FAQs about Real Estate Agents
Advice from the BiggerPockets community
"If you want an agent to help you identify residential properties suitable as investments, be sure to find agents who themselves are experienced investors (either as landlords, flippers, or developers).”
Mitch Messer, Investor in Atlanta
BiggerPockets Member
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What is the difference between a realtor, a real estate agent, and a real estate broker?
- A realtor is a member of the national association of realtors
- A real estate agent is anyone who has taken and passed the coursework required by their state
- The definition of broker varies by state. Some states denote brokers as those who have taken extra coursework and licensure and are approved to manage real estate agents, while other states such as Colorado have the broker designation for all agents.
Who pays for real estate agent fees?
- As of August 17, 2024, homebuyers may have to pay their own real estate agent fees separately from the seller. This is the result of a settlement agreement between the National Association of Realtors (NAR) and other parties. The agreement includes the following changes that are important for you to know:
- Listing agents: No longer specify how much the buyer's agent will be paid
- Buyer-agent compensation: Not allowed in listings on Multiple Listing Services
- Contracts: Buyers must sign a contract with their agent before touring any potential homes
- Sellers: Can choose to offer compensation to the buyer's brokers
Why do I need an agent?
- Real estate agents are experts in their field, and can help you negotiate the purchase of your home. There is an added benefits when agents invest themselves, as they have personal experience in REI.
- And not just the actual price, but they will help you navigate the many steps involved in the purchase process
- You are not legally required to use a real estate agent to help you buy or sell your home, but transactions involving agents typically sell faster
What changed with the latest NAR Settlement?
- If buyers have to pay for their agent's representation, they can pay upfront with the down payment and closing costs, or roll it into the mortgage. Be sure to talk to your agent about this.
- Click here to get the facts https://www.nar.realtor/the-facts
Advantages of Investing in Rental Properties
1. Steady income stream
Rental properties, especially when fully occupied, provide a consistent source of passive income. This income can be used to cover the property’s expenses, with any excess as profit.
2. Property appreciation
Over time, real estate typically appreciates in value. This means that not only can investors gain from monthly rents, but they also stand to benefit from the increased value of the property when they sell.
3. Tax benefits
Owners of rental properties can often take advantage of various tax deductions, including expenses related to property management, interest on a mortgage, and property taxes. This can reduce the overall tax liability, increasing the net income from the property.
4. Diversification of investment portfolio
Since it’s a tangible asset, real estate offers a way to diversify a portfolio. By spreading investments across different types of assets, you can mitigate risks associated with market volatility.
5. Leverage
Investors can buy rental properties using leverage, meaning using borrowed capital. This allows for the acquisition of a more valuable property than might be possible with cash alone, increasing the potential return on investment.
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What investors are saying
I highly recommend BiggerPockets to those looking for agents who are investors themselves as they can help point out details other agents would not!
Brad A.
Electronics Engineer & Investor
If you want an agent to help you identify residential properties suitable as investments, be sure to find agents who themselves are experienced investors (either as landlords, flippers, or developers).
Mitch M.
Investment Expert
The benefit of working with realtors in BiggerPockets is that they are investors themselves. They understand the language. They know what to look for in a deal. They give you on-the-ground information that a Google search or website can't provide. I don’t think I’ll be successful in any of my deals without their help.
Owee N.
IT Professional & Investor
Frequently asked questions
Why do I need an investment property agent?
- They know how to evaluate property deals: Property investing involves more complex metrics than single-family. Multifamily agents know how to run and interpret these numbers — and can help you find the best possible deals.
- They understand multifamily lending and financing: Multifamily deals often use commercial or portfolio loans, DSCR requirements, and seller financing or syndications. Multifamily agents understand what lenders look for and can guide you toward financeable properties.
- They have access to multifamily inventory like duplexes, triplexes, and quadplexes: Many multifamily properties aren’t listed on the MLS. Multifamily agents often have access to private listings through their relationships with brokers, property managers, and other investors.
- They understand local zoning and rent regulations: Multifamily deals are more sensitive to local rent control laws, tenant protections, and zoning limits. Multifamily agents can help you navigate these regulations and avoid legal or financial pitfalls.
- They know how to work with multifamily sellers: Sellers of multifamily properties tend to be more data-driven and less flexible. A multifamily agent knows how to structure offers and negotiate based on income statements, P&Ls, and realistic projections.
- A multifamily agent has specialized expertise that can make a real difference in the quality, analysis, and execution of your first (or next) multifamily deal. Here’s how:
What characteristics should I look for in a multifamily agent?
- Multifamily investment knowledge: They understand multifamily metrics like cap rate, NOI, DSCR, GRM, and rent roll analysis. They can speak fluently about cash flow, value-add opportunities, and financing structures.
- Multifamily transaction experience: They have a track record of closing on multifamily deals, and they understand differences between residential and commercial deals. They know how to navigate more complex negotiations, inspections, and financing timelines.
