Polycrystalline RAgSn2 (R=Ho, Er) compounds, synthesized by arc melting method are found to crystallize in cubic crystal structure with the space group Pm3 m. The dc and ac magnetic susceptibility data show that the compounds are antiferromagnetic at low temperatures. The absence of magnetic hysteresis reveals the soft magnetic nature. Magnetocaloric effect has been estimated from magnetization data that show moderate value for these compounds. The structure of the electronic states and corresponding inter-band transitions calculated for these compounds within the LSDA+U method are found in good agreement with experimental optical conductivity. The theoretical calculations also confirm antiferromagnetic ordering in RAgSn2 (R=Ho, Er). The values of the effective magnetic moments of holmium and erbium are found to be close to the experimental ones.