Are my expectations too high for a Buyer's Agent?

29 Replies

When I get involved in a business - Im very passionate and dedicated. My expectations are high. I really want to find someone who works as hard as I do. Im concerned that Ive set the bar too high.  I know they have other clients. I dont expect them to drop everything to help me. But Id like to know what is a realistic expectation to have. 

I wanted to purchase two properties before the end of the year. Cash for good deals that need work. My husband will be doing work and we have identified a couple of contractors.  Perhaps my target price is lower than they care to deal with for commissions. Under $20k each.

I have talked to two agents.

One I met via Zillow - and he showed us properties 3 weeks ago. We had a family tragedy which delayed my hunt for a couple of weeks but now I want to hit it even harder.  Im interested in one property that has sewage/septic issues - and the agent was going to use his contact with seller to find out more.  Ive identified more properties and have asked him to coordinate with my husband because I am out of town. Its been a couple of days.

The other was recommended by a friend and we have talked on email and the phone.  He said he'd contact me Sunday but did not. I sent him a message Monday - it is now Tuesday. 

Maybe I did not convey how serious I am - or maybe the commissions are too low.

Id like to develop relationships and find a relator in Pittsburgh who will even help with houses not on the MLS.

Any suggestions? 

Judy

You need to adjust your expectations. Most agents simply  wont deal with properties at this price range. They will make less than minimum wage to service properties at that price point. If you want good service at that price, you are going to need to offer an agent say a $5,000 commission out of your own pocket to make it worth their time.

If you are a cash buyer and are motivated, talk to the listing agent. If you haven't done so, get an inspection or if able, do it yourself. With that information negotiate the price ( the longer on the market, the better for you). You might build a good relationship with the listing agent (they are selling the types of properties you want).

I had an agent that kept steering me toward houses in the 150K range and I wanted houses under 100K. I quickly found a new agent. 

If you have a proper customer service oriented agent then it should not be a problem. It’s 2017, people have Zillow and Realtor and Trulia. Clients know what’s on the market for the most part and Can largely choose the properties they’d like to see. Our jobs are no longer as much about “selling” a property to clients as much as it is facilitating the purchase or sale after they’ve decided they want it.
That being said, you need to be aware that the average commission for an agent for a property under 20k, after commission split with their broker (many clients don’t realize how this works), may only be a couple hundred bucks. Now to put this in perspective. If an agent has a client who wants to see 3 houses that are prices at 125k and they likely stand to make a few grand on that makes it hard to make time for a client who wants to see 5 properties for 20k which will likely pay a few hundred dollars by the time it’s done. Multiply that by having multiple clients and it becomes exponentially more difficult for them to profitably dedicate their time for you.
I promise from an experienced agent that it’s nothing personal, it’s simply business. We’re independent contractors and technically self employees. I have a mortgage and bills to pay and a family to take care of. Time just has to be money.

3% of 20,000 is $600, and that's before the agent's expenses (which are likely much higher than $600 per sale), before they split it with their office/broker . . . and they only get it if/when the sale goes through. If I were a RE agent, I wouldn't touch that with a 10 foot pole. Or a 10 mile pole. It's a loser any way you slice it. 

I think you'll need to go directly to the listing agent to get access/information/showing, and expect to handle on your own all the niceties that a realtor might be happy to handle for 3% of a 200k or 500k house. Honestly, even the listing agent is going to be making almost nothing (or actually nothing) on this low priced a sale. I think you better get used to DIY'ing the purchase process.  

Im hearing 3.5% or a flat $2,000

Originally posted by @Judy Lipinski :

Im hearing 3.5% or a flat $2,000

 Only a newer agent is going to touch this, so at those price points, after factoring in brokers take, business overhead, divided by the average time to close a deal...an agent would be looking at $3.50 per hour for a 3.5% commission or $10 an hour at the $2000 flat fee. 

The level of service you get then should be consumite with what you would get from someone who works for $3.50 to $10 an hour.

(Estimated with 50% commission split, 80% profit margin and 80 hours per transaction)

Am I naive in thinking there is interest in building a relationship for future, bigger investments?

Russell hit the nail on the head. And don't think when you hear $2,000 flat commission that's what we actually see when it's done. We have to split our commissions with our brokerage depending on our agreements with them. Many times this is 50% or so. How much traveling did we do to see the property, inspections, closing, and paperwork? In Pennsylvania a standard sales agreement is 13 pages long. That doesn't include the other 50 or so pages of paperwork that we have to do for a deal. Just the closing table alone can take several hours depending on the closing company. We have to pay $50 a month for access to the MLS, we have to pay for access to the lockbox eKEY system. Many of us pay Zillow anywhere from $200-$3,000 a month for those advertsiments you see us on. An agent has a lot of overhead to maintain a business and do this work everyday. But if an agents time constraints force them to prioritize between clients then unfortunately the nature of the business is we have to go with the deals that will keep the lights on in our own homes.

