Should A Landlord Use The Seller’s Agent When Purchasing A Property?
When your rental properties are doing well, you might be tempted to use the extra income to buy another property. Whether you are buying land to build new construction or purchasing a pre-existing property, you may run into dual agents — real estate agents who represent both the buyer and seller. There are pros and cons of relying on the seller’s agent versus finding a buyer’s agent; read on to learn the consideration of each approach.
Why Use the Seller’s Agent?
There are several benefits to working with a dual agent. Since there is only one agent involved in the deal, communication becomes much easier. Not only is the chain of communication shorter (with one less person), but miscommunications can be avoided when the agent speaks with both sides personally.
Scheduling becomes easier, too, when the buyer and seller coordinate with a single agent rather than two agents. The deal may proceed faster when you use a dual agent. It can be a good idea if you are on a deadline — for instance, if you spend winters in another state and want to get the deal finished before you relocate.
Often, dual agents are receptive to lower their commission, since they’re getting a commission from both sides (versus two agents splitting the commission). Some agents won’t lower their commission — or will only drop off a percentage point, which doesn’t save you much money. Still, it never hurts to ask.
Why Find a Buyer’s Agent?
Whether you’re buying your first investment property or your fifth, you want to get a good deal. You may be wary of an agent who appears to be in it for the commission — not working hard to get you a deal. You may be more likely to have a bad experience when you hire a dual agent.
You may have heard that real estate agents have a fiduciary duty. This means that a seller’s agent has a duty to act in his or her client’s best interest at all times. For the agent to satisfy his or her obligation to the seller, he or she cannot help you (the buyer) get the best deal, as well. Someone loses, even if it’s a matter of $5,000 or $10,000. However, if it seems like you’re getting a great deal — and if you are willing to pay the asking price — a buyer’s agent can negotiate to save you money.
A buyer’s agent can also be forthright with you, since he or she does not have any obligation to the seller. While dual agents may be forthright to both sides, it’s tricky for them to maintain impartiality at all times. Even the most well-intentioned dual agent can slip up.
In some states — including Colorado, Florida and Texas — real estate agents cannot act as dual agents — thus, you must choose a buyer’s agent. To ensure impartiality, look for a buyer’s agent who is from a different brokerage. This reduces the likelihood that those agents will play office politics to try to get their clients a better deal.
After you’ve purchased your next investment property, use tips from American Apartment Owners Association to advertise your rental, screen tenants and start making a profit.