Podcast 123: Why You Should Always Use a Real Estate Agent

InvestFourMore Real-Time Stats (as of 12/12/17)
17 flips currently in progress. 139 flips completed. 18 rentals properties.
Follow me to see how I make money in any market cycle. Join Free Now >

I have been a real estate agent and real estate investor for over 15 years. I am biased when I talk about using real estate agents, but I am also extremely experienced when it comes to real estate. Being in the industry as long as I have, I see how valuable a good real estate agent is for both buyers and sellers. Real estate agents can be expensive, but they are usually well worth it because of the money they save their clients. On this episode of the InvestFourMore Real Estate Podcast, I talk about why buyers and sellers should use real estate agents. I also discuss how to find the best real estate agents and use them effectively to get deals or to help you sell your house.

Click on the green button below to listen to the podcast

Who should use a real estate agent?

Lately, I have been answering a lot of questions about real estate agents on Quora. Many people want to avoid using a real estate agent in order to save the commission they would pay to sell a  house. Some people even want to avoid using an agent as a buyer, which makes little sense because buyers typically do not pay for a real estate agent. Selling a house is a very complicated process, and every house is different, which makes them hard to value. When you value a house wrong, it can cost the seller 10% or more of the purchase price, which eliminates any savings from not using a real estate agent…and then some.

In the United States real estate market, most sellers pay for the real estate agents on both sides. The buyer does not have to pay their agent anything, so there is no reason not to use an agent as a buyer. If the buyer does not use an agent, it may be advantageous in some for-sale-by-owner situations, but it is very rare. In my opinion, everyone should be using real estate agents to help them buy or sell houses. You have to make sure you use a good agent and not just anyone with a license.

How hard is it to get a real estate license?

How should buyers use real estate agents?

There are many real estate agents, and not all of them are good. In fact, it could be argued that most of them are not very good. There are many part-time agents and many agents who have no idea what they are doing. The problem with many real estate agents is they are not taught how to sell houses in real estate school. Good real estate agents need training and a mentor to teach them how to sell houses and help their clients. Unfortunately, many agents choose to forego training for a higher commission split. Most buyers work with the first agent they find or know. They do no due diligence to determine if their agent is any good. Here are some tips for finding a good agent:

  • Try to avoid working with part-time agents. Most part-time agents are not available when a buyer needs them, and they have a much greater chance of messing something up because they are not giving the job their full attention.
  • Do not work with friends and family just because they are friends and family. Work with real estate agents because they are experienced, know what they are doing, and have time for you. If you have friends or family who are good agents, use them, but don’t use them just because they are friends or family.

I have many more tips on the podcast for finding and using good real estate agents. Try not to use more than one real estate agent at a time. This will actually hurt you more than it helps.

Why should sellers use real estate agents to sell their house?

Many sellers question using a real estate agent because it costs them a lot of money. Real estate agents are expensive, but they are also worth it. The most important thing a real estate agent does is value houses correctly. If you under price a house, it will most likely sell for less than it is worth, even if you get multiple offers. If you price a house too high, it will sit on the market and usually sell for less than it is worth as well. I go into much more detail in this article.

Other things real estate agents do include:

  • Marketing the house on the MLS.
  • Staging the house.
  • Taking pictures.
  • Making sure the house shows well.
  • Negotiating for the buyer or seller.
  • Handling inspection issues.
  • Handling appraisal issues.
  • Setting up closings and helping with title.
  • Showing the house.
  • Writing contracts, counters, and amend/extends.

All of these issues can cost the seller money if they do not know how to handle them right. Many real estate agents do not even handle all of these right, like being proactive with appraisals. When someone tries to sell a house themselves, they often end up dealing with a real estate agent for the buyer anyway. They still have to pay half a commission, and the buyer has someone negotiating for them, while the seller does not.

Why you should always use a real estate agent to sell a house.

Conclusion

I have much more great information on the podcast, including how investors should use real estate agents and how to motivate agents. My book, Build a Rental Property Empire, has a ton of great information on how to use agents too.

EPISODE 123

 

[INTRODUCTION]

 

[0:00:13.9] MF: Welcome to the Invest Four More Real Estate Podcast. My name is Mark Ferguson and I am your host. I am a house flipper. I flip 10 to 15 houses a year, I own 13 rental properties, with a goal to buy 100 by 2023. I’m also a real estate agent. I’ve been licensed since ’01, I run a team of nine and we sell close to 200 houses a year.

