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Updated almost 5 years ago on . Most recent reply
Should you use a real-estate agent for multi-family properties?
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
Most Popular Reply
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@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.