How to find a good buyer's agent? And make it worth their while?

Buying & Selling Real Estate
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How to find a good buyer's agent? And make it worth their while?

Lynn Harrison
Garberville, CA · Member since 2011 · 193 posts · 6 votes

We are looking at REO's and I'm thinking it might be better in our case to get a buyer's agent than work with the main listing agent in our area. We haven't got any recommendations for one yet.

My main concern is finding an agent who is not going to outbid us if we find a good deal... I don't know if it is legal for them to do so or not in California, but it seems like an actual concern here. Any such thing as a "no conflict of interest" form or something?

My second consideration is a real estate agent is not going to be making much on any REO deal we would buy. The commission would be minimal. I would like to arrange things so that the agent does not have to show us houses & does not have to search MLS listings etc.- we don't want to waste their time and can look ourselves.We just want someone to make offers for us and cover our butts with earnest money, escrow etc. Do you all think an arrangement like that might make it palatable for a buyer's agent to represent us? Less money but also less time? We are looking to buy one property only.

And does anyone have an idea whether or not getting a buy's agent from the same company as the listing agent would work in our favor? perhaps the same company but from an office in another town? Most but not all of the agents who are familiar with REO's are in the same company.

Any ideas on this would be greatly appreciated.

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Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
14y
Originally posted by Bienes Raices:
...I don't understand why your low offers would suddenly be more enticing to the listing agent in your town if she now has to split a commission with your buyer's agent.

That is wisdom gained from the BP forums shining through! The commissions on these bottom of the barrel properties will be low as it is, and the way it will end up getting split will not get any agents jumping for joy. And if there are bigger dollar properties for that buyer's agent to work on, where do you think more effort will be placed?

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  • Laura R.
    Real Estate Investor · Palo Alto, CA · Member since 2008 · 12 posts · 2 votes
    14y

    Lynn --

    this is a challenging issue. We live in California, but do all of our investing out of state using real estate agents who specialize in selling to investors. Have you checked into these resources --

    1. www.reoagents.net :: Website listing agents who sell REOs/ this doesn't mean, of course, that that is all they do, and you may have to kiss quite a few frogs, but you might find a few people who do this.

    2. www.icg.com -- A RE investor referral agency. They put "teams" together for investors in certain markets. No charge to the investor.

    the other option is to contact the wholesalers directly. you'll pay a little more for the houses, but they have inventory and they're looking for you as the investor.

    Good luck!

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  • Lynn Harrison
    OP
    Garberville, CA · Member since 2011 · 193 posts · 6 votes
    14y

    thanks Laura :)

    The RE people who do REOs are easy to find here. However, we are small time. We are looking to buy only one non-owner occupied property as an investment and are looking at bottom of the barrel stuff, so I don't think a team or investment specialist would be interested in dealing with us.

    I like your idea about buying from a wholesaler though. Where would I begin to find info on any in my area?

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  • Laura R.
    Real Estate Investor · Palo Alto, CA · Member since 2008 · 12 posts · 2 votes
    14y

    Lynn --

    Do you ever see the "We Buy Houses" signs in your town/area? They're the wholesalers. Also, if you have an Real Estate Investors club in your area, they'll know who the wholesalers are in your area, too.

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  • Richard Martin
    Real Estate Broker · Gilbert, AZ · Member since 2010 · 42 posts · 24 votes
    14y

    Lynn: Most Realtors take their fiduciary responsibility to their clients very seriously. A reputable agent won't be trying to cheat you out of that good deal. They want/need you to give a good referral to a friend who is not buying bottom of the barrel. For Realtors referrals are their lifeblood not a single deal. My former office manager busted her butt to help a client buy a $14k mobile home in Salinas because that is what she could afford. I helped a lot of clients buy $50k condos. If you show yourself to be a serious buyer most agents will be happy to work with you or will refer you to a qualified agent with less on their plate.

    So to answer your question on how to find a good agent. Walk into the brokerage in the market you are interested in and ask to speak to the floor agent. Ask the agent all your questions, tell them your story. If they are working the floor they are active agents and not snobs. You will do just fine. If at any point you think they are not doing right by you, walk away.

