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Why Real Estate Agents Don’t Work With Investors (& Why They Really Should!)

Matt Faircloth
6 min read
Why Real Estate Agents Don’t Work With Investors (& Why They Really Should!)

Hey there, BP! Have you ever found that some real estate agents are reluctant to work with investors? They think we are a pain in the rear, too picky, not worth the trouble, etc. Well, some of us actually are a pain in the rear. However, if real estate agents were willing to work with us and learned how to support us more effectively, we’d BOTH make more money!

For today’s article, we have a treat for you. My associate Karl is a seasoned real estate broker and has agreed to “sit” for an interview. As you will see, he has many years of experience in working with investors and a unique perspective on the real estate agent/investor relationship. I really enjoyed creating this interview with Karl, and I hope you find value!

A Conversation With a Real Estate Broker

1. Tell us a bit about your background in working with investors as a real estate broker.

I’ve been licensed for 19 years and have had extensive experience working with investors as an REO broker, as well as a regular residential real estate agent. As such, I’ve had hundreds, if not thousands of experiences with investors of all stripes from across the country.

2. Why do you think some agents are leery to work with investors?

It’s a pretty complicated answer, but I believe the easiest way to explain it is that agents by and large are not taught about the various forms of creative real estate, and as such, they are hesitant to get involved in transactions that do not appear to have any immediate payoff.

Most times, agents don’t know what “wholesaling” is. We call it “assignment of contract.” So when a newer investor wants to meet a newer agent for their investing needs, the newer investor typically uses the wrong language when they talk to the agent, and this starts the downward spiral.

Related: The Epic Guide to Finding an Investor-Friendly Real Estate Agent

3. What makes the agent/investor relationship difficult?

I know this seems simplistic, but in my mind, many times, it is simply a communication issue. Both parties want the same thing — a closed transaction. However, the agent will feel like, as the “real estate professional,” their skills and training are somehow superior to that of an investor.

Conversely, the investors that I’ve met typically are taught by other “older, wiser” investors to avoid agents. Many times, these newer investors also suffer from the same malady that a newer agent has…”Know-it-All-itis.”

With both parties knowing a different skill set within real estate, they begin to interact.

The real estate agent assumes that the investor will operate the same way a regular residential buyer will act, and the investor acts as if the agent will somehow “forget” their residential resale training.

This leads to a vicious, self destructive cycle. Both parties could help each other, if they could only learn how to communicate effectively. It is similar to one person knowing Latin, and the other person knowing Spanish. They have a lot of similarities in terms of structure, word etymology and pronunciation. Yet those speaking these two languages are completely unable to fully communicate. This is the problem.

4. So tell us how investors can help agents.

As a broker and a real estate agent/investor myself, I think of the agents that I have mentored or coached over the years. They have the same basic problems and concerns that an investor would have. They are always looking for leads to list. As investors, you are always looking for leads to buy. The good news is that these two goals are not mutually exclusive. Many times, the very leads you generate as an Investor may not work for you for one reason or another. Most of the time, you let these leads fall by the wayside. If they are unable to accept your wholesale deal, you throw it away.

My thought? Use those potential leads as bargaining chips with your agent to create a mutually beneficial result! By giving those “useless” leads to an agent, that very agent can return the favor by supporting the investor (i.e. comparable assistance, contract help, negotiation advice), and therefore an investor can create a great relationship with a like-minded real estate agent.

5. So why would a real estate work with an investor, particularly wholesalers?

Undoubtedly, you have heard, “When you see the herd go one way, go the other.” With this in mind, understand that there is a huge segment of the population in your town that is interested in real estate, particularly as investment property. As a real estate agent, you are taught early on in your career to build a “Center of Influence.” By considering investors (particularly wholesaling ones) as part of your Center of Influence who buys property occasionally, you can manage them more easily, as well as potentially have them as referral sources.

6. Karl, you used the term “Center of Influence.” Can you tell us more about that?

Well, if you were going to come and work for me in my office, your first job as an agent would be to build what is called in our business your “Center of Influence.” It is similar to an insurance agent’s “Book of Business.” Unlike a Past Client database of previous customers, this “Center of Influence” is a section of your overall database that is comprised of people who know, like or who trust you.

By consistently working with investors and adding them to your “Center of Influence,” you create long term, repeatable business. This Past Client and Center of Influence database is really the only thing you have to sell when you retire as an agent.

7. So how would an agent go about attracting and qualifying investors?

Fortunately, that is the easiest part! There are tons of investors and potential investors in your marketplace. Unlike residential retail buyers, investors many times are much easier to work with IF you maintain control (this is the key operative term). You see, you must understand that some investors will just never see things your way and will never change their opinions on things. Others who are newer are more coachable in terms of strategy, negotiation, and pricing. If you understand this, you will go a long way to having a great relationship with investors.

There are several methods to attract these newer investors. One of my personal favorites is using MeetUp groups. MeetUp groups allow you the flexibility of making a mass presentation, and the control of organized training. You see, the biggest thing that I’ve found to be true with wholesaling investors that has helped me is the fact that they are so much like newer agents. They have the same questions, the same problems, and the same issues you have as a real estate agent. By organizing a MeetUp group and advertising it as a free educational event for investors with a speaker on some topic (say, HUD properties), you are sure to attract a lot of newer, hungrier investors.

This allows you to educate them “en masse” and without cost or much time. You can make a short presentation prior to the speaker about your willingness to help them with contract questions, comparables, “what if” scenarios, and more. This will position you as the “authority” or “go to” person for the newer investor. This strategy is particularly effective because if wholesaling investors suffer the same fate as a real estate agent ordinarily does (only one in five real estate agents are in business after five years), then it is highly likely that this wholesale investor will be out of the business within 18 months.

As such, it makes sense to put yourself in the right place at the right time. These investors, although temporarily out of the game, are still on the lookout for property. They will tell you about deals they find out about, if you ask. Again, as part of your Center of Influence, make follow up calls.

8. What costs and time are associated to working with investors?

With the “MeetUp group” strategy, there is very little time and almost certainly no cost to conduct such a seminar. If you have been an agent for any length of time, you are familiar with a buyer seminar. You conduct this MeetUp group the same way. Make it a monthly event, and you will quickly discover that the word gets out about you being “investor-friendly.”

Certainly, with the advent of the Internet, there are literally thousands of places to go online to connect with others who are real estate agents who specialize in working with investors. Sites like BiggerPockets provide ample forums to meet local investors in a free, non-invasive way. Facebook provides tons of local groups of investors who are always happy to hear about an “investor-friendly agent.” The possibilities are simply endless with the Internet today.

Related: Top 5 Signs it’s Time to Find a New Real Estate Agent

9. So bottom line, how can the agent/investor relationship double the agent’s income long term?

Well, that’s really the key. It is two things: a “relationship” and “long term.” The problem is, most agents are so focused on the right now that they miss the bigger picture. Let’s just suppose a newer wholesaler brings you a “crazy idea” about “flipping houses with no money, and selling it before they close…”

Before you throw them physically out of the office, simply ask a few more qualifying questions! Are they looking to “wholesale” a property? (Which in real estate agent speak, we know as “assignment.”) If so, then simply understand that they need education, and if you can spend a little time educating them, you can add them to your Center of Influence. As they mature as an investor, they will become a valuable referral partner to you. Not every property needs to be listed, not every property is an investment property. Both parties can help each other serve their community if they communicate and work together!

Did you enjoy this article? Then be sure to share it with a real estate agent in your area! You just might build a new strategic alliance with them.

Be sure to leave a comment below to get some conversation going!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.