How to work with realtors?
Bell , CA · Member since 2009 · 33 posts · 0 votes
I've read that you should always have a realtor as part of your dream team. How can a realtor assist you? How much commision should you pay a realtor?
And manage your expectations property - meaning most realtors just don't get it. I know it may not make sense - heck - it doesn't make sense.
As someone here on BP said once if you find a good Realtor consider an informal marriage - they are that rare.
Not saying you can't find them but don't be afraid to play the field to find the one to marry.
Plus pay them - pay them well and often and don't ask for deals.
Access to the MLS is the number one thing to look for with a realtor. Most won't do it but some realtors will give you their access code to the MLS. The information on the MLS is tremendous, and I always pay them back with using them to make offers on any listed property. If they are a good realtor I will list my rehab to retails with them also.
Commissions for your realtor are preset when you are using them to buy a listed property. When selling the commission is negotiable (kind of). Most realtors won't come off of 6% but some will.
Working with realtors is a touchy subject here on BP.
Most investors on this site have found that building a healthy relationship with a realtor could be difficult.
For example, in the wholesaling business, I've found that every realtor I've interacted with became frustrated and tired of the whole putting in a 100 low ball offers and being rejected constantly.
I guess it all depends in what aspect of the business your in. Be upfront and let them know your in the business of making money and won't settle for half-*** work.
just make sure they know you're not competing with them. ask them to refer deals to you in situations where they can't help them. and, you will do the same.
give them a finders fee of 10% of any profit earned. that's plenty for taking a dead lead. if the realtor has a problem with the finders fee, tell them to go jump in a lake.
And manage your expectations property - meaning most realtors just don't get it. I know it may not make sense - heck - it doesn't make sense.
As someone here on BP said once if you find a good Realtor consider an informal marriage - they are that rare.
Not saying you can't find them but don't be afraid to play the field to find the one to marry.
Plus pay them - pay them well and often and don't ask for deals.
Jeff
One of the things to look for in a Realtor is if they own properties themselves, if they do then they have a more open approach to investing. I am a Realtor because I was an investor first, so I understand what investors are looking for. Taking a finders fee can cause you to loose your license, so instead make sure you list with them at a reasonable commission on the next property. Making lowball offers is not that much of a problem, just don't get stupid like a few people I've tried to work with :cry: (lease with option to buy for a year, no money down, $1. earnest money with an offer of less than a quarter of the asking price, maybe I'll buy it in a year and I can back out at any time). The problem I have with some investors is they want to cut commissions so low, the other realtors won't even show the property. The commissions are split between the buyers and sellers agents and their brokers, so if they don't make money, :roll: they are not going to show your house to their buyer!
I'm starting a working relationship with a buyer agent to help me either find REO properties or at least to help me write and submit the offers to the listing agent/lender. Even if I find houses on my own, I'll have my agent write the offer and submit it. All I have to do tell him how much I want to offer for a property and he'll write up the contract and e-mail or fax it to me. Then, I just sign it and fax it back to him with a POF letter. He'll submit the offer.
What a great question. I knew I should of promoted a class here in Denver more on Bigger Pockets. I taught a class on this very subject about one month ago with Bigger Pockets own Jon Holdman. I'm Jon's real estate agent.
I knew I should of video taped it. It was facts "not fluff" and lasted two hours.
Some great tips all:
I did like the one about owning property themselves.
The writing hundreds of lowball offers. LOL. If they are willing to do it, that's great.
It's about setting up expectations on both sides. I personally think most real estate agents are absolutely not a good fit. Find one that understands investing, wants to work with investors, and is able to handle the workload.
I've had a number of newbies contact me here about working with realtors. Most are very frustrated by the ordeal. The trick is not to worry about working with the realtor but finding one who is investor friendly and has the knowledge and ability to think outside the box to help you accomplish your goals. Very few have this but I just got an e-mail from one of my colleagues tonight that was very dicouraged and I offered her the same advice. She tells me she has found several who will work with her. Don't let the ignorance and narrow views of some get in the way of what you are working towards.