 

So on this show, we like to interview house flippers, landlords and the best real estate agents in the business. So stay tuned for some great shows, if you want more information on my rentals, on the numbers, how I buy properties, check out investfourmore.com.

 

[EPISODE]

 

[0:00:58.8] MF: Hey everyone, it’s Mark Ferguson with Invest Four More and welcome to another real estate investing podcast. Today, I’m going to talk about real estate agents. Why you should always use them, how to find good agents, the cost of agents, all kinds of great information.

 

Whether you’re buying as an owner occupant, as an investor. Whether you’re selling. I’m going to go through my thoughts on agents and why they are so valuable. Before we do that, just had news that a tree fell on one of my house so I have to go check that out here pretty soon.

 

That comes with being a real estate investor. I had a flip we were working on and had really windy day yesterday. Apparently that wind knocked down a tree and it’s laying on a house. I’ll go see how bad that is, hopefully not too bad. I’ll have to post a video on YouTube so.

 

If you have not seen my YouTube channel, have lots of before and after videos, all my flips, most of my rentals and have some other advice videos as well so check that out. Just search for Mark Ferguson or Invest Four More on YouTube and you can find me.

 

Yeah, we’ll get into the real estate agent side now. I just hopped on a new site called Quora. Really cool site where people can ask questions, people answer questions, a lot of interaction and of course it does send some people to my site which I love as well.

 

A lot of questions on there about, “Why do I really need a real estate agent, with all the technology out there, with Zillow, with the internet, digital cameras, all the stuff, our agents really needed, can’t I save a ton of money on commissions by just selling my house myself?” On the surface, it would seem like agents are being outdated, you don’t need them, you could save money. But, when you really dig in to the business and what agents do, I think you realize how valuable they are and how much service they provide as well as they simply make you more money when you use them.

 

I’m an agent myself so of course I’m a little bit bias but even if I wasn’t an agent, if I was an investor, I would be using an agent to sell my houses, to help me buy my houses. I know many other investors, some who are even agents themselves, like Jay Scott who I wrote a book with, he’s been on a couple of my podcasts. He is an agent but he pays another agent because he doesn’t have time to do the listing to sell his houses himself. He still sees the value in using an agent to sell his properties, help him buy properties.

 

I think the industry’s much different than other industries compared to real estate agents. People say, “Look at travel agents, they disappear because of the internet.” Yes, but travel agents were selling a vacation, that’s easily valued, you know what it’s worth and it can be bought online from a hundred different sites. A house is a little different, you have to value the house, get it appraised, get an inspection done, write a 20 page contract, there is a lot that goes into buying and valuing houses and that’s where agents bring their value into it.

 

First off, I’m going to start with the buying side, why you should use a real estate agent if you’re buying a house for someone who is looking to buy their own personal house, an owner occupant. The first thing to know if you’re buying a house, is you most likely will not have to pay your agent anything if you’re a buyer. The system is setup so that the seller pays a real estate commissions for both of the buyer and the seller.

 

The reason it’s set up that way is because the seller usually has more money than the buyer to pay an agent. A seller is selling their house, they probably have equity in it, prices could have gone up when they sell their house, they can use proceeds from that sale to pay an agent and an agent only gets paid once that house sells in most cases.

 

A buyer on the other hand has to pay closing cost, might have to pay a down payment. Most buyers don’t have a ton of extra money after buying the house to pay an agent so it makes sense for the seller to pay the agent because more people can buy houses, more people can sell houses.

 

It increases the price of houses and most people are better off with the seller paying the agent. If you’re a buyer, there’s no reason not to use a real estate agent because they’re pretty much free.

 

You don’t have to pay them to show you houses, you don’t have to pay them to help you find a lender or discuss your finances, what might be smart. Almost everything an agent does is free, they only get paid when they sell a house.

 

That’s important to remember too if you’re using agents, it is usually best to use one agent, not a bunch of different agents. It is no fun to be a real estate agent, spend hours and hours of time showing houses.

