Why You Should Not Use a Realtor to Buy Investment Properties

Before I begin, let me be clear that this article is specifically about buying investment properties, not about buying your primary residence. The considerations are quite different, and the advice in this article should not be blindly applied to a regular home purchase. I should also note that this is the first of a two part series. The companion article makes the case for why you should use a realtor. I encourage you to read both before making any decisions.

With those caveats out of the way, let me explain why many experienced real estate investors, myself included, often choose to represent themselves when purchasing investment properties.

The Best Deals Are Often Off-Market

In my experience, the most profitable investment deals are frequently off-market properties. These are properties that are being sold directly by the owner without being listed on the MLS or any other public listing service. They are often undervalued because the seller either does not realize the true market value of their property or is motivated to sell quickly and quietly.

When you work exclusively through a realtor, you are largely limited to properties listed on the MLS. While there are certainly good deals to be found on the MLS, you are competing with every other buyer in the market for those same properties. Off-market deals, by contrast, often have far less competition, which gives you significantly more negotiating power.

Finding off-market deals requires effort and a different skill set than browsing MLS listings. It involves networking, direct mail campaigns, driving for dollars, and building relationships within your community. These are skills that benefit greatly from personal attention, and they are difficult to delegate to a realtor who is focused on MLS transactions.

Commission Savings Can Be Substantial

The commission structure in Canadian real estate is typically structured so that the seller pays a total commission of 5-7% of the sale price, which is then split between the buyer’s agent and the seller’s agent. When you buy through a realtor, their commission is effectively built into the purchase price.

When you represent yourself as the buyer and the seller also does not have an agent, there are no commissions to pay. On a $400,000 property, that represents a potential savings of $20,000 to $28,000. Even when the seller has an agent, you can sometimes negotiate a reduced purchase price because the listing agent does not need to split the commission with a buyer’s agent.

For real estate investors who buy multiple properties over the course of their career, these commission savings compound enormously. The money saved on commissions can be redeployed into additional investments, accelerating the growth of your portfolio.

You Develop Critical Negotiation Skills

Representing yourself in real estate transactions forces you to develop strong negotiation skills. While a realtor can certainly negotiate on your behalf, there is a difference between having someone else negotiate for you and learning to do it yourself.

As an investor, the ability to negotiate effectively is one of the most valuable skills you can possess. It does not just apply to the purchase price. You will also need to negotiate with contractors, property managers, lenders, and tenants throughout your investing career. The practice you get from negotiating your own property purchases builds a foundation of skill and confidence that benefits every other aspect of your business.

When you negotiate directly with a seller, you can also build rapport and trust in ways that are difficult to achieve when communicating through intermediaries. This personal connection can sometimes make the difference between winning and losing a deal, especially in situations where multiple offers are being considered.

You Maintain Complete Control of the Process

When you represent yourself, you control every aspect of the transaction timeline and process. You decide when and how to make offers, how to structure your due diligence period, and when to walk away. There is no risk of miscommunication between you and an agent, and there is no delay caused by waiting for your agent to relay information.

This level of control can be especially valuable in fast moving markets or competitive situations where speed and decisiveness matter. Being able to respond immediately to a counteroffer or new piece of information without having to coordinate through a third party can give you a meaningful advantage.

Important Caveats

I want to be very clear that representing yourself in real estate transactions is not for everyone. It requires a solid understanding of real estate law, contract drafting, due diligence procedures, and market analysis. The consequences of making an error in a real estate transaction can be financially devastating.

Regardless of whether you use a realtor, you should always work with an experienced real estate lawyer. A competent lawyer will draft and review your purchase contracts, handle the conveyancing process, and protect your legal interests throughout the transaction. The cost of a good lawyer is a fraction of a realtor’s commission and provides essential protection.

If you are a newer investor or are unfamiliar with the local market and legislative environment, using a realtor is almost certainly the smarter choice, at least until you have built up the knowledge and experience needed to confidently represent yourself. The potential commission savings are not worth the risk if you do not know what you are doing.