    All this being said, Gaberville has a population of what about 1000 with Redding being 160 miles away. If you want to find a property near you then I can see your problem. If so become a Realtor yourself. Classes, test, first year Association should be less than $1k. This $ amount is likely made on the commission on the property you buy. You can hang your license with someone like Zip Realty down in Marin.

    1Reply
  • Rusty Thompson
    Real Estate Investor · Salem, OR · Member since 2011 · 422 posts · 149 votes
    14y

    I've found that I get a much better response by calling the listing agent, than by using my own "buyers agent". A buyers agent will not right multiple offers, has other clients they are working with, will not drop everything to show you one property & for such low commissions, they don't really have the motivation needed to work at a REI pace.
    On the other hand a listing agent wants to get it sold & they will usually work to my schedule. Since you already know your numbers, any concern that they wont represent you fairly goes out the window. You know what you are going to spend and there shouldn't be any way that they can convince you to spend more than you should.
    It took me 6 months to figure this out & believe me it works.

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  • Lynn Harrison
    OP
    Garberville, CA · Member since 2011 · 193 posts · 6 votes
    14y

    Thanks Laura, great info!

    Thank you Richard. The majority of people are decent people. And what you are saying is good business practice all around. And yes, I should be get a good feel for who a person is by walking into a couple offices. I agree with what you're saying even though I am a little leery about this area- have heard a few bad stories. All agents say "we don't mind the work" but I am sure a happy agent would be a better person to work with. I'm trying to think of things we can do to lessen any work load. & thanks, maybe next year I'll look into what's involved in a RE license.

    Rusty,
    thanks, yes, I think I've read other threads you've given this advice on and I like it very much. That is what I attempted to do, but the main listing agent looks at us like we are contagious & has a sort of negative jerky body reaction to low cash offers. She has several clients which she is trying to get loans for, so she says, then the properties tend to get transferred to another company and sold for what I assume is cash. For not much more than our (verbal) offer. The loans don't go through. Her body movements make me wonder if all formal offers would indeed make the bank desk. Would a buys agent be able to tell for sure if ours did?

    What do you mean by "A buyers agent will not right multiple offers, "

    We don't really need a buyer's agent to show us many houses. We find them ourselves, peek in the windows, crawl under the house and then can call the listing agent to look more if looks workable. My boyfriend has done construction and estimates and we can get a good first impression before bothering an agent

    What we mostly need is someone to do the paperwork right and protect our money and time.

    BTW, we're not ready quite yet- almost though.

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  • Bienes Raices
    Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
    14y

    Lynn, I used a buyer's agent for the first two deals and am now going directly to the listing agents. I agree with the other people that it is generally more advantageous going through the listing agent. The only drawbacks I've found is that occasionally it takes some work to figure out who the listing agent is, most of them do not offer to give out the codes, and a few of them are difficult to get a hold of on the phone. The paperwork is not hard to figure out on your own--I've rarely seen anything in an addendum that I didn't understand (but they are boring).
    As long as you have an inspection period, the only risk is your inspection money if you decide to back out.

    Having said all that--I haven't read this entire thread, but I don't understand why your low offers would suddenly be more enticing to the listing agent in your town if she now has to split a commission with your buyer's agent.

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y
    Originally posted by Bienes Raices:
    ...I don't understand why your low offers would suddenly be more enticing to the listing agent in your town if she now has to split a commission with your buyer's agent.

    That is wisdom gained from the BP forums shining through! The commissions on these bottom of the barrel properties will be low as it is, and the way it will end up getting split will not get any agents jumping for joy. And if there are bigger dollar properties for that buyer's agent to work on, where do you think more effort will be placed?

    2Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y

    I agree with Steve in that the listing agent firm gets the commission and if the listing agent can also get the selling agent "side"... the value to the agent is significant. Yes, the firm gets a cut on both sides, but REO splits (I'm assuming your area is like others in the country) aren't great, and the selling agent "supplement" can make all the difference.

