Should you use a real-estate agent for multi-family properties?
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Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
6y@Ben Hunt It's not so much a question of whether or not you should use an agent for multifamily, but rather how will you find any actual deals if you don't? As you're learning by looking at what's available on the MLS or other online sources, by the time a multifamily building is marketed online, whether it be the MLS, LoopNet, etc., it's almost always been passed around to a large network of agents first. Thats where the saying "the MLS is where deals go to die" comes from (although you can occasionally find a deal on the MLS, but not very often). So if you want access to the market where the actual deals are being made, the best way to go about it is to talk to as many of the agents who control that market as you can. In most areas a small number of agents control most of the deals. If you can find them and demonstrate that you're a real buyer who will close on deals without wasting people's time or trying to cut them out/mess with their commission, they will bring you deals. Once they do, you have to close and make it as clean a transaction as possible in order to keep getting deals. So it's a bit of a chicken and egg scenario, because in order to buy you almost have to be a buyer first, or at least convince agents you will close without wasting their time. Once you close on a few deals, all the commercial brokerages who are active in the space will find your info in the tax records on those closed transactions, and whether you like it or not they will start calling you with their "coming soon's", (or at least their junior agents will, as they will be trying to pick up the buyer side commission by finding a buyer for their senior agent's premarket listings). And that's the way it typically works. Another option other than building relationships with commercial brokers is to do what all the junior commercial brokers are doing: pull your own lists of thousands of building owners and mail/call them to see if they're interested in selling. It takes time to build relationships with building owners (property managers also often have access to premarket deals through their client network) before you start actually making deals this way, which is the main value agents bring as they have been developing these relationships with buyers and sellers for years and have junior brokers willing to cut their teeth by making thousands of these calls to generate deal flow. So if you want to play in the multifamily space, you pretty much have to use the agents who control the market in my experience, or do what they're doing better than they're doing it. It's certainly possible to build your own relationships with building owners, or create a lead funnel/do a lot of prospecting to find and negotiate your own deals. But it's probably easier to just use an agent who already has access to deals, at least until you have a few under your belt, have established yourself as a buyer and the commercial brokers start calling you with premarket action.
17 Replies
- Investor · United States · Member since 2018 · 565 posts · 356 votes6y
Originally posted by @Ben Hunt:
Hello BiggerPockets!
There's a small supply of MF properties, specifically 4-plexes, in the area that I'm looking in and I don't see much value-add from a buyers agent. I plan on house hacking a 4-plex that has some value-add potential.I'm currently set up on the MLS for a feed of 3 & 4 plex properties, but there's hardly anything on there, just a few listings.
In addition, everything that I've seen on the MLS, I've seen on other sites like Realtor/Zillow/Craigslist and etc.
So, from this, there's not much to manage in terms of property searching. I'm already resorting to an off-market search, so especially in this case, would an agent provide any extra value and 3-6% of the sale value at that?
Also, this would be for my first purchase. I wouldn't want to use one solely because "you're a newbie", but if there's actual value-add that can be had.Questions:
- Is there enough value-add from a buyers agent in this circumstance to warrant the 6% cost. (or 3% after split)
- What would I have to now manage if I didn't go with an agent? What would the difficulty be in making an offer myself?
Please let me know!
Best,Ben
for the small ones yes because they're on the MLS, for the larger one's you should with with a commercial broker. They unfortunately hold the keys to a lot of deals so you better start building some relationships.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes6y
@Ben Hunt It's not so much a question of whether or not you should use an agent for multifamily, but rather how will you find any actual deals if you don't? As you're learning by looking at what's available on the MLS or other online sources, by the time a multifamily building is marketed online, whether it be the MLS, LoopNet, etc., it's almost always been passed around to a large network of agents first. Thats where the saying "the MLS is where deals go to die" comes from (although you can occasionally find a deal on the MLS, but not very often). So if you want access to the market where the actual deals are being made, the best way to go about it is to talk to as many of the agents who control that market as you can. In most areas a small number of agents control most of the deals. If you can find them and demonstrate that you're a real buyer who will close on deals without wasting people's time or trying to cut them out/mess with their commission, they will bring you deals. Once they do, you have to close and make it as clean a transaction as possible in order to keep getting deals. So it's a bit of a chicken and egg scenario, because in order to buy you almost have to be a buyer first, or at least convince agents you will close without wasting their time. Once you close on a few deals, all the commercial brokerages who are active in the space will find your info in the tax records on those closed transactions, and whether you like it or not they will start calling you with their "coming soon's", (or at least their junior agents will, as they will be trying to pick up the buyer side commission by finding a buyer for their senior agent's premarket listings). And that's the way it typically works. Another option other than building relationships with commercial brokers is to do what all the junior commercial brokers are doing: pull your own lists of thousands of building owners and mail/call them to see if they're interested in selling. It takes time to build relationships with building owners (property managers also often have access to premarket deals through their client network) before you start actually making deals this way, which is the main value agents bring as they have been developing these relationships with buyers and sellers for years and have junior brokers willing to cut their teeth by making thousands of these calls to generate deal flow. So if you want to play in the multifamily space, you pretty much have to use the agents who control the market in my experience, or do what they're doing better than they're doing it. It's certainly possible to build your own relationships with building owners, or create a lead funnel/do a lot of prospecting to find and negotiate your own deals. But it's probably easier to just use an agent who already has access to deals, at least until you have a few under your belt, have established yourself as a buyer and the commercial brokers start calling you with premarket action.
