Buying without Buyers Agent

[Brian FitzGerald]

So I have a rental property here in North Carolina and I'm on a mission to acquire other buy and hold rentals. My issue is that 20% down on investment properties is a chunk of cash! Naturally, I would prefer to keep some reserves on hand in the case of HVAC/Roof/Water Heater emergencies and get into properties with less out of pocket. I actually just had to replace the HVAC system at my existing rental yesterday (ouch).

Anyhow, I am looking at other creative ways to secure properties including seller financing, buying primary residences at 5% and later converting them to rentals, buying a multifamily property and living in one unit, etc. Clearly there is a lot we could talk about there, but I am specifically interested in the question of using a buyers agents (or not).

I have a buddy who is a buyers agent, and I have no problem working with him on deals... that said, I'm also thinking that the 3% normally be paid to him could be used as a bargaining chip and turned into savings on my own deals. For example, if I work out a seller financing deal on a property that I found, it doesn't seem like I should need to bring in my agent to close the deal (when I could just work directly with the sellers agent).

That said, sellers agents seem surprised when I contact them directly (to schedule a viewing of the property) and communicate that I "am not looking to use a buyers agent on the deal."

First of all, does it even make sense to do this on listings which already have signed on with sellers agents? Of course, the contract is already signed between the seller and their agent, so is there really even an extra 3% to work with if I don't bring a buyers agent to the table? I have had people tell me that the seller has already "committed to paying the 6%, so the the sellers agent will just take the entire commission." That sounds questionable to me though, as in my mind everything is negotiable, even if it means restructuring existing contracts and commissions.

Anyway, just hoping to get some sense of what you guys do and whether or not it's worth it for me to try to skip using a buyers agent in hopes of saving that extra 3%!

Thanks for your insight,
Brian

[Ryan Hoover]

@Brian FitzGerald

I would caution you about being so focused on the 3%.  The real question is wether or not your agent is providing you value and giving you access to the listings that you are trying to pursue.  If you find the listing through your agent, then try to reach out to the seller's agent directly, that is a poor move for your relationship.  That is the type of stuff that keeps competent Realtors from wanting to work with investors.  If your realtor helps you secure an investment property and get started on your real estate journey, 3% is a drop in the bucket.

Now if you find the property on your own, that is off market, by all means push the fact that the seller will save agent fees.  But make sure you are comfortable with handling all of the paperwork on your own with the title company.  I personally don't get excited when my friend reaches out and wants me to handle all the paperwork, pro bono!

Also you are correct on your presumption, that since the home is already listed through a Realtor in the MLS, the seller is already planning on paying that full commission. If the seller's agent handles all of the paperwork to walk you through the escrow process, they will most likely try to take the full commission or most of it. Negating the benefit that you were hoping to achieve.