When Investing in Pre-Foreclosures Should You Hire a Buyers Agent ?

When you get started in the business of investing in pre-foreclosure homes, one of your key decisions will be whether, and the extent to which, you use real estate agents to locate and negotiate the purchase of properties for you.

Real estate agents are professionals licensed to represent buyers and/or sellers in real estate transactions. Because they deal with properties day in and day out, usually focusing on one specific geographical area and often on a certain type of property, they can often provide invaluable expertise about the properties in a given area. Plus, highly skilled agents will be adept at negotiation, and should therefore be able to negotiate a better deal for you.

Having said that, a buyers agent , like a sellers agent, is still compensated based on a split of the commission on the sale. The commission is a percentage of the sales value of the property. Therefore, there is a legitimate argument that the buyers agent lacks a strong incentive to negotiate down on price. On the other hand, buyers agents have fiduciary duties to act in the best interests of their clients. What's more, successful buyers agents, particularly those representing investors, know that they will do much better in the long run if they properly serve and retain their clients. By negotiating in their clients best interests on one deal, they are more likely to get the next deal, and the next, and the next, and so on.

Another legitimate objection to using buyers agents is that you will be able to save on the commission if you negotiate directly with the owner of a pre-foreclosure or their agent (sellers agent). However, unless you are an experienced negotiator, you may find yourself saving nothing, and even paying more, if you handle your own negotiations.

If you have strong relationships with buyers agents and they have either close contacts with sellers agents who represent pre-foreclosure homes or deal in such properties themselves, you are likely to have an advantage in terms of being the "first to know" when a new home becomes, or is likely to become, available. While such information becomes a matter of public record, agents often become aware of the situation before the news spreads.

Finally, by using multiple buyers agents, you can literally cover more ground; you can stay abreast of opportunities in multiple locations simply because you have more people to help you.

In conclusion, while a seasoned investor may be able to locate and negotiate better deals by locating and buying properties him or herself, for a majority of investors dealing with an agent may be a smarter and more advantageous option.




For a comprehensive guide to investing in pre-foreclosures, please go to www.foreclosurespotlight.com