- Local market expertise: They know the local multifamily submarkets, rent trends, zoning regulations, and tenant laws — and understand city- or county-level restrictions that may affect profitability. They can identify neighborhoods with upside potential or strong tenant demand.
- Access to deals: They tap into off-market opportunities and investor networks, and they can bring you deals before they hit the MLS. They have relationships with wholesalers, property managers, lenders, and other agents.
- When considering multifamily agents, be sure to look for these characteristics:
What questions should I ask a multifamily agent?
- How long have you lived and worked in the area?
- What strategies do you use in negotiations to get the best deals?
- How long have you been working as a multifamily agent?
- How do you evaluate a property’s rental income, growth potential, and risks?
- When considering multifamily agents, you may want to ask these questions:
What’s the difference between a realtor, a real estate agent, and a real estate broker?
- A realtor is a member of the National Association of Realtors (NAR).
- A real estate agent is anyone who’s successfully completed the coursework required by their state.
- The definition of a broker varies by state. Some states denote brokers as agents who have successfully completed extra coursework and licensure, while other states use the broker designation for all agents.
Who pays for real estate agent fees?
- Listing agents: No longer specify how much the buyer's agent will be paid
- Buyer-agent compensation: Not allowed in listings on Multiple Listing Services
- Contracts: Buyers must sign a contract with their agent before touring any potential homes
- Sellers: Can choose to offer compensation to the buyer's brokers
- As of August 17, 2024, homebuyers may have to pay their own real estate agent fees separately from the seller. This is the result of a settlement agreement between the National Association of Realtors (NAR) and other parties. The agreement includes the following changes that are important for you to know:
What changed with the latest NAR Settlement?
- If a buyer has to pay for their agent’s representation, they can pay upfront with the down payment and closing costs, or roll the payment into the mortgage. Be sure to talk to your agent about this.
- For more information, visit https://www.nar.realtor/the-facts
Why do I need a multifamily agent?
- They know how to evaluate multifamily deals: Multifamily investing involves more complex metrics than single-family. Multifamily agents know how to run and interpret these numbers — and can help you find the best possible deals.
- They understand multifamily lending and financing: Multifamily deals often use commercial or portfolio loans, DSCR requirements, and seller financing or syndications. Multifamily agents understand what lenders look for and can guide you toward financeable properties.
- They have access to multifamily inventory: Many multifamily properties aren’t listed on the MLS. Multifamily agents often have access to private listings through their relationships with brokers, property managers, and other investors.
- They understand local zoning and rent regulations: Multifamily deals are more sensitive to local rent control laws, tenant protections, and zoning limits. Multifamily agents can help you navigate these regulations and avoid legal or financial pitfalls.
- They know how to work with multifamily sellers: Sellers of multifamily properties tend to be more data-driven and less flexible. A multifamily agent knows how to structure offers and negotiate based on income statements, P&Ls, and realistic projections.
- A multifamily agent has specialized expertise that can make a real difference in the quality, analysis, and execution of your first (or next) multifamily deal. Here’s how:
What characteristics should I look for in a multifamily agent?
- Multifamily investment knowledge: They understand multifamily metrics like cap rate, NOI, DSCR, GRM, and rent roll analysis. They can speak fluently about cash flow, value-add opportunities, and financing structures.
- Multifamily transaction experience: They have a track record of closing on multifamily deals, and they understand differences between residential and commercial deals. They know how to navigate more complex negotiations, inspections, and financing timelines.
- Local market expertise: They know the local multifamily submarkets, rent trends, zoning regulations, and tenant laws — and understand city- or county-level restrictions that may affect profitability. They can identify neighborhoods with upside potential or strong tenant demand.
- Access to deals: They tap into off-market opportunities and investor networks, and they can bring you deals before they hit the MLS. They have relationships with wholesalers, property managers, lenders, and other agents.
- When considering multifamily agents, be sure to look for these characteristics:
What’s the difference between a realtor, a real estate agent, and a real estate broker?
- A realtor is a member of the National Association of Realtors (NAR).
- A real estate agent is anyone who’s successfully completed the coursework required by their state.
- The definition of a broker varies by state. Some states denote brokers as agents who have successfully completed extra coursework and licensure, while other states use the broker designation for all agents.
Who pays for real estate agent fees?
- Listing agents: No longer specify how much the buyer's agent will be paid
- Buyer-agent compensation: Not allowed in listings on Multiple Listing Services
- Contracts: Buyers must sign a contract with their agent before touring any potential homes
- Sellers: Can choose to offer compensation to the buyer's brokers
- As of August 17, 2024, homebuyers may have to pay their own real estate agent fees separately from the seller. This is the result of a settlement agreement between the National Association of Realtors (NAR) and other parties. The agreement includes the following changes that are important for you to know:
What changed with the latest NAR Settlement?
- If a buyer has to pay for their agent’s representation, they can pay upfront with the down payment and closing costs, or roll the payment into the mortgage. Be sure to talk to your agent about this.
- For more information, visit
https://www.nar.realtor/the-facts
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