Do I need a buyer's agent?

Question

I'm looking for my first deal and have been doing a lot of research on BP (podcasts, forums, books, etc). I'd like to start with a multi-family if possible. I've been analyzing deals using the various calculators and have some of my own cash to get started.

I'm wondering if not using a buyer's agents sweetens my offer to a seller, who then only pays one agent, not two. Am I missing something? Is this common?

If I do need an agent, what specific things would an agent bring to a deal that I could miss?

Anthony Wick · Answer

@Emily Laughlin

If you have to ask, I recommend getting your own agent to protect your interests. Until you get a few deals under your belt having an agent will greatly assist you. I’ve found my own deal and still contacted my agent to assist me. And get your own inspection during due diligence as well.

Matt Engle · Answer

@Emily Laughlin it is not required to have a buyer’s agent for multifamily investing but as you search for larger properties, the broker/agent you have a good relationship with will help bring you deals that you may otherwise not get to see. Good luck!

Account Closed · Answer

@Emily Laughlin The full commission percentage is agreed upon before the listing comes live so if the seller isnt paying the buyers agent, then the listing agent would get to keep it all.

There is no charge to you to use a buyers agent and they have only your best interests in mind and represent you. The listing agent first has a fiduciary duty to their client, the seller.

Caleb Heimsoth · Answer

@Anthony Wick I just did what Anthony said.  Found the property I wanted on my own, used a buyers agent to close it.  @Emily Laughlin

John Warren · Answer

@Emily Laughlin the seller pays the same commission in most cases whether the buyer is represented by a cooperative broker or by the listing agent. If you are represented by the listing agent, this is called dual agency. In this case, the listing agent gets the whole commission. While there are certainly times that this makes sense, for a newer investor there is little to no reason you would go this route. A good buyer's agent will represent your interest and will bring a whole team. I use a great attorney, inspector, lender, CPA, etc. When I have a buyer I can refer them to the same team members I use in my own investing, and this shortens the learning curve dramatically.

Riley Kurtts · Answer

@Emily Laughlin - I’d totally recommend having an agent. Let them do all the work!Typically, deals are a 6% commission that is split 50/50. Like myself and a lot of other agents, we’ll make it a 5% commission if a buyer comes unrepresented and we can switch into a “facilitator” of the transaction. At that point, no one is really “represented”. It’s somewhat confusing because it’s more work with less commission, but it can make the deal quicker and easier.

In summation, not being represented CAN set up a lower commission for the seller to pay. That may translate into a better deal. However, a facilitated deal usually starts off with a fair deal and not lots of dickering.

Russell Brazil · Answer

The commission amount is set forth in the contract between the seller and the listing brokerage.  Typically, though not always, the listing brokerage when they list the property on the MLS offers to pay a portion of their commission to a buyers brokerage for bringing a buyer.  That commission is the listing brokers, and is being shared at times with a buyers brokerage. Theres nothing wrong with not having your own agent, however that likely will not change the listing brokerages total commission.

Scott S. · Answer

This is one of the reasons that many investors consider getting their Realtor designation -- they get to keep the buyer's agent portion of the commission (or reduce the purchase price by a similar amount).

Bart H. · Answer

Emily, there are several reasons to use an agent imo.

1) A good agent will keep on top of the deadlines, knows how to fill out the paperwork etc.

2) a GREAT agent will know how to act when a deal goes bad.  I cant tell you how many times our agent has negotiated a better deal, found an error in an appraisal, helped us with negotiating the inspection process etc etc.  On an easy straight forward deal you might not need a realtor, but what happens if something odd comes up?  Investors are dealing with weird issues all of the time.  An agent navigates you thru those problems, and that's worth a LOT more than saving a couple percentage points on a deal.

3) If you get it out there that you are an investor, and do some deals with a realtor, when that realtor gets a deal, they will come to you. Just one deal can be worth a half dozen or more commissions.

I think when you ask the question about an agent, imo the real question is for a very small percentage you will close on more deals, have less hassle on easy closings and likely end up with more deals in the long run.

Yannik Cudjoe-Virgil · Answer

@Emily Laughlin Word of advice.... Don't interfere with the brokers commission. They want to get paid. I would prefer to go directly to the sellers broker to avoid having any communication issues as things often get interpreted incorrectly and too much back and forth can ruin a deal. Hope this helps!

Do I need a buyer's agent?

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