Is This Real Estate Investor Crazy? My Thoughts…

Is This Real Estate Investor Crazy? My Thoughts…

5 min read
Clay Huber Read More

I was cruising the forums here at BiggerPockets (which by the way, you should be doing! Lots of great discussions occurring!), and I stumbled on a discussion titled Realtor Thinks I’m Crazy. As a licensed Realtor myself, it caught my eye so I opened up the discussion to read. This was the investors original comment:

Real Estate Talking Points

The above brings up all sorts of good talking points. Each of the below talking points could easily an entire article in and of itself, but I’ll just touch on what I feel are the main components of each.

Real Estate Agents Are Key Members of Your Real Estate Investment Team

It sounds like one of two things is going on with this Realtor.

  1. They are an absolute Saint. Working with someone for 6 months, making multiple offers, and getting none of them accepted. They must have the gift of patience.
  2. They are not a very good Realtor. Maybe the only reason the Realtor is deciding to continue to work with this person is because they can’t find other work? If that’s the case, then it would seem this person can find a better Realtor for their team.

What should you take away from this?

  • Educate. You should explain to your Realtor exactly what you are looking to do, and be upfront about it. If they think you are just a normal retail buyer, they are going to have very different expectations than if they know you are an investor. If you are getting funny looks from your Realtor, it’s probably because they don’t understand ‘what’ you are trying to do.
  • Network. Network. Network. If you’re looking for a “good Realtor”, it’s all about putting on your hunting gear and finding them. There is no magic formula for doing this other than to get out there and start talking to people.
  • Trade Shoes. Put yourself in their shoes and take a look at things from their perspective. How would you feel if you were them? If you are getting funny looks, it’s more then likely because you have not clearly set expectations.
  • It’s Not Easy. A real estate agent’s time is just as precious as yours. Finding one who understands and is willing to spend the time looking to do what you want to accomplish as an investor will be rough. “Yes, I want to wholesale. Meaning, I want you to write up offers on multiple properties that will more than likely not get accepted. Did I mention, you will be filling out this multiple page purchase agreement form multiple times per week?” How does that sales pitch sound if you trade shoes and are the agent being pitched it?

Solution – consider getting your real estate license. I can check out houses all I want, and make all the offers I want. The only funny look I will get is from myself when I look into the mirror. As cliche’ as the saying is, it could apply perfectly for you and your goals: “If you want something done right, you gotta do it yourself.”

The Real Estate Market is a Fluid Place

Three things stick out to me in regards to this current person’s situation.

  1. They have been looking for 6 months. That is a long time. That’s like 180 days! And nothing has been accepted.
  2. The Realtor comes back and repeatedly tells them, “We need your highest and best”.
  3. They are bidding on the most mainstream properties today: REO’s (foreclosures owned by a bank/government).

What should you take away from this?

If it walks like a duck and quacks like a duck, it’s probably a duck. In this case, if there are three very similar parameters to the ones above, then your strategy probably isn’t an efficient one. This strategy may have worked well a few years ago, but in many markets, things have turned around for REO’s and it is extremely common to hear “highest and best” offer.

While I understand the pro to this strategy is you are not having to spend money on a marketing budget, the obvious con is the competition is fierce, and like this person has experienced, you run the risk of going a long time with nothing accepted.

If you are doing anything for this amount of time, with no results, it is time to audit your situation and reassess. In this person’s case, I think it has very little to do with their Realtor and more to do with their strategy.

Solution – organic marketing. Quit going after the houses that every investor and their brother’s sister’s grandma’s neighbor’s uncle is going after. Sure, this may cost you money upfront in marketing, but the trade-off is much less competition.

There is No Such Thing as a “Bad Idea” in Real Estate Investing

First, the obvious. Legally speaking, yes, there “are” bad ideas.

For this person’s situation, I would not say that them submitting a list of repairs on a short sale is a “bad idea”. If the Realtor told them they would be “wasting their time”, then there is nothing wrong with that. As long as it is not the Realtor’s time, then this person has every right to spend their time how they want.

What should you take away from this?

  • You’re the Boss. If you want to spend your time doing something (like putting together a list of repairs), then go for it. You are your own boss, and that’s what is great about it. Someone (Realtor) my suggest that you are wasting your time, but at the end of the day, it is your time to spend however you want.
  • You Never Know. Just because someone says it is a bad idea that will waste your time, it just might be exactly what the doctor ordered.
  • Time Management. You need to be wise with your time, and you definitely don’t want to be wasting it. What is a good way to avoid this? Keep reading…

Solution – Ask Around. Get multiple opinions. I’m not a statistics junkie, but what I do know is that a Sample Size of 1 is not a very good way to conduct a survey. Call up some other people. Tell them what you are planning on doing. If you call five people and four say, “Well… I’ve never had any success with that.”, then you should probably just NOT spend your time doing it.

Final Thoughts

I don’t think this investor is “crazy”. I also don’t think the Realtor is a push-over or anything of that nature. From the outside looking in, it sounds like a change of strategy and a bit more education to the Realtor member of the team would do this investor a lot of good.

While it may take more upfront money (whether that be obtaining a Realtor license or beginning organic marketing), it seems to me that the trade-off would be well worth it. Avoiding the majority of competition (organic marketing) and being able to conduct your offers however you please (getting licensed) is an attractive option from my experience.

I certainly don’t have all the answers though, so please leave your comments below on how else you think this investor in particular, or investors in general can make their life a bit easier when it comes to the above mentioned things.

Photo: Micha? Koralewski

I was cruising the forums here at BiggerPockets (which by the way, you should be doing! Lots of great discussions occurring!), and I stumbled on a discussion titled Realtor Thinks […]