    1Reply
  • Bienes Raices
    Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
    14y
    Originally posted by Steve Babiak:
    Originally posted by Bienes Raices:
    ...I don't understand why your low offers would suddenly be more enticing to the listing agent in your town if she now has to split a commission with your buyer's agent.

    That is wisdom gained from the BP forums shining through! The commissions on these bottom of the barrel properties will be low as it is, and the way it will end up getting split will not get any agents jumping for joy. And if there are bigger dollar properties for that buyer's agent to work on, where do you think more effort will be placed?

    Thanks Steve...I'm glad something's sunk in. I find that when people recommend a technique on this site, it usually works out, even if it's something I'm resistant to doing at first.

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    There is a difference between a SERIOUS buyer and a REALISTIC buyer folks.

    A buyer can be serious and have cash and want to buy at such a price for the area that only 1 property sold all year for that and it had 50 offers on it in 24 hours.

    That tells me that the buyer is in fantasy land.The odds of finding that deal and closing it and me getting paid is slim to none.

    Real brokers and agents aren't in the charity business.You might get a new agent to help a new investor and that can be the blind leading the blind.

    So is the buyer serious and realistic for the market is the key.

    There is a difference between a loser deal,marginal,good,great,and insane deal.

    If as an investor you can get into a good to great deal for an area you are realistic.If you are looking for an insane deal shotgunning all kinds of unrealistic offers you are not only wasting the broker/agents time but also yours as well.

    So do not always blame the broker/agent for not getting the deal you want.It could be you are unrealistic in your goals for the area.If investors are gobbling up properties at 50k and you want at 30k then you need to change to an area to find 30k properties or come up closer to 50k to compete.

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  • Lynn Harrison
    OP
    Garberville, CA · Member since 2011 · 193 posts · 6 votes
    14y

    That was a little assumptive and rude Joel. What we've "offered" (verbally testing the waters) is not far below what they have sold for.

    It's easy in this case to find the listing agent. She is polite but basically didn't like us at first sight.

    I think I need to check out the other REO listing office. They don't do as many REOs but what they do they sell. The first office has had a lot of the REOs go to another RE company after sitting on the market for a long time.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by Lynn Harrison:
    That is what I attempted to do, but the main listing agent looks at us like we are contagious & has a sort of negative jerky body reaction to low cash offers.

    If you think you can't trust a buyer's agent, you definitely want to stay away from the listing agent. Your buyer's agent has a fiduciary responsibility to YOU...the listing agent has a fiduciary responsibility to the SELLER. So, if you could trust the listing agent, then that agent is probably not doing a very good job...


    What we mostly need is someone to do the paperwork right and protect our money and time.

    Any agent can do the paperwork. In terms of protecting your time and money, that is what a buyer's agent does; that's not what a listing agent does.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    Lynn,

    The title of your post says "their" as in agents in the plural sense.

    Never in my post did I say anything about you.

    I posted real world experience on how things operate.

    There is a real world difference of how things "should" operate and how actually things "do" operate.

    Buyers can say how unfair buying REO's is and they get beat out etc. and cry foul OR accept that the world is unfair and figure out how to get their share of the deals.

    If you buy multiple properties it helps versus a one off.An REO broker is not going to want to tick off an investor that buys 20 properties a year from them just to give you a deal where you buy one time.

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  • Bienes Raices
    Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
    14y
    Originally posted by Lynn Harrison:

    It's easy in this case to find the listing agent. She is polite but basically didn't like us at first sight.

    Maybe you just caught her on a bad day. Or maybe she had reason to believe your offer/financing/funds whatever were shaky? In my experience agents care primarily about money--they aren't going to refuse to deal with someone based on personality if they know the person is a real buyer.

    Approach her again--be polite (not saying you weren't the first time) use RE lingo and make your points succinctly so that she knows you aren't someone who is going to waste her time.

