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7 Irresistible Ways to Find House Flips With Real Estate Agents

by Michael LaCava on December 15, 2013 · 25 comments

  
Flip Agent

About a year ago, I went to a REIA meeting and landed one of the best house flips I’ve ever done.

At this particular REIA meeting, I was given the chance to get up in front of the group and ask the group what I was looking for at the time. This is one of the really cool things about REIA meetings and is something we do in our own MeetUps as well.

I said I was looking for short sale opportunities in any market. Lo and behold, there just so happened to be a short sale specialist in the crowd.

I spoke with this woman after the meeting and quickly discovered that she was a real deal short sale specialist real estate agent. After we spoke, she put me on her very “short” (yes, bad pun) list of people to contact when she comes across a short sale in her market.

Her market is a good 30 miles from my office, but I kept her card on file and emailed her the next day telling her it was great to meet her.

About a month later I got a call from her. She said she had a short sale property in Scituate, Massachusetts that I had to see immediately. She had other real estate investors are list, but she had called me first because of our meeting.

Needless to say, I drove up to see if the next day. She ran some comps and I then put in an offer.

It was accepted the next day and off to the races we went.

To make a long story err, rather short (sorry, that’s twice now), we made over $42,000 in profit on that flip before taxes.

That flip alone made me a tried and true FAN of real estate agents…and it’s not just because my wife (the lovely and talented Christine LaCava) just so happens to be one too!

Real Estate Agents and House Flipping

Suffice to say, some of the best house flips I’ve ever done – many in markets I really didn’t know all that well – came from real estate agents.

Although most of the ways in which we find houses to flip are found through non-MLS listed listings, never discount a good real estate agent who knows your market to uncover excellent potential house flips for you.

Here are some tips on how to work best with them:

1. Take the Good with the Bad

As with anything in life, the good comes with the bad. There are good general contractors and there are bad ones. There are good plumbers and there are bad plumbers. There are good electricians and there are bad electricians.

The same holds true with real estate agents. It’s definitely true that not all agents are good to work with.  Some are great to work with and others are simply not quite as competent.

And keep this in mind when you’re building any member of your house flipping team. But with real estate agents, work with as many as you possibly can and we out the ones you really think are competent and the ones who are less so.

For me, I worked with dozens and dozens of real estate agents. But I only really do business with a handful of them. You can probably expect the same kinds of percentages

Clearly, the agent from Scituate is one of the really good ones who are kept in touch with very closely.

I can’t say that for all the real estate agents have worked with, but when I get a phone call from her next, I’m getting in the car that day and going to see whatever it is she has.

2. Agents Are Businesspeople Too

Never ever forget that agents are in business too.  They want to make a lot of money and time is money to them.

So your goal when you’re talking with them is educating them and making them understand your business model so they don’t feel like you’re wasting their time.

But likewise, keep in mind that most real estate agents are out for themselves. As with any profession, this is the rule rather than the exception. It’s the very rare and successful business person who is out for themselves and the same time out for you as well.

The smart ones realize that if they can help themselves while helping you enormously, you will both be successful. And that’s the best way to do business.

3. Training Is Okay

With some real estate agents, you’ll need to explain to them your business model, the demographics of what you’re looking for, as well as the geographic areas that you want to buy houses.

This is perfectly fine as most real estate agents are used to dealing with the retail sector and not the real estate investing sector.

Keep in mind that for agents that may not understand your business, you shouldn’t automatically exclude them either.

If you “train” a newer real estate agent into what you do and get them to hunt down properties for you, you both make plenty of money. Some of the best real estate agents I’ve worked with a relatively new agents who are go-getters and ambitious.

Your call with these types of agents is to build a relationship with them, get them to understand your business model and keep in close contact with them in your target market.

At the end of the day, they can make money both selling the property to you as well as selling the property for you when the renovation is all done.

4. Make Sure They Know You Roll…

When you first start networking to find good real estate agents for your house flipping business, you should talk to them about how you work.

Make sure you talk to them early on what it is that you do and how you’re going to be approaching your deals. This should involve you explaining to them that you may need to put in ten offers to get one deal. This also means that they may need to show you many properties – perhaps far more than the average home buyer.

As a house flipper, that’s just how you roll…and they need to know that up front.

When you talk to them about this at a networking event or over the phone, you’ll quickly get a sense as to how motivated they are. Finding houses to flip takes lots of legwork when you’re a real estate agent. If you sense them lacking enthusiasm on this initial consultation, you may have found a real estate agent that you don’t want to work with.

Likewise, if they appear motivated and ambitious and excited about the prospect of working with you and all the multiple deals your bringing in, that may be an early indication that you’ve really found a winner.

5. Build Rapport and Understand Them

Remember that as with any member of your house flipping team, the most important factor that keeps them on your team is the relationship you have with them. Make sure you understand from their point of view what motivates them and how their business operates. It’s not just all about you – to get them to work with you, you need to understand what’s in it for them as well.

In this comes from building relationships and understanding what they want as well is what you want.