 

You know, getting a buyer qualified, going through all of this process to buy a house and then the buyer goes and buys a house with another agent who didn’t do any work. That agent gets a commission, the agent who did all the work gets absolutely nothing. It can also bring up a situation where the buyer is responsible to pay a commission for an agent.

 

If you are working with a real estate agent, it is determined that that agent wants a recurring cause for you buying a house. Let’s say you see a house with one agent and then you go and decide to make an offer on that house with another agent.

 

The seller would pay the real estate agent commission to the agent who you buy the house with, you write the contract with. But, it could be ruled that the reason you found that house and bought that house was the first agent who showed that house to you. You as a buyer may be responsible to pay a commission to that agent on top of the other agent getting paid by the seller. You have to be careful as a buyer that you’re not just running around seeing houses with every agent, making offers with other agents.

 

Understand how the business works. For that reason, it’s usually best to find an agent you like and work with that agent exclusively. If you don’t want to work with them anymore, you need to tell them, be very clear, make sure everything’s completely understood by both parties.

 

You’re not working with him anymore, you chose a new agent, they’re not doing the work, they’re not wasting time on you and you may not owe them a commission later on for buying a house that they show you. It also gets agents working harder for you if they know you’re the only one working with them. Like I said, agents are taught in real estate school by their brokers all over, you should only work with a buyer who is working with you exclusively.

 

If they’re working with a bunch of other agents, don’t even waste your time on them because you don’t want to put all that work in, all that time in and then not get paid for anything you do. If you are working with multiple agents and the real estate agents know you’re working with multiple agents, they are probably not going to work very hard for you.

 

If they found a smoking deal that fits perfectly for you, they may send it to you or they may not. They may send it to their other buyers who they know are going to work with them and use them as an agent.

 

So, if you want an agent to work hard for you, to find you good deals, to really go out of their way, do not use multiple agents because they won’t do it, they’ll be concerned about getting paid and they’re just not going to work that hard.

 

As a buyer looking to buy a house, it’s almost always smart to use one agent. Make sure they know you’re exclusively working with them, use an agent for one because it doesn’t cost you anything.

 

Talk to that agent, communicate what type of property you want, what you’re looking for, you know? Find an agent who is experienced, if you know nothing about housing, find an agent who sold many houses, who has a team who can help you out.

 

Who has time to show houses as well, there’s all types of things to look for an agent. I know a lot of people, when they’re looking for an agent, they pick the first one they see. They go to an open house, boom, that’s their agent, they don’t do any research, they don’t spend any time interviewing other agents, they just pick the first one that comes along.

 

Take your time researching agents, choose a couple to interview, figure out who the best fit is for you. Don’t just use a friend or family member just because they’re close. I mean, it’s a tricky situation because they might get mad at you if they don’t use you.

 

But, if they’re a part time agent who doesn’t know what they’re doing or they’re brand new, do you want them to help you find probably the most expensive purchase you’re ever going to make in your life.

 

Do you want them to mess up that transaction? I think one really good way to talk to people about that is say “Hey, I had more than one friend, I had more than one personal contact who is a real estate agent. I had to choose between them to see who I would use and you know, I threw a couple of names in a hat, picked one and that’s how I came up with that person to use.”

 

Now, I would not choose an agent that way. I would pick the agent you think is the most capable and most experienced but you know, you don’t have to lie to the other agent either, you can just throw one person the hat and leave the other person out and then you did really pick that person’s name out of a hat.

 

But you still have to mention that their name was not included in the hat. Take your time choosing an agent, don’t just pick the first one that comes along, pick one that’s going to work well for you.

 

Moving on to the investor side buying houses, you know, investors are a completely different breed. You’re trying to get a really good deal, you might have to make a lot of offers. Might have to see a lot of houses. You need an agent who has time, a lot of people say they want an investor friendly agent, an agent who knows all about investing, who even invests themselves.

 

I don’t always agree with that because for one thing, I’m a real estate investor and a real estate agent. I don’t work with other investors to help them find deals because I want to buy those deals myself and it’s not fair to those investors if I’m buying them and not sending them to them. If you’re working with an agent who is also an investor, you may be missing out on deals because that agent might be buying them for themselves.

