All Forum Posts by: Brian FitzGerald

@Joel Owens, first of all, thanks for chiming in! But this isn't really about the amount of money down, whether it's through seller financing with 3% or 15%, or a traditional 20% down investment loan, I think the buyers agent conversation is still relevant. As an investor, do you personally use a buyers agent on your deals? And if you don't mind sharing, why or why not?

Thanks for all the responses guys.

@Ryan Hoover, I don't think it's as simple as that. My friend is actually quite a good agent and I have no problem shooting it straight with him. But let's look at just this thread alone... two investors, Angelo and Mike have already stated:

Angelo: "I cut out my buyers agent a long time ago due to this issue. A lot of "shady" brokers in NJ ignore outside agents and hold properties for "their" own buyers. This is how I was able to land some great deals."

Mike: "I always buy from the listing agent if I can. I've found the listing agent to be more motivated and will have more information on the property and the seller's situation."

This gets to the heart of the matter. I am not a typical homebuyer looking for their 3 bed / 2 bath family home and changing houses every 5-10 years (or whatever). I am looking to acquire a considerable number of properties (that don't fit into any one mold) in a short amount of time, so I feel that changes the dynamic of the typical beneficial buyers agent and buyer arrangement.

Now let's take a look at some of the comments on using Buyers Agents in this article on Bigger Pockets:

Brian Jolliffe (referring to claim that it is "free" for you as the buyer to use an agent): This is not true. The commission is reflected in the purchase price. And you said the buyer's agent is “legally required to put your interests first.” Great statement on paper. There’s also the real world we operate in. For a first time buyer, an agent is a safety blanket that provides psychological comfort knowing you have an “expert” to rely on. You shouldn’t need one after the first purchase if you’re willing to put in the work.

There are some other good comments in there but I won't clutter this thread with them. The point is if I can deal with a listing agent directly, and they are going to earn 6% from me (versus 3% from someone else), and/or makes them willing to sell to me and/or is extra motivation for them to get me a better price, then working with a buyers agent actually seems like more of a negative than a positive.

Especially considering all the tools available today helping me find my own properties. It would be different if (as an investor) you had an agent consistently feeding you amazing potential deals... well of course you would work with them. But at least for me, and it sounds like for other investors as well, that perhaps isn't the reality. Not because the agent isn't good, but because it is a lot of work finding deals! And if I'm going to be finding my own deals, why do I want to pay you to come in at the last second to do the paperwork? Especially when there may be other benefits to NOT doing that (as described above).

To be clear, I am NOT criticizing the valuable work buyers agents do in many important contexts, I'm just wondering if they are really a TRUE benefit to investors in my position.

Thanks for the response Ryan! Its content does not surprise me, especially being an agent yourself.

The thing is, my agent is not feeding me these properties. If he were, there is no way I'd be looking to leave him out of the deal. The properties I am finding are on the market, but I am finding them myself through tools like Redfin and Zillow.

Either way, it sounds like your take is that if there is already a sellers agent involved then I should be using a buyers agent, but if it is off market then perhaps that is a good time to remind the seller he/she can save up to 6% by us handling the transaction directly.

To be clear, I am often looking for unconventional deals with vacant, "paid off" properties where the seller may be open to seller financing. And I have been trying to negotiate terms with the seller as directly as possible (or at least with their agent), which is partly what has me not wanting to use a buyers agent.

To your point about the sellers agent trying to take the full 6%, that is where I would be communicating w/ them throughout the process what my expectations would be in terms of the structure of the final deal... of course building rapport along the way.

I guess if I'm finding my own deals something doesn't sit right about that 3%. Perhaps I just need to accept that's how it is and/or become an agent myself. As a new real estate investor (and not a typical buyer simply looking for his primary residence), I also want to see a lot of properties of different types, which sometimes feels like a burden to be asking my agent to take me all over the place and show them to me. Granted, I know that's his job, but.... shrugs.

So I have a rental property here in North Carolina and I'm on a mission to acquire other buy and hold rentals. My issue is that 20% down on investment properties is a chunk of cash! Naturally, I would prefer to keep some reserves on hand in the case of HVAC/Roof/Water Heater emergencies and get into properties with less out of pocket. I actually just had to replace the HVAC system at my existing rental yesterday (ouch).

Anyhow, I am looking at other creative ways to secure properties including seller financing, buying primary residences at 5% and later converting them to rentals, buying a multifamily property and living in one unit, etc. Clearly there is a lot we could talk about there, but I am specifically interested in the question of using a buyers agents (or not).

I have a buddy who is a buyers agent, and I have no problem working with him on deals... that said, I'm also thinking that the 3% normally be paid to him could be used as a bargaining chip and turned into savings on my own deals. For example, if I work out a seller financing deal on a property that I found, it doesn't seem like I should need to bring in my agent to close the deal (when I could just work directly with the sellers agent).

That said, sellers agents seem surprised when I contact them directly (to schedule a viewing of the property) and communicate that I "am not looking to use a buyers agent on the deal."

First of all, does it even make sense to do this on listings which already have signed on with sellers agents? Of course, the contract is already signed between the seller and their agent, so is there really even an extra 3% to work with if I don't bring a buyers agent to the table? I have had people tell me that the seller has already "committed to paying the 6%, so the the sellers agent will just take the entire commission." That sounds questionable to me though, as in my mind everything is negotiable, even if it means restructuring existing contracts and commissions.

Anyway, just hoping to get some sense of what you guys do and whether or not it's worth it for me to try to skip using a buyers agent in hopes of saving that extra 3%!

Thanks for your insight,
Brian