Mike - I like your ideas. I am a licensed Realtor and work almost exclusively as a buyers agent for my husband who is a investor/wholesaler and we are big advocates of using a Realtor for investing (especially as a BUYER).
Ask any newbie investor how to write up an offer or if they really understand all the terminology in a 40 page bank addendum and see what they say. Are they aware of any disclosures that should accompany the contract? The agent will handle your paperwork and correspondance, schedule the closing, meet the appraiser, etc, so that YOU don't have to. All you do is sign on the dotted line. Good Realtors should make your transaction headache and worry-free. They have MLS access, sales data, and can get you showing instructions quickly. They also make it a lot easier to bid on HUD and VA properties.
A few other thoughts:
-"Low-ball" offers are less offensive than you think. Bank sellers especially see them all the time. Most of our best deals started with low-ball offers, they are not always a waste of time!
-Don't be afraid to shop around for a Realtor...95% of them aren't going to have a clue about effectively helping you buy/sell investment property. A good place to start looking: try and find a Realtor that is a member of your local REIA, they are probably the one you want to know!
*side note: be careful if an agent gives you their login information/password for MLS access. In TN it is ILLEGAL and he/she could lose their license (not sure about other states.)
As an investor you won't need a Realtor on every deal, but they can be so helpful when you need them!
Preach it about the benefits of the agent. The lowball offers might have to do with the local market. Denver is an incredibly hot market right now for investment properties. I picked up a client who wants to write a bunch of lowball offers. I'm willing to see how it works out.
One reason I'm willing to write a bunch of lowball offers is I have an automated process that I can generate an offer in five minutes (at the most).
One of the things investors don't realize, is that the laws are different in every state. Colorado also rewrites its contracts every six months. Whether by design or an unintended consequence is that real estate agents are needed more than ever.
When Carlton Sheets was pitching his stuff the contract to buy and sell was one or two pages.
Make sure you read and understand the contract before you make a decision on whether you need an agent or not.
I'm not sure how to approach a realtor for assistance, as all I really want is their MLS access. As a beginner, I am just wholesaling, so there would be a lot of low offers, along with little commision. Since a finder's fee may not be kosher, what if I wrote up the offers and forwarded them thru the realtor to sign and forward to the seller? They get their commission, do nothing but sign and fax, and give me MLS access.
Maybe I could post an ad on Craigslist? Is it unethical to outright ask for their mls access? Is that something that is more hush-hush that should be approached once you have a conversation with them?
This is an update to an earlier thread I posted on this topic. My buyer agent isn't answering e-mails or voice mails. I'm now going to listing agents of REOs who seem to be very responsive.
If this thread gets bumped I'm sure that somebody will blast me about you don't need an agent etc. I'll even agree that a lot of the experienced investors don't and probably understand more than an agent, but you said you were new.
MLS access. In all probability, again I'm not familiar with your local mls, but it is likely to be a violation of your local mls agreement for an agent to give you access. Is it done in the real world? Of course it is.
Don't advertise on Craigslist the way you have it written. i.e. I just want your mls access. Agents can be a petty bunch and some agent would look to bust your agent. An ad like "I'm an investor who makes a lot of offers on property and looking for an agent who is experienced and comfortable working with investors." I think your best source is going to your local REI clubs. I know that I go to network at several of our local REI clubs and that is how I get clients. There are a several other agents that do that as well. These people would be the most likely to set up a relationship of the type you want.
P.S. In Denver, CO agents are charged $3 an hour for using the mls.
Shannon, I like some of what you have to say, but its obvious that you are a realtor.
. . . They also make it a lot easier to bid on HUD and VA properties.
Most realtors don't read or understand the bank's addendums either. I'm the type of person that actually reads the addendums and I've never gotten more than a blank stare when I ask any realtor a question about them.
