Do I need a real estate agent to close a deal?

Question

Hello BP, first blog post! I've purchased one rental property so far, and I used the traditional approach of hiring an agent. In a sense I felt cheated because my agent had to do minimal work, yet still collected the roughly 3% commission. My question is, do I need a real estate agent in order to close a deal? I know my agent had numerous legal documents for me to sign, but I'm wondering if there is a way I could complete the documents by myself or work with the seller's agent. Typically, the seller would pay my agent's commission, but it could still be a way to lower the purchase price if they didn't have to pay the commission. Any help is appreciated, thanks!

Jon

Jake Thomas · Answer

@Jon Kelly as an agent some transactions are easy and others are very difficult. What if the next house you buy turns into a nightmare and the 3% commission the agent makes didn't seem like enough in your eyes? It all evens itself out with time if you use that agent again. You can go directly to the listing agent to get a deal done but they won't always cut you a deal and discount their commission. In my market the listings agents don't have to as the house will sell regardless. I think it is worth it to have your own agent as realtors in a transaction can only represent one parties financial and best interest and for the listing agent its always the seller not "you" the buyer. The listings agents only job is to close the deal and get the most for the seller not try to get you the best discount possible. If you don't feel your agent added any value in the transaction I may suggest looking for another agent for future purchases.

Middy Matthews · Answer

There is no easy transaction.  I'm an agent.  There's a LOT of behind the scenes paperwork, title work and phone calls between agents, lenders, etc.  If your agent made this seem easy, good for them!  Here's what you're asking... can that 3% agent fee get into your pocket if you don't use one? NO.  We, as agents are also your insurance.  We have lawyers backing our work and we are there in case the deal is going sour, we know how to right the boat.  The seller has already agreed to pay 6% commission to his selling agent.  Sure you don't need to be represented in this deal.  Really, they don't care and would love it if no one is advocating for you.  So would the listing agent because, you know what happens now, he keeps the whole 6% and you're still have no one making sure you're protected in this deal.  Did you save any money?  Nope, but now you're completely exposed.  Please, get someone who you like and trust to work with.  Use them for every deal all the time.  Buy them a beer and get to know your agent and they will be on the lookout for you for properties to buy.  It's a two way street.  Go down it.

Dawn Brenengen · Answer

@Jon Kelly If your transaction seemed really easy, then your agent probably did a really good job.  :)  There is a ton of stuff that goes on behind the scenes.  We are constantly chasing down information and paperwork and always against a deadline.  It's like juggling a bowling ball, a ball of fire and a sharp knife.

I would build a better relationship with this agent.  If you are not an experienced buyer, then you probably do need one.  If you ever have a deal go south, you will be glad to have someone to lean on.

And what the others said about the listing agent just getting paid double is true.  The seller pays the same commission whether you have an agent or not.  He pays it to his agent who then shares it with the buyer's agent if there is one.  If there is no buyer agent, then there is no one he has to share with.  Yay for him!

John Stovall · Answer

So, really, the answer is no. Except in VERY rare cases will you receive a discount.\

But also pay attention to what the others are saying: If you're going into this thing head first, like I did, my best resource so far is my real estate agent. My guess is half of my purchases did not include an agent because I purchased them directly from the owner. But in EVERY case, my agent who's also my friend gives me his opinion. I also try and steer as much business his way when friends ask me for a realtor.

Russell Brazil · Answer

The listing agent will certainly be happy if you dont use another agent as they will make double.  However the seller is paying out the same percentage regardless if you use an agent or not, so they are unlikely to lower the price by the amount of the commission.

Also there is a lot that an agent does behind the scenes that their clients never see.  Some of that is work, some if it is just their knowledge of how to get the transaction to closing.  The easiest part of the whole business is finding you the property....the hard part is all the paper work, problem solving, nurturing the transaction to fruition which takes place between contract and closing....but you as the consumer dont see any of that happening.

Melissa Gittens · Answer

Hi @Jon Kelly most times alot of the work that the agent does may not even be seen by the buyer. We are typically negotiating with the listing agent on the back end and ensuring that documents are signed and sent in a timely manner.

Sometimes you do not need an agent to close a deal, you can go directly to the listing agent to work the negotiate but then the agent will be working for both you and the seller which is not always a great situation to be in. The buyers agent has a fiduciary right to work in the best interest of their client and are looking out for you.

Larry Turowski · Answer

@Jon Kelly As buyer you don't pay the agent's commission so it shouldn't matter to you.

As for being cheated, realtors do a lot of work that never pans out to a paycheck.  For every deal they do they've shown dozens if not hundreds of houses, listed properties that did not sell, dealt and dealt with endless tire kickers.  Plus they have all sorts of business expenses.  Don't begrudge them their paycheck.

Jon Kelly · Answer

@Dawn Brenengen that's great information. I'm glad I asked or else I would've tried to go down the wrong path, and I'm thankful for everyone's replies

Chris Mason · Answer

@Jon Kelly - Total realtor commissions were negotiated when the seller signed the listing agreement with the listing agent. You were not a party to those negotiations. If you do not have an agent, the listing agent simply gets paid double and you have no one in your corner representing you (lets not kid ourselves about "dual agency").

Experienced REI that do not need agents, because they've got a dozen deals under their belt, will sometimes use this to in effect bribe listing agents to push their offer over others, but that kind of only works if you have some specific reason to believe that the seller is an idiot.

Do I need a real estate agent to close a deal?

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