Don't Rely on Agents, Become One
DISCLOSURE: I mean no ill will to any of the fabulous Real estate agents (or Realtors) out there. I provide herein only my experience and advice.
I have found that becoming an RE agent is one of the easiest things in America to do as the barriers to entry are tremendously low. Thus, as one might expect, there are a lot of sub-par performers in this field. What's more, the good RE agents are doing big commercial deals, working for home builders, doing million-dollar plus listings, etc. So, if you are a landlord or RE investor looking for properties in the sub-$100k region, it is extremely difficult to find a GOOD agent.
If you have one KEEP THEM, but still consider...
If you are doing more than a few deals a year, why not keep the money in the family. There are fees to become an RE agent. There is a course or two to take, continuing education (relatively minor), state licenses, dues for being a member of the National Assoc. of Realtors (as well as state and local chapters - this allows you to call yourself a Realtor), and their are broker fees. Let me explain that last point.
Broker Fees: Every franchise is different. Every broker runs their business their own way and the fees and way they compensate for deals is all over the place. As a VERY GENERAL rule, plan on $125 a month (includes MLS access) even if you do nothing with the agency that month, these are some sort of 'office fee'. Also, VERY GENERALLY, plan on making about 2% net of contract price for every deal.
I further recommend to not be agent and buyer (though this is permissible if you disclose that you are an agent). For example, my wife and I decided she will be the Realtor and sign as such. I am the buyer (I mostly buy, though in rare situations I am the seller). My wife is more or less a one-client Realtor. She works for family and friends occasionally and is gaining some popularity at our local REI club. She does not seek this work and is comfortable just working for me, as being a Realtor is not her full time job.
Again, I hope I did not offend anyone as it was not my intention to do so.
My wife is a teacher now. But she is quitting the teaching field to work full time with me. She is going to become a RE Agent. Which is great for my business!!
I did the same thing! When I buy investment properties, I will (1) use the commission (cash) for repairs or (2) subtract the commission from the sales price (hello, tax free!).
I was shocked (shocked!!!) when I entered the business and had to converse with so many ill-informed, devious, and unprofessional REALTORS(R).
That's why I invested in education. My clients love me. Some are even card-carrying members of my "fan club." Some tell me their horror stories and wish they could have found me sooner. I've met other agents who do business like myself. We all say we're going to start a club. LOL!
Another great plus is using MLS during due diligence. When I'm bored at work, I pretend I already have capital (I'm so sad, eh), and analyze potential investments (oh, that gives me an idea for another post).
So, yes, everyone get your license. You'll gain experience and save money on your own investments!
I am an agent and an investor as well, yes it does help to have your license but in many cases I pay the other agents all of the commission anyway. On any deals that I find for myself I will keep the commission, but if any agents call me with good deals I let them keep the full commission as an incentive to bring me more good deals. Another thing that I have run into in my market is that foreclosures that are listed state in the listing agreement that agents acting a principal buyers don't get to keep their commission.
I have found there are some good advantages to being an agent as well as some bad. Many sellers have a tendency to believe that if I am an agent that I am somehow going to magically rip them off.
Originally posted by "esnuts":
if any agents call me with good deals I let them keep the full commission as an incentive to bring me more good deals.
I have not had the fortune of any agent bringing me 'good deals'. Either the deals are 'bad'. Or, I already knew about them days prior to receiving their call.
Originally posted by "YngInvstrAustin":
subtract the commission from the sales price (hello, tax free!).
I have heard of this down before, do you know if it is perfectly legal to do it? Will they allow you to use the commission as part of the downpayment?