- Trying to buy a house.
- Along with -- what is the maximum you are willing to pay -- this is the most frequent question.
- Why do they care whether I will live in it or rent it out? The two are not mutually exclusive.
Update: this is for UK
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I like the existing answers, but I'll add another thought:
Depending on country, some residences are restricted from being rented out (HOA, local bylaws, zoning). Since it is the real estate agents job to match a buyer with a house, this is important information for them to consider.
It may also make a difference for financing, which can cause a seller to look at other offers more favorably (this is why cash is king, it doesn't depend on mortgage approval). Banks typically want to see more upfront equity and offer worse interest rates for mortgages on rental units.
They ask if are you going to live in the place or rent the place because are trying to understand you the customer:
This also why they ask: condo/townhouse/single family; how many bedrooms; how much land; maximum price; preferred locations; do you have financing in place?
(EDIT: There seems to be some cause for debate in the comments as to whether I am answering the OP's question. My answer is based on the principle that, in the UK, the agent works for the seller (and indeed is obliged by law to act in the seller's best interests), not the buyer. When an agent does or asks a particular thing, they are generally doing so because it will either help them (e.g. by selling the property and earning a commission) or help the seller. If doing so happens to also help the buyer then that is a happy coincidence, but it is not the overriding factor.)
The question is tagged UK. Unfortunately many of the other answers are inaccurate for this jurisdiction. In particular:
What sellers typically are concerned with in the UK is your ability to raise finance. All other things being equal, a seller will prefer someone with a good ability to pay (e.g. cash buyer or with a straightforward mortgage application) over someone who will struggle, becuase this can be make a different of weeks or months to the transaction timescale.
The main difference between someone buying as a homeowner and someone buying to rent is the type of mortgage you will need (homeowner mortgage vs buy to let mortgage). With a homeowner you will be assessed on your income. With a buy to let you will largely be assessed on the rental value of the property. Depending on your circumstances, either or both types of mortgages may be very easy to obtain or very difficult / impossible. Sellers do not want to deal with the latter case.
"Why do they care whether I will live in it or rent it out? The two are not mutually exclusive."
Actually they can be mutually exclusive. Taking a buy to let mortgage and then living in it yourself will almost certainly be a breach of contract. Renting out with a homeowner mortgage also often requires the lender's consent under the terms of the contract. Lenders do not like you to have the wrong type of mortgage product because it invalidates their risk assessment. It is not uncommon for people to attempt to abuse the process e.g. someone with a very low income taking out a buy to let mortgage where the rent is sufficient to cover the monthly payments, then moving in to the property themselves. In my experience I've seen lenders going to extreme lengths to satisfy themselves that this won't happen e.g. requiring evidence that you have and will continue to have another residence available elsewhere, or wanting to see copies of tenancy agreements from the rest of your portfolio to make sure you haven't abused it in the past.
The realtor is trying to help filter what houses he shows you; they don't have unlimited time to go to every open house. If you are not sure what kind of house you want to buy you can do some browsing online in your country's real estate listing. You will get the most out of your realtor if you go in with a good idea of what you want so they can help you find it, and can point out potential problems with a house.
The realtors incentive is to get you the to buy the top of your range for a house because they are paid based on a percentage of the value of the house. If you set your range correctly that removes the realtor's negative incentive. If you want to rent out a property, you are most concerned with the relationship between the rental rate, costs of ownership and price; if you want to buy a house to live in you are most interested in the relationship between quality of living and price. While these are not mutually exclusive it is hard to optimize everything.
I'm not certain about the situation in the UK (though a quick Google search found at least one company offering these services), but in Australia, many real estate companies offer property management services, effectively acting as middlemen between landlords and renters as well as finding suitable renters for the properties; this can be a major source of income for them as businesses. According to this page, in Australia, the typical fees that real estate agencies make from these services range between 5-15% of the weekly rent, depending on the area the property is located in.
As a result, if you're looking to buy a house, it may well be useful for them to know if you're planning on renting it out, in order to determine whether or not they should try upselling you on property management services as well.