And if you are making an offer on listed property, the listing agent will make sure you sign the proper disclosures.
I am all for working with realtors, but I would also recommend that as an investor you should learn your state's standard contract and contract laws. A Law of Contracts class at a local community college or online course would be a good investment of your time and money.
In reference to putting in offers on HUD properties, you normally have to use a realtor. In my region you can NOT make an offer on HUD's without a realtor.
If an agent does NOT give me access, I won't be working with them long term.
"ILLEGAL" is a strong word thrown around by realtors way too much. A realtor "could" lose their license for running a red light, but they aren't going to. I don't know Tennessee licensing law but I seriously doubt their licensing act addresses MLS access. Normally the MLS is hosted by a local association of realtors and they normally do NOT have the authority to suspend a realtor's license. Now the local association can suspend a realtor from the association (i.e. MLS access), but that does not mean they would lose their license.
Now if a realtor is being charged $3 an hour for the MLS then I would lean towards compensating them in one way or another for that access.
As Bienes shared, realtors normally have little or no understanding of what a good investment is. They think in terms of appreciation because its an easy sell for them, but its bad business for 95% of investors. If you are letting anyone else make your business decisions for you, you won't be in business long. Your focus needs to be to learn this business well enough that you are not dependent on someone else's opinion. Maybe you will need information from someone (i.e. comps from a realtor), but you need to get to the point that you do not need their opinion on whether something is a good deal or not. What most realtors "think" is a good deal is a total loser for most investors.
Inform and educate yourself, so you will be adequately equipped to make knowledgeable choices about your investing.
I can understand the investor wants MLS access. But whether it is "illegal" according to state laws or a serious, get your butt kicked out of the MLS and effectively end your career as a REALTOR, that it does not matter to you.
But look at it this way, if I am willing to do something that either breaks the laws of my state or the federal gov't, or violates the rules of the MLS I have sworn to obey, can you trust me? And if you ask me to break rules or laws for you, or do anything that is the slightest bit unethical, can I trust you? If rules, laws and ethics mean nothing to you, can I trust you? Should I?
Your reputation takes a lifetime to attain but just a moment to lose. If people start thinking that you are dirty, whether you are an agent or an investor, it will affect your future profits.
To work with a REALTOR is easy. Develop an ongoing relationship and do not ask them to cut their pay, break the law or the rules of their MLS and the NAR.
Now flame away. :wink:
Lol, so I sacrifice my integrity by asking for MLS access? Wow, right off the cliff with that one.
I have NEVER screwed any realtor or investor, and there have been multiple times I have gone way above and beyond financially to make sure that no one might feel like they got screwed.
Yes, there are multiple realtors that I work with that have violated their sacred oaths of secrecy to the MLS God and I STILL trust them.
Yes, I will ask you to cut your commission, yes, I will ask for your MLS access even though its against the rules, and, yes, I will ask you to sacrifice your first born to the Dark Side.
Funny thing, though, my reputation and integrity is still intact. 6 years and 250 houses later and I'm still going. I do feel a little dirty, though, but I always do after I've been talking with realtors. :goofy:
When you ask someone to do something wrong it does have an effect on your integrity. Sorry you cannot see that.
How many houses or years you have been doing this does change the fact that someone is breaking a rule for your benefit. Even if it is a rule or law you do not like, it is still wrong for them to break a rule or law.
Wrong is wrong. Breaking rules or laws is wrong. Even if you do not like the law or rule.
"Normally the MLS is hosted by a local association of realtors and they normally do NOT have the authority to suspend a realtor's license."
True, but they do have the authority to boot you off the MLS, and out of the Association. Without that, it is difficult, if not impossible, to function as a real estate agent.
How to work with Realtors....Hmmmmmm
The first thing you need to realize is just because someone has a certain title don't blindly assume they know what they're talking about.
