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by: Stephen Cook
This article is excerpted in part from Stephen Cook's
course, "Wholesaling for Quick Cash: A Real Life Guide
to Flipping Homes."
One of the most critical steps for a new investor is finding
a competent real estate agent who understands your needs as
an investor and will work hard for you. This article attempts
to address that need.
Understanding the Agent
In most cases, you will have to train a Realtor to work
for you. Real estate agents are generally good at what they
do, but most of them do not deal with investors and our methods
are foreign to them. This does not make them bad people, nor
does it make them stupid. Typically, an agent makes more money
dealing with pretty houses and people with good credit, so
this is the area where they become experts. If you can find
an open-minded agent and teach them about what you do, then
you can put together a mutually beneficial relationship. But
first you have to respect the agent’s perspective.
An agent gets their license and starts selling real estate
to make a living. They aren’t doing it for charity. They only
get paid if someone buys a home and settles on it. A lot of
work goes into a putting a deal together. Agents have been
burned time and time again by investors who do not produce.
Many so-called investors have real estate agents scour through
listings, make appointments to see houses, show them around
town, get them back into houses a second time, and never make
an offer. Many investors who do make offers produce offers
which are so ridiculous that if the agent knew this up front,
then they probably would have never agreed to work with the
investor. Then there are investors who get offers accepted
but never settle on the deal. So the agent, who has about
30-40 hours worth of work into a transaction, will never get
paid for their time. How many of you would want to go to work
for a week and then not get paid?
What to Expect from Your AgentYou need to recognize the
fact that you are going to be looking at many houses and buying
few. You don’t need the agent to drive you all around town,
pull up comps on every house you are going to see, or present
offers on which you can’t follow through. This is a waste
of their time and yours. The only thing that I expect from
my agents is to provide me with listings and submit my offers.
Occasionally I will ask them to show me a home or pull comps
for me if I can’t find anything on my own. With few exceptions,
you need nothing from your agent but for them to give you
listings and submit your offers.
How to Find an Agent
When interviewing Realtors, you need to have a good idea
of what you expect from them so that you can explain to them
exactly what you need. They need to know exactly what their
role is going to be if they are working for you. I simply
tell new agents the following:
"I'm looking for a new real estate agent to help me,
someone who can provide me with lists of fixer uppers and
foreclosures on a daily basis. It won’t be necessary for you
to run me around town to see all of the houses. Occasionally,
I may need to get inside of a home, but not very often. I
may also need comps once in a while, but mostly I’ll just
expect you to submit my offers for which I will provide all
of the terms up front. I will probably make about 20 offers
per ______. My offers will be low and most will be turned
down, but I usually get one or two. Since you won't have to
work to hard for these sales, would you be interested in working
with me?" Most Realtors will say yes. The ones who usually
decline are those who are mega producers and already busy
enough.
It is not difficult to find a real estate agent, however
it can be difficult to find one that you like who will also
work with you. The first thing I suggest is for you to look
for someone whose location is convenient for you. You will
have to see them regularly and you don’t want to be traveling
out of your way all of the time.
Be Honest with Your Agent
When dealing with a new real estate agent, be sure to be
totally honest with them. If you have never done a deal before,
you shouldn't walk into their office and tell them that you
are a successful investor who does 5-10 deals per month. First,
this is lying, and second, your inexperience is bound to show
through and you are sure to lose all credibility with the
agent and anyone that they know. A real estate agent will
be more inclined to work with you and be happy about it if
they know everything about your situation up front. If you
enlist their services through deception and they discover
shortly thereafter that you have never done a deal, you will
probably never hear from them again. Overall, real estate
agents possess a good heart like anyone else, and they like
to see people succeed. Moreover, they would like to be a part
of your success story, so be honest with them and you will
see how much further it will take you.
How to Work Well with Your Agent
The key to working well with an agent is for you to respect
their time. Real estate agents are just like you and me. They
do what they do to make money. Their time is money. If you
have an agent run you all around town to look at houses, spend
hours preparing contracts, hours on the phone with other agents,
hours pulling comps (we will discuss comparable sales later
in the course) and hours pulling listings but you don’t buy
a home, then the agent loses. They get nothing for all the
time that they spent in good faith, hoping that you will buy
a property. You need to be aware of this and respectful of
it. Most investors who go to a real estate agent are beginners/wannabes.
They never buy a home, yet the real estate agent invested
a lot of time and effort into them. As a result, on the whole
real estate agents have little success with investors and
therefore tend to stay away from them. You have to be different.
Be considerate of your agent's time and produce.
Real Life Experience
I have never had a problem with finding real estate agents
to work with. I can walk into any real estate agency, and
find an agent to work with me. I sit down with the person
on floor duty and ask them a couple of questions about their
experience. I ask them if they are opposed to working with
investors and I listen to their response. I then go into my
pitch. I tell them that I am an investor and that I buy 3-5
houses per month. I ask if they would be interested in handling
that for me. I always get a yes to that question. I then give
them something else to get excited about. I tell them that
I do not expect them to take me out to show me houses- their
faces usually light up. Next I tell them what I do expect
of them. I want listings on a regular basis and I want them
to make all of my offers. I let them know that I will usually
make about 30-50 offers per month in order to get 3-5 accepted.
I ask them if that will be a problem. That usually is not
something they like to hear, but they realize that they don’t
have to do anything else so they agree to it. I tell them
that the reason I only get about 10% of my offers accepted
is because I offer very low. I let them know that most will
be turned down, but some will be accepted and those are the
ones that we want. I also explain some of the things that
I have learned when it comes to dealing with banks. Most banks
pay real estate agents a minimum commission (as opposed to
a percentage), so if you are making low offers your agent
can still expect to make decent money. This is another plus,
they like to hear that you want them to make money. Bring
it up often- tell them that you value their time and you won’t
waste it. Be considerate and they will be loyal.
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