BiggerPockets

How A New Investor Should Work With A Real Estate Agent?

The first thing to understand is that a solid relationship with a real estate agent is important especially if this agent is in the deal flow of foreclosed properties. As you are researching properties in your investment area you are bound to come across a set of listing agents that have a high number of foreclosure/REO listings. These agents have worked very hard to be a go too person for various banks and thus they do everything than can to service the bank.

Do you know what makes the agent look good in the banks eyes? Closing as close to 100% of the deals that go into escrow the first time is very important for the listing agent. The agent will look very bad if most of the listing fall out of escrow and take months too sell. The bank will simply find another agent who is hungry for listings.

Being a real estate agent is hard work as they must absorb all the costs of listing a property or working with a buyer in hopes of closing a successful transaction. This is why most agents burnout and never sell anything. Please do not make the mistake of thinking or assuming the real estate agents job is easy.

Knowing the above is important because you can distinguish yourself from the pack of new investors calling for "deals" by doing the following.

First: Do NOT simply call the agent and tell them you are a new investor and you will take the next deal (steal) that comes along. The agent will just blow you off or worse send you some junk property they haven't been able to unload. Either way you are no better off than you started.

Instead call the agent and tell them you are a new investor looking to buy a property with the following characteristics (Example only: 3 Bedroom, 1 Bath house with attached garage over 1,000 sq ft with under 7K of make ready costs). We would follow this up with a listing or two this agent has available (example your house at 123 Main Street seems to fit our model). By doing the above the agent is now in a position to work with you because you have given them your requirements and an example that you think fits. This will lead the agent to tell you why the property is a good fit or why it is not.

Second: Do NOT come to the agent empty handed. You need to be prepared and in the current market that means you should have a pre approval letter from a funding institution. We do not mean one of these simple form letters but an actual letter stating your are approved for "x amount" and can close by "x date". If there is any language in the letter that states they have to review your credit or income then you do not have a pre approval letter. So go get one.

You need to be both a ready and willing buyer who can close the deal. The easier this process is the more likely you will get a second chance at a getting a deal.

The final thing we suggest a new investor should have ready when they are reaching out to a new real estate agent is a list of things you know you're not interested in. For example we do not want any condo's or houses priced over 150K or houses in war zones where you feel unsafe getting out of the car after 8 PM.

Remember this is an important relationship to establish and nurture. Also first impressions are important so do what you can to be ready for the first conversation. However, if you do not click with the agent don't feel bad if you have to move on but just do it quickly.

We know from first hand experience that some agents are either so busy or they just don't care about finding new buyers that they seem to ignore establishing new relationships. When we find one of these we just move on and look for different agents. Because at the end of the day both of you should make money from the transaction.

Good Investing

Comments

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  Jim Wineinger — about 2 years ago

  Dont forget that if they are helpful you might also be able to get a list of "back-up" buyers if your first buyer could not perform. This way your exit plan may not be as expensive as under normal conditions without any backup plan in place.

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  Ron Paisley — over 1 year ago

  That was great advice!! Thanks for the post!!