This post has been removed.

@Guy Yoes Hit it on the nail My first two properties were $41k for both. I called the listing agent directly we closed and now he is my buying agent. When I see a deal I can just text him the address and put an offer in quickly with no pof.

Originally posted by @Judy Lipinski :

When I get involved in a business - Im very passionate and dedicated. My expectations are high. I really want to find someone who works as hard as I do. Im concerned that Ive set the bar too high.  I know they have other clients. I dont expect them to drop everything to help me. But Id like to know what is a realistic expectation to have. 

I wanted to purchase two properties before the end of the year. Cash for good deals that need work. My husband will be doing work and we have identified a couple of contractors.  Perhaps my target price is lower than they care to deal with for commissions. Under $20k each.

I have talked to two agents.

One I met via Zillow - and he showed us properties 3 weeks ago. We had a family tragedy which delayed my hunt for a couple of weeks but now I want to hit it even harder.  Im interested in one property that has sewage/septic issues - and the agent was going to use his contact with seller to find out more.  Ive identified more properties and have asked him to coordinate with my husband because I am out of town. Its been a couple of days.

The other was recommended by a friend and we have talked on email and the phone.  He said he'd contact me Sunday but did not. I sent him a message Monday - it is now Tuesday. 

Maybe I did not convey how serious I am - or maybe the commissions are too low.

Id like to develop relationships and find a relator in Pittsburgh who will even help with houses not on the MLS.

Any suggestions? 

Judy

 As another passionate, dedicated and hard working investor I find my own deals on Zillow and Realtor apps. No need to get an agent 

You can do the same. 

Just contact the listing agent of each property you want to see

Put the control into your own hands.  Don’t leave it up to an agent who will never be as dedicated to you as you are to yourself 

Originally posted by @Judy Lipinski :

Am I naive in thinking there is interest in building a relationship for future, bigger investments?

 Would you give your all to work for $3.50 an hour when you usually make say $350 an hour, because a stranger promises you they will pay you a lot more money down the road?

You asked in the title thread if your expectations were too high...yes they are.  Your expectations need to match the salary you are paying someone. You will simply get different levels of work from people when paying someone $3.50 per hour versus $350 an hour.

You should be able to get what you're asking for, if for no other reason than RE agents can set a minimum commission; it doesn't have to be a straight percentage.  Assuming you're investing in the Pittsburgh area you're probably too far out for @Ray Peslar to help directly, but I'd contact him nonetheless and see if he or is brokerage have someone out that way with the same work ethic.

Thanks,

Chaz

"Am I naive in thinking there is interest in building a relationship for future, bigger investments?"

Not at all.

@Judy Lipinski Have you showed these agent a proof of funds that shows you are a legit cash buyer? That may help. There are a lot of people in this business that say they are cash buyers when they really aren't so agents are sensitive to that.

@Judy Lipinski Unfortunately, the best way to build credibility with agents is to become known as a closer on deals and not just kicking tires. Investing starts off slowly then picks up as your reputation and experience grows. Good luck!

I dont understand why you don't just source your own deals.  It just takes a bit of marketing and you can learn that all here on BP. 

If that takes up too much of your time, you can easily turn to wholesalers.  We have a lot of wholesalers in Pittsburgh who would be happy to assist you.  What you are trying to find as far as the real estate is pretty easy. 

I hope that helps 

Josh

20,000 X 3% Commission = $600 for the Brokerage

Many agents make in the 70% of that realm = 420

Take a third away for taxes and the agent makes = $277.20

Have I done that? Of course. Will I do it again? You betcha. But is the buyer fixing it and then I am selling it later? If so then sure lets keep rolling, my money comes on the back end (When you list it for sale at $139,900. Is the buyer fixing it and then renting it out for the next 10 years? Well, where is my upside? The opportunity to find 10 more deals like the one above? If that's the case it's not really what my business is based off of. Even if you promised to buy 10 more this year I would end up at $2,770 for 10 houses, (you looked at some already so figure you want 1 out of 3) so I showed 30 of them. That's worse than grinding out at a fast food place.

Also if I have showed you 4 or 5 already and none are "Quite right" then I would question your ability/interest in closing. The people I generally would do that with call and say "Mike go look at 123 Main street or can you meet me tonight around 6ish, I'll bring the checkbook". Combined I have about 2 hours maybe 3 in the whole thing for the $277. Not horrible for a repeat customer. But a whole lot of work with little reward for someone with no relationship

Good Luck and I hope you find the right one.