 

I think it’s best to work with an agent who maybe isn’t investing themselves. I don’t even know how much they have to know about investing either. I think the job of a real estate investor is to know exactly what kind of properties they want, the cashflow with their flipping, how much room they need.

 

The investor needs to know all those things. Not their real estate agent. You should not be relying on your real estate agent to tell you what kind of house to buy, how much money you’re going to make, what the repairs will be. You need to know all that stuff yourself.

 

What you need is an agent is someone who has time for you, will work extremely fast and is competent. He doesn’t have to be the most experienced agent, it doesn’t have to be an investor friendly agent or even an investor themselves.

 

That has to be an agent who might even be young or not that experienced yet but they have plenty of time, they can go out there, show houses to you right away. They’ll go out there looking for really good deals for you because they don’t have much else going on.

 

Those can be some of the best agents for investors. If that agent happens to be on a team like many of my agents are, they’ve got the backing of more experienced agents who can help with any problems or things that come up.

 

So that you’ve got kind of the best of both worlds. A young agent on a team who has time to find you deals but they also have more experienced agents on that team to help them get through the process or figure out any problems, difficulties, things like that.

 

As an investor as well, a lot of investors work with more than one agent, you know? It’s kind of like the idea of “Hey, if I have 10 agents looking for deals for me instead of just one, I’m going to get way more deals.”

 

Again, it comes down to the agent’s motivation. Once in a while I would send deals that I couldn’t buy to other investors. I’ll tell you a quick little story, there was a contractor I worked with who helped to repair houses for me, no longer works with me.

 

I found him a flip. I mean, it was a HUD home, I couldn’t buy, excessive HUD listing agent, he bought it for like 100,000 and I’m selling it for 165, he made 30 grand on it. Used me as a real estate agent to sell it and he comes up to me and says “Hey, Mark. You know, thanks for finding me this deal. I’m going to list it now.” I was charging 3% commission for my side, we paid 3% commission for another side, all commissions are negotiable but that’s what I was charging.

 

He says, “I know you want to charge me 3% to list this but I’m going to list it with somebody else unless you charge me two and a half percent.” I’m like, “Okay, I just made you $30,000 on this deal, you didn’t have to find the property and you’re going to use another agent because I won’t lower my commission?”

 

Basically, what he was saying was, he wants to save $750 or he’s going to use another agent to sell this house. I agreed to do it for two and a half percent. But I can tell you what, I never sent him another deal again in my life. I haven’t really talked to him since then.

 

On the other hand, I have some investors who I’ve worked with who ended up buying a house, they found a house, called me up so they wanted me to make an offer for them and I said “Sure.” I helped them out.

 

We got the deal done at closing, they gave me a bonus even though the seller paid my commission, they came around, gave me a bonus because they wanted me to pay extra for helping them out, doing things quickly and doing a good job.

 

When the next deal comes along, who do you think I’m going to send it to as an agent? The investor who wanted to nickel and dime me for a smaller commission even though I made him 30 grand. Or the other investors who paid me a bonus because they appreciated what I do and want to keep me in their mind?

 

I mean, think about the big picture and when you’re working with agents, who’s going to make you more money in the long run? Not saving a few hundred dollars on one deal because that contractor never got another deal from me, I can tell you that for sure.

 

These other investors who I’ve worked with for years and if there did happen to be a property I couldn’t buy myself or do something with, I would let them know and send it to them first before anybody else.

 

If you’re working with more than one agent, I know that story doesn’t kind of apply to that but it sort of does. If I know an investor is working with more than one agent, they might not use me to sell the house or if I send them a deal, they might use another agent to write the contract for them.

 

I have no motivation to send them deals, where I have a lot of motivation to send deals to the investor who I know is going to buy it through me and I know is going to sell it through me.

 

If you want to work with 10 agents instead of one, you may not get as many deals because you’re going to have 10 super unmotivated agents. Versus one really super motivated agent if they know they’re going to work with you, they know you’re going to do all your business through them.

 

There’s no questions asked. I think it’s usually better to use one agent instead of a lot, unless you’re working like multiple geographic areas where one agent can’t cover everything. Then hey, maybe use an agent for one area, an agent for another area.

 

That can work out well. Alright, so, along with investors come the idea of writing a lot of offers, doing a lot of work for nothing for agents. As an agent and seeing many agents on my team, I do see a lot of investors come through who have high hopes of flipping houses or buying rentals and they never ever do a deal and it wastes a lot of time for agents.

