you with the listings, but rather the market knowledge. I various neighborhoods, I know the names of low-quality flippers. Agents who ALWAYS overprice listings just to fish for buyers. Blocks that don't get you the rents the rest of the neighborhood does. History of many buildings (like court/city compliance issues). I know the right professionals to work with like inspectors, lenders, and attorneys. I know the negotiation style of various agents and how to work with that to get you the best deal. How to buffer your message and the other side's message when things get heated. How to present your offer in the best way possible and how to recommend responding to counters so the other side doesn't just shut us down.

    2Reply
  • Doug Orchard
    Specialist · Tacoma, WA · Member since 2016 · 73 posts · 30 votes
    7y

    @Lien Vuong agents are very recalcitrant if you don't have "pre approved " or you don't have POF or you have the temerity to make an offer that's considered lowball. If you contact an agent through Zillow you get to talk to their "liaison " who's job it is to tell you that it can't be done unless you have the above prerequisite. I'm sick of talking to realtors!

    2Reply
  • Doug Orchard
    Specialist · Tacoma, WA · Member since 2016 · 73 posts · 30 votes
    7y

    @Doug Orchard sorry to vent I guess I’m just frustrated.

    1Reply
  • Matthew Olszak
    Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
    7y
    Originally posted by @Doug Orchard:

    @Lien Vuong agents are very recalcitrant if you don't have "pre approved " or you don't have POF or you have the temerity to make an offer that's considered lowball. If you contact an agent through Zillow you get to talk to their "liaison " who's job it is to tell you that it can't be done unless you have the above prerequisite. I'm sick of talking to realtors!

     If you can't provide proof of how you are going to pay for a property you are offering to purchase, why do you expect a professional to work with you, potentially for months on end? Those who are preapproved or have cash in the bank have no issue providing proof. Even when the amounts are in the 7 digits.

    6Reply
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