Value of using an real estate agent in the deal?

[Silver A.]

Hi BP family,

Please help me understand, why using an agent in the deal makes sense?

I have been flipping apartments for the past few years. Now I got a job as a real estate agent in a small local real estate company and I will be starting in 2012.

The main reason I have decided to become an agent again, is to have a cheaper access to the advertisement of my own flips, to get more leads, and find more properties to flip while I serve as an agent helping to advertise and sell properties, that have rejected "the offer from our partner to buy for flipping", but need to sell at market value. A commission from a deal every now and then is welcome :)

So it's all money.

I personally have sold my flips as FSBO-s, and I have avoided using an agent, because the % seems to be unjustified. Unless the agent has come to me with a client, who ended up buying the property from me.

Please help me see the other side of the coin, how does the customer win from using an agent?
What makes the service worth the price (5-6% from the selling price) to you?

[J Scott]

I've written about this before on the BiggerPockets blog, but as a licensed agent and an investor (along with my wife) who sells a decent amount of houses (about 15 of my own per year and about 25 for other investors per year), here is what I consider to be by-far the biggest value we provide when selling properties:

We have a strong reputation and a strong network of agents who we work with.

Our average DOM for the houses we sell is 17, and if you take out the two properties that took the longest to sell, it's closer to 12; the reason this number is so low is that my wife and I know most of the successful buyers agents in our area, and all those buyers agents know us and our reputation.

When an agent in our area has a buyer in our price range, they call us first. They want to get into our houses, for several reasons -- quality of rehab, value, and ease of working with us. We often get competing offers the first weekend, and we often have a list of buyers waiting for our houses to finish up so they can have "first dibs."

Don't get me wrong -- getting your listing on the MLS is important; I'd venture to guess that 95% of our traffic that doesn't come from direct correspondence with our network comes from the MLS. But, the MLS (and any FSBO marketing) pales in comparison to working with an agent who has a strong network, a great reputation and the ability to market your properties.

In my opinion, you have two choices:

1. Find a great agent who has the ability to market and sell your property quickly and pay him/her the 3% (or whatever they want); or

2. Use a flat-fee broker and list on the MLS for $400.

I don't see any reason to pay 3% to a typical agent who is just going to list on the MLS and maybe send an email or two.