 

So not all investors do that but a lot do. So that jades a lot of real estate agents’ ideas about investors. They see an investor come in and all of them might say, “Oh great, this is going to be a huge waste of time. They’re never going to do anything.” And just getting that idea in your head of being disappointed with investors will naturally not make you want to work very hard for them.

 

So as an investor who needs a good agent you have to realize that. You have to realize that some agents may look down upon you because you’re an investor because of their past experience with investors. So you need to show them you are serious. Get pre-qualified, if you have cash to buy a house bring your proof of fund sheet. Do some work ahead of time just show that you took the time out to be a real investor.

 

If you have bought houses before, show them that you bought houses before. Let them know you’re serious and if you haven’t bought houses before, if you’re brand new take your agent to lunch. Do something, help them out, show them you’re serious, show them you are not just a tire kicker. Who’s going to look at 20 different houses and never make an offer.

 

Prove you’re serious and an investor will work harder for you which will get you more deals as an investor. So that’s what I want to talk about on the buying side for owner occupants, owner investors. It’s almost always best to work with one agent. You should use an agent because it costs you nothing and the better you take care of your agent, the more deals they’ll send you, the better off you’ll be.

 

So moving on to the selling side. This is where it gets trickier for people and where a lot more questions are asked because the seller is who pays the real estate agents. Like I said, we charge 6% on most deals. Commissions are negotiable, they can be more or less. There’s all types of different commissions out there.

 

There’s no set commission but that’s what we charge. So if you are selling a $200,000 house and you have to pay a 6% commission, that’s $12,000 out of your pocket. That is a lot of money and people automatically think, “Oh my gosh $12,000, I can do this myself and save all that money. It will be so worth it.”

 

And on the surface again, it’s like, “Hey, yeah maybe you will save that money.” But when you look into it you may not actually be saving any money, you maybe costing yourself money and creating a lot more work and a lot more hassles for yourself in the process. The reason is because real estate agents are very valuable to sell houses. The number one thing an agent can do is price a home correctly and market it so that it reaches the most buyers.

 

When you don’t price a home correctly it can easily cost you 10% of the selling price which right there, eats away all those real estate commissions that you saved. If it’s not marketed correctly again it can easily cost you 10% or more which eats away all that savings from the commissions.

 

And you might still end up paying the buyer’s agent which means you are only saving only half the commission 3% to do all this work yourself and still lose money over using an agent. So how does that make sense? It usually doesn’t but people don’t know all the things that go into what an agent does and how the housing business works.

 

So I’ll start this out with a house I just bought off of Zillow that was a for sale by owner. It’s a fix and flip we are working on now. The house was listed on Zillow for a $199,900. I saw it come up, I have a little search that pops up that notifies me when new for sale by owners, pop up in my area. I thought it was a pretty decent deal.

 

That house was probably worth 225, 230 so 199, yeah it’s a good deal. Not quite enough room for me to flip but I had my eye on it. A week and a half later the price was dropped to 1799. That got my attention. I thought, “Hey this is a much better deal.” I called the number, set up a showing, went and saw the house. It’s the son who lived there, his dad owns the property.

 

Didn’t need a whole lot of work so I’m like, “Okay, great.” I called the dad, started negotiating. We ended up texting back and forth. I bought the house for a $157,000. So that’s $22,000 less than their list price and about $42,000 less than the original asking price and the house probably needed 15,000 maybe 20,000 work. Like I said, it’s worth 225, 230,000.

 

To show you how being a for sale by owner hate or hurt the seller, that house would have sold for $200,000 if it was marketed by an agent on the MLS system which is a Multiple Listing Service, where houses for sale are listed by agents. I have no doubt that house would have sold for that amount if people knew about it.

 

But maybe 10% of buyers out there or less actually knew that house was for sale because it wasn’t on the MLS. It was only on Zillow. And even if buyers did see it on Zillow agents are not excited about showing houses that are for sale by owner. There’s no guarantee they’re going to get paid a commission and they’ve got to do all the work for the seller.