- Rental Property Investor · Cleveland, OH · Member since 2019 · 67 posts · 37 votes6y
Originally posted by @Ben Hunt:
Hello BiggerPockets!
There's a small supply of MF properties, specifically 4-plexes, in the area that I'm looking in and I don't see much value-add from a buyers agent. I plan on house hacking a 4-plex that has some value-add potential.I'm currently set up on the MLS for a feed of 3 & 4 plex properties, but there's hardly anything on there, just a few listings.
In addition, everything that I've seen on the MLS, I've seen on other sites like Realtor/Zillow/Craigslist and etc.
So, from this, there's not much to manage in terms of property searching. I'm already resorting to an off-market search, so especially in this case, would an agent provide any extra value and 3-6% of the sale value at that?
Also, this would be for my first purchase. I wouldn't want to use one solely because "you're a newbie", but if there's actual value-add that can be had.Questions:
- Is there enough value-add from a buyers agent in this circumstance to warrant the 6% cost. (or 3% after split)
- What would I have to now manage if I didn't go with an agent? What would the difficulty be in making an offer myself?
Please let me know!
Best,Ben
For residential, doesn't the seller pay for the agent's commission, whether split or not? In all of my transactions, the seller has paid this. Might be an Ohio thing where other states what's expected is different. In this case, there is almost no reason not to go with a buyer's agent. Plus that agent may have connections to where if you say, "Hey, I'm looking to house hack a 4-plex", they could ask around and might get a lead on one coming on the market soon.
OR if you are looking for a flip, you could try to partner with someone who is wholesaling or flipping themselves.
In my opinion, you don't take on that much in Residential. You do the same things, just all the small stuff too, like taking all the calls, scheduling all the appointments, inspections and managing the bank and title company. Buyer's agent usually deals with the details so that the retail purchaser doesn't have to. What's nice is you are in control of negotiations if you don't have one. When we bought our house, the agent we used frankly didn't try much.
Just some ideas!
- Investor · Kansas City · Member since 2017 · 28 posts · 20 votes6y
Its always easy to look at "money gone" by using an agent but if we believe in trusting or being an expert ourselves, we need to work with the experts in our respected space. I live in Kansas City and own properties in the Multifamily space. I love Austin but that market is tough. If you're looking to connect and network in the KC market, let me know. Cheers!
- 6yJordan MoorheadBusiness MemberReal Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
@Ben Hunt well to start you yourself don’t pay anything, the seller does. You won’t save any money not using an agent. Also an agent makes the whole process a whole lot easier and a good agent may have connections to get off market deals or renovations done after closing. As an agent and investor I have a wide network of professionals that I hand out to all of the people I work with and help get deals closed that wouldn’t otherwise happen.
The Moorhead Team5140 Reviews - Real Estate Agent · Winter haven, FL · Member since 2011 · 572 posts · 336 votes6y
Originally posted by @Ben Hunt:
Hello BiggerPockets!
There's a small supply of MF properties, specifically 4-plexes, in the area that I'm looking in and I don't see much value-add from a buyers agent. I plan on house hacking a 4-plex that has some value-add potential.I'm currently set up on the MLS for a feed of 3 & 4 plex properties, but there's hardly anything on there, just a few listings.
In addition, everything that I've seen on the MLS, I've seen on other sites like Realtor/Zillow/Craigslist and etc.
So, from this, there's not much to manage in terms of property searching. I'm already resorting to an off-market search, so especially in this case, would an agent provide any extra value and 3-6% of the sale value at that?
Also, this would be for my first purchase. I wouldn't want to use one solely because "you're a newbie", but if there's actual value-add that can be had.Questions:
- Is there enough value-add from a buyers agent in this circumstance to warrant the 6% cost. (or 3% after split)
- What would I have to now manage if I didn't go with an agent? What would the difficulty be in making an offer myself?
Please let me know!
Best,Ben
Working with an agent cost you nothing. The seller pays the 6% commission. And just because you don't use a buyer's agent doesn't guarantee an automatic discount on price. It definitely sound to me like you need a professional to guide you threw this purchase. - 6yBen HuntNew to Real Estate · Austin Texas · Member since 2020 · 24 posts · 4 votesOP
Thanks @Manny Cirino and @Jordan Moorhead for the responses!
I know that the seller pays the 6% and I'm also aware that by not using an agent does not guarantee a discount of the purchase price.
However, I felt more pressure than I would like for making an offer from an agent when touring a property. It seemed we had our own interest. Mine was to find a good investment and the agent's was to get a good commission.Like everything, it varies from person to person and I can't project that view on to every agent.
