Should investors work with real estate agents?
That's an age-old question. Should investors work with real estate agents? The answer is—of course they should if it's the right fit. Let me explain. All investors and agents are not good fits to work together. But building a relationship with the right kind of agent is very beneficial for both parties.
There are many agents out there that have zero desire to work with real estate investors. Most agents are simply agents for homeowners that want the perfect property, the perfect conventional buyer and they're not looking for any type of creative financing. They're not looking for a low-ball cash offer. They're not looking to have you communicate directly with the seller. They are truly looking just for an easy vanilla sort of deal.
However, you can identify some of the agents out there that are used to working with investors, and this can take you a long way. So, one way to identify those types of people is to look for investors that have a track record of already working with other investors and these folks can be found in local real estate investors associations. Look at agents that are typically listing bank-owned properties. Look at other investors and properties that they've purchased through agents and get to know them. Now there are a couple of agents that I deal with locally that I love. They're great to work with and super easy, which brings me to the next point here.
Is it better to work with your agent or with the listing agent? Now, a lot of times, if I'm going directly into a situation where I want the property, and I want the listing agent to be on my side, I will go directly to a listing agent, and here's why. I do that because now they get to double-dip. Although their allegiance should be lying with the seller, that they have the property listed for they still have their own best interest in mind because they can make more money off of taking care of both sides of the transaction. So, because of that, now there is a better chance of them swaying the seller to accept a crazy low-ball offer, or a crazy term offer that might be put out there.
Now, don't always go directly to the listing agent. Sometimes it's better to bring a personal agent into the mix as that agent can handle all of the B-S and stuff that's involved especially with a bank-owned property. They're going to go through a lot of steps and a lot of stipulations when buying bank-owned stuff asking for the proof of funds, and making you jump through hoops of certain title companies. Anytime you switch title companies, there are always going to be a different set of rules to follow, at least here in Ohio.
Sometimes it's a very simple package and you can just sign a couple of documents and you're good to go. Other times, it feels like taking out an FHA loan to do a cash transaction. They have so many documents to sign. So, the agent will help navigate a lot of stuff and make sure that you're staying on track with getting everything closed. So, in short, it is completely cool to work with real estate agents, but it's also not necessary. Now, dealing with off-market properties and not listed properties, there's absolutely no reason to bring an agent in on it. There have been investors who wanted to buy off-market properties that I own. They'll say, great I'm going to have my agent contact you and that always blows me away.
Why do you want your agent to contact me? There is nothing your agent's going to bring to the table. I know you want to buy. I want to sell. You've already seen the property. You and I are already talking, why are we going to pay someone a percentage to handle this transaction which isn't coming out of my pocket? It's going to come out of their pocket, and I have to explain that sometimes that agents are not necessary to do a transaction. An agent will help navigate the paperwork. They'll help with a purchase agreement, getting escrow opened up, dealing with the title company, and so forth. So, if you're completely uneducated in this world of real estate investing, maybe it's not a bad idea, however, as long as one of the people involved in the transaction understands how to get it closed, I feel like there is no need for a realtor.
It's just putting a purchase agreement together, getting it over to escrow, and following the instructions on the terms that you and the other party have come up with to get the deal closed, in a reasonable amount of time. Most of the stuff that agents are putting in their packages is to protect them, more than it is to facilitate the transaction that you're setting out to do. So, my advice, if necessary, if it's a listed property, absolutely have no problem with using a real estate agent. I never beat them up on their fees. I never tried to get them to take less money. They earn their money. It's a pain in the butt, dealing with buyers, sellers, especially investors. I know this, don't beat them up, especially if listing a property.
If listing a property, don't try to get them down to a discount because they'll never bring their buyers there. Because again, their favorite radio station is WIIFM, (what's in it for me). They want to know how much money they can make and if they're making less money on your deal than they are on someone else's deal, they're going to steer to that other deal. Even though it's supposed to be against a code of ethics, they're still human beings.
So, I'm Rob, The House Guy, go out there and find a deal any way you possibly can with, or without an agent but don't be afraid of using them when the time is right. Remember, nothing works unless you do.