 

Write the contracts, go through all the inspections, the appraisal with them, help them out, agents are very unmotivated to work with for sale by owners. So that hurts you. From there, the house is not on the MLS, which means most buyers will never see it and then the people who do see it are people like me, investors who are looking for a really good deal and want to get a low price.

 

So when I bought that house, they didn’t have to pay any real estate commissions. I waved those as part of the advantage of selling it to an investor without listing it but that saved them what? 10, $12,000 and it cost them probably $40,000 in price because it wasn’t marketed directly. I see that all the time with houses that are for sale by owner.

 

Maybe it’s not quite that big of a disparity in price but it’s definitely most houses sell for less as a for sale by owner than if they are marketed by an agent. So that is the first thing to know is sure, you might save that commission but you’ll probably going to get a lower price than if it was marketed to everybody by an agent.

 

And going back to pricing, pricing is so important. If you price a property too high it will sit on the market. People won’t see it, they won’t make offers and it becomes stagnant and people start to wonder what is wrong with that house why isn’t it selling. Even if you lower the price 20 grand and it’s now it’s a price point where it should sell people are like:

 

“Wow, yeah that house seems priced right but it’s been for sale for three months. Everything else is selling for 30 days or less, why has that house been for sale so long? There must be something wrong with it.” Even if there’s not something wrong with it that’s the mindset people have and buyers think about, so it hurts you to overprice a house.

 

It can easily cost you five or 10% of what it was sold for. If you priced it right, had a bunch of buyers going through it in the beginning and they’re making offers and people say, “Well I’ll just price a property too low. I’ll get multiple offers, it will bring the price to where it should be. Problem solved” well maybe not.

 

When you price a property too low, yes you can get multiple offers. They can raise the price but you also scare away some buyers. It’s silly, it makes no sense to me but a lot of buyers have the mindset of “Well I am not going to compete with anybody else. I don’t want to get into a bidding war. I’m not going to make an offer on a house that has multiple offers.”

 

I think that is not very smart. I think you just make an offer no matter what but a lot of buyers do that which means you are eliminating buyers when you have multiple offers and then buyers look at the list price to figure out what they want to pay. If they’re priced 20,000 less than market, the buyers are going to have a hard time saying:

 

“Well I’m going to pay 200,000 for this house even though it is listed for 180.” They are going to say, “Hey, it’s listed for 180, if I just go 5,000 over I might get it so I’m going to bid for 185.” Now they might get beaten out by someone else or there might be three buyers with that same mindset, where if the house is priced at 200,000 what it’s worth? The buyers say:

 

“Hey, okay we are offering at 198 or 200,000 because that’s what it’s worth. You don’t have to worry about trying to squeeze money out or look for a good deal.” So pricing it too low can also cost you five or 10% very easily. Homes that are priced too low attracts people like me. Again, investors looking for really good deals and if you want to sell your house for the most money that’s usually not who you want to sell the property to.

 

So not having the house in the MLS system, not pricing it right, can wipe out all of those real estate commission savings right off the bat. I know a lot of people say, “Well I’ll just use a limited service and the last agent to put it in the MLS for me. They’ll handle the showings and all of that and I’ll be able to market to people.”

 

Well that’s not always possible because in many states, including Colorado where I’m at, limited service MLS listings are illegal. They are not allowed by the MLS, you have to have a full-service MLS listing because that agent is responsible and has to make sure that sellers are taken care of and are not being taken advantage of. They can’t just list the property in the MLS and forget about it.

 

They have to be responsible to review offers, review inspections, appraisals, all of that stuff legally. They are responsible to do that, they cannot take a little service listing. So that may not be possible in your state either if that’s what you’re thinking. Other things the agents help with, marketing, making sure the pictures look great, the house looks great.

 

Negotiating offers, like I said I negotiate $22,000 off the price on that for sale by owner. Could I have negotiated that much if they had an agent? I don’t know maybe, maybe not but they probably would have had 12 other buyers competing against me pushing that price up if it was marketed right. Inspections, setting up inspections to buyers who will want to look at the house.

 

As for repairs, as for price reductions – if you don’t have an agent working with you it’s very hard to figure all of that out. Appraisals can come in low. What happens if an appraisal comes in low, does the seller pay for all of that difference, does the buyer? If you have an agent working for you they can help you. They can help even get that appraisal raised.