6. It’s Not Just MLS

Properties listed in MLS are where most of your agents are going to source deals for you.

But also bear in mind that sometimes, they get deals outside of MLS as well. And in many cases, real estate agents have listings that are currently “off market”. These may be deals where the seller is just feeling out whether or not they want to sell. Real estate agents will have access to these kinds of properties.

But to get the best deals, you shouldn’t just wait around for things to be listed at the correct price in the MLS.  Sometimes properties are overpriced and the real estate agents will understand that and know that, but in many cases still know about properties that are coming up for sale prior to them being listed in MLS.

7. Look Out for Short Sale and REO Agents

If a real estate agent has a direct link with the asset managers from a bank and they’re the REO broker, they’re going to know ahead of anyone else when deals come available.

So if a property is listed at $150,000 and for an investor it’s only worth $100,000, a good broker will inherently understand this. In that case, don’t waste your time, don’t put your offer in because the banks aren’t going to accept anything that’s too far out from what they’re expecting to sell for.

Actively seek out these kinds of specialized real estate agents, meet them, befriend them, have a cup of coffee with them and keep them in your Rolodex as well as make sure they keep your card in their Rolodex when they get a good deal.

Conclusion

For me personally, real estate agents have worked extremely well for me. Many other real estate investors would disagree and may tell you that you never want to buy anything on MLS due to the fact that everybody knows about it.  And when everybody knows about it, the chances are that the price is going to be out of your range to make your numbers work.

This is precisely the reason why you should meet and get to know as many real estate agents as possible. If most real estate investors think this way and you do the opposite, you now have a leg up on the competition.

If you keep the ideas from above in mind, you too will find plenty of excellent house flips from real estate agents.

 If you’ve made it this far, please leave a comment below! What do YOU think about working with real estate agents? Please leave a comment and share your thoughts!

Photo: Alan Cleaver

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{ 25 comments… read them below or add one }

chuck wilson December 15, 2013 at 9:46 am

I have also bought many very profitable flips from agents. Even in a hot market agents have given me deals. If they know your reputation and if you use them for the resell it’s to there advantage to feed you deals. Less goes wrong with me buying versus some picky buyer who wants everything perfect. If you pay cash there is no loan or appraisal contingencies. If an agent has a pocket listing they will double end the commission.

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Michael December 15, 2013 at 6:14 pm

So true Chuck and we offer many of them the listing as well if we get the house.
They will make even more money because we increased the value from the distressed situation to a house worth more than twice what we paid in many cases. Who wouldn’t like all those commissions.

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Judith Anne Condon December 15, 2013 at 10:27 am

Is there a script outline to use when introducing oneself as a wholesaler
that you’ve had success with?

Bullet points?

Thanks!

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Michael December 15, 2013 at 6:19 pm

Hello Judith
I did read a lot when I got started and even spent a fair share on courses……..but really the best advice I can give you is just be honest in your approach and tell them exactly who you are and what your plans are. Do some role playing if your nervous in networking….
I don’t think you need a script for this. One tip is to make more about them and not just yourself. Tell them your interested in buying distressed houses and would they be interested in listing them for you as well. Who wouldn’t want more listings.

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Shari Posey December 15, 2013 at 10:33 am

I would add another tip…When an agent calls you to view a hot property that he or she thinks is a good deal, return the call immediately. In the end, it may not be a good deal for you but you never know and it’s a professional courtesy to be prompt. I can’t tell you how many times (the majority of times) I call an investor with a good deal and they wait 2 or more days to call me back. Of course, by then the deal is gone and I don’t bother to call them again. This is the number one reason I don’t work with many investors.

A particular deal that comes to mind still haunts me because I should have bought it myself when the investor didn’t call me back the same day. I met him about a week earlier and he stressed how eager he was and he seemed to be. So, when an REO SFR in a really good area dropped from $329k to $299k, I called this guy and told him to write an offer sight unseen because I had checked it out already. He called me the next day but it was too late. It was purchased for $295k and flipped for $445k with probably $30k of work done on it. I drive by that damn house all the time and curse it.

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Michael December 15, 2013 at 6:22 pm

Hello Shari –
I agree and you’re not alone in making that mistake. I recently wrote a blog on that exact thing. I got a call on Sunday late and thought I could wait until Monday to wrap it up because I already saw the house and new what my offer would be……
WRONG. Move on and get motivated for more deals.

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Shari Posey December 16, 2013 at 9:26 am

I should have clarified…I am a real estate agent and my pet peeve is the slow response from most investors.

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Steve Johnson December 15, 2013 at 1:30 pm

Great article. I’m always happy to see investors who are willing to work with agents.

You mention you work with a dozen or so. How do you navigate around the agreement stating a realtor is your exclusive Realtor? Do you have different searches set up with different agents or do you have a dozen markets you farm each with its own agent?

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Michael December 15, 2013 at 6:26 pm

Hey Steve
I don’t do exclusives with any agent. My wife is an agent as well.
What we do is work with different agents in different markets so they don’t compete too much with each other. We let them all know and haven’t run into any problems doing this and on a rare occasion there may be some overlap but we work it out.