The first thing I learned when I got in this business is that most people would rather die than admit they don't know something. Don't ask me why, but it's true.
Realtors, mortgage brokers, title agents etc. Would rather say: "You can't do that", "That's illegal" or my favorite "Yea but thats the way we do it here."
Simple rule of thumb: Trust no one, verify EVERYTHING!
Stuck to that and you'll do fine!
Jose is soooooooooo right about "most people would rather die than admit they don't know something." I also have run into hundreds of Realtors/agents/brokers who told me (and others) that I couldn't do something that I actually knew that I could do. I usually silenced them by referring them back to the relevant law(s).
For example, I once told a Realtor that I wanted to write certain terms on a contract, and explained that handwritten terms trump the legal verbiage in a contract according to contract law. He admitted he was unaware of that, and he check with his broker. His broker told him that I was wrong, and I referred him several links including ones from Harvard and Standford citing that law.
Like Ryan, I read every line of every page--including the fine print, and I'll hire a real-estate attorney to interpret the provisions that I don't understand.
I used to find it quite difficult to work with Realtors until I changed my approach. I found that most Realtors had a greater issue with writing multiple offers rather than writing low offers, and of course many of them also had issues with writing low offers. Now, I'll send a copy of my business and marketing plans to any new agents that I intend to qualify, and I'll ask them for a copy of their marketing plan. I explain that I'll use LOIs and I won't have him/her to write up anything until after I have an accepted LOI, and I won't schedule any visits for properties that I don't already have under contract.
We need to realize that a Realtor's time is his/her most valuable asset, and a little consideration goes a long way.
Yes read the contracts, every word, I actually do this as an agent. I also stress to my clients that it is there deal, and they are responsible for reading it. If you don't understand anything, get an attorney.
Yes agents are most concerned with the quantity of offers. It takes time. No matter what the price is, it still takes the same amount of time to make the offer.
What I really liked most about your post was presenting your business and marketing plans to your agent. Everyone should do that. Let me make sure I understand your strategy, and that I'm comfortable doing it. If you want a 100 offers a week sent with these terms is different than let's drive around and look at ten houses to see which ones you want to make offers on. A relationship between two parties is all based on expectations. As an agent I have certain expectations of my investors and I go over them.
As for a marketing plan. I've got a 17 page business, plan I'm not sure you want to read the whole thing. I do have a one page document that summarizes how I work with investors. Most people don't like reading documents so I try to make it short.
Let me know if you are ever thinking about investing in Denver, CO.
Well, Mark, I'm more of the mindset that if a rule is stupid then its stupid and it should be changed. And until it is changed I'm probably going to break it along with half the other people out there.
Now let me separate rules and laws here, criminal penalties are enough for me to fall in line with a law that I disagree with, but just because some stuck up realtors sit in their ivory towers setting rules to desperately hold on to the control of information that they feel escaping their pitiful clutches does not mean I give a flip about them or their rules.
Breaking rules and even laws is actually the very foundation for most types of change in those rules and laws (i.e. the founding of the United States of America).
I'm a rebel at heart and I do break the rules sometimes, but I am still confident that my integrity is still solidly intact. I will do what I say I will do, EVERY TIME, and you and any other realtor or investor can trust that even if I ask you for your MLS access or for you to lower your commission.
My point in sharing how long I've been doing this and how many houses I've done is that me asking a realtor for MLS access obviously did not tarnish my reputation or negatively affect my business.
"I will do what I say I will do, EVERY TIME, and you and any other realtor or investor can trust that even if I ask you for your MLS access or for you to lower your commission. "
Ryan, I have no doubt that is true. Just remember that every Realtor has also promised their MLS Association that they would not give their login information to another person. I hope you would expect your Realtor to hold himself to the high standard of integrity you expect of yourself.
Also, on a more practical level, our showing service is linked into our MLS. If one was logged on my account he/she could set up an "appointment" for any house in the MLS and gain the access code. The potential liability there is staggering.