FIRST PROPERTY, SHOULD WE USE OURSELVES AS AGENTS?

Question

Hello everyone!

My wife and I are currently in the process of buying our first investment property. I am currently in the military, and we have been looking forward to buying a property for a while (particularly a duplex/triplex). We have gotten some great referrals for agents who then hooked us up with a good lender. We have a pretty good CCC set and the agent we are talking to is experienced with investment properties and well versed in general.

Although, my wife is currently working on getting her real estate license. So, we are wondering if we should stick with the current agent or wait until she gets her license? (Hopefully within the next month or two). If we did that, we could take advantage of saving some money and adding this to her portfolio. It seems like common sense to be our own buying agent and save that commission for ourselves, but we're not sure if it would be the smartest move since it is our first property both investing in and acting on as an agent. Is there anything we're missing or not thinking of?

Also, we don't want to potentially lose that connection with the fantastic real estate agent. How should we tell her that we are going to go solo without sounding like we want to stop working with her in the future or seeming disrespectful for wasting her time and taking her referrals. Let me know what you think.

Thanks so much!

Corby Goade · Answer

Congrats on jumping in!

There's a reason why 90% of new agents fail- crazy low barrier of entry BUT high bar for success and effectiveness. People think that they get their license and then clients drop in their lap and they start making a bunch of money. The truth is, the way you negotiate, build rapport with other agents and manage the transaction will make or break you. There's skill, knowledge and finesse to doing this that you don't inherit once your license is active.

Trust me-you don't want to be in a position where you think you are saving money and simultaneously being taken advantage of by an expereinced agent on the other end of the transaction AND destroying a relationship with the agent you already have and trust.

I'd stay with your current agent and ask them to guide you like insiders, since your wife will have her license. Who knows, that relationship might blossom in to a partnership where you do many great things together.

Best of luck!

Lien Vuong · Answer

Use the agent, they have expertise and would be able to save you much more $ than what your wife is able to get in commission. This is the largest purchase of your life (thus far) I wouldnt want to risk that to gain a small fee. Trust the professionals.

Nathan Gesner · Answer

"A man that represents himself in court has a fool for an attorney."

I see real estate the same way. Your wife doesn't know the market and has no special skills or experience. You may save a little on commission, but you may lose a lot by failing to negotiate a better deal, spot a problem, adhere to the law, etc.

Another favorite saying:

Marshall Leipprandt · Answer

@Regnor VonDedenroth About a year ago, I was still Active Duty military and had gotten my RE license. I hung it with the brokerage that I planned on working with in the future and shortly after, my wife and I found a property that we planned to use as a future investment. I was still in the process of learning the ropes, but had the general idea of how to complete a transaction, so I asked one of the experienced realtors in my brokerage if they would act as the co-agent (for a fair share of the buyer's side commission) to help QA all of my documents and assist in those little nuances that arise during escrow. It worked well and I learned a lot in the whole process.

I agree that you definitely want an experienced realtor on your side. Maybe consider bringing one on as a co-agent if they are willing to and if you legitimately think that you have the time it takes to dedicate to drafting and completing the forms/contracts, working the transaction through escrow, coordinating inspections, etc. Just don't ask another good realtor to act as a co-agent for a split of the commission and make them do all of the work. Just an option!

Tim Johnson · Answer

Hi @Regnor VonDedenroth, welcome to the forums....and congrats on getting started.

1. If you're working with a great realtor who is well-versed in investment purchasing and can introduce you to good lenders and other vendors, why skip this chance to get her help and learn something in the process? It generally doesn't cost you.... and her experience and negotiating strengths may save you far more than a commission.

2. When you're working as your own buying agent, it's generally a lot smarter to negotiate a lower purchase price and skip the buyer broker commission. Seller will get the same net, and you'll get a tax-free benefit. Obviously, if you need the commission to cover your closing costs, that's different.....

I'd stick with the experienced realtor.....best wishes.

Rob Chiang · Answer

if your wife wants to be a realtor full time there is no better experience than "actually doing it" instead of observing the "pro in action".  Ask to split the commission with your experienced realtor.  Win-win.

Regnor VonDedenroth · Answer

@Marshall Leipprandt

@Michael Brattelli

Thanks Marshall, and Michael. I hope everything is going well with both of your RE careers. It's actually funny you both say that because there had been a few folks to mention that option here and there, but not as something to necessarily go after. In response to you both, and somewhat as an update to the whole situation, my wife was able to work out that exact situation. To work as a co-agent on the deal and learn from this awesome agent! We wouldn't be in this situation if we didn't ask and realize the amount of potential and opportunity that could come from gaining this experience. As well as being able to see the deal take place from a buyer's perspective.

(I would be remiss if I didn't give the opportunity for people to contact this great agent. So, if you are looking for a rockstar agent in San Diego, and you are a SERIOUS BUYER, please direct message me and I can put you in contact with her.) Thanks so much everyone!

Joe Norman · Answer

If a Realtor came up to you and said "Hey, I'm a brand new agent. I have never done a real estate transaction before and if you let me represent you in this purchase I'll credit my full commission to your closing costs" would you hire them?

I hope not, but thats exactly what you and your wife are looking to do. Stick with the experienced Realtor who is there to guide you through one of the biggest transactions of your life.

Michael Brattelli · Answer

@Regnor VonDedenroth as others have said I think you should stick with the seasoned agent that knows investments. Try to learn as much as you can while they help you. Then you’ll have a good agent in your market to network with and maybe even have your wife join their brokerage to keep learning from this person.

Most importantly just because your wife will pass the test she will still have virtually no experience as an agent or the ins and outs of the business. Knowledge takes time.

Either way sounds like you’re in a great position. Wish you the best!

Billy Daniel · Answer

Stick with your experienced agent.

1. You're probably not going to save money on commissions as the buyer.  As an agent, your wife won't have the ability to negotiate commissions.  Thats only allowed to be done between brokers (at least in my state).

2. If you're agent has been around longer than 12 months, they are in the top 13% of agents who get licensed.  If they've been around longer than 5 years, they are in the top 2% of agents.  Keep that experience and knowledge working for you.  You will save far more money using that leverage than you ever will on commission checks.

3. If your wife gets her license, you don't want her to start out with a reputation in the MLS.  She should mention it to this agent and ask to shadow and learn.  Again, another way to leverage their knowledge and experience to make more future dollars.

Good luck with the purchase!

FIRST PROPERTY, SHOULD WE USE OURSELVES AS AGENTS?

FIRST PROPERTY, SHOULD WE USE OURSELVES AS AGENTS?

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