Real Estate Broker · Austell, GA · Member since 2013 · 72 posts · 24 votes
I've been searching for an RE agent to make an offer on my first investment property. I found a great agent that says he works with investors exclusively. After talking on the phone once, we meet at a 4plex I picked out to make an offer on. We view the property and I decide to make an offer of $55,000 (asking price $129,900). Here's the email that followed:
I think that a $55000 offer is OK. If you intend to occupy as a primary resident, then FNMA likes that.
Cool?
If so, then I will draft a brokerage agreement and write up the offer, OK?
Now, I'm a newbie in both investing and purchasing a home in general, but for multi-family homes that range from $150,000 - 50,000 a $3,000 agent fee aside from other closing costs seems a bit outrageous. Could I get a word of advice from experienced investors?
Personally I would find another realtor. If all you he is doing is writing the offer after you have found the properties and vetted them. Than no,no other value is offered.
That being said, with the relationships I have with my realtor I would think about it, if that is there request. To date, I have never had this request. The arrange has simply been to refer them any business and use them exclusively.
My realtors use their mls connection, networking and area knowledge to find and close the deals. I have gotten many deals simply because they knew the sellers agents and were able to either find a "pocket listing" or write the strongest offer because we knew the what motivated the seller. I have found houses/put offers on a house because my realtor (who has become my friend) was over having dinner/drinking wine and a house I had been watching came up. I mentioned it was over price and she mentioned the local "trick". If I get the house at the price I want (its still a process) it would be because of the dinner/wine. We have also spent a day looking at houses and never found anything.
In your particular situation for this one house, I recommend you just use the listing agent in this case. I recommend you keep looking for an agent that wants to create a "relationship". With 2 out of 3 of our realtors we have bought 2+ houses. The other one we have referred a bunch of people. If all goes right, by the end one of our agents will have help my family and I close on 6 houses. Yes your buying a cheap house now, but if all goes right you will continue to invest with them overall and it will even out.
I'll just chime in one more voice as a broker myself. It is important for a broker to value their time and effort appropriately. However, it's not my buyers' problem if my commission is low because the purchase price is low. I will work just as hard on a $50k property as a $500k property and that's my choice. I never know where a relationship with a buyer will lead in future business or referrals and my job is to help them achieve their real estate goal.
I think this is a problem with many agents, they base everything on money and lose sight of what's best for the client, and themselves.
My broker has a great story about a kid who he helped lease a $1,000/mo. condo when he was right out of college. Took good care of him and did right by him, even though the commission was low. Same kid 5 years later owns a giant tech firm here in Austin and refers all his highly paid new hires to my broker; $1,000 lease into millions in home purchases.
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
12y
I don't think there is anything wrong with the agent putting a floor on their commission as long as they're providing value for it. We pay our broker in Austin very well for locating properties for us that are extremely hard to find. She earns every cent.
It sounds like you're paying the agent to write offers and you're doing all of the hard work. I'm not sure why that would make sense. Finding the deals is generally the hard part. Writing offers and negotiating is quite a bit easier in many cases.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
12y
I didn't read all of the responses, but my advice would be:
1. Don't start off with MF if you are new to the bizz. If you make a mistake with a SF, it will likely be easier to sell and get out of. MF can lose you a lot of money. Ask me how I know.
2. If you will be making a lot of offers on MLS-listed properties, then become a Realtor yourself.
Durham, NC · Member since 2012 · 498 posts · 48 votes
12y
Bryan Hancock was absolutely right!
The real value of a buyer's agent is to find great deals for you. It is not just a matter of hard work. Real great deals are rare. Sometimes, your agent must use his own political resources. Very likely he must ask for a favor from his colleagues and he knows that one day he must return such favor. With my own experience, Some best deals I got would never have been found by myself.