“You are as strong as your weakest link.”
This age-old proverb applies to so many things in all walks of life. Within real estate, this most obviously applies to building your team.
Looking for a real estate agent? Check out BiggerPockets’s agent match!
As David Greene talks about in his book Long-Distance Real Estate Investing, in order to be a successful real estate investor, you need to have a rockstar “core four” on your team. That core four consists of your:
- Property Manager
If you pick your team correctly, you will be the weakest link. Don’t be upset, though—this is a good thing!
Remember another cliché: “If you’re the smartest person in the room, you’re in the wrong room.”
In this case, you’ll be able to learn invaluable lessons from your team every day.
Choosing each one of these core-four members could be a separate article in itself. In this post, however, I am going to talk specifically about choosing a great agent for your real estate investment business.
Choosing an Agent
There are 1.4 million real estate agents in the United States, making it one of the most saturated industries in our economy.
Why? The barriers to entry are so low. Take a class, pass an exam, and boom, you’ve got your license.
You now have the ability to represent buyers and sellers, earning 3 percent commission on every transaction. In some markets, that may translate to tens of thousands of dollars per transaction, making it a very appealing option for many.
If you’re thinking the same, remember that you’re not the only one who thinks this way! There are 1.4 million other real estate agents who have already jumped on this bandwagon. The only problem is that 87 percent, or 1.2 million, of these agents aren’t very good and end up quitting the real estate business after just one year.
It is your task to find the 13 percent of agents who can stick with you for the long haul. Then you need to make sure they understand your strategy.
What are you going to be doing?
Do you want to house hack? Buy, rehab, rent, refinance, repeat (BRRRR)? Invest in traditional rentals? Or simply buy a home for you and your family? Whichever strategy you choose, you are going to have to go out there and find an agent who understands what you are trying to do.
Just like anything in real estate, finding your agent is part of a funnel approach. The first step in the funnel is to find a pool of three to five high-probability leads that you can reach out to and speak with about their business.
New! Investor-friendly agents
No matter your investing experience or where you’re looking to invest, connect with a local agent who knows the market inside and out and can evaluate properties from an investor’s perspective. Here’s how BiggerPockets’s agent marketplace works:
- Pick your market
- Share your investment criteria
- Match with an agent!
Step 1: Select 3 to 5 Agents to Interview
The first step in selecting an agent is actually finding five to interview out of the tens of thousands available. Thanks to BiggerPockets, this is easier than it sounds.
It blows my mind when I meet someone in the real estate space that has not heard of BiggerPockets. As an investor or aspiring investor, would you be more likely to work with an agent who is a contributing member in the BiggerPockets community or someone who has never heard of it?
If they are not on BiggerPockets, they may not be passionate about helping investors find properties. Try searching Google, Apple podcasts, or Amazon for “real estate investing,” and BiggerPockets will come up at the top every time. If they’re not on BiggerPockets, it means they have done very little learning on their own.
Do you want this?
You have narrowed your search down to just those on BiggerPockets. Now, there are a lot of people on BiggerPockets who sign up for an account and then never return or contribute.
Who do you think is more knowledgeable? The agent with 500-plus posts, a high vote-to-post ratio, and one who has been active in the past few days? Or the agent with six posts, one vote, and who hasn’t been active for months?
I think that’s self-explanatory.
Luckily, if you go to BiggerPockets > Network > Agents, BiggerPockets displays this easily for you. So pick your top three to five, and set up an interview.
It doesn’t stop there, though! In addition to posts and votes, BiggerPockets also displays how many deals each agent has done (or at least filled out) on top of references left by their clients. Just like you would a restaurant, take a look at the reviews, and pick your top candidates.
Then, shoot them a message and ask them to chat for 15 to 20 minutes over a phone call.
Step 2: Conduct the Interview
Once you have them on the phone, now is the time to ask all of the important questions and really get a feel for them. Start out by seeing if they can build a rapport with you—you’re going to be working with this person for at least the next few months and hopefully for at least a few years. You are going to want to like them.
