How to Utilize Realtors

Question

Investors: how do you utilize a Realtor if you're looking for sellers who are motivated to sell a house off-mls? That 6% can make or break a deal, and I assume the paperwork isn't that complicated. I ask because a book I'm reading kind of implies that you should be utilizing a Realtor to help you with comps and neighborhood info and such. And getting into houses for sure - you know, getting to know your farm better.
Agents: how do you feel about this issue?

Michael Galloway · Answer

Jason Merchey , i second what Karen M. is advising you. I am a licensed broker, that said, if an agent brings me a deal, they get paid. The relationship is worth far more than saving several thousand on a deal. If it's a real deal, we all get paid. If the margin is too thin for a seller to go through a traditional listing without it being a short sale, then you might want to offer the listing agreement to the agent after you rehab, if they don't feel that there is enough room for their full commission. The last 3 transactions i have done were from Listing Agents not in my office. They called me and asked if i was interested in a property. If i tell them yes, i let them write the offer. They are taking both sides of the transaction. i Sometimes even give them the listing as well. (they get paid 3 times. I did one last year that made 4 commissions) Why do i give up so much of the fees? Because i am not after the fees. I am after the deal. Hopefully, you can follow this. If i lost you please don't hesitate to ask questions. Go find the top listing agents in your farm and make a relationship ;) ... and if they bring you a deal you better be ready to perform.

Karen Margrave · Answer

Jason Merchey Actually an agent can't go show you property and then cut their broker out of the deal, that would be unethical. In all honesty, there's really no good way to see property that is listed unless you are working with an agent. Aside from that, if they have a new listing that comes in and it fits your needs, you can find out about it quickly. Trying to save money by not using an agent, unless your market is very depressed, is hard. On the other hand, if there is an abundance of homes available, then look for the ones for sale by owner and go that route. I personally am an agent, but if another agent finds me a property, I'm more than happy to pay them for it.

Karen Margrave · Answer

Jason Merchey I'm not clear on what you're asking. If you are saying you want to use the agent to take you and show you houses, run comps for you, and then you don't use them for making the offer, it would be the same as if you went out with the Realtor, and when you got out of the car you stole their laptop. Would you think that was ok? Probably not. Their time, has value, as does their knowledge of the market. In addition, they pay alot of money for their MLS dues, and keycards. If a deal can't make it and allow you to act with integrity, don't do it. Put down the book and start doing your research on BP. Become knowledgable on your local market. If you want to save on commissions, think about taking a real estate class or getting your license so you can write your own contracts. If you think the paperwork is easy, go get a contract, and all the disclosures, and see if you understand them, and are comfortable filling them out. Call on houses that are FSBO. If all that works, go for it and save the commission! Good luck!

Paul Falbo · Answer

Paul Falbo · Answer

One day I get a call from my realtor. "I've got a house down the street that just came on the market. It's an REO. Asking 300,000 k. Nice house with many upgrades. You can probably rent it for $2,350/ mo. That was 3.75 years ago. Cash on cash, almost 10 percent. One tenant. House has appreciated over 25 % in 3.75 years. I didn't pay any commission on the buy side; and, I'll use him on the sale side, someday. Had I not had a good relationship with a realtor, I would have missed this opportunity. A good, honest relationship, with a good honest realtor is invaluable. His knowledge, dedication, experience and integrity made both of us some money. I was busy running my company, serving my clients; and, had little time to know even my own neighborhood. I'm a property manager, a CPM and SCSM, so I save some money there. I'd be a fool to not use someone who knows the market, better than I ever could.

Karen Margrave · Answer

Michael Galloway We do business much the same as you. It's not the commissions, it's the deal. We even listed our house with other agents that specialized in luxury homes, because we were developers of commercial buildings and didn't have the network they did for buyers. Getting too greedy gets you nowhere in this business.

Jason Merchey · Answer

Yah I am beginning to get some clarity. I found another spirited discussion or two along these lines. It's grey, and I don't have enough experience to see what a Realtor can do for me in off-mls deals and what I can do for myself. But one thing that I am coming to believe is that this issue is a lot like romantic relationships - with the investors being the typical guy and the Realtors being a typical woman. Reminds you of the saying about cows and milk...

Jason Merchey · Answer

I guess I'm saying that sure, I wouldn't use a Realtor exclusively and then at the last minute ditch them to save 3%. But most investors don't use them, correct? Or maybe I have that wrong. It just seem like I couldn't get familiar enough with my farm area without seeing a lot of houses and of course I can't do comps without a Realtor. So does one who needs comps but seals deals themselves like float the Realtor a $1,000 bill and say thanks, or how do investors interact with Realtors? Oh and I did take the real estate class.