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  • Lynn Harrison
    OP
    Garberville, CA · Member since 2011 · 193 posts · 6 votes
    14y

    Thanks J Scott. I think finding a buyer's agent with the other company is a good idea at this point. I'll ask for recommendations locally.

    I wanted to know if anyone had any ideas as to how to make a buyer's agent happier. I realize they are not going to be making much money on any property we buy.

    Joel, again, I think you are assuming. OTOH maybe you have issues that don't have anything to do with me. If so please don't direct them at me.

    Bienes Raices, thanks. Yes, that could be. She is not refusing to deal with us- she is polite and very professional and careful not to burn bridges. I get the impression she is hating her job right now. I believe she is a top agent in the area and I'm sure her commissions have gone down drastically. What she seems to be doing is working hard on the clients who need conventional loans and who are offering more. On the surface it looks like the bank is not accepting those offers but accepting lower cash offers. Several of those sales came after the bank sent the properties to another agent/company to sell. I'm sure she is not liking this- I don't blame her. And in fact I like that she is trying to get people conventional loans. It just wouldn't work for us.

    We haven't made any formal offers yet- we need to wait a little longer. I'm just seriously checking out the market and figuring out how to do this and who best to work with.

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  • Bienes Raices
    Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
    14y
    Originally posted by Lynn Harrison:
    Thanks J Scott. I think finding a buyer's agent with the other company is a good idea at this point. I'll ask for recommendations locally.

    I wanted to know if anyone had any ideas as to how to make a buyer's agent happier. I realize they are not going to be making much money on any property we buy.

    Then she is probably just jaded with buyers in general (and maybe everyone else in the business), not you personally. If you have the money available, maybe you should offer a large EMD when you do make an offer through her--that might get your offer more attention.

    If there are only two REO listing agents in your town that could be a positive for you--you can develop a rapport with both and come to understand how they like to do business, maybe they will give out the codes once they trust you. Where I live there are so many listing agents that I'm dealing with a new person for each property I want to look at.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    "Joel, again, I think you are assuming. OTOH maybe you have issues that don't have anything to do with me. If so please don't direct them at me."

    Your thinking WRONG. Let's quit the word games and personal attacks.Stop making these accusatory comments at me.It's wasted space.Let's stay on the subject of the topic.

    You seem like you are frustrated with trying to buy an REO property and trying to direct it at me.

    It's simple.If you are a cash buyer then show the REO broker you are serious.Show them proof of funds valid within the last 30 days from your bank account.If you are using hard money then that is different from cash and subject to the appraisal and valuation the hard money lender wants.

    If your boyfriend is a contractor then maybe you can save on a home inspection and do it yourself.

    The REO brokers loyalty lies with the asset manager and the company they get listings from.

    Again if you are buying one property the REO broker is usually not going to work hard to get that accepted unless it's at asking or above.

    The bank is possibly giving 20 or more properties a year to the REO broker. I get investors all the time looking for a property with just carpet and paint that want to pick it up for less than list price.

    The problem is that so do home buyers.They do not have to make the spread for a flip or hit certain numbers for cash flow.If the home buyer puts in carpet and paint and only picks up 5k to 10k equity with current market values they are happy.

    So to recap all things being equal many asset managers will take a chance on a finance buyer if it nets them much more.The asset manager might be telling the listing broker to work the finance offers to get to close and achieve a higher net.

    If the property needs considerable work that generally weeds out the home buyers as they can't get financing. If your offer is slightly less than a finance offer with cash then they will go most likely go with you.

    Every market is slightly different.Hope it helps.

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  • Greg LeDoux
    Real Estate Investor · Portland, OR · Member since 2012 · 13 posts · 0 votes
    14y

    How about offering the Buyer Agent a fee above and beyond the commission. This solidifies the business relationship as you are personally paying for the Agent/Brokers service. (as long as this is on the up and up)

    As I see it, Seller and Buyer agents receive their funds from the seller.

    Rusty - I have approached REO listing agents in the past. They said they were unable to represent a buyer. This seems to work for you, and we are in the same state. What have you found to be the solution?