Hi all - a few of you have asked why I don't source the deals myself.

Remember, I am new at this. I still have a lot to learn!

I have missed two houses so far that I was interested in because the numbers looked great. In both cases I could not reach the listing agent until it was already under contract. Weeks later.

With your advice, I will try and contact listing agents more often.

Ive started looking at Craig's list and I am now on 2 wholesalers email lists.

Whatever further advice you have - I am open to it!

IMHO, agents are wary of a time suck.  I had a frank talk with my realtor, what I wanted to see, what we would do once we view it.  Here is my opinion on low $ deals.  if the realtor is saving you/making you $$$... pay them yourself.  If they are digging up deals, working negotiations hard, PAY for that, because that is where you will make your $.  Promise to list your flips with them too.  realtors love stats.    People are willing to pay $400 for a home inspector or termite certificate... but the idea of paying a realtor is foreign... makes no sense.

@Judy Lipinski the average new car price is over $30K and in most cities a bare lot sells for $30-40K or more. Buying properties under $20K tells me they are in bad condition in a bad neighborhood. You are lucky any agent wants to work with you at all.

No problem investing in these properties, but you probably need to do most the work yourself as far as identifying the properties and checking them out. I normally recommend using a buyers agent, but in this price range, I would just work with the sellers agent. You might find a good sellers agent that becomes your buyers agent in the future.

As far as being naïve, there are lots of people who claim to be investors. Agents hear lots of talk, so how do they know you are the real deal? People want to be treated like they are a big investor when they are newbie with no experience. Your credibility is built after you close deals. It is like this in every profession. A doctor starts out as an intern and they get worked like dogs in the beginning. Stop complaining and close some deals, then you can earn the right to demand more.

The actual advice being given is much appreciated!

Ive never said I was complaining - Im learning. 

I want to treat whoever is helping me with respect and especially be sure to pay professionals for their time. Im a contractor in my own line of business, and I expect the same with my clients. Although there are times when I provide certain services knowing it leads to other deals.

The rates that I gave are what I was told. I didn't ask them to lower their rates.  I also talked to realtors and asked if they specialized in foreclosures and if they were interested in showing me these types of homes.

We are in Pittsburgh.  I wonder how that factors in when some of you are from cities where the cost of living is much higher?

Most agents are NOW administrative type meaning you need to view the properties yourself. They are there to guide you. At a recent listing I had 57 viewers first day, just 1 realtor card was left. Second day I had same faces , 2 additional cards. But realtors started calling me about making offers etc. Two days later we picked one buyer and informed other 7 offers that their offers were not accepted. Several I told agent do not bother to submit as they will not get the attention of sellers.  On very low priced home say $125K many wanted to low ball. One had $2.5M in the bank wanted 30% off. One wanted one half of listing agent commission back. It received 18 offers sold at $329K.

  

Hi Judy, I'm a former full-time Realtor. 

First, do deals under 20K each exist in your market? What is the average market price?

I will tell you when agents got leads for homes WAY under the market average at my brokerage they would usually refer it out to someone else. Like others have said, it was the hungry agents who would bite. One agent who got such a referral said bluntly she doubted a deal would come out of it since there is no inventory.

Having said that, I do not think your expectations are too high or unreasonable depending on your market and what the average home price is. You will need to do a lot more research though than just asking on Zillow. Those sites are basically playing roulette for both clients and Realtors. Think of it like online dating, you'll need to cast a much wider net. Also, word of mouth is the best way to find your agent. 

Do you attend any investor meet-ups? Do you have an insurance agent or another self-employed business owner who could refer you to such an agent? If you are part of an investment/real estate/wealth building community that's where you'll get your leads and referrals.

I know agents who specifically work with investors, low-balling offers (which is a HUGE no-no in this market.) To the point listing agents have complained to them about unrealistic offers and "wasting their time". They still did it though because it was part of their own business strategy (VOLUME) and it paid off. 

So those kind of agents are out there but you'll have to look.

Also, personally I would not ask the listing agent to double-end the deal and represent you. It's always in your best interest to have your own dedicated and separate agent. This is what I tell all buyers. The reason why you are getting advice to have the listing agent make the offer for you is in the scenario you literally have no other options because no legitimate buyer's agent will represent you. 

I think you do, but again, you'll have to dig. If you don't or can't dig, then go with the listing agent. You can also do online only deals through Open Listings which specializes in distressed properties. 

Good luck and let us know if you ever find someone!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.