The 6% Realtor Solution

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To get a Realtor or not to get a Realtor, that is the 6% question …

Joshua asked a question about a recent post:

I’m planning on buying a condo soon  … fixing it up a bit and renting it out … but how would someone “educate themselves daily on the market”? I keep an eye on the 30 FMR and am impressed with rates right now but I’m wondering if there’s more to this education.

If you’ve been following this blog, you’ll probably also be thinking that now might be a great time to be buying some real-estate: a house, a rental house/condo, duplex/triplex/quadraplex, retail/commercial, office or industrial … the choices abound!

No matter what you are thinking of buying, once you have done some of your own homework and narrowed down (a) the type of real-estate you want, (b) the price range that you are interested in, and (c) the area/s that you are looking at …

… then find a Realtor who will send you ‘comps’ (i.e. comparable sales) on similar sales in the area from the Multiple Listing Service (MLS).

Also, ask the Realtor for information that will help you find how the market has changed over the past couple of years … do the same with rental ‘comps’.

Also, physically look at a number of similar properties in the area/s that you are interested in before choosing one.

 Of course, you can get some (most) of this information from public (many free) databases … just Google ‘MLS’ for listings of properties of the type that you are interested in, and sites like for rental rates on apartments and houses. Sites like realtytrac and loopnet are great for commercial.

But, there are some big advantages of using a Realtor:

1. Qualification – these guys are trained (more so than a ‘standard’ real-estate agent … the ‘Realtor’ designation actually means something!) and if they have worked in the market for a while, they will know what you are looking for before you do.

2. The MLS listings that they can get you are far more detailed than the publicly available ones.

3. If they own and invest in the same types of properties in the same areas that you are interested in, they can be a great resource (AJC: this should be the first question that you ask … only deal with an Investor/Realtor who already invests in the same type of real-estate that you want to be investing in, and in the same or similar area/s).

4. They will represent you in the purchase and the other guy (i.e. the one selling the property) pays their fee – they typically split commissions with the selling agent.

So, the seller’s 6% commission pays you for a ‘free’ buyer’s agent … just choose the right one … OK?

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4 thoughts on “The 6% Realtor Solution

  1. Hey AJC, just for an update on where I am with my RE purchase – I’ve talked to a RE lawyer and he said I could get a 30 year FRM for around 5.0% because I’m a first time home buyer and I make less then a certain amount. I do believe I would need to actually live in it for some time, which is ok.
    Thanks for further exploring my question.

  2. @ Joshua – I don’t know whether 5% is going to be a good rate or a bad rate this year or next … but, I DO suspect that in 30 years time your fixed payment is going to look VERY, VERY cheap compared to the rent it will be pulling in for you … hope the next 10 acquisitions are just as good 😉

  3. How do you overcome the bias towards higher prices?

    Even if you have a buyer’s agent, their commission is still based on the selling price – not a lot of incentive for them to negotiate the best price for the buyer.

  4. @ Bill – They take your instructions to the seller via the seller’s agent … let the Realtor know up front your price expectations (don’t ask him for advice on that!) and he will negotiate to that without (as much) emotion as you. But, your point is entirely valid: get a good agent and let him know that you are a multiple-purchase-investor …

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