Do you like small talk? Or are you a straight-to-the-point type of person? The agent will likely start with small talk to be friendly.
If you aren’t having it and it shows in your voice, does the agent persist with the small talk? Or do they get down to business? Communication reading and style here is key!
If you do engage in small talk, this should last at the most two to three minutes. You are trying to be amicable and fun to work with, but there’s no need to swap life stories.
Next, it’s time to get to the meat of the conversation and the questions to ask. Many of these questions come straight from my book The House Hacking Strategy, so if you have read the book and they feel like repeat questions, that’s why!
- Are you a full or part-time agent?You will want to work with someone who is a full-time agent. If the person has another W-2 job, you will likely not be their priority.
- What percentage of your clients are investors vs. homebuyers?You will want someone whose client base is made up of at least 50 percent investors. You want them to think more like an investor and not a homebuyer so they’ll be able to help you get the highest return on your investment.
- Are you an investor yourself?If they do not currently have rental properties, they will not be able to guide you through the transaction with expertise—even if they claim to know how. There’s really nothing like doing it yourself. Try to find an agent who is currently or has recently carried out the exact strategy as you.
- Have you ever transacted on a house hack, BRRRR, or traditional rental property (whatever your strategy is)?If they have not, it’s on to the next question. If they have, great! Ask them about the numbers, type of property, location, etc. If it all sounds legitimate and like a deal that you might want, this will be great news!
- What do you look for when helping people find a house hack, BRRRR, or investment property?Consider their answer carefully. Are they B.S.-ing you? Or are they confident? At this point, you’ve educated yourself and should know what to look for—the rest is up to you.
- What’s your view of the market/what neighborhoods do you like?This is a softball question—everyone asks this one, but it’s still good to understand. You’ll be talking to a lot of agents in this process, so you’ll want to see if there is any overlap between answers. If so, you’ll want to look into those places. If there’s a neighborhood they mention that you’ve never heard of before, inquire further.
- Can you tell me about a time where you negotiated on behalf of the buyer?Agents get paid a portion of the purchase price. Many buyer’s agents cannot see the forest for the trees when it comes to trying to get their buyers the lowest possible price. Ask about a time they negotiated heavily for the buyer where the purchase price was reduced.
If there are any other specific questions you would like to ask, by all means, do so. This is a big decision, and you want to make sure you’re picking someone who is going to act in your best interest.
If you are talking to three to five different agents, I would recommend taking notes for each one so you don’t get conversations confused (it happens to me all the time). Review your notes and head on to the next step.
Related: 7 Signs of a BAD Real Estate Agent
Step 3: Pick an Agent
After you’ve conducted your interviews, you should have an idea as to which agent you want to pick, although it might be tough. There will likely be two or three that you really like and are good in their own ways.
So what do you do? Write it out!
Take a piece of paper and draw a line down the middle. On either side of the line, write each agent’s names, respectively. Along the lefthand side of the page, write your criteria and a weight multiplier for each category.
The weight multiplier should be a percentage from 0 percent to 100 percent. Whichever characteristic you value more, assign it a higher weight, but be sure that the sum of your weights equals 100 percent.
Your piece of paper should look something like this:
After all of your criteria are filled out, rate each of these on a scale of one to five in each category, with one being the worst and five being the best. Multiply their scores by the weight multiplier and add all of them up. Whoever has the most points is who you go with—easy as that.
After conducting this thorough analysis, in the above example, it will become clear that you should be going with Agent No. 1. Give them a call or shoot them a text, and let them know that you want to proceed. Have them set you up with a search, and keep looking until you find the right property.
Now, let’s be real. With 1.4 million real estate agents in the country, a real estate agent is a commodity. What most of them do is show you properties, write up contracts, and that’s it.
Your job is to filter through these agents and find someone who can serve as a mentor, consultant, and friend who leads you through the entire process. Your agent should be someone who can connect you to the right people, analyze a deal, and give you their honest opinion with your goals in mind.
Don’t take this decision lightly—find a good agent and your investing career will be much easier.
What do you look for in a real estate agent?
Let us know in the comments below!