Use a real estate agent for off-market properties?

Question

Newbie here.

If I find an off-market property by, say, driving for dollars, am I wise to ask a real estate agent to help me through the offer, negotiation and purchase process? Pros and cons of that vs. trying it on my own?

Will Barnard · Answer

As James stated above, absolutely not. Once an agent is involved, they are likely going to strive for commissions, that’s how they make their money. The entire strategy of finding off market deals is to remove one of the potential middlemen in the transaction.

Secondly, as James also eluded to, there are very few who actually have the knowledge you are looking for other than local market knowledge and running comps for you.
If you are not yet comfortable with the offer documents, negotiations and process, then you are putting the cart before the horse attempting to do a deal before that. I suggest getting back to the education process until you have this under your belt first.

James Hamling · Answer

@Lee Syndergaard speaking in generalization (and remember I am "The REI REALTOR") I would say hands down NO, it is all but certain to end badly.

Thing is the vast majority, we are talking 90%+ of agents, know less about REI deals than say disarming a nuclear device.

And of the <10% who have some REI knowledge, 90%+ of them are 1 or 2 trick ponies.

I can count on my hand how many agents I know who have a good command of these listed strategies, and all the in's and out's of it who do agency for others, we are exceptionally rare, like a triple rainbow, that end's in a leprechaun village, guarded by Unicorns, flanked by flying pigs, lol. Ok, maybe not that rare but you get the point.

Now, you create a relationship with 1 of us, than that math flips to the opposite of "hands down YES'. We can bring resources, network and deals others can only dream of, we pipeline off-market deals on the regular, have done the craziest of complicated deals and have those who can get them closed, financed etc.. AND most importantly, we LOVE what we do, we do it for our passion and happen to make good $ for it, unlike the other 99.2% chasing dollars, this matters because we value YOU far more than any 1 deal, it's 1 piddly deal, we will have 3 more next week, so why bother to steal 1 deal over the relationship.

Other Pro's, we have a list of ready buyers of every kind, and can lend that insight of what ___ would pay you for that deal, possibly even set the exit before you get into it. Other Pro, we are doing them all the time, know the problems to look out for, problems to solve before there problems, etc..

Other Pro, we may have some jazzy creative deal construct that we have done or know that you don't, and it could help land that deal. Another good point, keeps everything with a degree of separation and legal-eagle so anything ever blows up it falls on the agent and brokerage, your not stuck in that legal seat alone.

I can think of a lot of Pro's, but it's all contingent on who you have for the agent, the agent can only be as good as there knowledge and experience base and if there the average agent, well, your better off bringing a sock-puppet to help.

Nate Sanow · Answer

I understand the above sentiments and I’m not going to die on the hill of “realtors are great so you should get one.” But I will also say, if you find a good one just know that they don’t have to charge a full 3-6%. Also, I’ve been mulling around the idea of almost entirely doing NOTHING in a wholesaler type of way, both for me and my clients, and am planning on almost exclusively doing off market work with agent representation. What I’m saying is a good agent could help you and in exchange for their help, whenever you buy you could pay them for the paperwork part as you learn and grow. It’s no different then buying a FSBO with an agent, just more deliberated.

Everest Harkey · Answer

I think it's good to have an agent on your team especially if it's your first couple of times buying. As others have said the point of off-market is to eliminate the middle man but if the numbers work I don't see why you couldn't pay them a commission. The commission is to pay them for their services in assisting you, and you'll want to make sure they know they'll be compensated. It's also important they see the same vision as you. I personally would say tackle it on your own, the worst that happens is a learning lesson. From my perspective though, Pros: using a qualified professional means quality work, less hassle for you to start, someone to help you out and answer your questions. Cons: the commission fee, lack of learning the trade, the real estate agent may have little knowledge of the full process.

Evan Conner · Answer

As both other comments have stated, it is important to find a Realtor that is knowledgeable about the investment strategies that you're planning to use. If you have a bad agent, which there are plenty, they can make for as much headache as they do help. All of that being said.. the value a good, investment minded agent can bring to you is unfathomable. As a buyer you should not pay any commission so as far as "chasing" such commission, that won't affect you unless you buy a bad deal that they send you(?) but that would be your fault as the investor in my mind. Trying to tackle a contract when you don't know what you're dealing with is one of the worst things you can do, in my opinion. Good luck!

Lee Syndergaard · Answer

Thank you all for your replies, truly!

The Realtor I'm working with has been a RE investor for about 20 years, has bought and sold many of her own properties, and, as far as I can tell so far (we're still getting to know each other), knows REI very well.

However, you're right, I should get to know the documents, negotiations and process better. Thanks for the homework assignment, I'm on it!

And advice on how to best tackle that education?

One thing comes to mind: buy my 1st property off an MLS listing she sends me (I analyze almost all of them using the BP calculator), have her walk me through the negotiation/purchase process start to finish. I'm willing to get a "base hit" on my 1st property in order to learn the ropes hands-on.

Any other thoughts?

Use a real estate agent for off-market properties?

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