So, I am a commercial real estate appraiser and have access to FMLS here in GA. I am currently working with an agent for my RE investment needs, but I can find properties with realtor details just like he can. In fact, I have been the one bringing properties to him to go look at and discuss. What else could having a realtor provide me to earn the 3% commission that I can't do? Aren't all contracts available online? I'm struggling with this as he is a great guy and we have a good relationship. Any advice would be much appreciated.
The easier part is finding the deal.
A lot of the work comes after the offer is accepted. The transaction can take a lot of work and specific knowledge about the process.
Definitely not impossible without a realtor but a lot more work and you have to know what you’re doing or you could get taken advantage of.
Is the agent an investor also? If they are an investor they can look at it from many angles.
You said FMLS so you must be buying smaller type commercial properties or just residential.
The millions to tens of millions and up in price properties are not usually on GAMLS or FMLS.
If you do not see value in the agent then why not do it all yourself? You must value something about the relationship.
When I find clients deals they could not find they care less about what I make on a commercial transaction. If the investor already has a big plate for return off the deal they are buying and looking at taking off the agents smaller plate that is greed. That is a sure way to lose a broker or agent from bringing anymore deals to that party.
Why don't you ask your guy if they know of any possible off market sellers or other broker/agent pocket listings not on MLS.
If they can't help you evaluate properties and they have a very limited network just sending you properties on MLS it sounds like they might be newer or not that experienced.
[insert "of course she's going to say yes...she's a Realtor" here...] :)
But seriously... there is so much that can happen between identifying the property and closing...this is a definite yes. If you're working with an experienced, reputable real estate professional, you are taking advantage of their negotiating skills, their connections, and their experience navigating potential issues from contract to close. Definitely worth working with an experienced agent!
And (at least in Texas, where I am) -- the sellers are paying the commissions, not the buyer. So as a buyer, it's a no-brainer to be represented.
In 2017, I coordinated 170 transactions. I've been doing this for 6 years. I've seen A LOT. I can say without a doubt that if I was representing myself having only experienced a couple of transactions, I would not be equipped to handle some of the issues that came up during escrow. Partner with a professional -- it helps you reduce your risk...and your stress!
Thanks Joel, yes, right now I am looking at smaller residential/commercial properties. Just getting started and don't want to get over my skis.
I did not mean to give the impression that I do not want to pay a commission. It was a question as to value for production/help. I am more than willing to pay a commission if a realtor is able to do something I am not already able to.
You have a good point that there are deals out there that are not on FMLS. I will have a more detailed discussion with my guy about his network and any possible off market sellers.
First off, I love TX. From Ft. Worth originally and hopefully will get back someday.
Good points Katie. In the markets I have been researching, things are so hot that for deals to close the buyer is paying for all commissions. I will say that I do feel way more comfortable with a professional.
@Mason Carter You're not paying the commission if you're the buyer. So my question is why would you not want to have your own representation working on your behalf when it doesn't cost you a cent?
Find the properties with LESS EYEBALLS on them so you can negotiate and get closer to the price and terms you want even in a hot market.
If the seller has tons of eyeballs on the property they have the advantage in most cases.
The insurance of someone being on the hook for watching your back because their license is at stake.
I had always look and find my deals before I became an agent myself. No one knows ur need more than yourself! Trust no one and do your due diligence. Ok. You can trust others for some tasks but really! Do your own research!
That 3% or some seem like a lot but not if you divide up the time that it could take to close a deal. And truth be told, you are not the only client the realtor is working with. If you are hoping for more, then be upfront and honest about your needs. A realtor values your business and down to hear you out!
After all, it just might not be a good fit.
@Mason Carter Is it typical for the sellers to pay the commissions in your area? if so, what is the downside to you using an agent as a buyer?
The seller is likely agreeing to pay a total amount in commission as a part of his listing contract with the buyer. Whether there are 2 agents or 1 involved in the transaction the amount they are going to have to pay is likely the same.