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Mike Grayford December 15, 2013 at 2:20 pm

I agree with this. Our best deals by far have come from real estate agents. Now if only we could find agents who could repeat the success…

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Michael December 15, 2013 at 6:27 pm

Exactly Mike and we are trying to get more deals from each of the agents for 2014 as we are ramping up again. We will see who has the goods.

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Geoff December 15, 2013 at 9:30 pm

Do you pay your Agent the standard commission for all of your deals? If not what kind of agreement do you have with them, do you have sample paperwork?

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Michael December 16, 2013 at 7:12 pm

Typically the real estate commission is 5% on the total sale but that gets divided with buyers agents as well and don’t forget the agents split with the office they hang their license with. Depending on the agent those percentages vary with the broker office and teh volume of business they do.

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Sharon Vornholt December 16, 2013 at 10:17 am

Mike –

I have always believed that agents should be part of your team. Like any other business relationship, you just have to be a “fit”. Sometimes that just takes a while to find those folks that understand your business and will eventually be part of your team. It’s a process to find those folks for sure.

Sharon

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Michael December 16, 2013 at 7:14 pm

So true Sharon. It is a process and sometimes certain things take longer to evolve than others but it’s all part of running a successful business as you know.

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Mark Ferguson December 16, 2013 at 7:17 pm

Nice article Michael. I have 6 flips going and five were bought off MLS.

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Michael December 16, 2013 at 7:19 pm

Thats great Mark. Keep it up. So great to see other’s making it work!

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chris December 17, 2013 at 11:55 am

I would also like to expand with what Michael said on Non-Exclusive Rep agreements. I have found as a Realtor that many investors make the mistake of using many Realtors for the same geographic area. It creates problems where we are setting up the same MLS searches and sending the investor all the same properties. It wastes my time and other Realtors time.

I believe the best way to work with Realtors is by geographic location where they are extremely familiar with the market. That may only be a couple cities or 5, but give that Realtor the business in that specific area. It is still non-exclusive in case a REO agent or another listing agent throws off-market properties your way, but stick with 1 Realtor geographically for your main buyer rep.

That may mean depending on the size of your area there are 10 Realtors you work with, but they will be extremely proficient in their individual markets, and they will also become accurate on determining ARV for you.

Lastly, remember that Realtors are not that much different than contractors or any other vendor you work with. The good ones all understand you are a volume play, which is why they are willing to take a hit on their commission to work with you. We work harder and spend more time with you compared to the retail buyer market.

That means you always have to be conscious on how many deals your individual Realtors are getting, and if they are not getting enough volume you may need to make changes. Otherwise they will most likely drop you.

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Michael December 17, 2013 at 6:25 pm

Great points Chris and thanks for spelling that out in detail. No reason to have all those realtors working the same area’s for sure. As a matter of fact word will get out and none of them will waste their precious time with you if you don’t take them seriously.

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Shaun December 27, 2013 at 3:23 pm

I like working with Agents.
I will work with any agent that shows some interest.
I am an agent myself but I always explain to them if they bring me a good deal they can be my buyers agent and, assuming it is a flip, get the relist on the resale.

I tend to find most are similar to most wholesalers that approach me at a REIA or other REI meeting and I never hear from them again. They respond at a bit higher percentage but still well under half. However the ones that do tend to actually bring better prospects so I like seeing stuff from them. Most of them still don’t work but they are at least worth evaluating.

Most recent purchase was one a Realtor I have done a bit of work with found and brought to my attention. Closed last week and will keep him updated on the rehab progress so he can relist it as soon as it is ready.

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Michael December 27, 2013 at 4:45 pm

The old 80/20 Rule here again. Where is your recent flip?

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Shaun December 27, 2013 at 6:18 pm

Yeah 80/20 is probably generous, probably more like 95/5.
But just have to cultivate the relationships since you never know which one will be gold.

Bought a little shack in Rockland last week.
Even with Christmas got a few days of work in.

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Michael December 27, 2013 at 6:39 pm

Your probably right on the 95/5. The one in Rockland is that the one Neil K. was wholesaling?
Good luck with it.

Shaun December 28, 2013 at 9:33 am

No it was a REO from Freddie Mac.

Actually this is a great example of working with a Realtor. That isn’t a town that I mine the MLS on regularly but is in this guys sweet spot. He noticed a big price drop ($30,000) on it and said that it looked to be not so far off form a deal at that point.

I took a look at the listing and agreed. Since it was closer to him he went and took a look and got me a bunch of extra pictures and info on the place and the area. Put in a bid right away and worked something out like another $11K under the list. Since I had not seen it I did keep a short inspection period to look at it and bring my contractor in for a hard quote.

Likely never would have even seen it if he didn’t bring it to me.

Michael December 29, 2013 at 7:56 am

Realtor’s are great when you find the ones that understand your business model you can make a lot of money together. That’s great – Keep me posted on your progress with this.
What are your projections. You can inbox me if you like.

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