Here's the situation:
I have been working with a buyer's agent to find investment properties. My agent has never asked me to sign a contract, and has yet to walk me through a property yet. We have contacted somewhat regularly (1-2 times per week on average) via email whenever I have asked for more information on properties that I've found on the MLS. This agent has only "highlighted" one or two properties that I should look at -- the rest have been me finding interesting ones on the MLS and initiating contact by asking for more info.
Separately, I've found an FSBO that I may be interested in. They say they will work with a buyer's agent, but in this case "my" agent hasn't done anything to facilitate the deal. I am ok with my agent getting paid their commission for MLS properties that I can't do all of the research for, but for off-MLS properties it seems like I'm giving money away (in the form of the seller not going as low on the price) if I use my agent.
I know that legally I am ok with no contract in place, but I also don't want to get a reputation as someone who gives agents the run around. Thoughts?
Great post. Here's one suggestion that may help you to make a decision on using your agent in a FSBO transaction. Look at this situation from the point of view of your agent. The agent works to receive payment for service they render. The agent has delivered service to you and has received no compensation for that service. How much would you be willing to do on a continuous basis for zero compensation?
By putting yourself in the shoes of the other person, you can clearly see where they are coming from and that may help you to understand that person better. Even in a FSBO situation your buyer's agent can offer you services that could help you get a better deal. The price may be slightly higher because the seller pays the agent commission. It is up to you to decide if this is a deal breaker for your and also a relationship breaker for you and your agent.
Also, as an investor, consider getting a real estate license if you do not have one. There are many advantages for investors who have a license.
Hope this helps.
I'm an agent that works primarily with investors so I actually love this situation that you're mentioning because it's interesting. Is there any reason why your agent hasn't shown you properties yet ? Is he refusing to show them or discouraging you from viewing certain properties ?
From personal experience I know some investors would rather look through the properties on their own and some would rather their agent only send properties that fit their criteria. I have two clients like this one guy likes to go through the MLS list I send him, drive by the properties first and then we set up a showing for the ones he likes and I have one guy who wants me to filter things and then send them to him. Personally I don't mind either because I enjoy working with investors. I would suggest talking with this agent about your needs and expectations from him.
As far as the FSBO goes that is a hard one because it's really based on your relationship. Everyone should be compensated for their time and effort but if you're dealing with someone who isn't putting much effort into helping you I would probably just give him a few hundred bucks and part ways. I've had clients who ended up buying FSBO or buy from wholesalers and I do the comps for them and they still pay me but I'm pretty sure they paid me based on my effort and time I've put into helping them with other deals.
Thank you both for your thorough responses!
I have only asked to walk through one property so far. My agent had a separate client make an offer on the property already, so she didn't feel right showing me the place and taking an offer from me as well. She coordinated for a separate agent from the office to walk me through the property on very short notice. The only thing I didn't like about the situation was that it fit the criteria that I had laid out almost exactly, but I wasn't given a heads up on the property.
I certainly do not want to take advantage of anyone or have them work for free. While she has been very prompt on providing me additional information on items I request (disclosures, utility statements etc.), I wouldn't say she's put a ton of time into the whole thing. If I had MLS access I would not even consider a buyer's agent. Once I start direct mailing for my own properties, I certainly will not use a buyer's agent.
Also -- it gets more complicated. I have previously submitted an offer with this agent, and part of the offer packet was a contract. My wife (we were offering under her name) signed the page, but nothing was filled out other than her signature. For example, the section that states who the representative is was left blank, the period of the contract was blank, retainer fee was left blank, etc. I fully acknowledge we should not have signed this as a blank document, but is this now obligatory?
The agent you are working with doesn't sound very motivated to work with you. I would be setting up that appointment to get out there and look at investment properties with you. It's a fun business and I enjoy going through the process with my clients.
You should look at hiring an agent that can bring some knowledge and experience to the investment that you don't have. When buying an investment property, it is crucial you know what you are comfortable with as an investor and find professionals that can make up for your weak points, then learn from them.
Also consider this relationship with your agent, and be honest with yourself whether you both will hit it off. Have fun and do all your homework.
That is a hard question to answer. It goes back to your relationship with the person. Your "obligations" end with your business relationship. Since I am assuming the agent did not send you the FSBO and you don't have a mutual or contractual agreement on how these are to be handled, in my opinion it's fair game.
You may want to have a frank discussion with your Buyer's Agent on your expectations in the relationship. It will help dissolve some of these gray area issues and hopefully help in forming a better business partner and not just a Buyer's Agent. Investor needs are different from the general public. Realtors should be considered as a vendor/business associate.
If It's called an agency disclosure then it should only be obligatory for that deal but I'm not sure what the laws or real estate regulations are in Australia.
I can tell from the contractual language that it's designed to be used for any buyer representation, and is not specific to that deal. The interesting thing is that the agent submitted it to us for signature without filling in any of the details. It still has all of the standard language, but the blanks __________ are left in place for the important details like period of contract, buyer, and broker assignee.
I appreciate all of the feedback in this thread! Regardless of what happens with this particular property, I am convinced that I need to clarify with my agent that I only wish to partner with them on the buy-side for MLS properties.
Another question that comes to my mind is - have you purchased a property recently? Do you know how to move this transaction smoothly? Since this is a FSBO, are you prepared to help the sellers, who may not know what they are doing? As you typically don't pay for the buyers agent, why not let them take part so you don't have to take so much of your time?
Probably a time for a face to face chat with that agent. You can talk about what each of you wants, ideally, from the other and see if this is a worthwhile thing to continue.
For the FSBO that you are considering offering on, maybe you could arrange that the seller could pay the agent a limited commission (1%? 1.5%?) for doing the paperwork on the deal: filling out the settlement statement, ordering title searches, setting up the closing, etc... I don't know what's usually considered the agent's job and what is the title company's job in closings AK but there's bound to be stuff where an experienced person would be very helpful.
I think that by signing a brokerage agreement (or your wife signing) you actually really have legally entered into an agency agreement. Those can be changed at any time by mutual agreement, of course. And if you're really not happy then my guess is that the agent will be fine with letting you go -- it's usually just not worth the hassle to deal with someone who doesn't want to work with you.
My agent will run the misc paperwork and interface with the title company for $500 on simple FSBO deals we bring her. We probably don't need her for them and I have done a couple FSBO myself and the title company handled everything needed but I like knowing she dots the I's and crosses the T's for me.
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