The way I look at it is what is better than having someone working for you that has your best interest in mind throughout the transaction and their services are completely free in almost all cases to the buyer.
@Mason Carter - you are not licensed as an agent, so you cannot earn the commision. The seller signs a commission agreement with the listing agent to pay a percentage no matter who brings in the buyer (agent or non agent)
So why wouldn't you use an agent?
Like others have said, getting the deal under contract is easy, getting it to close can be a challenge. Sometimes it is easy and sometimes it requires a lot of experience to navigate the problems that arise.
When you are represented by a broker, that broker takes on the liability of ensuring your transaction is legal and goes by the rules - regardless of what state you're in, there are plenty of rules.
If you go it alone and miss a rule, and somebody notices or one party is injured(financially or otherwise), you could be held personally liable. real estate liability can get expensive real quick.
I've seen dozens of deals where unrepresented investors bought a fsbo and didn't get disclosures, or they didn't jump through the hoops that are required by a specific town or county, or didn't get a title policy, or inherited a mountain of liens, or they got a sh*t deal from a shady wholesaler, or there was no mention of the meth lab that was "cleaned up" but really wasn't. The list goes on and on.
Just laying here in bed on a Saturday morning I can recall at least $7,000,000 in bad deals (just in the last 8 years) due specifically to poorly structured and improperly executed transactions that had no brokers or agents involved. And those are just the deals I know of. Had a broker been involved, the deals either would have been nuked because a broker would have noticed they were bad to begin with, or they would have been fixed and losses mitigated.
We're in the age where a lot of buyers "find" their own deals (with this new Internet thing that has finally caught on), so you don't hire an agent to find your deals, you have an agent to make sure your deals are done legally and properly. Hire an agent. Consider it an insurance policy.
Ditto what @Blair Poelman said!
Most of the standard contracts are copyrighted material and can only be used by members of the realtor board that writes and copyrights them.
There are positives and negatives to having a license.
- You save one side of the commission, but you can't be in dual-agency with yourself, so you still pay the other side.
- Access to the MLS.
- You are held to a higher standard. If you ever find yourself in court the judge may feel you used your knowledge to take advantage of someone, or if you didn't know - you should know as an agent.
- National association fees, state association fees, city association fees, MLS fees, lockbox/key fees, broker fees, and probably some I'm forgetting.
- You can only pay commission's or finder fee's to a licensed broker. This eliminates working with unlicensed bird dogs.
- Many people do not like real estate agents (I know, it's hard to believe :) and they refuse to work with agents, but you must disclose that you are an agent.
- Required CE training.
- You are under the thumb of the department of real estate. If you don't follow their rules they will strike down upon thee with great vengeance and furious anger.
I'm in Arizona your state may differ.
Everyone, thank you so much for all the great and honest feedback. It sounds as though, that no matter if I can birddog my own deals, it is best (until I get my license) to use my agent. And this is what I’m going to do. I just want to reiterate, that this question was in no way a slam on agents or a way to not pay commissions. It was more of a question of possibly streamlining the buying process and getting value.
This community is amazing!
@Mason Carter There are a lot of good answers above describing the value that agents provide. I'd like to challenge you to rephrase the question though. Instead of asking whether you can do something, you need to ask whether you should do it. You have a (presumably) full-time job as well as other commitments for your time (family, friends, etc). If you want to be successful with the limited time that you (and everyone else) has, there are a lot of things that you can do, but not many that you should.
Developing and implementing business strategies, finding deals, negotiating, providing direction to contractors, etc. are all things that an investor/business owner should do. These activities generate 100s if not 1000s of dollars an hour. Painting, installing flooring, cleaning toilets and handling the transactional details are things you absolutely can do but absolutely should not. They do not save you money. Rather they cost you money as they prevent you from taking care of the truly important.
We all need to think about the highest and best use of our time. Most often, the best thing to do is hire/train the appropriate professional and then get out of their way.
@Erik Hitzelberger you make a very good point. Maximizing my time and resources is paramount. There are things I CAN do, but I will focus on the things I SHOULD do. Thank you.
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