Need some advice re involving real estate agent in deal

5 Replies

I have found a property I am interested in purchasing. It is agent owned and is a SFR with a tenant in place. Based on the numbers I'm using, it should cash flow immediately. If it matters, this will be my first investment property. My questions:

1. Should I involved a real estate agent of my own and why?

2. What is the downside of not invovling an agent?

Some initial thoughts I had are:

An agent could help familiarize me with the going rental rates in the area as well as past and future appreciation. I'm being told the current rental rates are below market and, based upon my investigation so far, that appears to be correct. While I'm somewhat familiar with the area, I live in a relatively large metropolitan area and this isn't my usual stomping ground.

An agent may know of future development/zoning/etc. issues of which I'm unaware.

If I get an agent inolved, that will take money out of the pocket of the seller, which may not allow me to get as much of a reduction off the asking price, true?

I know there have been several posts re real estate agents and I'm not looking for a big, heated debate, just the board's thoughts on the pros and cons. Thanks in advance for the replies.

Heated debates? It's quite chilly where I'm typing :D

If you decide to use a realtor just make sure that they have actually invested in real estate before. There are a lot of realtors out there that might know residential properties / appreciation, but don't know squat about rental rates rental markets in general.

The downside of using a knowledgable realtor is that you can pretty much guarantee you won't get a STEAL, but you should be able to find a good "starter" property.

I assume you mean I won't get a steal because someone has to pay the realtor, correct? Since the owner is a realtor and has a number of other investment properties, I don't think it would be likely the home is priced so low it is a steal. In this case, I think the home is priced acceptably and a little negotiation could make the return even better. My main concern is that if I involve my realtor, he wants a cut and then the seller doesn't have as much room to drop the price during negotiations. Is this a valid concern?

I would think, if you would feel more comfy using your realtor in this deal, but still want a good deal and not pay that good deal upfront to your realtor...then ask him to take his commission over a 6 or 12 month span. If the property makes enough cashflow to do that, then he'll have a little money coming in "cashflow" every month. Either way, he is getting paid :)

OR, if you plan to invest in more rental "cashflowing" properties, you can tell your realtor that if he works with you on this deal, you'll bring him in on other deals, as well. He still makes money either way.

Besides, some realtors just blow their upfront commission and have nothing left to live on untill the next deal. What you are offering him is steady income via his commission broken up over that 6-12month period.

Hope that helps! Denise 8)

The seller has already committed to paying a commision if you use the sellers agent you will not get full services as they are expecting to pay a buyers agent. When you are dealing with an agent owned property you are negotiating with someone who does this for living. Would you go into court against a lawyer without a lawyer? Get someone to give you a hand.

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pixelmation Posted: Wed Sep 20, 2006 8:29 am Post subject:

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I would think, if you would feel more comfy using your realtor in this deal, but still want a good deal and not pay that good deal upfront to your realtor...then ask him to take his commission over a 6 or 12 month span. If the property makes enough cashflow to do that, then he'll have a little money coming in "cashflow" every month. Either way, he is getting paid :)

The commision is disbursed at closing on the HUD-1 so that won't work.
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Get a good agent that is familar with the area. I have a buyer currrently that is closing a property next week. The accepted sales price is 5k less than where he wanted to start offering at.
A good agent knows the market conditions and where to go to get information that is needed on a daily basis. Best of all a buyers agent normally won't cost you a dime but can save you a lot of money.

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