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  • Rusty Thompson
    Real Estate Investor · Salem, OR · Member since 2011 · 422 posts · 149 votes
    14y

    -Greg
    A lot of the "Gurus" like to talk about forming your "team. Which invariably includes a real estate agent. I have yet to FIND a agent that knows a single thing about investing. I personally believe the only thing I will get from listening to a agent is trouble.The agents I use is are all friend of mine. I do all the work. They might have to show it to me and write some contracts, but that is it. I already know what I will pay & what the market is in a area & were the comps are.

    That being said, I prefer to give the $$$ to the listing agent. It gives them the incentive to move things along quickly. I don't approach a agent unless I have a specific property in mind. It's a waste of my time and there's. I already have a idea of what the max I will spend. It's usually hit or miss, if they will show it, because for sellers there are two kinds of agents, there are sellers agents & sellers brokers.

    The sellers agent will probably show you the property & probably double commission on it. Its a win/win. If they show it to me, but refuse to represent me I offer them a referral fee to use my agent. Again, a win/win. If all else fails then I would just use one of my agents.

    The sellers broker is a different animal. They will not show it. They probably don't even want to talk to you in my experience. That is fine, just ask for a referral. The will invariably recommend a agent in their brokerage. Again a win/win because all the money stays in house.

    The whole system is designed to make it "in their best interests" to close the deal & it works

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  • Jake Kucheck
    Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
    14y

    I got smacked around in another thread for being to harsh or critical or whatever... so I think I'll do the same here.

    Basically you aren't worth most agents' time. That being the case... you aren't going to get a "good" buyer's agent. You'll probably get a pretty new one who is hungry for business. Not necessarily a bad thing, because you'll be able to tell him how things are going to work, instead of being stuck with an old dog unwilling to learn any new tricks. I would see this as a positive, since you're already really good at determining ARV, rehab estimates and so forth. Also these new guys wouldn't dare snake your deal... not enough experience or cynicism under their belt yet.

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  • Rusty Thompson
    Real Estate Investor · Salem, OR · Member since 2011 · 422 posts · 149 votes
    14y

    Jake-
    I just read through that thread. Honest and brutel is much better than half truths and nice in my book. I understand that I'm not worth a good agents time, so I have to invest my own & figure out how to make the system work for me. I hope some day I will be one of the "big fish" in my pond, but until that time I just work, watch & wait.

    0Reply
  • Bienes Raices
    Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
    14y
    Originally posted by Rusty Thompson:
    -Greg
    A lot of the "Gurus" like to talk about forming your "team. Which invariably includes a real estate agent. I have yet to FIND a agent that knows a single thing about investing. I personally believe the only thing I will get from listening to a agent is trouble.The agents I use is are all friend of mine. I do all the work. They might have to show it to me and write some contracts, but that is it. I already know what I will pay & what the market is in a area & were the comps are.

    I totally agree with this. I haven't met one so far who seems to know anything about numbers for rentals, or insurance problems, and other issues we deal with. I'm sure there are some who do out there--probably the ones who post here who also invest--but I haven't run across them out in the real world so far.

    I don't blame them--it's just not what most of them are trained to do. They are used to owner-occupant buyers. So I get as much information online and by phone about the property as I can before I contact the listing agent. I don't want to waste their time or mine because there was some feature of the house or neighborhood that's a dealbreaker for me.

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  • Lynn Harrison
    OP
    Garberville, CA · Member since 2011 · 193 posts · 6 votes
    14y

    Joel, Yes, I've been asking a lot of questions here. Some of that is very useful. Thank you.

    Thanks Greg. Good idea. I did ask one agent if I could do that and she said no quickly so I assumed it wasn't ethical. Seems ethical to me as they'd be earning less for the same work without some change in contract or whatever. I'll look up California.

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  • Lynn Harrison
    OP
    Garberville, CA · Member since 2011 · 193 posts · 6 votes
    14y

    I'll have to read this second page of postings another night, Looks like a lot of info and I need to shut down for the night. Thanks.

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