Should You Use an Agent When Starting Out?

Question

I'm sure this will get mixed reviews, but I want to see everyone's opinion on this.  I am a real estate professional and my company is in the business to assist people, investors, and companies in buying and selling their properties.  Even before I got into real estate, I knew to use a professional when I bought my house.  It saved me time and money and the best part was I didn't have to pay a dime.  As an investor, I feel you should have someone in the real estate profession to help buy properties.  A professional has access to properties, contacts in the industry, can help you run the numbers, negotiate, and much more. Every investor my company works with is more than happy to let us take on work that they don't want to mess with.  Do you have to use one? Of course not.  But why wouldn't you?   I will throw out a disclaimer and say that I am referring to working with a professional that has experience and knowledge of working with investors, not your typical residential agent. I'd love to hear from all of you and whether or not you agree or disagree and why.

J Scott · Answer

Just my opinion, of course...

Personally, I suggest finding a great agent who specializes in working with investors as the *second* best option...

Best option is to get your own license, which has several benefits:

- Access to MLS.  This means instant access (not waiting for another agent to send you scheduled queries) and also means access to the private agent remarks that you won't get with a buyer query;

- Access to Properties.  Before my wife got her license, I can't tell you the number of times I missed out on properties because my agent (who was fantastic, btw) and I couldn't sync our schedules to allow me access to a property I was interested in.  And the good ones go QUICKLY!

- Commissions.  My business earned/saved over $40K in commissions this past year on properties we've bought and sold.  And this was a slow year for us.

- Leverage.  Being an agent means we get commissions.  Getting commissions means we can hand them over to the other agent in the transaction.  I can't tell you the number of times we were able to buy a property that went to highest-and-best likely due to the fact that we were happy to give the listing agent a cut (or all) of our commissions.

- Negotiation Control.  I've never met an agent that can negotiate better than I can, either with buyers or seller.  And leaving my negotiations up to another person (even when I'm making the decisions and the agent is just relaying the messages) is suboptimal.  Being able to negotiate directly with buyers/sellers/agents has allowed me to make/save tens of thousands of dollars over the past couple years;

- Control Over Showings.  I want to know that before *EVERY* showing, the property is ready to be shown; this means lights on, blinds open, sidewalk swept, fliers on the table, etc.  I don't expect an agent to show up before every showing to turn on the lights, but I'll certainly do it myself (or have one of my employees do it).

- Appraisal Control.  Perhaps the biggest aspect of wanting to have our license is the ability to control our appraisals.  In this market, more deals die because of a bad appraisal then any other reason.  As long as I'm the agent (or my wife is the agent) on a property, no appraisal can be done without my being present, or at least talking to him before the appraisal is completed.  In the two years my wife has been licensed, we've only missed on one appraisal, and it was while my wife was giving birth so I couldn't be there to control it.

- Marketing.  No agent is going to care about your property more than you will.  The ability to do your own marketing (including contacting agents directly) is crucial to making quick sales.

Now, that said, for anyone who doesn't have the time, skills, inclination or interest in doing the stuff above, I certainly recommend that they employee a good agent who is experienced in working with investors and experienced in selling vacant properties.

Peter Giardini · Answer

When I started out... 2001, I thought using an agent was a big waste of time.  I refused to use them... until the velocity of my business dicated that I had to expand my team and finding and creating compentent real estate agents freed me up to pursue what I consider the three prime responsibilities of any successful real estate investors...

These are... 1. Mastering the process of finding and getting deals under contract, 2. Know how successfully finance and get every deal to closing, and 3.  Completing renovations on time and on budget... time and time again.

I as for agents... once the property is ready to be sold... that is where the agent should be earning their keep...

The real estate investor should be repeating steps 1 - 3 while the agent focuses on getting the properties sold.

This process has worked for me and everyone who has worked for me...

Your milage may very.

Pete

Joel Owens · Answer

At the end of the day we all want money to afford the things we want to accomplish and have in life.

Given that no matter who you are you only have so much time in the day.You can leverage people to do more in the same amount of time but the time remains the same.

I want to flip this around.A great broker will not only be working with investors but doing deals of their own.

If the investor has the know  how they can get licensed and do it themselves.Some investors are professionals like lawyers,doctors,cpa's and want to invest but have no time.They need a broker to help them with their goals.

There is plenty of business out there for everyone and there are many flavors of investors.

If I only have so much time in the day I as a broker want to maximize my return.I can sell a 1 million dollar commercial property and use the same time  as selling a 50k property but my returns will be way less.

Will Barnard · Answer

Jason has an excellent biz model and it works well for him. I too believe I have a great biz model and it works great for me. Each investor must decide which path they prefer. There is NO right or wrong choice on this particular topic.

Vincent Vomero · Answer

JScott made some great points. But if you are investing in a different state or in an area you are not familiar with, it is best to have an agent that specializes in the area you're looking to invest in.

Account Closed · Answer

J Scott makes excellent points.  As an investor there are good and bad reason to get your own license.  I can see the value in a license.

I use a buyers agent / broker.  Finding one that is truly investor friendly that understands investing takes time.  I've worked with real estate agents though that are investors that still real have no clue.  One that I can think of was willing to accept negative cash flow because a property was expected to appreciate substantially over time. The properties he described and suggested would have made poor investments.

Mathew Hill · Answer

I use agents all the time, they are very valuable if you have one that is used to working investors. I am getting my own license, but I still work with others.

Derrick Sakai · Answer

I think every starter should start with an agent.  Although getting your own license can be really really helpful, but it's best to find a good agent until then. This is especially true for people who just stepped into this field.

Tim Booz · Answer

Finding an agent that is full time, and not in the business for extra income, supplemented retirement, or just for fun is important as well. I'm sure there are some great part timers, but I think I'd rather have someone who's depending on the outcome of the deal(If I weren't licensed.)

Chris M. · Answer

I still use an agent. I've found that using an agent who also was an investor worked out best for me. My previous agent was the one I used to purchase my first condo was a residential agent and grandmother. Great lady but after she retired and I started using my current agent, I see the difference.

Should You Use an Agent When Starting Out?

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