Also, I'm not talking about not using an agent in every circumstance, rather the specific circumstance when there aren't really any properties listed for sale on the MLS. - Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes6y
I would be comfortable with not using a broker to purchase but the problem is if I find a deal in the public space chances are dozens of investors already passed on it. It's the brokers network where you find the deals.. So having said that I would want representation..
- Specialist · Plano, TX · Member since 2020 · 2k+ posts · 861 votes6y
@Steve K. Thanks for such amazing information and advice on where to find deals and how to go about this in markets to ensure we are seeing great deals.
- 6yJordan MoorheadBusiness MemberReal Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
@Ben Hunt I’ve picked up four off the mls personally and used an agent every time to negotiate discounts off the price. I’m an agent in TX and MN but have bought a lot where I’m from in KY and always used an agent.
The Moorhead Team5140 Reviews - Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes6y
Originally posted by @Ben Hunt:
Hello BiggerPockets!
There's a small supply of MF properties, specifically 4-plexes, in the area that I'm looking in and I don't see much value-add from a buyers agent. I plan on house hacking a 4-plex that has some value-add potential.I'm currently set up on the MLS for a feed of 3 & 4 plex properties, but there's hardly anything on there, just a few listings.
In addition, everything that I've seen on the MLS, I've seen on other sites like Realtor/Zillow/Craigslist and etc.
So, from this, there's not much to manage in terms of property searching. I'm already resorting to an off-market search, so especially in this case, would an agent provide any extra value and 3-6% of the sale value at that?
Also, this would be for my first purchase. I wouldn't want to use one solely because "you're a newbie", but if there's actual value-add that can be had.Questions:
- Is there enough value-add from a buyers agent in this circumstance to warrant the 6% cost. (or 3% after split)
- What would I have to now manage if I didn't go with an agent? What would the difficulty be in making an offer myself?
Please let me know!
Best,Ben
The seller has already agreed to pay the commission to the listing agent. The listing agent then agrees to split some of that with the buyer's agents out there who bring in offers. So there isn't any savings by not using an agent. The money is already getting spent. It's either all going to the listing agent or it's going to be split between the listing agent and the buyer's agent.
So with what I said above the argument can be made that you should get your own agent as it's essentially free. However on the other hand there is something to be said about going right to the listing agent. If a listing agent has two identical offers to present to his seller and one of them is going to give him 2x the payday than the other which one do you think he's going to advise the seller to sign?
- Real Estate Agent · Winter haven, FL · Member since 2011 · 572 posts · 336 votes6y
Originally posted by @Ben Hunt:
Thanks @Manny Cirino and @Jordan Moorhead for the responses!
I know that the seller pays the 6% and I'm also aware that by not using an agent does not guarantee a discount of the purchase price.
However, I felt more pressure than I would like for making an offer from an agent when touring a property. It seemed we had our own interest. Mine was to find a good investment and the agent's was to get a good commission.Like everything, it varies from person to person and I can't project that view on to every agent.
Also, I'm not talking about not using an agent in every circumstance, rather the specific circumstance when there aren't really any properties listed for sale on the MLS.I understand that is the trait of a bad agent. Agents should never be high pressure. All you have to do is cut them off and wait for the right deal and the right agent to present themselves.
- 6yBen HuntNew to Real Estate · Austin Texas · Member since 2020 · 24 posts · 4 votesOP
@James Wise, well stated!
I hadn't thought about it in the sense that any listings that are already on the MLS will have the entire 6% already allocated. So while I knew that there was a 6% split, I didn't realize that no matter what, if the listing is on the MLS, there will be that commission taken. Then, it's pretty much just motivation for the listing agent to take your offer over others if you went without.
In my case, I'm sending out some mailers to off-market MF properties in the area. If one lead bites, there's no listing agent/buyers agent at this point, should I use one?
Thanks again. - Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes6y
Originally posted by @Ben Hunt:
@James Wise, well stated!
I hadn't thought about it in the sense that any listings that are already on the MLS will have the entire 6% already allocated. So while I knew that there was a 6% split, I didn't realize that no matter what, if the listing is on the MLS, there will be that commission taken. Then, it's pretty much just motivation for the listing agent to take your offer over others if you went without.
In my case, I'm sending out some mailers to off-market MF properties in the area. If one lead bites, there's no listing agent/buyers agent at this point, should I use one?
Thanks again.What's your level of experience?
- 6yBen HuntNew to Real Estate · Austin Texas · Member since 2020 · 24 posts · 4 votesOP
@James Wise
I won't shy away from saying I'm a newbie, because I am. (This is my first purchase, a house hack).
However, I also won't shy away from reading as much as I can and talking to others more experienced than I for advice. Basically, being well educated before taking any action. - Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes6y
Originally posted by @Ben Hunt:
@James Wise
I won't shy away from saying I'm a newbie, because I am. (This is my first purchase, a house hack).
However, I also won't shy away from reading as much as I can and talking to others more experienced than I for advice. Basically, being well educated before taking any action.I recommend you work with a buyer's agent for your 1st few deals.
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