 

They can help the appraisal come in at value before the appraisal is done. If you don’t have an agent, a lot of times you’re stuck with that appraisal, you don’t know what to do, you don’t know how to handle it. The same thing for closing fees, closing costs, knowing what is standard to pay for the seller and buyer in each state. Agents help with all of those things.

 

It can be very confusing if you don’t know what is typically done and if you’re trying to do that yourself. Now on top of that, you’re trying to figure out if you’ve got to contract yourself that can be 20 pages long. You’re setting up showings yourself, showing people so many things that go into selling a house that a real estate agent can help with.

 

And the bottom line is you’ll usually make more money using an agent, even though you are paying commissions, than you would trying to sell it yourself. Because of pricing and marketing and not to mention all the work you have to do yourself when you’re doing the showings, looking at the contract, revealing everything else.

 

And then the last thought I’ll leave you with here is when you are selling a house yourself, most buyers will have an agent because it’s free, as we discussed earlier in this podcast. They don’t have to pay an agent so why would they not use one? Well if you have a for sale by owner and you don’t want to pay that agent, you are limiting most buyers.

 

Not smart to do. You want to be willing to pay at least the buyer’s agent or else you are going to have a really hard time selling the property. So if you do pay the buyer’s agent like I said you are only saving 3% instead of 6%, or whatever the commissions may be. And the buyer is being represented by an agent now and you are not.

 

So who is going to have the advantage negotiating? That buyer’s agent is not going to be on your side trying to help you out. They are going to be on the buyer’s side trying to get everything they can for those buyers. So when they are negotiating the price, they are going to do everything they can to help those buyers out.

 

When they are negotiating the closing fees, the closing cost, inspection fees, who pays the appraisal, all of that stuff. They are going to be working on the buyer’s best interest assuming the seller doesn’t know what normally goes on and they can try and sneak some things into the contract that the seller won’t notice.

 

When the appraisal comes up they’re not going to fight to get a high appraisal on the property. They are going to be happy with a low appraisal because it will get their buyer a lower price. And if the seller agrees to it, they are not going to fight to try and push for just a reasonable inspection request. They are going to fight for everything they can for their buyer.

 

So it is just important to know that when you are selling a for sale by owner yourself, you are at a huge disadvantage on marketing, huge disadvantage on pricing and a huge disadvantage dealing with buyers because you are most likely going to have to use a buyer who has an agent. They’ll just have all the ammunition on their side with none of it on your side.

 

So in conclusion, not using an agent usually costs you money and a lot of time and gives you a lot more work to do. So, for me like I said, if I wasn’t an agent I’d still use an agent. It would be a no-brainer for me. My time is so much more valuable doing other things than trying to show houses and do all of that other stuff that comes with selling a house. I’m in the business.

 

I know exactly what I’m doing. For people who aren’t in the business, who aren’t doing it all the time, the pricing, the negotiating, all of that it just doesn’t make any sense not to use an agent.

 

All right so that’s all I got for this show. Like I said, being a real estate agent using an agent so much different than most other industries because houses are so unique. They’re all different, it’s really hard to price them and being an expert on pricing houses is one of the most important thing that agents can do.

 

And appraisers yes, can help you price a house but they’ll charge you $500 up to $1,000 to do it and it’s probably not going to be as accurate as an agent because appraisers have certain guidelines to go by for banks and encourage low appraisals. So that’s for another podcast but I will add a link to the show notes that talks more about appraisals, how they work and why they often come in low – to the show notes.

 

Again, thank you for listening. Hope everyone is doing well and doing lots of deals. Again check out more if you want. I’ll have a link in the show notes and up vote my answers if you like them. Follow me, I have a lot of cool answers and information on there, not just on real estate but on cars too since I’m a bit of a car nut.

 

Alright thanks again everyone, take care.

 

[END]

 

This post may contain affiliate links and I may be compensated if you make a purchase after clicking on my links.

Ready to learn more? Get my comprehensive book "Build a Rental Property Empire" on AmazonĀ Ā»

4 Comments

    • Mark Ferguson November 3, 2017
  1. Jack Bobeck October 23, 2017
    • Mark Ferguson October 23, 2017

Leave a Reply to Jack Bobeck Cancel reply